The rural economy of West Bengal is predominantly dependent on agriculture. According to government estimations, there are around 71.23 lakh families who are dependent on agriculture. It is one of the focus areas of the state government and the state's Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 12.47% from 2011-12 to 2017-18. However, better penetration of a vibrant cold storage network can further augment the agricultural sector. According to last estimates, there are around 400 cold storages in West Bengal while the net cropped area is 52.05 lakh hector.
Cold storages are warehouses that are used to store additional agricultural yield. Farmers often store their additional yield in these cold storages so that the product can be later sold in the market when demand regenerates. A farmer family from Chinsurah, Hoogly, West Bengal, shared with BE, “After production of onion and potato, we send a large amount of the produce to the market and keep some for our household consumption. After this, if there is a substantial amount left, we send the excess produce to the local cold storage.”
Every cold storage in West Bengal is controlled by the state government although most cold storages are privately owned. West Bengal Cold Storage Association (the association of cold storage owners in West Bengal) and the state government jointly operate these cold storages. Being a government controlled sector, cold storages need permits from different departments like the pollution control board and other such departments. The source of income of cold storages is the rent that is attained according to the storing quantity of crop. The rates are finalised by the state government and evaluated on a yearly basis. West Bengal Cold Storage Association acts as a pressure group and tries to promote the interests of the owners of cold storages in West Bengal. According to the West Bengal Cold Storage (Licensing and Regulation) Act, 1966, the present rent division is Rs 140 to Rs 150. Farmers need to arrange storage tickets, generally known as ‘bonds,’ for storing crops in cold storages. The storage fee needs to be paid partially in advance.
BE spoke to the management of the Chinsurah Cold Storage Pvt. Ltd., which is the oldest cold storage in the district of Hooghly, West Bengal. According to the source, “We only store potatoes. They are mainly for seven to nine months. For storing potatoes for nine months we charge Rs 150 per quintal. The rate is same for seven months or even for a week.”
West Bengal has an annual potato yield of about 11.5 million tonnes, while the storage capacity is 7 million tonne. Due to shortage of storage space, framers face difficulties in getting bonds which are required to store their agricultural produce. Resultantly, market prices often shoot down, landing these farmers in severe distress.
A well-placed source from the West Bengal Cold Storage Association, told BE, “The general production of the state in general is around 100 lakh tonne. But in case of over-production, we are unable to store the excess yield. As from December to the last week of April, the potatoes in the market come from directly from the harvest. After that, around 65% of the total production remains in cold storages. The problem starts when over-production occurs. Cold storages are unable to store the excess yield and that lead to agrarian distress and leads to severe losses for farmers.”
The government doesn’t interfere in this sector unless there is a severe agrarian crisis. In such cases, the state government along with the West Bengal Cold Storage Association jointly formulates a policy that tries to balance the interests of the farmers and the cold storage owners.
According to a well-placed industry source, the number of cold storages in India is reducing. Private entrepreneurs are getting disinterested in entering this sector. The reason behind it is the uncertainty in this sector. The initial investment for cold storage is around Rs 8,000 per tonne of capacity. On top of that, operational cost comes to about Rs 1,250 per tonne each season. According to the source in West Bengal Cold Storage Association, “The government controlled rental rate is Rs 1,360 per tonne and such low rates cannot attract any new investment in this sector. Minimum expenditure to create a cold storage is Rs 900 - Rs 1000 per quintal while the rental rate is Rs 148 in south Bengal and Rs 152 in north Bengal.” Additionally, cold storage owners need to pay a certain amount to obtain the necessary licences that are required for cold storages. That adds to the initial investment. According to the source from the West Bengal Cold Storage Association, “We are trying to impress upon the government the need to restructure the present rental structures.”
Additionally, there are stringent structural specifications that need to be adhered to and that adds to the initial investment as well. According to the West Bengal Cold Storage (Licensing and Regulation) Act, 1966, agricultural produce stored shall be kept and arranged in such a manner as to prevent its deterioration from damp, moisture, heat, blast, or from water from the floor, side walls, roof, doors and windows. Insulation of the floors, roofs, walls, doors and windows or any opening of the cold storage is mandatory and shall be made with cork slabs or glass wool or rock wool or expanded rigid plastic form. Such regulations make maintenance expensive. According to many sources in the sector, many cold storages have been mortgaged as owners could not attain the necessary profit margins required to keep their ventures afloat. Many of them have been declared as Non Performing Assets (NPAs). There is an urgent need to relook the rental structure that exists for cold storages. It is required to incentivise the sector so as to attract private investments. A robust cold storage network can transform the present agrarian situation.