Decentralised Grain Storage Plan in the Cooperative Sector, Strengthening Food Security and Rural Cooperatives

Why in News?

India’s Decentralised Grain Storage Plan in the Cooperative Sector, launched as a pilot project in May 2023, has expanded substantially.

• By July 2026, 1,012 PACS or cooperative societies had been identified.
• Godowns had been completed in 313 PACS, creating more than 1.80 lakh metric tonnes (LMT) of storage capacity.
• The plan integrates storage, procurement, processing and distribution infrastructure at the village level.

What is the Decentralised Grain Storage Plan?

• The Decentralised Grain Storage Plan is a cooperative-led initiative designed to develop integrated agricultural infrastructure through Primary Agricultural Credit Societies (PACS).
• It seeks to establish storage facilities closer to agricultural production centres by converging several existing government schemes. The National Cooperative Development Corporation (NCDC) is its implementing agency.
• PACS are village-level cooperative institutions that primarily provide short-term agricultural credit and related financial services to rural borrowers. Under the plan, their role is being expanded to include storage, procurement, processing, machinery rental and food distribution.
• The initiative was rolled out as a pilot project on 31 May 2023.

Why Does India Need Decentralised Grain Storage?

India’s expanding agricultural production and food-security obligations require a reliable and geographically distributed storage network.

According to the Third Advance Estimates for 2025-26:

• Foodgrain production was estimated at 376.563 million tonnes.
• This was about 18.8 million tonnes, or 5.3%, higher than the previous year’s production of 357.732 million tonnes.
• India’s food-security system under the National Food Security Act, 2013 covers approximately 80 crore people.

Although centralised warehouses operated by the Food Corporation of India and State agencies remain important, excessive dependence on distant storage facilities can increase transportation costs and delay procurement and distribution.

Local storage is necessary to reduce post-harvest losses, preserve grain quality and allow farmers to store produce until market conditions improve.

What are the Objectives of the Plan?

The plan seeks to:

• reduce foodgrain wastage and strengthen national food security;
• create storage facilities closer to farms and procurement centres;
• enable farmers to avoid distress sales and secure better prices;
• reduce transportation costs among procurement centres, warehouses and Fair Price Shops;
• diversify the economic activities of PACS;
• improve farmers’ access to processing, machinery and marketing facilities;
• generate new income sources for cooperative societies; and
• strengthen rural employment and agricultural value chains.

How Does Scheme Convergence Support the Plan?

The plan does not operate as a completely separate subsidy programme. It brings together assistance available under four existing schemes:

• Agriculture Infrastructure Fund (AIF): Provides financing and interest-subvention support for creating and upgrading post-harvest infrastructure.
• Agricultural Marketing Infrastructure Scheme (AMI): Provides a back-ended capital subsidy for constructing foodgrain storage facilities.
• Sub-Mission on Agricultural Mechanisation (SMAM): Supports Custom Hiring Centres and access to agricultural machinery.
• Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME): Promotes the formalisation and expansion of micro food-processing units.

This convergence enables PACS to function as integrated rural service centres instead of remaining limited to agricultural credit.

What Facilities Can Be Created at the PACS Level?

The plan permits the development of several complementary facilities:

• Warehouses and silos: Silo-based storage units of 50 MT, 100 MT and 200 MT capacity can be developed.
• Procurement centres: PACS can procure foodgrains on behalf of State agencies and the FCI.
• Primary processing units: Facilities can undertake cleaning, sorting and drying to improve the quality and marketability of produce.
• Custom Hiring Centres: PACS can purchase tractors, harvesters, tillers and other machinery for rental to farmers.
• Fair Price Shops: Cooperatives can distribute foodgrains and sell locally processed food products.

Together, these facilities connect agricultural production with storage, processing, procurement and distribution.

How are PACS Selected?

PACS are identified and approved by the District Cooperative Development Committees (DCDCs) in accordance with the prescribed Standard Operating Procedure, called the Margdarshika.

Selection is based primarily on the local demand for storage. The prescribed land conditions include:

• PACS should preferably own the required land.
• The land should not be waterlogged.
• It should not fall within a forest area.
• Consent of PACS members is required before using cooperative land.
• If the land is leased, the lease period should exceed 20 years.

These conditions seek to ensure long-term operational viability and prevent investments in unsuitable locations.

What is the Institutional Framework?

Implementation involves coordination at multiple levels:

• National Cooperative Development Corporation: Implementing agency.
• Inter-Ministerial Committee: Monitors the plan’s overall implementation at the national level.
• National-Level Coordination Committee: Coordinates among participating institutions and agencies.
• State Cooperative Development Committees: Facilitate implementation and coordination at the State level.
• District Cooperative Development Committees: Identify PACS and coordinate execution at the district level.
• PACS: Develop and operate the facilities at the grassroots level.

The framework combines central supervision with decentralised implementation.

What Financial Support is Available?

Several measures have been introduced to improve the financial viability of projects:

• The subsidy under the AMI scheme has been increased from 25% to 33.33%.
• The margin-money requirement has been reduced from 20% to 10%.
• Cost norms for godown construction have been revised.
• A 3% interest subvention is available under the AIF.
• NABARD provides a special refinancing facility.
• The combined assistance can reduce the effective loan interest rate for eligible PACS to 1%.

Under the AMI scheme, NABARD serves as the subsidy-channelising agency. State Cooperative Banks and District Central Cooperative Banks sanction and disburse loans to PACS.

The Food Corporation of India has also been authorised to provide assured hiring of eligible godowns, subject to prescribed conditions. This can provide cooperatives with predictable rental income.

What Progress Has Been Achieved?

The pilot phase covered 11 PACS across 11 States and created 9,750 MT of storage capacity.

The participating States were Maharashtra, Uttar Pradesh, Gujarat, Rajasthan, Madhya Pradesh, Uttarakhand, Tamil Nadu, Telangana, Assam, Karnataka and Tripura.

By July 2026:

• 1,012 PACS or cooperative societies had been identified;
• godown construction had been completed in 313 PACS; and
• more than 1.80 LMT of storage capacity had been created.

This indicates the plan’s transition from pilot implementation to wider expansion.

How Does the Plan Benefit Farmers and Cooperatives?

Benefits for Farmers

• Storage near farms lowers transportation expenses.
• Farmers can delay sales during periods of low market prices.
• Advances against stored produce provide immediate liquidity.
• Cleaning, sorting and drying enhance product quality.
• Machinery rental reduces the cost of farm mechanisation.
• Local procurement centres improve access to government procurement.

Benefits for PACS

• Storage rent, processing charges and interest income diversify revenue.
• PACS become multipurpose agricultural service institutions.
• Increased economic activity can strengthen cooperative membership.
• Assured hiring by the FCI can improve project viability.
• New facilities generate rural employment.

Wider Benefits

The plan can reduce foodgrain wastage, improve buffer-stock management, strengthen the Public Distribution System and promote more balanced rural development.

What Quality and Transparency Measures are Prescribed?

Storage structures must conform to the standards prescribed by the Warehousing Development and Regulatory Authority.

The principal requirements include:

• construction suited to local environmental conditions;
• use of durable and corrosion-resistant materials;
• adequate ventilation to prevent spoilage;
• adherence to safety and design specifications;
• regular inspections and quality audits; and
• uniform branding through the prescribed logo and colour scheme.

PACS members are expected to monitor implementation. Project Management Consultants must provide updates on construction and expenditure, improving transparency and accountability.

Challenges

• Limited managerial capacity: Some PACS may lack professional expertise in warehouse management, processing and marketing.
• Financial viability: Low utilisation of warehouses or delays in assured hiring could affect repayment capacity.
• Regional imbalance: Storage facilities may expand faster in States with stronger cooperative institutions.
• Quality maintenance: Poor ventilation, pest control or maintenance can result in grain losses despite the creation of new capacity.
• Land constraints: Suitable land may not be available to all PACS, while long-term leases can be difficult to secure.
• Coordination difficulties: Convergence among multiple schemes, ministries, banks and implementing agencies may cause delays.
• Digital and logistical gaps: Storage infrastructure must be connected with procurement, market-information and transport systems.
• Governance concerns: Weak audits or local elite capture may reduce equitable access for small and marginal farmers.

Way Forward

• Provide PACS with professional training in warehousing, accounting, quality control and commodity management.
• Conduct district-level storage-gap assessments before approving new facilities.
• Integrate warehouses with electronic procurement, market-information platforms and negotiable warehouse receipts.
• Ensure adequate access for small, marginal, tenant and women farmers.
• Introduce scientific pest control, moisture monitoring and regular third-party quality audits.
• Develop processing and value-addition facilities according to locally produced crops.
• Publish project-wise information on costs, capacity, utilisation and financial performance.
• Link storage facilities with railways, roads, mandis, Fair Price Shops and food-processing clusters.
• Encourage renewable energy, water conservation and climate-resilient warehouse designs.
• Strengthen cooperative governance through member participation, social audits and transparent decision-making.

Conclusion

The Decentralised Grain Storage Plan can address critical gaps in India’s post-harvest infrastructure by locating storage, processing and procurement facilities closer to farmers. Its scheme-convergence model reduces the need for an entirely new administrative structure, while its cooperative foundation gives PACS an expanded role in rural development.Its success, however, will depend not merely on the number of godowns constructed but, on their utilisation, scientific management and accessibility to small farmers. Strong cooperative governance, professional capacity and transparent monitoring are therefore essential for transforming decentralised storage into a durable pillar of food security and farmer prosperity.