THE shortage of grain storage facilities results in huge post-harvest losses that range from 15pc to 35pc and affects national agricultural output.

For decades, Pakistan’s storage facilities and technologies primarily in the hands of the public sector have lagged behind the required capacity to store grains.

“However, the super floods of 2010 came as a shocking reality check and the public and the private sector began work on expanding grain storage facilities,” says a senior official of the Ministry of National Food Security and Research. “Now we are better off than in 2010.”

Silo bags are specially designed hermetic bags that can store up to 60 tonnes of grains, under such conditions that prevent infestation, by squeezing oxygen levels

Officials say that post-harvest losses of cereals have gradually fallen to about 15pc from as high as 20pc back in 2010. They claim that such losses in case of fruits and vegetables now range between 30-35pc, down from 40pc in 2010.

In the last six years, Pakistan Agriculture and Storage Corporation (Passco) and provincial food departments have spent billions of rupees on revamping their existing grain storage facilities or expanding them, officials claim.

In Punjab some steel silos have been installed under an IFC supported public-private partnership programme, but a similar project in Sindh is believed to have run into snags. Punjab’s combined storage capacity is in excess of 100,000 tonnes. Both, the Punjab Board of Investment and Trade (PBIT) and the Sindh Board of Investment have been lobbying for attracting investment in silos construction.

According to a PBIT feasibility report, an 8-unit large scale steel silo capable of storing over 6,000 tonnes of grains could be built at a cost of Rs370m and its payback period of is a little less than six years.

Officials hope to see enough investment coming in once such silos are constructed, the storage facility could be rented out to Passco and Punjab food department.

Private sector companies providing grain storage solutions are also now playing a noticeable role in improving storage infrastructure. One private sector company, the authorised dealer of GSI silos in Pakistan, for example, now has a 50-plus client list. And, its clients include some top flour and rice mills and poultry farms, industry sources say.

The authorities in Sindh and Punjab are also interested in building storage complexes in wheat and rice growing areas. “Since such complexes comprising storage facilities plus auxiliary equipment for drying of crops and loading them on transport vehicles are very expensive, we plan to engage local and foreign funds and companies,” says an official of Sindh Agriculture Department told this writer.

Officials say that Passco still relies on traditional storage facilities. Paucity of funds is often cited as the prime reason for non-development of modern silos and storage complexes.

Last year, Passco got its only wheat storage facility vacated from illegal occupation and carried out repair works on several large concrete wheat godowns across Pakistan, officials claim. But insiders say that the corporation which is also responsible for maintaining has not focused much on building new storage facilities for storage of rice and sugar for maintaining their strategic reserves.

According to a SBP report, based on 2012-13 statistics, there is a huge gap between the public sector’s total storage capacity and its actual need for grains and fruits and vegetables.

These estimates show that there is room for developing proper storage facilities for 16m tonnes of wheat (against total output of 24.3m tonnes), 4.4m tonnes of rice (against 5.5m tonnes), 4m tonnes of maize (against 5m tonnes) and 3m tonnes of potatoes (against 3.5m tonnes).

Even storage facilities in the private sector are mostly outdated. But growers say the situation is improving as bank lending is in excess of Rs1.4bn for building of godowns and cold storage facilities for the past four years, against less than Rs1bn till FY12.

Gaps in storage requirements and available facilities offer huge business opportunities for companies interested in this sector.

From ready-to-install small steels silos to silo-bags there are many ways of expanding storage infrastructure, officials of provincial agricultural departments say.

Silo bags are specially designed hermetic bags that can store up to 60 tonnes of grains under such conditions that prevent infestation by squeezing oxygen levels.

Some big landlords in Sindh and Punjab have started importing Chinese silo bags with prices ranging between $1000-10,000 per set depending upon their quality, storage capacity and the material used in manufacturing. Scarcity of grain storage facilities has also given rise to godown and warehouse-renting, industry sources say, adding that storage rents in Sindh has increased by 30-40pc in past four years.

Published in Dawn, Business & Finance weekly, April 24th, 2017