Public Sector Undertakings In Food Transport

As per the discussions held with the officials of MSRTC, it was discussed to explore the opportunities of MSRTC tying-up with the Government Agencies for transportation of their goods. As a part of the study, we have taken up study of the Departments which have published RFPs or are involved in the business of transportation food products, agriculture, dairy products etc. within Maharashtra:

• Maharashtra State Warehousing Corporation
• Public Distribution System
  • Food Corporation of India (within Maharashtra)
  • Fair Price Shops
  • Aanganwadis
  • Self-Help Groups
• Maharashtra State Seeds Corporation Ltd.
• Mahanand Diary under Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit

Maharashtra State Warehousing Corporation

Maharashtra State Warehousing Corporation (MSWC) started with 3 Warehousing Centers and gradually grew up to the extent of 193 Centers with total capacity of 15. 73 Lakhs M. Ts. (as on 31stMarch 2016). Warehousing activities of MSWC include scientific storage of food grains, industrial goods, fertilizers, , cement, cotton bales, and at some places it runs custom bonded warehouses and container freight stations. MSWC has floated various tenders for transport contractors. While specification of truck capacity has not been categorically provided, however, the payment section below gives a brief idea of the Truck Capacity envisaged in the contract.

Out of the number of godowns owned by the State in 2017 was 1, 102 holding a total storage capacity of 6. 94 lakh MT, 18 godowns with 0. 09 lakh MT capacity had been given on rent and 225 godowns with total capacity of 0. 99 lakh MT were not in suitable condition for storage. As a result, 106 godowns with the capacity of 0. 73 lakh MT were hired. In order to build capacity, the State proposes to construct new godowns with a holding capacity of 3. 66 lakh MT.

Conclusion: The Department can be approached for a G-2-G contract for transportation of goods. However, the range of required capacity varies from 3-4 MT capacity for Stage II transportation and 16 – 26 MT capacity for Stage I transportation. To meet this criteria, the buses need to be converted to minimum 16 MT capacity trucks. The cost benefits analysis and the feasibility of this conversion is worked out in the next section. Public Distribution System Public distribution system (PDS) in India is one of the largest welfare institutions in the world and operates through a multi-level process in which the centre and states share responsibilities. The centre is responsible for procuring or buying food grains, such as wheat and rice, from farmers at a minimum support price. It also allocates the grains to each state on the basis of a formula. Within the total number of poor in each state, state governments are responsible for identifying eligible households. The centre transports the grains to the central depots in each state. After that, each state government is responsible for delivering the allocated food grains from these depots to each ration shop. Across the country, food grains are distributed to a network of around 5. 27 lakh Fair Price Shops.

The Ministry of Women and Child Development released operational guidelines for Food Safety and Hygiene for supply of food material etc. under the ICDS, which include:

• Vehicles carrying the raw /finished food must be checked for the cleanliness and should disinfect if required.
• The duration in transit should be as short as possible, so that chances of contamination and spoilage are low.
• Before receiving the product the receiver should check that the packaging is intact and contamination has not occurred.

Analysis of PDS have revealed several gaps in implementation. These challenges pertain to the inaccurate identification of households and a leaking delivery system. Leakage of food grains during transportation to the ration shop and from the ration shop itself into the open market is a major problem faced by PDS. In an evaluation of TPDS, it was observed that, at an all-India level 46. 7% of grains and 36% of rice and wheat accounted as leakage in the last calculated year 2011-12 with Maharashtra standing among High Leakage states (25% - 50%). Measures however are being taken to curb them.

Fair Price Shops

States bear the responsibility of transporting food grains from these godowns to each Fair Price Shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. The State governments are also responsible for transporting food grains from the state godowns to the doorstep of each FPS in the state. Till December, 2017 the total number of FPS in the state were 51, 273 operational, of which 5, 427 placed in tribal areas and 28 operating as mobile shops. Transport of ration is an important aspect and the mode of transport used varies with the location of the shops in distant and inaccessible areas. It also varies with the size of the consignment to be lifted. The usual mode of transport used by the majority of the dealers are bullock-carts, cabstars, trucks, lorries depending upon the area of transportation.

Conclusion: The use of cabstars is the highest (40%) for urban and rural combined, closely followed by Bullock carts and trucks. The market share of trucks, as we see, in rural areas is the highest along with Lorries and cabstars and is higher than urban requirement viz. 30%. While the target market share herein is the 20% of the truck, however, pertinence shall be laid on the 14% market of Lorries. The weight load capacity of a lorry is approximate 9MT, which is the near capacity of the non-modified converted trucks by MSRTC. The additional benefit of targeting the market share of Lorries is that it is a 100% rural sector mode. With the route accessibility MSRTC holds, tapping the rural market is a feasible option.

However, there is a need for technology driven checks to prevent leakages and strong operational processes for clean and safe delivery of food grains. The Central and State Government are in continuous efforts of curtailing the same. With digitalization of the PDS system, transparency in allotments and building storage infrastructures, the state has during 2017-18 (upto November, 2017) contained storage losses and transit losses to (-) 0. 04% and 0. 32% against the MoU target of 0. 36% and 0. 36% respectively for FCI.

Anganwadis

With more than 550+ ICDS projects being operational, the work force comprising of over 4000 supervisors and around 2 Lakh Anganwadi Workers / helpers and Mini-Anganwadi Workers drive the entire ICDS machinery starting from grass root level. A Mini Anganwadi can be proposed on the population of 150 in a village/hamlet. A Mini-Anganwadi should be located within one km from the main Anganwadi and there should be 15 to 20 beneficiaries therein. A godown is to be constructed for every 5 centers for storage of food at the cost of Rs. 50, 000/- by the State Government from JRY funds. With respect to transportation, the scope of work for transport contractors are extremely wide and beyond the basic task of transporting food from FCO godowns to Angandwadi Centres.

The scope for a contractor includes:

• Procurement, Lifting and transportation of Wheat & Rice under WBNP Scheme from designated depots of FCI godowns
• Unloading of raw material at manufacturing unit
• Procurement of raw materials other than Wheat & Rice like Soya Grid, Moongdal, Toordal, Coconut Flakes, Sugar, Edible Oil, Spices, Flavours and Micronutrients.
• Procurement of Laminates & HDPP woven bags.
• Quality checks of procured raw material & Packing Material, its approval.
• Storage of all raw material, micronutrients, packing materials in separate godown,
• Cleaning, processing of raw materials as per requirement,
• Mixing of grinded raw materials as per specification as per RFP
• Roasting of the mixture.
• Adding Sugar / Spices / Dry Vegetables / Roasted Coconut Flakes as per specifications.
• Fortification with required micronutrients and Testing of final product before dispatching for Anganwadi centers
• Packing of the final product as per packing specifications
• Testing of quality as per specifications
• Storage of final product at manufacturing unit,
• Loading of final product,
• Transportation of final product up to the ICDS anganwadi centers of the respective sector,
• Putting banners on vehicles during transportation of final product
• Finalization of transportation plan in consultation with Deputy Chief Executive Officer (CW) Concern Sectors CDPO in advance.
• Manufacturing of precooked recipe as per Manufacturing Process Flow Chart prescribed

Conclusion: The Aanganwadi model looks at only one contractor from procurement of raw materials, to storage, preparation and transportation of the final product. Hence, this model may require building up the capabilities inhouse, to manage the entire logistics chain, by MSRTC, as it involves the entire chain of transportation as mentioned above. It may be taken as 2nd phase of logistics activities subject to economics.

Maharashtra State Seeds Corporation Ltd.

Maharashtra State Seeds Corporation Ltd. , popularly known by its brand name “MAHABEEJ” is one of the largest and leading State Seeds Corporation among all State Seed Corporations in India serving in the larger interest of farmers from three decades with farmer’s faith brand loyalty, quality assurance, dedicated service and sustainable contribution for upliftment of farmers with Glorious achievements. The authorized share capital of MSSCL as on is Rs. 10 Crores divided into equally shares of Rs. 100 each. As against that, the paid up share capital of MSSCL is Rs. 4. 18 Crores.

MAHABEEJ is primarily engaged in production, processing and marketing of seeds of more than 50 crops and 250 varieties and hybrids in almost all categories i. e. Cereals, Pulses, Oilseeds, Fiber Crops, Fodder, Green Manuring Crops & Hybrid Vegetables.

Conclusion: The Department can be approached for a G-2-G contract for transportation of goods. However, the range of required capacity varies 9-16MT capacity trucks for transportation. To meet this criteria, the buses need to be converted to these capacity trucks. The cost benefits analysis and the feasibility of this conversion is worked out in the next section.

Mahanand Dairy under Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit

MRSDMM (Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit) was established on 09th June, 1967. At present MRSDMM has more than 24000 primary milk societies & 25 lakh milk producers with plants. MAHANAND DAIRY, established on 18th August 1983, is the unit run by the MRSDMM and spreads over the Maharashtra. In order to take care of seasonal fluctuations in milk procurement, the dairy has installed its own Milk Powder Plant of 30 tons per day capacity and is distributing 3. 00 Lacs liters milk per day in Mumbai with the help of one packing depot strategically located at Navi Mumbai. The total sale of milk under Mahanand Brand name in the state is 4. 00 LLPD including the sale of milk in Konkan, Pune & Nagpur region. Mahanand Konkan Dairy plant has been established for giving special impetus for development of backward region. At present, we are selling about 20, 000 ltrs. of milk per day from Konkan Dairy Project. Mahanand Pune Dairy Plant is established to supply Mahanand MIlk to the huge population in Pune city and surrounding area. At present, we are selling about 30, 000 ltrs. of milk per day from Pune Dairy Project. Mahanad Nagpur Dairy Plant is establish to provide special impetus to backward region of Vidarbh in general and Nagpur in particular. At present we are selling about 15, 000 ltrs. of milk from Nagpur Dairy. Mahanand Dairy Latur During the financial year 2002-03 the MRSDMM has taken over the Government Milk Scheme Latur (Government of Maharashtra) on long term lease basis (30 years). The Mahanand Latur Dairy Plant has been started to provide special support to develop dairy activity in Marathwada region. At present we are selling about 15, 000 liters per day of milk from Latur Dairy Plant.

While FSSA does not specifically provide requirements for a carrier of milk or dairy products, however, a tender published by Amul provides following requirements for vehicles transporting Milk: “Refrigerated Vehicles having following conditions is preferred. a. Vehicle must have Carrier or Thermoking brand refrigeration plant with liquid PUF injected insulation of the container. b. This refrigeration plant must be mounted on the vehicle chassis not older than 5 years. c. All refrigerated vehicles must have data lodger in working condition. ”

Conclusion: Since the transportation of the milk and its products require specific conditions to the trucks such as refrigeration plant and other cold storage machinery, the cost of conversion of the buses to these specific trucks will require huge investments and is risky at this stage for MSRTC. . Hence, this opportunity is considered for further analysis Compulsory Licensing under FSSA.

Section 31(1) of the Food Safety and Standards Act, 2006, states that: “No person shall commence or carry on any food business except under a license. ” It is thus clear that a license is mandatory for carrying on food business in India. Further, section 3(n) of the act defines food business as “any undertaking … carrying out any of the activities related to any stage of manufacture, processing, packaging, storage, transportation, distribution of food, import and includes food services, catering services, sale of food or food ingredients.

Therefore, section 31 read with section 3(n) shows that any undertaking carrying out the transport of food can be said to be doing food business and therefore must obtain a license under the act.

Section 31(3) of the act states that anyone who wants to commence or carry on any food business has to apply for grant of food license to the designated officer in such a manner as may be prescribed by regulations. Section 92 empowers on the Food Safety and Standards Authority of India (FSSAI) to make such regulations.

The Food Safety and Standards (Licensing and Registration of Food Business) Regulations lay down the procedure for obtaining a license to commence or carry out food business in India. The regulations state that if a food operator operates in two or more states the license shall be granted by the Central Licensing Authority. The regulations explicitly state that any person who is a transporter of food must make an application using Form B of Schedule II for grant of license. Considering all the above provisions together leaves no doubt that the transport of food requires a transport license under the act and the regulations.

Key determinants & regulatory intervention

An analysis of the above PSU operations and requirements, it can be concluded that there exists enough scope to be tapped into in the field of transportation as well as warehousing:

1. As we are aware that the MSWC is aiming to increase storage capacity to the tune of 5 lakh MT, in order to support MSWC for transport and warehousing, MSRTC can offer to lend warehouse space. This can work as an immediate step.
2. The capacity that may be estimated as required by MSWC for transportation ranges from 3-4 MT capacity for Stage II transportation and 16 – 26 MT capacity for Stage I transportation. Since 3-4 MT are smaller vehicles, MSRTC can target Stage I transportation. Similarily for MSSCL requires a truck capacity of 9MT and 16MT, which will require MSRTC buses to be converted to minimum 16 MT capacity trucks.
3. With respect to Aanganwadis, Mid-day meals and other social centers, MSRCT would require to build a complete infrastructure of procurement, preparation, storage, handling and transport to manage the entire logistics chain of public distribution. Similarly with milk and dairy products, the trucks will require insulation so as to preserve milk and will have to satisfy the FSSA criteria.