In the wake of the global financial crisis, attention focused on food security . Some governments have responded to the unprecedented food price spikes of recent years by increasing the stocks of grain that they hold as strategic reserves. For such policy initiatives to best improve food security , the expanded cereals stocks must be contained in modern bulk storage and handling systems that will minimize losses in storage, lower operating costs, and allow for efficient management of the grain in storage. Traditional storage of bagged grain in warehouses falls far short of fulfilling any of these criteria. A 2007 study estimated up to $4 billion in post-harvest losses in Sub-Saharan Africa alone, which is equivalent to the annual calorific requirements of 48 million people. Nevertheless, traditional storage is still widely practiced by state grain agencies—especially in South Asia, and to a lesser extent in Southeast Asia and Sub-Saharan Africa. Recognizing this challenge, governments have begun to institute measures to reduce food wastage, including that due to poor storage and handling.
One solution identified by countries running large food security programs was to introduce public-private partnerships (PPPs) in food storage, especially for storage of grain. PPPs in grain storage have brought simple solutions like storing surplus grain in vertical silos instead of warehouses or open platforms that reduce losses due to rot , theft and misuse by a staggering 20 percent. By partnering with the private sector, the government is accessing experience building and operating large-scale, state-of-the-art storage facilities for port installations, inland grain production locations, and at processing plants like wheat and rice mills.
If properly structured, a PPP for government grain storage can ensure that:
- Public funds or borrowing capacity are not tied up in capital construction costs.
- Storage facilities are built at a competitive price using the most suitable technology.
- Government agencies spend limited time on management of stored grain in a large facility.
- Hiring of new public employees, including labor for the expanded grain reserve, is minimized.
- Know-how in grain management and storage technology is transferred from the private sector to government.
- Governments are not left with an unused asset when policy or market conditions change and grain stocks must be reduced.