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 enhance food security, the expanded cereals stocks should 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. Nevertheless, it is still widely practiced by state grain agencies—especially in South Asia, and to a lesser extent in Southeast Asia and Sub-Saharan Africa.

But private sector grain companies in all of these regions have 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. Governments should use this expertise, engaging the private sector to build and operate modern grain storages to hold larger reserve stocks, or simply maintain the existing ones more carefully. Public-private partnerships (PPPs) are an excellent vehicle for this.

If properly structured, a PPP for government grain storage can ensure that:

  • Precious 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.
  • Contracts are structured such that private sector grain is stored in the same facility, enhancing utilization.
  • Governments are not stuck with an unattractive asset when policy or market conditions change and grain stocks must be reduced.

Long-term benefits

There are a number of solutions for automated bulk storage and handling of grains. Some involve flat storages, but in most cases vertical silos—steel or concrete—provide the greatest long-term benefits. Infestations from insects, rodents, and birds are prevented, as silos keep them out while allowing for more efficient and less frequent fumigation than required in a warehouse. In addition, effective temperature monitoring is not possible with bagged grains, but is in silos, via cables with sensors suspended from the roof hot spots. With this technique, any point in the grain mass can be readily detected and addressed through efficient aeration, fumigation and/or recirculation of stored grain. Furthermore, filling grain into and discharging from silos are high speed operations. Other benefits include:

  • Avoidance of rising costs and potential labor strife associated with large numbers of people loading and unloading bags from trucks and stacking and unstacking them in warehouses.
  • Reduction in financial costs and environmental problems associated with the polyethylene fiber bags and wooden pallets
    used in flat warehouses.
  • Reduction of land area devoted to grain storage, as 20 tons per square meter of surface can be put in a silo, compared to about 2.5 tons per square meter in bags in a warehouse.
  • Inventory levels in silos can be monitored via computerized systems tracking incoming and outgoing inventory via weighbridges.
  • Reduction of pilferage due to sealed and locked silos with automatic controls, while bags of grain entering and leaving warehouses are easily miscounted.

Entrenched, inflexible bureaucracies often have a vested interest in keeping any system as it is, including when it comes to bagged storage of government grain. However, strong, visionary leaders can improve food security for their populations—not just by enacting policies to store more grain, but by storing it more efficiently in modern bulk silo systems created through well-structured PPPs.

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