In India, some estimates suggest that around 40 per cent of the country’s grain production is lost every year. The grain is often stored at open-air sites, leaving it unprotected against the weather, vermin and decay. The lack of quality storage facilities is a key contributing factor to what some have coined India’s ‘paradox of plenty’ – insufficient availability of food grain despite sufficient annual production in the country, which is home to over 190 million undernourished people.
Tenders for 200 new storage facilities
The huge food loss also impacts the government-initiated food programme, which is buying one third of all grain produced in India and distributing it to low income families at subsidised prices.
To address this challenge, the Indian government has initiated a large-scale programme that invites private companies to finance, build and operate new storage facilities across the country. The government-owned Food Corporation of India (FCI) is tendering the construction of over 200 modern storage sites with a total capacity of 10 million metric tonnes. The total expected investment is around DKK 10 billion.
Investing DKK 95 million
Through the Danish SDG Investment Fund, IFU is investing DKK 95m in Leap India Food & Logistics, a market leader, which has already won seven concessions from FCI totalling 350,000 tons capacity. The company’s overall target is 700,000 tons.
By investing in Leap India, we are helping to improve food storage efficiency and reduce grain waste. By this we also fight undernourishment in India
Deepa Hingorani, VP South Asia at IFU
She continues: We are partnering with a strong local company and a like-minded investor and have secured an attractive risk vs. return profile in the deal and large impact. The strategic fit of this investment is evident for us.
The investment is made in cooperation with the Neev Fund – a capital fund focussing on infrastructure and sustainable development in India’s poorest regions. The main investors of the fund are the State Bank of India and the UK Government’s Department for International Development (DFID).
Building steel silos and infrastructure
Leap India’s first facility will become operational later this year. IFU’s investment will support Leap India in winning further tenders and realising the projects.
The individual storage sites will consist of modern steel silos and adjacent infrastructure, such as roads and rail. Each silo will have a sophisticated monitoring system installed allowing close quality control of the stored grain. It will be operated on a 30-year take-or-pay contract with the FCI.
Each site will have a capacity of 50,000 tons. This will mean grain storage facilities to 30,000 farmers and create approx. new 50 jobs.
– At Leap India, our aim is to build a large platform of grain storage sites, which can help FCI and the private sector make grain storage more efficient. The new investments from IFU and the Neev Fund will allow us to expand and reach a critical size, while we at the same time team up with strong foreign institutional investors, said the founders of Leap India.
Supporting the Global Goals
The investment supports the UN Sustainable Development Goal 12.3 setting the target to halve per capita global food waste and reduce food loss along production and supply chains, including post-harvest losses, by 2030.
– This investment is in line with our business model, where we target projects that have a high impact, support the UN Sustainable Development Goals and can provide a good return for the investors, said Deepa Hingorani.