Importance of Warehousing to Different Parties

Warehousing benefits several different participants in the economy, each in a distinct way:

• To producers/manufacturers. They can store finished goods until market conditions are favourable, rather than being forced to sell immediately after production at whatever price the market offers, and can plan continuous production even when demand for their product is seasonal.
• To wholesalers and retailers. They can buy in bulk (often at a lower per-unit price) and store the surplus in a warehouse until it is gradually sold, without needing large storage space of their own at every point of sale.
• To farmers. Warehousing (particularly cooperative and public warehouses set up for agricultural produce) lets a farmer avoid the classic "distress sale" immediately after harvest, when prices are typically at their lowest because supply is at its peak — the farmer can instead store the crop and sell later at a better price, and can even raise an immediate loan against the warehouse receipt to meet urgent cash needs without having to sell at once.
• To the Government. Warehousing (through FCI and the State Warehousing Corporations) is central to India's food-security policy — building buffer stocks of foodgrains for the public distribution system and for use during shortages, floods or other emergencies, and helping stabilise foodgrain prices across the country. …