Mass production:
Production is based on the anticipated demand for goods. Mass production of goods takes place by establishing big factories and modem production. The market for such goods is spread all over the country. Therefore, warehouses are to be built at different places to store these products and provide prompt supplies when demanded.
Nature of commodities:
Some goods are perishable in nature and therefore it should be consumed in time to avoid deterioration. Storing them in cold storages can extend the life of the goods.
Seasonal production but regular consumption:
The farm products such as wheat, sugar, pulses, etc. are produced only in seasons. But the consumption of these products are evenly spread throughout the year. If proper storage facilities are not provided, the quality of these goods deteriorates and may become not usable.
Regular production but seasonal consumption:
Certain goods are produced regularly throughout the year. Be they are demanded in seasons only. For example, rain-coats, blankets, Umbrella, etc. require storage for whole year. They can be released in large quantities to meet the heavy demand in rainy and winter seasons.
Proximity to production centres:
Productions of goods at specific centers need to be supplied in time and without interruption to consumers throughout the country. For this purpose goods are regularly fed to the warehouses situated at different market areas.

The following are the functions of warehouses:
Storage:
There is a time gap between the time of production and the time of consumption and a gap between demand and supply. The surplus goods are stored properly for the purpose of supplying them at right place and the right time.
Price Stabilization:
Warehousing ensures price stabilization by supplying goods as and when demanded. It acts as a cushion to absorb price fluctuations and supplies the goods at more or less uniform prices throughout the year.
Equalization of Demand and Supply: 
Warehousing equalizes the demand and supply of goods by storing the goods when they are not demanded and releasing them when there is a demand. Thus the consumers get the commodities regularly even during the off-season periods.
Business Finance:
Based on the goods deposited in a warehouse, the depositor can get finance from banks and other financial institutions by showing the receipt issued by the warehouse keeper.
Risk bearing:
In case of damage to the goods, warehouse keeper compensates the loss caused to the owner of the goods. Thus, warehouses bear the loss of risk involved in storage of goods.

India is an agrarian country but the importance of warehousing was not felt till 1950. Agriculture contributes 16 percent of the overall GDP and accounts for employment of approximately 52 percent of the Indian population. It is estimated that more than 40 percent of our agricultural productions wasted due to poor storage facilities. On the recommendation of the All India Rural Credit Survey Committee, the Agricultural Produce( Development and Warehousing) Corporation Act enacted in 1956 authorized the Government to setup National Co-operative Development and Warehousing Board to develop agricultural Co-operatives and warehousing.

The following are the Functions of CWC:
1. To provide agency services for scientific storage of agricultural produce, seeds, manures fertilizers, agricultural implements and other notified commodities.
2. To issue a negotiable warehouse receipt for procuring credit to the owners of goods.
3. To preserve the produce deposited with care and protect against insects and various pests and deterioration due to moisture and dampness.
4. To act as an agent of the government for the purchase and sale, storage, and distribution of specified commodities and transport to and from warehouse.
5. To reduce the cost of storage and facilitate the marketing of produce through proper grading.

The following are some of the important Principles of Co-operative Societies
(i) Voluntary Membership:
Any person can become the member of the society and can leave it any time.
(ii) Equal Rights:
(1) Each member of the society has an equal right to vote and ownership.
(2) Each shareholder has one vote.
(iii) Democracy:
(1) The principle of democracy is adopted while making the decisions.
(2) The decision of the majority is honoured.
(iv) Honesty :
(1) It is the basic principle of this society. Its members should be honest.
(2) Selfish people can not run the business of co-operative society
(v) Mutual Confidence
(1) The foundation of Co-operative society is laid on mutual confidence.
(2) Members of the society should trust each other and work like a team.
(vi) Welfare Main Objective:
Its main objective is to provide goods and services to its members at lower price.
(vii) Cash Payment:
Credit term is prohibited and goods are supplied to its members on cash payment.