A Road Map For Perishables !

This column is being resumed after several weeks of hibernation! Resumption is always a challenge, for in a weekly column, one takes the events/ trends of the last few days into account. Thus one would have discussed issues relating to delayed monsoon, the alternate cropping strategy, provision for seeds, drought mitigation plans and the like. Over the last few weeks, much action has taken place on these fronts, and now the clear challenge is to address the impact of delayed monsoon in Punjab, Haryana and UP. Agro-Watch is still hopeful that the rain gods may shower their grace by the end of this week, and if this happens, then the paddy production can be salvaged.

This week’s column will, therefore, focus on a meeting convened by the National Centre for Cold Chain Development on July 17 at the India Habitat Centre to evolve a road map for cold chain sector in the country. In the keynote address, this writer drew the attention of the stakeholders to the broad spectrum under which the road map had to evolve. The first was that the country had moved from an economy of scarcity to an economy of plenty, even in the domain of perishable commodities. This was no mean achievement because the ‘demand’ factor for perishables was raising exponentially—both on account of urbanisation and increasing incomes. Secondly, production of perishables was essentially for the market. Farmers were not growing perishables for self-consumption—or even for consumption in their close vicinity. Markets for perishables could be accessed only if the road networks were in shape, and mechanised transport was available. Fortunately, both on account of the PMGSY (rural roads programme) and the general availability of credit for light commercial vehicles and pick up autos, the essential condition for retrieval of perishables from the farmers field was now available. True, these are not specialised vehicles for perishables alone, but they do suffice the purpose of moving up to two hundred odd kilometres , and are thus in a position to supply the late evening harvest in fairly good condition to the market yards by early morning.

Another ‘push factor’ for the cold chain was the demand for variety and quality. The urban consumer was willing to pay the ‘extra premium’ for quality produce. Thus it was now possible for aggregators to select /earmark quality produce at the farm gate level, and put this produce on a separate track with premium CA/MA storage and traceability. Even though FDI in retail has been put on hold, several domestic chains are clearly in the business of perishables—not because it is profitable by itself, but because it enhances the footfalls to their outlets.

The stakeholders present in the meeting—and these included equipment suppliers, civil engineers, project management consultants, state governments, individual cold storage owners and logistics companies, large farmers—were also told that while governments were concerned about the sudden ‘peaks’ in prices of vegetables, especially onions, potatoes and tomatoes—there was little that government could do about it because most of the transactions were in private hands. Therefore, while it was not for the government to engaging transactions directly, it was imperative for the government to create /facilitate conditions in which transactions in agriculture became transparent and easy. Thus better roads, support for farmers producer organisations, access to credit for vehicles, cold storages and ripening chambers close to the production centres with facility for warehouse receipts, electronic auction facility at market yards would surely pave the way for a better system. Thus while understanding that the market forces had to play the lead role, government had to accept the responsibility for creating infrastructure necessary for the value chain in perishables.

In this context, the public-private partnerships in agri infrastructure could play an important role. Thus a chain of publicly owned, but privately managed cold chains and terminal markets could play the critical role. Perhaps even more than FDI in retail, if this infra network could be built and managed professionally in the hinterland, farmers’ incomes could grow manifold. The success of Adanis and FEHL in the case of Himachal apples proves the point that if cold chain infrastructure can be managed professionally, and linked to a value chain—incomes of farmers can grow manifold, even as the consumer gets better value for money.

Last but not least is the exemption of perishables from the domain of the APMC Act. Some states, notably Uttarakhand, West Bengal, MP and Maharashtra have exempted perishables from the purview of APMC. Bihar, Kerala and Tripura do not have the APMC Act at all. In fact the time has come for a single license for perishables for the country. In fact, a pan-India cold chain will require not just technology, but also institutional processes to back it up. Most of the cold chain infrastructure in the country is today basing its revenue model based on ‘rentals’ from the producers, or intermediaries. There are very few players who are building the infrastructure for price arbitrage on a national scale, which is the only way in which long-term sustainability of the system can be assured. This calls for changing the way we have looked at cold storage capacity creation and utilisation. As of now, it is being used primarily for the potato crop—and just about 50 per cent of the capacity is utilised as the stores are not designed to handle any other commodity.

The challenges ahead are manifold—but the positive side is the enthusiasm with which the stakeholders have started offering their suggestions. Their expectations will indeed drive NCCD to fulfill the mandate given to it by the Cabinet—primarily to ensure that the wastage in perishables is minimised and farmers get a better price realisation even as consumers get a better produce!

 By Sanjeev Chopra

(An IAS Officer, the author is Joint Secretary & Mission Director, National Horticulture Mission, Government of India. The views expressed are personal.)

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