Friday, 7 August 2020

Integrated Chain For Fruits And Vegetables

Updated: May 12, 2012 4:57 pm

Your columnist has been entrusted with the task of envisioning an integrated value chain for fruits and vegetables in the country, taking into account the ground conditions as they exist, and the institutional and technology changes that can be introduced to redress the situation. This is both an opportunity as well as a challenge. It is an opportunity for it allows one to think out of the box…but it is a challenge as well: all suggestions must have an internal consistency, and also clear cost and time implciations. So, let us begin by first listing out the challenges.

The first challenge is that almost all the horticulture producers covering the wide range of horticulture crops—from fruits to vegetables , honey, nuts and spices are predominantly marginal and small farmers, though some orchard owners growing apple and citrus may be medium to large farmers as well. Farmers are good only at production. However markets require produce that is sorted, graded, and preferably packed in a user friendly manner. Today these activities do not take place at the farm gate, but at the local Mandi, or sometimes at the terminal market. The first intervention therefore has to be within the farm gate. Whatever can be stored, sorted and graded at the farmer’s field should be done there itself. Take onions as an example. Bamboo based low cost storage structures can be developed on the farmers’ filed itself, which extend the shelf life by at least a few weeks which is sufficient to ensure that a glut situation is avoided. Likewise Pusa Low cost energy systems can be popularised in a big way. The advantage here is that the technology is absolutely simple, and no institutional intervention is required. However, as individual producers do not have the requisite volumes, they are dependent on the local intermediary to aggregate the produce, and given the asymmetrical relationship between multiple producers and a monopolistic or oligarchic aggregator, the prices are set by the aggregator.

However, if there was an organisation, and the infrastructure to collect, sort and grade the produce and an arrangement to reach it to the market yard, the terms of trade would change. Therefore, in vegetable growing clusters, especially those around urban clusters, there is immediate need to develop both an organization and the market infrastructure. A reference to Amul becomes pertinent here for interventions will have to be made simultaneously in both organization and infrastructure. The milk collections centres were backed by s strong organization, as well as infrastructure, including milk testing centres, chilling units, milk collection vans, and processing plants.

What kind of market infrastructure is required for fruits and vegetables? Well, it must have a facility for electronic auction which will also generate a data base for the kind of price realization along the quality matrix. It must have a facility to store the produce of a farmer, or primary level aggregator for at least two to three days so that temporary disruptions of transport and or extreme market fluctuations can be taken care of. The facility to transact in the electronic auction centre should be open to all those who can furnish a bank guarantee of a like amount basically to ensure that there are no defaults. Depending on how far the electronic auction centre is from the terminal market, or the urban centre, the number and requirement of reefer vans can also be worked out. This will also help in assessing the requirement of cold storage(s) as well as cold chain at a disaggregated level.

Establishing cold storages, even with the latest norms prescribed by the International Institute of Refrigeration will not suffice—unless individual cold stores are part of a ‘cold chain’ and network with each other, and offer a warehouse receipt can be traded like a negotiable instrument. This calls for establishing norms for cold storages, as well as standards for the commodities that are amenable for storage. This task has to be done by the National Centre for Cold Chain Development and the warehouse Development and Regulatory Authority.

However the biggest bottleneck in farmers getting the price realization is the absolutely antiquated APMC Act which effectively creates a cartel of intermediaries who exclude all others from transactions in this sector. Take Azadpur Mandi—which is designated as the Mandi of national Importance—as an example. The number of traders/commission agents is virtually frozen from the time of its inception even as the volumes have gone up manifold. Why should this group of intermediaries want any change in the existing system which gives them high returns without having to incur any production risks? This group of intermediaries exercises tremendous clout with the municipal or state authorities for they have the financial clout to extend patronage, and the muscle power to create nuisance and short term disruptions in the supply chain. This group also realised that once the monopoly is broken, they would lose their clout and so they go to any length to ensure that any effort at establishing a transparent system is nipped in the bud. So much so that NIDD which pioneered dairy co-operatives in our country, and has an excellent track record in working directly with farmers groups on the one hand, and the urban consumer on the other has suffered huge losses in the Safely National Exchange project in Bangalore, and is not very keen to expand the Safal (Mother Dairy Fruits and Vegetables Pvt Ltd) in Delhi.


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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