Infrastructure Is Not An End By Itself!
That infrastructure is not an end by itself has been learnt the hard way as CONCOR’s effort to run a dedicated train for perishables (especially horticulture produce) is struggling for viability even though the costs are half those of conventional transport, the time taken is less and the wastages on account of high temperatures are practically zero ! True, trial runs have been successful, and with active support from the National Horticulture Board and the growers associations, the train found ‘loads’ for the bulk movement of bananas from Bhosawal in Maharashtra to the Azadpur Mandi in Delhi, as also potatoes from Agra to Mumbai. Then it took onions from Nashik to Kolkata. In all these runs, the technical parameters have worked fine. The problem is that the volumes required are so huge that farmers or aggregators are not finding it commercially viable. The reasons are as follows.
First, the volumes involved are really voluminous. Each train carries the equivalent of 150 fully loaded trucks. Creating such a cargo at regular intervals is a logistic nightmare. As things stand today, aggregators collect loads for one or two truckloads, and keep despatching them to the destination mandis. True, the trucks take longer, face harassment at inter-state borders and about ten to fifteen per cent of the produce is also lost to the elements, but the work of consolidation is spread over at least fifteen to twenty aggregators who have their own links both with the growers and with the buyers. The trucks take off on different dates and times, and therefore there is no sudden ‘glut’ in the destination market. While a truck can be loaded at the farmers field, or at a cold storage, the train needs a dedicated stockyard/platform where it can be loaded.
Secondly, with the truckers, there is flexibility with regard to payment. Often the party which hires the truck gives an initial advance to cover the costs of diesel and incidentals, and the balance is paid after the stock is sold, and the payment recovered from the market. There is a ‘concession’ for regular users, and what is most important, great flexibility with regard to invoicing, and even the final destination. Thus, a truck from Nashik to Kolkata can also be diverted to Dhanbad or Guwahati if the market prices are much higher in these destinations. A dedicated horticulture train, on the other hand, cannot change its course once the destination has been cleared. In fact, there is no discretion, whatsoever, once the train has been loaded.
The third aspect is origin and destination pairs. A train must have sufficient cargo for the return journey, because the wagons are designed for temperature controlled, and designed for perishables, these cannot be used for cement or coal or fertilizer. The closest agri-industrial load one can think of is gunny bags but this is also an example of prime sub-optimality. Therefore, while the train carries onions from Nashik to Kolkata, it must have an equivalent load of perishables from Kolkata to Nashik, or some station in a hundred kilometre range to make the trip viable! One can think of tender coconut or pineapples, or lychees, but the receiving market must be in a position to absorb the commodity. Imagine a town like Nashik receiving 150 truckloads of lychee twice a week. That is why when states insist on starting a train to extricate produce from the production areas, the counter question is: what will the train carry on its return journey?
There is another aspect—that of transparency. As of now, the market for perishables operates in the grey domain. No one is even sure of the volume of goods that have been moved. Most of the evidence is anecdotal, and there is no formal record of the weight, volume and value of the load. This will not be possible in the horti- train.
Last but not least, is the question of service tax. Movement of perishables has not been exempted from service tax, and therefore the margins on transport have been squeezed. In fact, service tax has also been levied on cold storages, and even though the matter has been taken up at the appropriate levels, as of now the possibility of the tax being withdrawn on perishables does not appear bright.
Having said all this, do we give up, or find answers to the hurdles. Agro-Watch has always believed that hurdles are hurdles because they be crossed. The main hurdle in this case was not taking ‘key stakeholders’ on board not realising that the core competence of aggregation and trading lies with the ‘aggregators’, and that the ability to set up an ‘infrastructure for movement of perishables’ is not enough. It will have to be supplemented with warehousing at the receiving stations to avoid ‘distress sale ‘on account of excess volumes, electronic auctions, third-party inspections, forward integration with food retailers or processors and successful implementation of the vegetable initiative for urban clusters. Perhaps for the first few years, Viability Gap Funding may be offered as an incentive to wean the consolidators away from the conventional transport system, especially from the North-East and difficult areas. It is also important for CONCOR, NHB, growers associations, consolidators and the state governments to have a regular dialogue on how to leverage technology and infrastructure for the primary producers. Putting infrastructure together is good: making it work for producers is a marvel! Let’s work together to make it happen… .
By Sanjeev Chopra
(An IAS Officer, the author is Joint Secretary & Mission Director, National Horticulture Mission, Government of India. The views expressed are personal.)