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Integrated Chain For Fruits And Vegetables-II

Updated: May 19, 2012 4:07 pm

Readers may recall that during the last onion crisis in January 2011, the government made a serious attempt to address the spiralling prices by importing onions form Pakistan, and directing Nafed and NCCF to retail onions through select outlets and mobile vans at Rs 20 per kg to stabilise prices. As the Managing Director of Nafed, your columnist felt that rather than supply all the onions from Azadpur Mandi, a depot could also be opened at Okhla to cater to the South Delhi and Noida markets. However, even the apex body of agricultural marketing co-operatives in the country was not able to get permission to operate in the Okhla Mandi as there was no vacancy at that time. This brings us to the core issue. APMCs throughout the country first let out shops and yards in the market place, and restrict the membership to those who own/lease shops and yards. As no new shops or yards are being built, there is a virtual monopoly of these commission agents whose stranglehold on the trade is reinforced by the APMC which is controlled by this group, and has every reason to block all reform.

What should be done

Markets for agricultural commodities, especially perishables should be organised on lines similar to those of stock exchanges where most transactions are online, and physical presence of the transaction partners is not required. Thus instead of the fifteen hundred odd traders who control the entire trade in Azadpur, the numbers could expand manifold. Every consignment of fruits and vegetables that lands in the market should be sorted, grader and preferably pre-packed so that it can be put on auction immediately, and it should be open to anyone who puts in the requisite bank guarantee to take part in the transactions. This calls for a reorganisation of the way the Azadpur Mandi works. The mandate of the APMC should be to ensure weighments, certify quality and grades, organise an electronic auction for each lot, facilitate logistics and ensure that the transactions are settled within a stipulated period. This requires imagination and organisation, rather than space, which is often cited as the main constraint by the APMCs. All private shops and yards should be replaced with a series of electronic auction platforms and CA/MA storage spaces and warehouses. Once this oligopolistic trading makes way for transparent transactions, infinite possibilities open up for establishing value chains. Many large domestic retail chains will be able to organise their supplies, RWAs and vegetables vendor associations may also join hands to improve logistics. This can be done over the next eighteen months if there is strong political commitment—because technologies, funds and management expertise to transform the system are available.

The second intervention is in terms of a dedicated train for perishable produce on the lines of the Bhosawal Azadpur horticulture train. This train, which has successfully completed its trial run brings bananas from Bhosawal to Azadpur Mandi, moves on to Agra from where it picks up potatoes (from cold stores) and brings them to Mumbai. This train has been financed jointly by the NHB with CONCOR at a capital cost of Rs 16 crore, but has the potential of cutting down transport time and costs, besides ensuring good keeping quality of fruits and vegetables. Such trains need to be multiplied across the country and several such grids can be thought of pineapples and ginger from NE, bananas from Mumbai, citrus from Nagpur, pears and peaches from Punjab, apples from Jammu and so on. This becomes even more critical for the NE, where unlike J&K, Himachal and Uttarakhand, the road network is not very deep and developed. If this can be coupled with a chain of CA/MA storage and reefer vans and collection centres, as has been done for apples in Himachal by Adanis and FEHL, the positive impact on the growers economy will be clearly visible as in the case of Kullu, Kinnaur and Shimla.

The third intervention is in terms of CA/MA storage close to the production areas so that the commodities can be stored within a few hours of its harvest. Thus, if apples can be stored within a few hours, their shelf life will be much longer than if they are transported over two days in heat and dust before they get to be stored. This calls for a comprehensive domain study of some of the principal commodities, especially those like onions, potatoes, tomatoes and oranges which have high volumes, and are also amenable to considerable price fluctuations. The National Horticulture Mission (NHM) has got these studies commissioned through the FEHL (Fresh and Healthy Enterprises Ltd, a hundred per cent subsidiary of CONCOR ) and this will give a considerable insight into the requirement and preferred location for cold chain for some of these key commodities.

Last, but not least, there is an imminent need to build a robust organisation, which can organise the aggregation of the produce from the farmers clusters to the markets. In addition to the institutional and technology bottlenecks, there is also the issue of financial viability. A producers organisation will necessarily lose money in the first few years of operation as organising farmers, training them to prepare their produce for the markets, and effectively compete in the marketplace with the current set of aggregators who may have extended loans to the farmers. There is a strong case for providing Viability Gap funding to an organisation which takes up this mandate—for development of an integrated value chain is not just of physical infrastructure the establishment of an organisation to organise people and collect produce is equally, if not more important.

 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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