The promise of horticulture

The ongoing debates on rural India are mostly aimed at scoring political brownie points, and thus much of it is rhetorical. But there is some serious policy attention that India’s agricultural sector deserves.

We must first acknowledge that farming has become unremunerative and is riddled with insecurity, thus rendering it highly unattractive to its practitioners, as a recent Lokniti survey shows. Even as farmers are faced with dwindling farm incomes, most of the rural population already don’t consider farming their main source of income. Agriculture in India is contingent on a range of factors and rescuing the sector from its current state will require multifaceted responses.

Indian farmers overwhelmingly grow cereals — rice, wheat and lentils. Aside from the fact that the minimum support prices (MSPs) act as an implicit incentive for doing so, a number of factors hinder farmers from growing vegetables and fruits, which are inherently higher income-generating crops.

Among them are, first, lack of cold storage facilities and inadequate transport infrastructure. Second, vegetables and fruits are more labour intensive than cereals. Let’s deal with the second problem first.

While rural labour is not scant, farm labour has become so. This is because farmers tend to complement their incomes with non-farm jobs out of need. Increasing farm incomes in the first place will automatically undo this trend.

While rising productivity and mechanisation will likely slice farm employment in the coming days anyway, one way to generate more cash flows for farmers is through a measured and gradual shift towards vegetables and fruits.

Although the latter are more profitable, the following qualification obviously applies: that fluctuations in this segment can be wild, rendering farmers vulnerable to crashing prices, like, say, tomatoes selling at ₹2 a kg as it recently happened in Maharashtra. This can be cushioned by appropriate financial arrangements.

By way of an initial push, one can argue for rolling out MSPs for vegetables and fruits in the initial years and gradually phasing them out. Any added pressure on the exchequer can be eased through rationalisation of fertiliser subsidies and leaky food subsidies, now overdue.

Additional measures should include a price stabilisation fund for vegetables and fruits which should be used to scale up prices (to cushion farmers) as much as to scale down prices to ease food inflation. It should also be noted that small holdings, which in fact 85-90 per cent of Indian farmers have anyway, are conducive for fruits and vegetables. Now, the first problem — infrastructure and farm-firm linkages. The perishables business in agriculture entails quick turnaround periods.

This points to the urgent need for beefing up rural infrastructure — warehouses, metalled roads connecting up to the last village, cold storages, pack houses, chains and silos, and so on. Of course, micro-irrigation is crucial too. Toiling farmers must be convinced that they are not looking at spoilage worth half their produce even as they are encouraged to diversify.

While India remains the second largest producer of fruits and vegetables in the world, exports haven’t quite matched up. During 2013-14, India exported fruits and vegetables worth ₹8,760.96 crore. This, compared to ₹23,161.56 crore worth of rice exports in the first half of FY 2014-15 alone. While India’s share of global rice exports hovers around 20 per cent, our horticulture represents less than 1 per cent of the global market. More importantly, horticulture covers only about 5-10 per cent of India’s total cultivable land. Ironical, given that India’s farm productivity is highest in the vegetables and fruits segment.

In horticulture, a combination of perceptive policy and local institutional support can further shore up farming incomes. For one, local government bodies can help producers move up the value chain (grading, cleaning, cutting) through dissemination of knowledge and expertise.

The food processing and agriculture ministries should work in tandem at a time when demand for processed food is increasing within and outside India, an opportunity that should be tapped. Plus, to make product upgrading a reality, farmers should also be sensitised about the sanitary and phytosanitary requirements of exports and standards imposed by organised retail entities. Above all, the existing inefficient and corrupt supply chain should be overhauled and middlemen weeded out. Ideally, farmers (and farmers’ groups) should be able to gainfully sell directly to private/cooperative entities and retailers, who would then, if required, further engage third party logistics providers.

India is a grain-surplus and grain-exporting country — the world’s largest exporter of rice. It is time to explore further potential in production, value addition and export of vegetables and fruits too. In due course, if sustaining farmers’ incomes is the end, then only a long-term view will help. It is all very fine to propose direct monthly income support to farmers, but that does not sound like a ‘sustainable’ solution, much less a long-lasting one.

The writer is with a Delhi-based advisory firm

COMMENT NOW