The recent surge in vegetable prices has been a cause for concern among consumers and policymakers alike. This year, the situation has been particularly dire, with vendors in New Delhi and other parts of the country reporting alarming price hikes. This rise in prices can be attributed to the erratic monsoon that has swept across parts of the country, coupled with subsequent flooding in certain North Indian plains. While seasonal fluctuations in vegetable prices are not uncommon, the current circumstances demand a comprehensive approach to tackle the issue effectively.

Traders and farmers point to a combination of factors that have contributed to the current price hike. The initial intense heatwave was followed by intermittent rainfall, and now, the surplus rainfall has severely disrupted the fresh vegetable supply chain. The excessive moisture has caused crop damage and hindered transportation, resulting in reduced supply and increased prices. To address this issue and mitigate the impact of such weather-related challenges in the future, sustainable food processing practices must be adopted.

Reducing inflation risks

The annual output of fruits and vegetables in India stands at over 300 million tonnes. India is the second largest producer of fruits and vegetables. However, the processing of these agricultural products varies significantly among different countries. India, unfortunately, processes only 2-3 per cent of its fruits and vegetables output, whereas China and the USA process 25 per cent and 55 per cent respectively. This stark contrast in processing rates has significant implications for wastage and pricing in the industry. Due to the low processing amount in India, a considerable portion of the produce ends up being discarded, leading to high wastage levels. This highlights the importance of increasing the processing-to-produce ratio in India to make fruit and vegetable prices less prone to inflation.

India’s food processing sector has significant potential to play a crucial role in alleviating the vegetable price hike. In 2019-20, the Gross Value Added (GVA) in the food processing sector was ₹2.24 lakh crore, contributing 1.69 per cent of the total GVA in the country. Moreover, the sector has also attracted foreign direct investment (FDI) inflow, with $709.72 recorded during the 2021-2022 financial year in the food processing sector alone. These figures highlight the importance of focusing on sustainable food processing as a means to tackle the vegetable price hike effectively.

The Government of India, through the Ministry of Food Processing Industries (MoFPI), recognises the significance of boosting investments in the food processing industry. Various initiatives have been launched to fulfil this objective. One such initiative is the Pradhan Mantri Kisan Sampada Yojana (PMKSY), which aims to develop a modern food processing infrastructure. This scheme supports the establishment of food processing units, cold storage facilities, and integrated value chains. By promoting the use of sustainable technologies and infrastructure, PMKSY contributes to stabilising vegetable prices and ensuring a consistent supply throughout the year.

Extending shelf life

Adopting sustainable food processing practices offers numerous benefits in addressing the challenges of the vegetable price hike. Sustainable techniques enable efficient utilisation of available resources, minimising wastage and optimising productivity. For instance, the implementation of improved farming methods such as precision agriculture and hydroponics can increase crop yields and reduce the dependency on weather conditions. Additionally, advanced storage and preservation techniques, including cold chain infrastructure, can help extend the shelf life of vegetables, reducing spoilage and post-harvest losses.

Price hikes for fresh fruits and vegetables are not as steeply reflected in processed foods as they are during the procurement of raw materials. The process of converting 8 kg of tomatoes into 1 kg of tomato paste offers an interesting insight into cost dynamics. Considering that the tomatoes are procured at ₹4 per kg during the harvest season, the total cost of 8 kg of tomatoes amounts to ₹32. However, after undergoing the processing and packaging procedures, the cost of producing one kg of tomato paste is approximately ₹60. This cost includes not only the initial procurement of tomatoes but also the expenses incurred during processing and packaging.

The most remarkable aspect of this cost analysis is that even though the final cost of tomato paste is ₹60 per kilogram, it remains significantly lower than the current inflated prices of tomatoes in the market. This makes processed tomato paste a more affordable and accessible option for consumers. Moreover, since the product is already processed and packaged, its cost is unlikely to be affected much by any future price fluctuations in the fresh tomato market. This stability in pricing ensures that consumers can rely on the consistent affordability of tomato paste. The processing of tomato into tomato paste doesn’t impact the nutritional value of the products. Moreover, with proper packaging material, the shelf life of the product increases from a week (for tomato) to 18 months (for tomato paste).

Offering incentives

Sustainable food processing practices also foster value addition, enabling farmers and producers to diversify their offerings. By converting perishable vegetables into processed products such as frozen vegetables, pickles, and dried vegetables, the shelf life is significantly extended, allowing farmers to fetch better prices for their produce. This improves their income and contributes to reducing price volatility in the market.

To encourage the adoption of sustainable food processing practices, the government should provide financial incentives and technical support to farmers and SMEs in the food processing industry. Offering subsidies for sustainable farming technologies, facilitating access to credit, and organising training programmes on sustainable food processing techniques would empower stakeholders to make the necessary investments and upgrades. Moreover, collaboration between research institutions, government agencies, and industry players can facilitate the development of innovative and sustainable solutions tailored to local conditions.

The vegetable price hike caused by erratic monsoons and subsequent flooding calls for a comprehensive approach to address the issue effectively. Sustainable food processing practices offer a viable solution to mitigate the impact of weather-related challenges on vegetable prices. By investing in modern food processing infrastructure, promoting sustainable technologies, and facilitating value addition, we can stabilise vegetable prices, reduce wastage, and ensure a consistent supply throughout the year. It is imperative for the government, farmers, traders, processors, and other stakeholders to collaborate and embrace sustainable food processing practices to overcome the challenges posed by the current price hike and build a resilient and sustainable food system for the future.

The author is Founder, Agrizy