Policy Watch: The horticulture miracle

Any way you look at it, the horticulture sector is a miracle which Indians seldom think about.

Take production figures first.  In tonnage terms, horticulture has already surpassed cereal production.  And do bear in mind, that this sector does not enjoy the comfort of a procurement policy that has benefitted only the rice and wheat sectors.  In most cases, this sector has thrived even without a minimum support price (MSP) to cushion it.

In some ways, it does point to the old saying, that business grows healthily, if the government stays far away.

Moreover, unlike cereal, where per capita intake is declining (http://www.dnaindia.com/analysis/column-policy-watch-food-water-crisis-ahead-2035871) the demand for fruit and vegetables is growing healthily.  The trouble is that consumption (at a 5% compounded average growth rates) has been growing faster than production (3%). 

Horticulture composition
Of course, it must be remembered that horticulture covers many things.  But vegetable (39% of land and 47% of value) enjoys the biggest share.  Then comes fruit (29% of the land, and 24% of value).  Flowers, which are more in the limelight, take up 1% of the land under horticulture, but contribute to 23% of the value.  Plantation crops on the other hand account for 15% of the land but just 5% of the value. 

Hence the focus of this article is more on fruit and vegetables. And even though this sector has been growing, the lack of infrastructure, and the existence of artificial road-blocks to market-access have hurt many farmers.
The absence of good roads and proper food preservation facilities has caused at least 35% of the value of the crop to perish. The absence of storage facilities within a radius of 50 km of the farms ensures that many farmers are compelled to dump their produce at distress prices to middlemen, who, in turn, rake in the moolah by demanding more money from urban consumers.

At the same time, many states have laws that compel the farmers to sell their fruit and vegetables through APMCs (Agricultural Produce Market Committees). APMCs are little more than rapacious State-sanctified middlemen who pay the farmers a pittance and charge urban consumers a lot more.  In Mumbai for example, the difference between the prices farmers get and the money that urban consumers pay can be as much as 4-6 times!

Obviously, therefore, APMCs need to be abolished — the way they have been in some progressive states like Gujarat and Delhi.  Maharashtra has been toying with this idea, but political pressure (and money) have allowed APMCs to survive.  The losers are thus both the farmer and the consumer.

The China factor
The biggest competition India faces is from China which has become the world’s largest producer of fruit and vegetables.  This is because of three reasons.  
First, it is by now quite well known that China manages to achieve more produce on less land than 
India on account of its better farm practices 
(http://www.dnaindia.com/money/1828230/report-indian-agriculture-and-ndash-pamperedandterriblyexploited). 
Second, China has not propped up grain production artificially as India has done, causing more land to be allocated to cereal —  especially rice and wheat — than to other crops.  
Third, as a result, China has been able to allocate land more on the basis of market economics. Thus it has more land for horticulture.  
As of 2012-13, China produced 137 million tonnes of fruit on 11.8 million hectares of land.  India, on the other hand, produced 81.2 million tonnes on almost 7 million hectares.  In other words, both countries are neck to neck when it comes to fruit production yields — both accounted for around 11.6 tonnes per hectare. But since China brought more land under horticulture, its total output was larger.
But when it comes to vegetables, China’s productivity levels are definitely higher.  China produced 574 million tonnes of vegetables on 24.6 million hectares (23.4 tonnes per hectare), while India produced 162 million tonnes on 9.2 million hectares (17.6 tonnes/hectare).

Oppression of the marginalised
To understand this, one needs to look at the profile of farmers growing vegetables. Vegetables are mostly grown by small farmers, because they provide a cashflow every 2-3 months.  Cereals and fruit often offer a yield once in six months and at times once a year. Marginal farmers  — perennially short of cash — opt to grow vegetables, hoping to augment their limited cashflows.  But without preservation facilities (and at times even the ability to take them to more lucrative markets) they are often compelled to sell the produce at distress prices.  Much of it also perishes and has to be thrown away.
The State needs to create mechanisms to run preservation units on a cooperative basis. True, an attempt was made in this direction under the Safal brand (Safal derives its name from ‘sabzi’ meaning vegetables and ‘fal’ meaning fruit). But without the right vision of a person like Verghese Kurien, the man behind the milk revolution (http://www.dnaindia.com/money/comment_strategic-advantage-verghese-kurien-style_1801912), the experiment has met with limited success.  Fiscal incentives could do the trick, but somehow policymakers have not paid much attention to this. 
India could do a lot more on the export front if food processing is given a thrust.  If the right policies are followed, India could augment horticulture production substantially.  Moreover, providing small farmers market access will mean that they will earn more, hence focus a great deal more on augmenting production and productivity.  That will mean lower prices for consumers, and a further expansion of the domestic markets as well. Hopefully, changes aimed at achieving these objectives will be one of the focus areas of the new government.

The author is a consulting editor with dna