CAN INDIA REPLICATE THE AMUL SUCCESS STORY FOR THE FOOD AND VEGETABLES’ SECTOR?

THE CONTEXT: India’s fruits and vegetables (F&V) sector, contributing 30% to crop agriculture, faces challenges like high post-harvest losses (Rs 1.53 trillion annually) and fragmented value chains, where farmers earn only 30% of consumer prices. Sahyadri Farms, a leading Farmer Producer Company with a turnover of Rs 15,489 million in FY 2023-24, showcases a scalable model for integrating small farmers into organized value chains, reducing losses, and ensuring farmers receive up to 55-60% of consumer prices.

CHALLENGES IN THE FRUITS AND VEGETABLES (F&V) SECTOR:

• • Lack of Organized Value Chains: Unlike the dairy sector, where milk is a single commodity with standardized value chains, F&V involves multiple crops that require distinct handling. This complexity leads to inefficiencies in aggregation, grading, and marketing.
    • Farmers receive only 30% of the consumer price due to intermediaries dominating the supply chain14. For example, Sahyadri Farms has demonstrated that organized value chains can raise farmer incomes to 55% of the Free on Board (FOB) price for exports.
    • The absence of a dedicated institutional body like the National Dairy Development Board (NDDB) for F&V exacerbates this fragmentation.
  • Inadequate Storage and Processing Infrastructure: India loses 8.1% of fruits and 7.3% of vegetables annually during post-harvest stages, amounting to ₹1.53 trillion46. NABCONS (2022) highlights this as a major economic drain.
    • The Ministry of Food Processing Industries reports insufficient cold storage facilities, with only 10% of perishable produce being stored under proper conditions8. Government schemes like the Mission for Integrated Development of Horticulture (MIDH) have made progress but remain insufficient.
  • Vulnerability to Seasonal Gluts and Price Crashes: Seasonal oversupply leads to extreme price fluctuations. For instance, tomato prices in Kolar Market dropped by 85% in 2016 due to oversupply.
    • Only 2-3% of F&V production is processed in India compared to 65-70% in developed countries like the USA6. This limits value addition and price stability.
    • Operation Greens, launched in 2018 with a modest budget of ₹500 crores, aimed to stabilize prices but lacked execution depth and leadership akin to Operation Flood4.
  • High Post-Harvest Losses: Post-harvest losses account for nearly 37% of total agricultural losses annually. This includes wastage during harvesting, transportation, storage, and marketing.
    • The Agriculture Infrastructure Fund (AIF) provides collateral-free loans for post-harvest infrastructure but requires better implementation and private-sector participation.
  • Fragmented Supply Chains Leading to Low Farmer Income: Multiple layers of intermediaries erode farmer profits. In contrast, dairy cooperatives like AMUL ensure farmers receive 75-80% of consumer prices through direct market linkages.
    • While Sahyadri Farms exports grapes successfully by adhering to Good Agricultural Practices (GAP), most small farmers lack access to such premium markets due to fragmented supply chains.
  • Lack of Institutional Support: Unlike NDDB for dairy, there is no equivalent body for F&V to streamline policies and market linkages. While Farmer Producer Organizations (FPOs) hold promise, their growth is hindered by limited access to working capital, managerial expertise, and digital integration.
    • Although 8,875 FPOs are registered as of August 2024 under the government’s target of 10,000 FPOs, their impact remains uneven due to inadequate support structures.

GOVERNMENT INITIATIVES AND FUTURE DIRECTIONS IN THE FRUITS AND VEGETABLES (F&V) SECTOR:

• • Target of 10,000 Farmer Producer Organizations (FPOs): FPOs enable small and marginal farmers to pool resources for better market access and price realization. Sahyadri Farms in Maharashtra demonstrates the transformative potential of FPOs. Starting with 10 farmers in 2004, it has over 26,500 members with an annual turnover of ₹1,549 crore in FY 2023-24.
  • Operation Greens: Launched in 2018 under the Pradhan Mantri Kisan SAMPADA Yojana with an initial budget of ₹500 crore. Initially focused on Tomato, Onion, and Potato (TOP) crops, it expanded to include 22 perishable commodities in 2021-22 and further to 41 fruits and vegetables in 2022.
  • National Horticulture Mission (NHM): Launched in 2005 under the Mission for Integrated Development of Horticulture (MIDH). Aimed at holistic growth of horticulture through research, production, post-harvest management, processing, and marketing.

THE WAY FORWARD:

• • Strengthen Farmer Producer Organizations (FPOs) Through Institutional Support and Digital Integration: FPOs enhance farmers’ bargaining power, reduce input costs, and improve market access. Increase working capital availability through interest-free loans under the Agriculture Infrastructure Fund (AIF). Link FPOs with platforms like the Open Network for Digital Commerce (ONDC) to eliminate intermediaries. Train FPO members in financial literacy, quality control, and export standards.
  • Revive and Expand Operation Greens With Clear Leadership and Accountability: Increase funding to ₹2,000 crore annually to match the scale of Operation Flood. Include additional perishable commodities under its ambit. Appoint a dedicated visionary leader akin to Verghese Kurien for dairy.
  • Adopt a Commodity-Specific Value Chain Approach: Focus on production clusters under the “One District One Product” (ODOP) scheme for specialization. Prioritize processing at least 10-20% of F&V produce to reduce wastage. Establish partnerships with organized retail chains like SAFAL for assured procurement.
  • Establish a National Fruit and Vegetable Board (NFVB): The NFVB can streamline policies across states to reduce inefficiencies, facilitate adherence to international quality standards like GAP (Good Agricultural Practices), and link NFVB with existing schemes such as MIDH (Mission for Integrated Development of Horticulture).
  • Aim for Farmers to Receive 55-60% of Consumer Price: Promote e-NAM (National Agriculture Market) adoption for transparent pricing. Replicate AMUL’s cooperative framework in the F&V sector. Encourage fair contract farming agreements under the Farmers’ Produce Trade and Commerce Act, 2020.
  • Foster Innovation Through Technology Adoption: Technological interventions can address inefficiencies in post-harvest management and supply chains. For example, predictive analytics can be used for demand-supply forecasting. Invest in solar-powered cold storage units for rural areas.

THE CONCLUSION:

Transforming India’s fruits and vegetables sector requires scaling successful models like Sahyadri Farms, strengthening FPOs, and adopting a commodity-specific value chain approach to ensure farmers receive 55-60% of consumer prices. With robust policy support, increased processing (currently only 2-3% compared to 65-70% in developed nations), and institutional frameworks like a National Fruit and Vegetable Board, India can unlock the sector’s full potential for economic growth and farmer prosperity.

UPSC PAST YEAR QUESTION:

Q. Assess the role of the National Horticulture Mission (NHM) in boosting the production, productivity, and income of horticulture farms. How far has it succeeded in increasing the income of farmers? 2021

MAINS PRACTICE QUESTION:

Q. Discuss the key challenges faced by the F&V sector and suggest innovative, policy-driven solutions to replicate the success of the dairy sector in transforming this sector.

SOURCE:

https://indianexpress.com/article/opinion/columns/can-india-replicate-the-amul-success-story-for-the-food-and-vegetables-sector-9839613/