Context: India’s horticulture sector including fruits and vegetables can try replicating the Amul model for harnessing the potential of farmer producer organisations.
Relevance of the topic:
Prelims: Government Schemes
Mains: Horticulture Sector
About Horticulture Sector:
- It is a vast and diverse field that encompasses the cultivation, production, processing, and marketing of fruits, vegetables, flowers, and ornamental plants.
- Major types of horticulture:
- Pomology: Fruit cultivation and includes Viticulture (grape cultivation)
- Olericulture: cultivation of vegetables
- Floriculture: cultivation of flowers and ornamental plant
- Arboriculture: cultivation of trees and shrubs
Status of India's Horticulture Sector
- India is the second-largest producer of fruits and vegetables globally, after China.
- Contribution to Agriculture Gross Value Added (GVA): 33%
- In 2023-24, horticulture production was estimated at 355 million tonnes, surpassing food grain production.
- Horticulture sector growth rate: Around 4-5% annually, higher than cereals.
- Exports: India is ranked 14th in vegetables and 23rd in fruits.
- Post-harvest losses: About 8.1% for fruits and 7.3% for vegetables, accounting for 37% of the total post-harvest losses, valued at Rs 1.53 trillion annually (NABCONS, 2022).
- Farmers' income: Farmers typically receive only 30% of the final consumer price due to unorganised value chains.
Significance of Horticulture Sector for India
- Sunrise sector: Horticulture has the potential to:
- Double farmers income
- Generate employment
- Enhance foreign currency earnings
- Enable rural development
- Food & Nutritional security:
- Fruits & vegetables form major sources of vitamins/minerals in Indian diet
- Potential in India:
- Favourable agro-climatic conditions
- Abundant labour force
- Relatively low production costs
- High productivity, compared to cereals
Challenges in India’s Horticulture Sector
- Infrastructure Deficit:
- Poor logistics and lack of equitable cold storage and warehousing facilities contribute to delays and wastages as Horticulture crops are highly perishable.
- Cold storage distribution among the states is inequitable, with around 59% of the storage capacity present in 4 states- Uttar Pradesh, West Bengal, Gujarat, and Punjab.
- Post-harvest losses:
- Lack of cold storage, grading, and processing infrastructure leads to significant wastage.
- Seasonal gluts result in price crashes, affecting farmers' incomes.
- Small operational landholdings:
- They limit the amount of land available for cultivation, for crop rotation and sustainable soil management resulting in reduced yields and decreased soil fertility.
- Fragmented value chains:
- Unlike the dairy sector, where cooperatives like AMUL ensure stable pricing, horticulture lacks a structured aggregation and distribution system.
- Middlemen dominate the market, reducing farmers’ bargaining power.
- Limited processing and value addition:
- Only 10% of India’s fruits and vegetables are processed, compared to 60-70% in developed countries.
- The absence of strong food processing industries leads to distress sales and lower farmer earnings.
- Market linkages and Export challenges:
- Limited direct market access for farmers results in price volatility.
- Quality and traceability issues restrict India’s potential in global Fruits & Vegetables exports.
- India’s export share in horticulture remains low, despite being a top producer. (mere 1%.)
- Indian exports face food safety and standards related issues due to non-tariff trade barriers like Sanitary and phytosanitary measures.
- E.g.: pesticide residue has led to rejection of exports in key markets like the EU.
Initiatives taken
- Mission for Integrated Development of Horticulture (2014): Centrally Sponsored Scheme, for the holistic growth of the horticulture sector with 2 sub-schemes:
- National Horticulture Mission: aims at holistic development of the horticulture sector by ensuring forward & backward linkage through a cluster approach under Horticulture Cluster Development Programme.
- Horticulture Mission for North East and Himalayan States.
- Operation Greens:
- Launched during Budget 2018-19 to address price fluctuations in tomato, onion, and potato (TOP) and for the benefit of farmers and consumers.
- It was later extended to all crops (from TOP to TOTAL).
- Clean Plant Programme:
- CPP aims to enhance the quality of fruit crops across the nation by providing disease free high-quality planting material to farmers regardless of their landholding size.
- Formation of Farmer Producer Organisations (FPOs):
- The government aims to establish 10,000 FPOs by 2027, with 8,875 already registered (as of August 2024).
- FPOs help in collective bargaining, better price realization, and reducing dependency on middlemen.
- Agriculture Infrastructure Fund (AIF):
- Provides financial support for cold chains, warehouses, and processing units.
- Aims to reduce post-harvest losses and improve price realization for farmers.
- Coordinated programme on Horticulture Assessment and Management using geoinformatics (CHAMAN):
- To develop and firm up scientific methodology for estimation of area and production under horticulture crops.
- Capital Investment Subsidy Scheme:
- for construction/ expansion/ modernization of Cold Storages/Storages of Horticulture Products.
- Mega Food Parks:
- Establishment of agriculture export zones and Mega food parks to increase processing facilities for horticulture crops.
- HORTINET App:
- Launched by APEDA (Agriculture and Processed Food Export Development Authority).
- Provide online services such as farm registration, testing and certification, real time details of farmers, farm location, etc.
Case Study: Sahyadri Farmer Producer Company Ltd (SFPCL)
- Located in Nashik, Maharashtra, Sahyadri FPO started in 2004 with 10 farmers and has expanded to 26,500 farmers across 252 villages and 31,000 acres.
- Annual turnover: Grew from Rs 13 crore (2011-12) to Rs 1,549 crore (2023-24).
- Processing & Export:
- Largest grape exporter (90% exported to EU and UAE).
- Strong processing infrastructure, turning tomatoes into ketchup, puree, and sauces.
- Employs over 6,000 people, with 32% being women.
- Impact: Farmers receive 55% of the final export price, compared to the usual 30% in traditional markets.
Way Forward
- Strengthening Farmer Producer Organizations (FPOs):
- Provide institutional support for working capital, infrastructure, and digital integration.
- Leverage platforms like Open Network for Digital Commerce (ONDC) to enhance market access.
- Reviving and expanding Operation Greens:
- Increase financial allocation to improve processing, storage, and logistics.
- Commodity-specific value chain development:
- Develop dedicated infrastructure for key horticultural crops, ensuring at least 10-20% of production is processed.
- Promote PPPs:
- Encourage public-private partnerships (PPP) in food processing industries.
- Promote partnerships with retail chains like SAFAL to improve farm-to-market efficiency.
- National Fruit and Vegetable Board:
- Establish a board similar to National Dairy Development Board (NDDB) to streamline policies, market linkages, and farmer support.
- Leveraging technology for Market transparency:
- Implement blockchain for traceability and AI-driven price prediction models to prevent distress sales.
- Expand e-NAM coverage for horticultural produce.
The horticulture sector has immense potential to boost farmer incomes, enhance food security, and strengthen India’s agri-export base. Scaling up successful models like Sahyadri FPO across India can replicate the AMUL success story in fruits and vegetables.