With a production of over 230 million tonnes of fruits and vegetables over an area of 20 million hectares , the horticulture sector in India is now a significant contributor to the agricultural GDP of the country , but its contribution to farmers’ incomes livelihoods, nutrition, export earnings, ecology and equity does not get the prominence it deserves because our political discourse and economic commentary is geared to the ‘meta narrative’ of food security , MSP and PSS for wheat , rice , pulses and oilseeds . In fact one has to be grateful to the runaway inflation of the humble ‘onions and potatoes’ that perishables made it to the national attention grid, but for the wrong reasons! While it is true that the sector has received more funds than ever before, and production has increased manifold, the sector now faces the problem of ensuring that the primary producer gets a ‘fair and remunerative share ‘ of the consumers rupee, as in the case of ‘primary crops ‘like wheat and rice.
How then does one look at the horticulture sector’s growth scenario. As in Dickens’s classic ‘A Tale of two cities’: it was the best of times, it was the worst of times! It is the best of times because few other sectors have seen such exponential growth in terms of funding ….from just about Rs 700 crores in the seventh Plan to Rs 15,000 crores in the eleventh Plan. The sector now boasts of the National Horticulture Mission, the Horticulture Mission of the Himalayas and the North East, the National Mission on Micro Irrigation and the national Bamboo Mission, besides substantial funding and policy support for the National Horticulture Board and the Coconut Development Board. Besides there are smaller , but focused missions like the Saffron Mission for Jammu and Kashmir, and the National Bee Board. Many state governments are creating ministries and departments exclusively for horticulture, and there is a general sense of ‘can do ‘attitude!
However the primary challenge to the sector emanates from the fact that almost every policy instrument which regulates this sector was designed primarily for wheat and rice, and by extension, pulses, oilseeds and millets. Thus when it comes to financial inclusion of farmers, provision for fertilizers, price support, and especially the marketing arrangements, the sector faces the ‘worst of times’. This does need further elaboration. Take the Kisan Credit Card for example. The very design of this financial instrument which is responsible for providing agriculture credit of more than four hundred thousand crores to the farmer at a concessional rate of interest through interest subventions caters to the ‘wheat-rice’ cycle, and its norms are designed to cover seeds, fertilizers and pest/weed management. Fortunately, the humble potato fits into this cycle as an alternate crop in West Bengal, Punjab and UP, but the marginal farmer who wants to grow strawberry, egg plants, broccoli or okra for the vegetable market, or wants inputs for the small poly house that s/he has created out of NHM funds does not have access to this concessional credit. Thus the vegetable grower must take credit at usurious rates of interest, often from the intermediary, who then gets a control over the produce even before the cultivation cycle starts. True, there is no ‘bar’ to the KCC financing vegetable crops, but unless the ‘norms’ for funding are circulated to the banks and co-op institutions, pious intentions do not get translated into ground reality. Therefore the first point to note is that the horticulture farmer pays a higher ‘cost’ of credit.
This financial exclusion leads to a vicious spiral: because his crop has not been financed, it cannot be insured. Thus, in the case of a crop loss on account of adverse weather conditions and/or pest attack, the horticulture farmer does not have a ‘right’ to get compensated. He has to depend on ‘patronage’ and a visit by a central team to assess the damages, and receive a ‘pittance’. Even in the revamped agricultural insurance scheme, and the Weather Based Insurance, horticulture is an ‘add-on’. However, horticulture crops are more sensitive to climate change, and therefore require urgent attention. This essayist has made a strong case for convening a meeting with the insurance companies, farmers associations and insurance regulator to take the first steps towards designing product portfolios for the vast range of horticulture crops – from saffron in Jammu & Kashmir to areca nut in Karnataka!
Let us now move to agricultural inputs, including seeds, nutrients and pest/weed management strategies. In addition to the National Seeds Corporation and the State farms corporation of India, almost every state, and many agricultural universities have their dedicated corporations to address the issue of seed supplies. Their primary focus has been to HYVs and hybrids for the major crops, and because there is still a very wide gap between demand and supply in this ‘core sector’ the horticulture sector, more or less fends for it. True in the case of potato, the CPRI has taken the lead role in the development of Foundation seed, and the Indian Institute of Vegetable Research at Varanasi and the IIHR at Bangalore have developed several varieties, the challenge is not the development of a good seed/planting material in the lab – but to ensure its commercial production, certification and regulation to ensure that the farmers are not given spurious seeds. Again, the focus of the seed certification labs in the country is primarily geared to ‘crops’, rather than fruits and vegetables, and face severe capacity constraints in most states. If horticulture were to add its own portfolio, the backlog would be so high, that entire seasons would be missed, thereby rendering the exercise redundant.
From Products to Processes: Accrediting Nurseries, and Redefining their Roles
As such, a better option would be to move into a regime of accrediting nurseries which can supply planting materials and seeds, besides stocking seeds of companies which have their own testing regimes, or have the credibility and brand name, backed by internal research. The National Horticulture Board has recently taken up the task of accrediting nurseries, and the number of stars assigned to each will depend on periodic review and inspection. Thus while getting the ‘five star status’ will be great for a nursery, being able to retain it will be greater, and the possibility of losing the status will impel the nursery to take all steps in this direction. It may take a few years time, but by the end of the XII Plan period it would be possible for the NHM to give directions that state procurement should only be from ‘accredited nurseries’. Over time, the accredited nursery movement may evolve a dynamic of its own, and these could also be the centres for sale of horticulture equipment, bio fertilizers, and other agri inputs.
Breaking the ‘land holdings barrier’: Protected Cultivation and Micro Irrigation
Taken together, protected cultivation and micro irrigation can break the ‘land holdings barrier’, which has been the bane of Indian agriculture. Given the fact that India is a land of marginal and small holders, and that it will not be possible to increase the per capita farm size, the only option is to increase the productive capacities multifold to make incomes rise at a pace which compares with the services sector. This is where horticulture sector brings in its unique competitive advantage : with shade nets and poly houses, fan –belt systems and micro irrigation, it is possible for a 300 square meter plot of land to generate an income of up to Rs 3 lakh per annum( an impossibility in a rice-wheat /cotton/sugarcane cycle) True, this will involve higher capital costs – but given the support under NHM , with supplementary grants by the state and institutional funding, it would be possible for the new generation of agripreneurs to break free of the ‘ land holdings barrier ‘. The question is: are we prepared to invest in the sector on the scale that we are doing for airports and national highways? To cover just 1% of India’s cultivable land under protected cultivation, the requirement of funds could be as high as Rs 25,000 crores (back of the envelope calculations). This can however generate incomes and livelihoods in a ‘virtuous cycle’, and may be more productive than other interventions, especially as this involves a ‘public private partnership’ in the real sense!
Reducing Transaction Cost and Time: Repealing APMC Acts
Getting funds for breaking the land Holdings barrier may be easier than getting this Act amended. The ‘vested interests’ which control these Markets are not agriculture producers, but traders and intermediaries, and because they have ‘controlled’ these institutions for the last fifty years, they have perfected the art of finding both creative and coercive reasons of holding the system to ransom. While the DAC has been reiterating the need to amend the Act, several states including Punjab, Haryana, UP, Rajasthan and Delhi – to name few- have not accepted this. Of course every political party sings paeans for the ‘toiling farmer’ but his right to sell his produce at his farm gate has been compromised by every party across the political spectrum. The time has come to make it abundantly clear that unless Act is repealed, higher production and yields will not translate themselves into incomes for farmers. True, the subject falls under the domain of the state governments, but if an Empowered Committee of State Finance Ministers could take the lead in establishing the VAT regime in the country, this can also be done. The APMC Act was designed to ensure that the farmer brings his produce to the Mandi so that he has greater choice: today the choice is being restricted because of the Act itself. Moreover the markets under APMC have failed to keep pace with technology: as a country which prides itself in IT skills, and BPO sector, less than 1% of our agriculture produce is sold through electronic auctions with transparent price discovery. It was time the Competition Commission of India took suo motto notice of the restrictive provisions of the APMC Acts which had virtually restricted the entry of any new player in this sector, and also prevented any member to introduce systems to usher in a monopoly.
While NHM has been supporting ‘terminal markets’ and many states have come forward to take assistance of up to Rs 50 crores (one third of the anticipated project cost ), this has not caught on like wild fire, because any modern system will keep a record of transactions, but the ‘guild’ which controls the trade does not want any trail. This is perhaps one of the largest ‘unorganized sectors’ in the country. Can one believe for example, that the total requirements of fruits and vegetables for the NCR region are less than Rs 2 crores per day?
The NVI
To a large extent, these issues have been thought through in the National Vegetable Initiative, which aims to connect cities with a population of 1 million with farmer’s clusters. Easier said than done- for there is no way in which multiples producers and consumers can connect without markets and aggregators. The NVI recognizes that every person in the value chain – from the supplier of agri –inputs to the small holder to the vegetable vendor who delivers a wide range of vegetables on his push cart – has a role to play in the process. But the vegetable vendor has his own set of issues – which are beyond the ken of horticulture – issues relating to municipal zoning, livelihood, credit and ‘inspectors’ of different departments- from health to legal meteorology and of course the police !