Indian Express Editorial Analysis
17 February 2025
A success story like Amul
(Source – Indian Express, Section – The Ideas Page – Page No. – 09)
Topic : GS3 : Agriculture
Context
India’s fruits and vegetables (F&V) sector is growing rapidly but remains fragmented, leading to high post-harvest losses and low farmer earnings, highlighting the need for structured value chains and Farmer Producer Organisations (FPOs) to replicate the success of India’s dairy sector.
Growth of India’s Fruits and Vegetables Sector
- India’s fruits and vegetables (F&V) sector is expanding at a faster pace than cereals, contributing nearly 30% to the value of crop agriculture.
- Besides being more nutritious, it has the potential to enhance farmers’ incomes significantly.
- However, the sector lacks the necessary policy attention and institutional support compared to cereals.
- The absence of organized value chains, inadequate storage facilities, and limited processing infrastructure make F&V highly vulnerable to seasonal price fluctuations, market gluts, and post-harvest losses.
- According to NABCONS (2022), post-harvest losses amount to 8.1% for fruits and 7.3% for vegetables, contributing to an annual economic loss of ₹1.53 trillion.
- Additionally, due to fragmented supply chains, farmers receive only about 30% of the consumer price, highlighting the need for structural reforms.
Learning from India’s Milk Revolution
- The transformation of India’s dairy sector under Verghese Kurien’s leadership is a model of success that the F&V sector could potentially replicate.
- Through a well-structured cooperative model, India transitioned from a milk-deficient nation to the world’s largest milk producer, with 239 million tonnes in 2023-24.
- Milk cooperatives like AMUL ensured that dairy farmers received between 75-80% of the consumer price.
- Unlike milk, however, the F&V sector involves multiple commodities, each requiring specialized infrastructure.
- Seasonal fluctuations, regional production concentration, and high perishability make price stabilization difficult.
- A structured approach involving aggregation, grading, processing, and direct market linkages is essential to ensure stability and better earnings for farmers.
The Role of Farmer Producer Organisations (FPOs)
What is a Farmers Producer Organisation (FPO)?
- Definition: An FPO is a type of Producer Organisation (PO) formed by farmers. It operates as an organisation of the producers, by the producers, and for the producers.
- Supporting institution: The Small Farmers’ Agribusiness Consortium (SFAC) plays a vital role in promoting FPOs across India.
- Purpose: A PO represents producers of various goods, including agricultural products, non-farm items, and artisan goods.
It can adopt legal forms such as producer companies, cooperative societies, or other entities that allow members to share profits and benefits.
- Ownership: The ownership of an FPO lies entirely with its member farmers.It operates on the principle of shared decision-making and benefits.
- Farmer Producer Organisations (FPOs) are key to addressing structural inefficiencies in the F&V sector.
- A case in point is Sahyadri Farmer Producer Company Ltd (SFPCL) in Maharashtra’s Nashik district.
- Founded in 2004 by Vilas Shinde, SFPCL has grown from a small group of 10 farmers to a vast network covering 31,000 acres and 26,500 registered farmers by 2023-24.
- Its turnover surged from ₹13 crore in 2011-12 to ₹1,549 crore in 2023-24, showcasing the power of organized farming.
- About 64.6% of SFPCL’s revenue comes from domestic sales, while 35.4% comes from exports, with grapes and tomatoes being the dominant contributors.
- SFPCL’s success lies in its ability to integrate small farmers into structured value chains, ensuring quality, traceability, and access to global markets.
Strengthening Value Chains and Processing Infrastructure
- SFPCL’s ability to connect farmers to international markets has made it India’s largest grape exporter, with 90% of its grapes reaching the EU and UAE.
- Farmers under SFPCL receive around 55% of the Free on Board (FOB) price, significantly higher than traditional markets.
- The company has also invested heavily in processing infrastructure, particularly for tomatoes, which contribute 35% of its domestic revenue.
- By processing tomatoes into ketchup, puree, and sauce, SFPCL has mitigated price volatility and ensured stable farmer incomes.
- The company’s expansion has also created over 6,000 jobs, with women comprising 32% of the workforce.
- These interventions highlight how organized FPOs can revolutionize the F&V sector through aggregation, processing, and direct market access.
Scaling Up: Policy Interventions and Future Roadmap
- The success of Sahyadri Farms provides a scalable model for the entire F&V sector. The Indian government has targeted the formation of 10,000 FPOs, with 8,875 already registered as of August 2024.
- Scaling up FPOs like SFPCL could replicate the milk revolution in the F&V sector.
However, three key interventions are needed:
- Strengthening FPOs – Providing institutional support, working capital, infrastructure, and digital integration through platforms like the Open Network for Digital Commerce (ONDC). Blockchain technology could improve transparency and farmer earnings.
- Revamping Operation Greens and the National Horticulture Mission – The government’s 2018 initiative to stabilize perishable prices lacked a strong leader like Kurien and had limited financial backing (₹500 crore). A more robust implementation strategy is required.
- Developing Commodity-Specific Value Chains – At least 10-20% of F&V produce should be processed to prevent distress sales and stabilize prices.
Towards a National Fruits and Vegetables Board
- To transform the F&V sector, India needs a National Fruit and Vegetable Board, akin to the National Dairy Development Board (NDDB).
- Such an institution would streamline market linkages, promote efficient value chains, and integrate retailers like SAFAL to ensure better price realization for farmers.
- The key question remains: Can Vilas Shinde become the Verghese Kurien of India’s F&V sector?
- The Sahyadri model has already demonstrated a successful approach. With the right scale, policy support, and leadership, India could ensure that F&V farmers receive at least 55-60% of the consumer price, leading to a major transformation in the agricultural landscape.
Conclusion
- India’s F&V sector has immense potential but remains unorganized, leading to high post-harvest losses and low farmer earnings.
- With the right leadership and reforms, India can replicate its milk success in the F&V sector, driving agricultural prosperity.