Record Horticulture Harvest in India in 2017: Is it a cause for celebration?
While the world knows what the supply is, there is not sufficient knowledge about what will be the trend in demand in short term.
Latest data released by the Ministry of Agriculture of Government of India showed that the production of horticulture crops like fruits and vegetables will touch a record high of 295 million tonnes in 2016 -17. It took India a decade and a half to double the production in the horticulture sector – a sure cause for celebration. The focused effort of the current and the previous government along with right policies to promote long – term investment by the private sector has brought a shift from cultivation of paddy and other cereals to more resource friendly horticulture crops.
However, if one does a google search on Record Horticulture Harvest in India – one will find that the tone of headlines in newspaper provide not so encouraging mood. Why so? The growers are not getting remunerative prices and in some crops like potato, onion and tomato they are not even able to sale at a price that will cover their cost of production.
Supply Data – Out there everywhere
Prices are determined depending on the data of supply and demand. While the world knows what the supply is, there is not sufficient knowledge about what will be the trend in demand in short term. Consumers will not start eating more potato just because there is a glut in the market. However, price-sensitive customers will shift to other vegetables if there is a scarcity in the market for any of the staple crop and there is an increase in price. An insightful article (http://goo.gl/c7Jk5E) by Vipul Mittal, National Head (Fruits & Vegetables) of BigBasket, a big online grocery company argues about how customers should look into the whole basket of vegetable and not on any particular vegetable.
Supply data can also be estimated from some other sources (e.g. Sales growth of agri – input companies , weather forecast etc…) at a very early period even before the first seed is sown for any particular crop.
Demand Data – Treasure Hunt
Demand of fruits & vegetables depends on a quite few factors e.g. consumer’s spending decision, income. To know more on the same specifically for India, one can refer to the IMF Working Paper – Understanding India’s Food Inflation: The Role of Demand and Supply Factors (http://goo.gl/eORPw8). The Government of India has done mapping on the various fruits & vegetables that are grown across the country. What is not available are the latest data on demand across different market segment (e.g. export, processing sector, retail or inventory) for vegetables. This creates a difficult situation for the seller of vegetables specially the growers on whether to sell their produce immediately or store it for some time before they get suitable price.
This leads to a sense of loss among the growers and develops mistrust for all the other stakeholders in the chain – aggregators, consumers and government. According to the newspaper article (http://goo.gl/JXBiKJ) it is certainly being felt in a certain region of India where farmers are en masse protesting and even thinking of cutting supply to the big cities.
What is being done about it?
The current government has set an ambitious target for doubling farmers’ income. Out of the various initiatives that are being rolled out one of it is to create a National Agriculture Market (http://enam.gov.in) for India. This will provide the farmers with atleast some kind of knowledge as to selling in which region will provide them an optimal price. It may not be a short term panacea but over a few years period there will be enough data publicly available for forecasting demand trends.
The Ministry of Food Processing & Industry (MoFPI) is implementing different market friendly schemes for developing the food processing sector. Food processing companies surely appreciates glut in the market as that will reduce their raw material cost however they also need to develop stable supply chain. These companies will then hopefully go for assured buyback of vegetables as well as keep a certain component for their facilities to be utilised in case there is over supply in the market of vegetables. The processed companies will also more likely to promote international trade of semi-processed products.