March 8, 2018 1:21:24 am
Written by T Nanda Kumar
OPERATION GREENS (OG), focussing on organised marketing of tomatoes, onions and potatoes (the so-called TOP vegetables) by connecting farmers with consumers “in a manner that satisfies both”, is among the crown-jewel proposals of the latest Union Budget. While a welcome announcement, it is a difficult one to implement. OG is going to be a long-haul journey where mistakes will be made, hence, requiring persistence and commitment to take it forward. Operation Flood (OF), the models it seeks to emulate, wasn’t done in a day!
Let’s identify the key challenges.
The first is size: India’s production of potatoes in 2016-17 was estimated at 48.61 million tonnes (mt), while 22.43 mt for onions and 20.71 mt for tomatoes. What percentage of this output can be brought under OG in a given time frame?
The second is range: There are so many varieties of the above produce, grown in different climatic conditions and in different seasons, making marketing intervention all that more complex, unlike in milk that is a relatively homogenous product produced round the year.
The third is technology: In horticultural produce, viable technology options for long-term storage, transport, and processing are still being developed or fine-tuned. This is again unlike in dairying, where the processes for production of pouch milk, butter or skimmed powder are more or less standardised. The energy intensity of available technologies, especially with rising fuel prices, poses additional challenges.
The fourth is markets: When Amul started off, it was lucky to have a ready market for pasteurised milk in Mumbai (then Bombay), even though dominated by the privately-owned Polson dairy. A similarly organised market seamlessly connecting producers to consumers for TOP – whether processed or otherwise – is, at present, very small in relation to total production. This market has to be developed through a viable business model. Such development, going by the author’s personal experience in marketing dehydrated onions, is both time and cost consuming.
The fifth is institution: I do not see any institution today that can implement OG, similar to what the National Dairy Development Board (NDDB) did in OF. Is it a good idea to set up a new one?
The sixth is funding: The budget provides Rs 500 crore for OG. How is this money going to be spent? The Finance Minister’s speech suggests that OG would promote farmer producers organisations/companies (FPO/FPC), agri-logistics, and processing facilities. But doesn’t that risk spreading resources thin across components and states, rather than having a focused mission scalable over space and time?
What is the possible way forward?
To start with, it is good that the OG scheme would be limited to just TOP. But there are still key issues that need addressing.
The first concerns policy
The mandate for OG has to be clear: It should primarily be for farmers, to get them a fair share of the consumer rupee, by connecting better to markets and reducing wastages in storage and transit. There would, to that extent, be a reduction in price volatility. OG, however, should not be allowed to morph into to a public distribution system-equivalent for TOP. Unless this mandate is clear, enthusiastic bureaucrats may, at the first sign of price rise, convert even OG into a consumer-focussed intervention, as has often been seen in the past. Ideally, there should be no price control measures, whether through export restrictions or stocking limits, at least in the TOP crops. In terms of policy priority, OG has to be farmer-focussed and kept above the middle class housewife’s cooking-pot concerns.
The second is to do with market
Good business sense demands we recognise that the current market segment for processed vegetables is too small and would take time to develop. The real large market today is in fresh or, at best, frozen vegetables. The logistics for fresh produce — cold chains, atmospheric control at retail outlets, etc. — are different and involves establishing clear linkages between producing areas and selling points. Addressing this segment necessarily calls for a market-led approach, as was the case in milk where Bombay provided the market for the dairy producers of Kaira.
Processed veggies are technically amenable to transport over long distances without loss in taste or flavour. But processing requires specific varieties of produce: the potatoes for chips are different from the humble aloo used in everyday kitchens; so is the tomato for puree compared to the tamatar sold in the market. The strategy for processing has to address varietal and agronomic specifications, pre- and post- harvest food safety issues, and extension services. There are successful examples of industry-led extension services in potatoes and bananas (PepsiCo, Jain Irrigation, etc) which can be templates for further interventions.
The third element is technology.
Here, appropriate interventions, maybe even a little bit of ‘jugaad’, is the key. Many cold storages for potato now operate with age-old technology. Onion storage mostly uses traditional, yet improved, technologies, although some modern cold chains, too, exist. We can have multiple options even in tomatoes — sun-dried tomatoes, for instance. Use of natural factors such as solar energy and atmospheric conditions — the Defence Institute of High Altitude Research has reportedly designed zero-energy based vegetable cellars for storage of potatoes in Ladakh – can co-exist with modern energy-intensive technologies, the choice depending on the product and the market. A bouquet of technology options helps, more so considering that in vegetables things aren’t as simple as in milk.
The fourth prerequisite is focus.
The success or failure of OG would, indeed, depend on how much of a focussed programme it is. Milk began with Bombay and Kaira. OG also needs to start with four or five major markets and production centres. Once the markets are identified, logistics plans must be made for servicing these by the most efficient and nearby producers, based on commercial logic.
The fifth is the institution or implementing agency for OG.
Ideally, an autonomous organisation is the solution, but whether the government would accept such a body free from Krishi Bhawan control remains to be seen. There’s probably less confusion when it comes to the bottom of the structure, where the support for FPOs/FPCs is unambiguous and a large number of them have already come up with the support of NABARD and the Small Farmers’ Agribusiness Consortium. Favourable tax treatment – the budget has announced 100 per cent deduction to FPOs/FPCs on their profits for five years – should hopefully result in at least some of these emerging as reasonably large businesses. Their growth need to be aligned to the larger business plan of OG.
Finally, we come to funding. The idea of a continuing government grant, even if infrequent, is detrimental to a sustainable business model. The initial grant for OG through the budget should be mainly invested as equity in the proposed new institution. This government equity could, then, be gradually divested in favour of FPOs/FPCs.
The journey ahead for OG is likely to be difficult but worth it.
It can succeed if some unconventional thinking and committed implementation is brought on board. The ultimate dream should be to see packed and safe-to eat certified veggies sold by franchisees – including small ‘thelawalas’ – resulting in the transfer of about 70 per cent of the consumer rupee to the farmer!
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