The apple debate,before and after FDI

Horticulture Minister Narinder Bragta has blamed the arrival of foreign apples for the crash in prices. “It’s only when foreign apples from China,the US and Europe reached Indian markets that prices crashed as we cannot compete with those varieties. It has caused a loss of more than Rs 600 crore,” he said,a day before the BJP and other parties observed a Bharat bandh to oppose FDI in retail.

Bragta predicts FDI will wipe out India’s fruit industry and the biggest losers,besides Himachal Pradesh,will be Uttarakhand and Jammu and Kashmir. Himachal’s apple industry generates Rs 2,200 crore annually.

Other than prices,the problems facing growers include lack of marketing infrastructure — which some hope will improve with the arrival of foreign retailers — and the middlemen culture. “Unless we address these basic problems,the fruit economy of the state will remain in a crisis due to gluts,fruits rotting in the orchards and the markets,crashing prices and exploitation by middlemen,” says Prakash Thakur,an orchardist and director,Agricultural and Processed Food Products Export Development Authority.

In 2010,when Himachal had a bumper apple crop with more than 5 crore boxes,growers suffered heavily when the glut in the market sent prices crashing as low as Rs 500 to Rs 600 per box. The apples started rotting in orchards,trucks,roads and eventually 20 to 35 per cent of the harvest never reached the market and had to be dumped at Parwanoo. The loss was estimated at Rs 700 crore.

“FDI is definitely a hope,a solution to the current problems,for longterm stability of apples,” says Thakur,who blames the BJP government for doing a disservice to apple growers by opposing FDI for political rather than logical reasons.

In 2010,apple growers had blamed the waste on poor roads that made transportation difficult. The fact remains,however,that Himachal does lack infrastructure; what apples need is controlled atmosphere (CA) stores to store the produce for months till they can be marketed when the demand best suits this. Opinion on FDI is divided,with not all apple growers sure if it will bring them better prices or solve their other problems,but one thing they are hoping for is large investments in infrastructure,especially CA stores and cool chains.

Three CA units set up by the Adanis have already made a difference with a total capacity of 18,000 metric tonnes. The Dev Bhumi group (1,500 tonnes) and Containers’ Corporation of India (12,000 tones) too have units. Besides,they buy apples directly from orchardists at the farm gate and make the best payments.

“It’s working very well for the farmers,both in Shimla’s apple belt and in Kinnaur. The orchardist selling the apples at the gate need not worry about market trends or the hassles of packaging and transportation,” says principal secretary (horticulture) V C Pharka.

“There will be more buyers knocking at the door once FDI comes,” says Prakash Thakur. “The market will become more stable as multinational companies invest more in infrastructure such as cold stores,packing and grading houses and refrigerated vehicles.”

Studies have shown that 40 per cent of apples go waste for lack of proper packaging and poor handling. Proper handling would mean better prices for the consumers too.

The annual demand for apples is 35 lakh million tonnes and only 21 lakh tonnes is available. That leaves a gap of 14 tonnes for foreign producers to exploit. Apple imports are currently just 2 lakh tonnes.

Bragta fears foreign companies will promote only foreign apples at the cost of local ones. “It was during the NDA regime that prime minister Atal Bihari Vajapayee,at the instance of chief minister Prem Kumar Dhumal,had raised the customs duty on apples to 50 per cent. Despite requests in writing and a resolution passed by the Assembly,the Centre did not raise the customs duty from 50 to 80 per cent. Foreign apples have caused a big dent on the domestic market,” he says.