Amidst concerns that apple growers in Jammu and Kashmir will suffer in their peak harvest season due to the prevailing security clampdown in the state, the government has announced that, through NAFED, it will procure the crop directly from growers. This process will not be simple.
In 1991-92, apple production in India was 11.48 lakh tonne on an area of 1.94 lakh hectare. By 2016-17, it increased to 22.42 lakh tonne on 2.77 lakh hectare land. In this period, the productivity of apples rose from 5.9 tonnes per hectare to 8.1 per hectare.
Jammu & Kashmir is the largest producer of apples and contributes about 75% of the total produced in India. In 2016-17, J&K produced 16.72 lakh tonne while Himachal Pradesh produced 4.92 lakh tonne. In Jammu and Kashmir, Baramulla, Kupwara, Shopian and Kulgam are the major apple-producing districts. In Himachal, Shimla and Kullu are the major centres of apple production.
Apples from HP fetch a higher price because of their shape, colour, size and slightly earlier period of arrival.
The revocation of Jammu and Kashmir’ special status has negatively affected apple trade, according to reports. But the quantum of arrivals in major wholesale mandis at Parimpora (Srinagar), Pulwama Sopore and Shopian is not yet known.
There are five important apple trading markets in India: Ahmedabad, Delhi, Kolkata, Hyderabad and Bengaluru. In the Azadpur market in Delhi, the arrival of apples from August 1 to September 13, 2019 is 87,524 tonnes. In the same period in 2018, the arrival was 71,703 tonnes.
Since the breakup of arrivals from J&K and HP is not known, it is not possible, at this point, to assess the precise impact of the August 5 decision on the movement of apples from Kashmir to Delhi. It is possible that the impact has been minimal. It is equally possible that the increase in arrivals is accounted for by an increase in production of apples due to a prolonged winter.
The supply chain of apples is inefficient at the best of times, with several layers of intermediaries and issues in the supply of packing material. This year’s situation may have been aggravated in J&K as the system of sorting and grading is primitive compared to the rest of the country.
Ahead of the curfew imposed in Kashmir, large numbers of labourers moved out of the state because of the uncertain situation. Harvesting may have also been adversely affected. Delays in harvesting and lack of proper packaging can reduce the shelf life of apples and these would realise a lower price.
Over the past ten years, India has made a significant investment in cold chain storage infrastructure for apples, but they remain inadequate. By using Controlled Atmosphere technology increases the shelf life of apples by up to 10 months by increasing the carbon dioxide levels and decreasing oxygen levels.
The ministry of food processing provides grants up to 50% in the Himalayan states to set up cold chain infrastructure. But, as of March 2018, only six cold chain projects to store 7,310 tonnes of apples were sanctioned in J&K. In contrast, 12 projects were sanctioned in Himachal Pradesh, which produces far fewer apples than J&K. Their cumulative storage capacity is almost five times that of the projects in J&K.
Between 2009-10 and 2016-17, new storage capacity of 69,647 tonnes was added in J&K. Himachal Pradesh added 1.11 lakh tonnes. J&K also has less than half the reefer truck fleet strength compared to Himachal Pradesh, reducing the efficiency of transportation.
With such a small cold storage capacity (along with other commodities), it is no surprise that most apples produced in J&K and HP have to be sold by farmers in mandis in fresh condition. They do not get any benefit of price rise during the offseason of apple, from December to July.
Getting fair prices
Getting a fair price for agricultural produce is a challenge for farmers everywhere. This has been made even more challenging in J&K as farmers do not have access to this information due to the termination of internet services.
In this context, the government has decided to procure about 13 lakh tonnes apple from J&K through NAFED. It ought to bring some cheer to apple producers. NAFED, on the other hand, will find itself logistically stretched. Setting up procurement centres, grading and packaging the apples, finding labour in Kashmir valley for loading, arranging trucks for transportation to mandis across India and selling them through auctions in opaque mandis is going to be extremely challenging. To conduct these operations, NAFED will need large working capital and an assurance from the government that any losses will be reimbursed from the Union Budget.
The challenge that NAFED faces can be gauged from government agencies which procure wheat and paddy in Punjab and Haryana. These agencies procure more than 90% of market arrivals at the minimum support price (MSP), but even they face enormous problems in storage, quality control, handling and transportation.
In Jammu and Kashmir, this will be the first time that commission agents would be left out of the supply chain of apples. Agents have deep-rooted relations with apple trade and we cannot predict what effect their elimination from the supply chain will be over the long-term.
Fixation of the procurement price of apples will also not be easy. There is no MSP and market prices fluctuate. In 2016-17, the Madhya Pradesh government conducted a similar exercise to procure onion, It is estimated to have incurred a loss of about Rs 780 crore.
India also imports a significant amount of apples. In 2015-16, for instance, about 2 lakh tonnes of apples were imported. The private sector has set up Controlled Atmosphere cold chain projects in major port cities to store these imported apples. As a result, people are used to consuming apples round the year. This has also improved price realisation of apple producers in J&K and HP.
In crises like earthquakes, cyclones and floods, the Indian bureaucracy has performed admirably. A similar urgency has not been utilised when it comes to agricultural crises. NAFED’s intervention and the elimination of commission agents may bring cheer to apple producers. If apple producers realise a better price than previous years, loss of statehood may bring the farmers some immediate benefit in an otherwise gloomy scenario.
Siraj Hussain retired as Union agriculture secretary. He is a visiting senior fellow, ICRIER.