Govt clears Rs 500-crore plan to stop swing in vegetable price
The government has finally cleared a Rs 500-crore project it hopes will stabilise supplies and prices of tomatoes, onions and potatoes, nine months after the programme was proposed by finance minister Arun Jaitley in his Budget speech.
These vegetables are prone to alternating seasonal spells of high inflation and plunging prices at least twice a year, angering consumers (when prices rise) and farmers (when the rates crash).
Price swings of these daily-consumed vegetables can be politically costly. In 1998, a sharp spike in onion prices was widely seen as one of the reasons for the defeat of the then Bharatiya Janata Party government of Delhi.
Jaitley had said the scheme, dubbed Operation Green, would be similar to Operation Flood, an initiative that saw India become the world’s largest milk producer.
Campaigning for the Karnataka Assembly elections on February 5, PM Narendra Modi too had touted ‘Operation Green’, saying: “That is why I call it top priority — the T of tomato, the O of Onion and the P of potato — TOP priority.”
Funding under the scheme will go into boosting storage and food-processing infrastructure in 23 pre-identified hubs across 20 states to increase the shelf life of these perishables. The second component is to enable quick movement – through rail and road — from surplus regions to deficit states, an official said, requesting anonymity. But it could take up to a year or more for these new assets to be created, he said.
In May this year, hundreds of farmers dumped several quintals of potatoes on roads to protest prices crashing below Rs 1 a kg in Haryana’s Charkhi Dadri.
On the other hand, during the first half of last month, wholesale prices of onions shot up 145% at Lasalgaon, the largest wholesale market near Nasik, from Rs 8.75 per kg to Rs 21.51 per kg.
Its effects rippled in Delhi, where prices rose three times. In an emergency meeting led by consumer affairs secretary Avinash Srivastava on October 19, authorities decided to crank up supplies to Delhi by three times from state-held reserves, utilising a ‘price stabilisation fund’ set aside for such purposes.
Under it, 50% subsidy will be provided for hiring storage facilities and transportation in the short-term, food processing minister Harsimrat Kaur Badal said. Longer-term steps include supply-demand management and post-harvest processing. Farmer collectives, cooperatives, food companies and supply-chain operators as well as retail and wholesale chains will qualify for funding under the scheme.
Chittoor and Anantpur in Andhra Pradesh and Kolar and Chikkaballapur in Karnataka are among the onion clusters selected for the scheme. Nalanda in Bihar, an onion-deficit state, also features in the list. For potatoes, Hooghly and Purba Bardhaman in Bengal and Agra in UP have been included, among others.
“Along with improving infrastructure, there is a need for measures to prevent hoarding by trader cartels in the onion trade to contain price volatility,” said Sanjay Singh, assistant director at the National Horticultural Research and Development Foundation.
A key reason for price swings in perishables is a pressing shortage in cold-storage facilities. According to Siraj Hussain, former agriculture secretary who is now a fellow at the think-tank ICRIER, it is possible to replicate the success of cold-storage facilities now available for apple and milk.
At an all-India level, the requirement of additional cold-storage capacity is 3.26 million tonnes, which was just about 12% of about 26.85 million tonnes of capacity in 5,367 working cold stores as of 2014, Hussain said, citing a study conducted by the National Centre for Cold Chain Development.