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Friday, Aug 16, 2019

Apple sales, a case study for low demand of fruits this year | Opinion

Not just auto, the demand for fruit is also low. The wholesale prices of many horticulture produces such as apple, pears, watermelon and pomegranate have fallen this year primarily because of the dip in the demand

opinion Updated: Aug 15, 2019 15:12 IST
Chetan Chauhan
Chetan Chauhan
New Delhi
The cost of transporting an apple box from Shimla to Delhi is about Rs 200. (Photo by Waseem Andrabi/ Hindustan Times)
The cost of transporting an apple box from Shimla to Delhi is about Rs 200. (Photo by Waseem Andrabi/ Hindustan Times)
         

Last week my father, an apple orchardist in Himachal Pradesh, got a SOS call from our family fruit commission agent at Asia’s biggest fruit and vegetable market in Azadpur, Delhi, saying — “don’t send the produce, there are no buyers.” That was for the first time, my father recalled, that such a call was made in the last 30 to 40 years.

For a reality check, I went to the Azadpur market early one morning last week when the sale of fruits and vegetables takes place. Unlike the past, when one would rub shoulders with other people while walking through the fruit selling zones of the market, there was nothing of that sort this time. The markets of monsoon fruits — apple, watermelon, pomegranate, banana, pears, plums and litchi — bore a deserted look with just retail buyers around.

“There are very less buyers this year,” said a commission agent, while off-loading a watermelon truck. “See, I am yet to sell the produce I received three days ago,” he said, pointing towards the packed open storage, called Phad in local parlance, with thousands of cartons of watermelon.

At a stone-throw distance is the apple selling zone, a trader told a commission agent that buyers in Gujarat, Maharashtra, Karnataka — the up-market states — have told him not to send an apple box costing more than Rs 1,000. A box of apple weighs about 25 to 30 kilogram depending on the size of the fruit. So, the box of large size apple will weigh less as compared to a box of super small, called six-layer.

So, this means that the trader will buy an apple box for not more than Rs 800 at Azadpur—Rs 32 to Rs 35 per kilogram of the delicious large or medium size apple, considering he has to ensure that the produce reaches these states at less than Rs 1,000 and he earns profit too. The smaller grade apple, which forms 80% of the total produce, is getting a much lower buying price.

The cost of transporting an apple box from Shimla to Delhi is about Rs 200. And if one adds the entire year cost, an apple box reaching Delhi costs about Rs 500. If the apple quality is very good, the farmer is earning Rs 300 per box and if not good, he may be even losing money. But, the consumer is still paying a high price for the fruit.

“Bhaiya, uncle ko bolo apple mut bheje (Brother, ask uncle not to send apple),” our commission agent told me, as soon as I asked what was the price. Pointing at the apple selling zone, he said: “See, there are very less buyers. Most of them are local retailers. Big buyers from outside Delhi have not come.”

I asked a few traders why the market was sluggish. There is no demand and there is a huge cash crunch, they said. They also pointed out that many big traders in the business, who used to invest heavily in the business by financing smaller traders, have lost money since demonetization in November 2016. “Frankly speaking, we don’t have extra cash to invest in the risky business,” said one of the traders.

The fruit and vegetable wholesale trade in India largely runs on credit for a period ranging from a week to a few months. There is a huge risk involved in the business as the buyer can refuse to clear the debt citing financial losses or may go missing. Most traders take these factors into account, believing that up to five percent of the credit will never come back. But, the last few years have been really bad with creditors defaulting on up to 30%, the traders claimed.

Two of the middle-level traders, I spoke to, said they are yet to recover Rs 10 crore each from the buyers of last apple trading season (July to November). And, they are not the only ones. There are many in the Azadpur and in other fruit and vegetables markets in the country, who are yet to get their money back, leading to the cash crunch.

The double whammy for the traders this year is that the demand for fruits among retail buyers is not encouraging despite lower price of most of the fruits such as apple, pears, plums, watermelon, pomegranate, litchi and banana. “The wholesale price of water melon is 30-40%, less than what it was last year but demand is weak,” said the commission agent at the watermelon sale zone, quoted above.

For all fruits, there are two distinctive markets in India. The better quality fruit gets good price in more developed Gujarat, Maharashtra, Karnataka, Tamil Nadu, Punjab and Kerala whereas the lesser grade fruit goes to markets in Uttar Pradesh, Bihar, West Bengal, Odisha, Madhya Pradesh and North-East. Traders say that the slowing down of demand is more in the lucrative western and southern Indian markets, which off-late have also been hit by floods, than in the poorer states, bringing down the overall prices.

The overall sentiment in the Azadpur market reflects that the slowdown in the economy was hitting the horticulture produce, much worse than what the agriculture ministry’s data depicts. The agmarknet.gov.in shows the price range for a quintal of apple at Azadpur was Rs 3,000 to Rs 5,000 (approx about Rs 800 to Rs 1,500 per box) for large size. This season, only five percent of the total produce so far is of large size because of the heat wave and very less rainfall during summer months. The lower grades are selling at half of this price.

As my father went against the family trader’s advice, our commission agent after failing to sell the apple boxes for about 40 minutes gave up and bought the produce himself. Obviously, he will take a hit as he would have to sell it for some loss. “This is only for uncle. I cannot disappoint him,” he said, urging me not to tell other apple producers from Shimla in the market about it. Obviously, he will sell their produce at whatever price it gets. And, he knows the market price is not just.

First Published: Aug 15, 2019 13:53 IST

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