Monday, January 20, 2014

Squash the problem by attacking the root cause

Farmers throwing tomatoes to the roads are kind of regular news item once or twice in a year! 

Farmers throwing produce on streets
Picture : The Hindu

On the demand side, we see a increasing standards of living in the cities and the rapid urbanization taking place in the rural areas, consumption of tomato based products is expected to go up steadily.
But when it comes to the supply side, once or twice in a year;  there is a glut in production leading to protest from farmers and below the cost price sale or almost wastage of produce. 

How do we fix this? 

We should learn from our mistakes and work towards reducing the glut situation of tomato going forth, instead of just seeing this price crash of  happen year after year! 

With a shelf life of 6-10 days for common to hybrid variety, the tomato is crying for cold storage facilities and post-produce processing industries to consume the peak demand. Nearly one third of our horticultural produce, especially fruits and vegetables are wasted, mainly on account of poor cold storage and other storage facilities. There is a vast scope for agri-businesses and entrepreneurs to enter the horticulture sector especially potato and tomato sector in Karnataka.

In the year 2010-11 , Karnataka was the second leading Tomato producing state  in the country after Andhra Pradesh and accounted for 10% of the total production of tomato in the country. With a productivity of 34.3 MT/ha which is the highest in the country, we regularly see a glut/crash in prices during the winter season.

The farmers should come together (as co-operative society, self-help group or even as corporate company) and start working towards building cold storage facilities, post –processing industries to get over the seasonal price variations. The government should focus on creating the infrastructure to run the cold storage facilities rather than giving fertilizer subsides, free electricity for pump sets and so on.

If government provides at-least good roads, power supply and water facility, the cold storage industry can sustain and provide employment opportunities too. Also, apart from government initiatives; entrepreneurial farmers or corporate sector should also work on constructing, expanding and modernizing the cold storage's for horticulture products. There is 25% subsidy for projects below rs. 50 lakh from government agency.

People looking forward to start something on their own, this is one more industry to watch out for! At present, the market of ketchup/puree, especially in the urban areas, is dominated by brands likes MAGGI , KISSAN, Heinz etc. The ketchup and sauces market in India is estimated to be about Rs. 1,000 crore by Technopak Advisors. [2] The Indian food processing industry will continue to prosper, thanks to the rising income levels and modernized food retail stores. 

Lets start fixing the brittle supply chain which is causing soaring or falling vegetable prices by addressing the back end infrastructure ; this would ensure intermediates are reduced in longer run and it can build the potential to change the economic power of different components in the supply chain 


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