In the Indian agricultural and allied sector, over three crore farmers grow horticulture crops for at least one season a year on over 30 million hectares of land. Evidently, there is a scope to greatly enhance production, given the importance of horticulture in terms of nutritional security, enhancing farmers’ income and increasing the contribution of the overall agriculture sector to the gross national product (GNP).
India is the second-largest producer of horticultural products but enjoys a share of less than 2% as compared to the related world trade. Even today, India is a net importer of fruits and vegetables. Thus, there is scope for India to ramp up horticulture production, targeting increased domestic demand as well as global demand. Many horticulture commodities are protected by tariff walls of up to 40%. There is a need to convert seasonal comparative advantage to year-round competitive advantage. Moreover, production and productivity, post-harvest and processing, market intelligence, marketing and logistics and export-related constraints require to be redressed.
Some of the critical constraints confronting the horticulture sector and necessary interventions may be viewed as follows:
Production: Farming practices since the green revolution have affected soil and water health. There is less focus on soil health management due to the urea-centric production approach, which also leads to nutrition deficiency. India uses 66% more fertiliser per hectare compared to the USA. The use of bio-stimulants is also barely two kg per hectare or 4% of that in Brazil, which has demonstrated commodity-export-led growth. In addition, the dearth of adequate inputs like seeds and planting materials and crop protection products has affected yield. Furthermore, irrigation and credit constraints affecting the application of technology in farming, including in mechanisation, are other smallholder farmers’ limitations. Moreover, the scale of government intervention is marginal compared to the needs of the sector. In this context, private sector participation is vital. For instance, the private sector can play a huge role in improving the availability of quality planting material and help in digitisation and agtech services. It can also provide solutions to farmers around crop advisory, purchase of inputs and mechanisation and fulfilment of credit needs at scale. Propagation of micro irrigation and watershed management systems is also key. Farmer producer organisations (FPOs) may also serve as facilitator platforms for the widespread delivery of services.
Post-harvest and processing: There is a limited post-harvest facility in India, and cold storage is limited mostly to potatoes. Though presently, significant commitment and investment are made by the Government of India in developing storage infrastructure through a range of schemes. With new agtech, automation of activities in warehousing and logistics is also taking place.
There is a research and development (R&D) shortfall in processable horticulture varieties. Presently, the capacity utilisation of processing facilities in the country is also only to the tune of 25 to 30%. Supply-related security of processable varieties throughout the year is required to encourage investment in processing facilities and infrastructure. This implies that in order to extend storage life, post-harvest infrastructure is key. The packaging ecosystem needs to be developed, and post-harvest nutrition losses also need to be targeted.
Market intelligence: India is constantly facing gluts and scarcity of horticultural crops every other year. Market intelligence in advance on supply, demand and prices is critical for production planning by farmers, and related systems need to be developed as well. FPOs may also be developed as aggregation platforms.
Exports: Indian horticulture products are facing tariff walls in developed countries, along with non-tariff, phytosanitary requirement-related barriers. Quality produce, conformance, aptly exploiting free trade agreements (FTAs), sea protocols and traceability systems are important to promote fruits and vegetables in the international market. Development of post-harvest and logistics infrastructure to facilitate the evacuation of marketable surplus is also key to helping farmers avoid resorting to distress sales during harvest.
Agtech: The supply and demand side of agtech services needs to be developed. These range from drones to financial services providing platforms. Other emerging technologies are irrigation management through Internet of Things (IoT) devices and pest, disease and soil management through artificial intelligence (AI) models.
ET SpotlightThe forum concluded with a resolution to evolve an Indian horticulture consortium representing leading stakeholders. Six working groups are to be constituted addressing:
- Inputs: Availability and access to quality planting material, crop protection solutions, farm mechanisation, etc.
- Digitech: Advisory services, traceability, etc.
- Logistics: Supply chain effectiveness systems and market-linked post-harvest storage
- Finance: Access to credit and insurance
- Marketing and exports: Orienting FTAs, market intelligence and ensuring conformance
- Processing: Incentivising value-addition
A cluster value-chain-based approach is being progressively adopted by the government, which will be adopted to take Indian horticulture to its deserving world market leadership position.
The article has been contributed by V. Padmanand and Kunal Sood, Partners, Grant Thornton Bharat LLP.