Recently, there have been reports of price crashes and distress sales in case of farm produce, such as tomatoes, mangoes, and garlic. In some cases, farmers have dumped their produce on roads. Produce such as fruits and vegetables are perishable and therefore have a short shelf life. Further, due to inadequate storage facilities and poor food processing infrastructure farmers have limited options but to sell the produce at prevailing market prices. This can lead to distress sales or roadside discards (in some cases to avoid additional cost of transportation).
Food processing allows raw food to be stored, marketed, or preserved for consumption later. For instance, raw agricultural produce such as fruits may be processed into juices, jams, and pickles. Activities such as waxing (for preservation), packaging, labelling, or ripening of produce also form part of the food processing industry.
Between 2001-02 and 2016-17, production of food grains grew annually at 1.7% on average. Production of horticulture crops surpassed food grains with an average growth rate of 4.8%. While production has been increasing over the years, surplus produce tends to go waste at various stages such as procurement, storage, and processing due to lack of infrastructure such as cold storages and food processing units.
Source: Horticulture Statistics at a Glance 2017, Union Budget 2018-19; PRS.
Losses high among perishables such as fruits and vegetables
Crop losses ranged between 7-16% among fruits and around 5% among cereals in 2015. The highest losses were witnessed in case of guava, followed by mango, which are perishable fruits. Perishables such as fruits and vegetables are more prone to losses as compared to cereals. Such crop losses can occur during operations such as harvesting, thrashing, grading, drying, packaging, transportation, and storage depending upon the commodity.
It was estimated that the annual value of harvest and post-harvest losses of major agricultural products at the national level was Rs 92,651 crore in 2015. The Standing Committee on Agriculture (2017) stated that such wastage can be reduced with adequate food processing facilities.
Sources: Annual Report 2016-17, Ministry of Food Processing Industries; PRS.
Inadequate food processing infrastructure
As previously discussed, perishables such as fruits and vegetables are more prone to damages as compared to cereals. Due to inadequate processing facilities in close proximity, farmers may be unable to hold their produce for a long time. Hence, they may be forced to sell their produce soon after harvest, irrespective of the prevailing market situations. Expert committees have recommended that agri-logistics such as cold chain infrastructure and market linkages should be strengthened.
Cold chain infrastructure: Cold chain infrastructure includes processing units, cold storages, and refrigerated vans. As of 2014, out of a required cold storage capacity of 35 million metric tonnes (MT), almost 90% (31.8 million MT) of the capacity was available (see Table 1). However, cold storage needs to be coupled with logistical support to facilitate smooth transfer of harvested value from farms to distant locations. This includes: (i) pack-houses for packaging and preparing fresh produce for long distance transport, (ii) refrigerated transport such as reefer vehicles, and (iii) ripening chambers to ripen raw produce before marketing. For instance, bananas which are harvested raw may be ripened in these chambers before being marketed.
While there are sufficient cold storages, there are wide gaps in the availability of other associated infrastructure. This implies that even though almost 90% (32 million tonnes) of cold storage capacity is available, only 15% of the required refrigerated transport exists. Further, the shortfall in the availability of infrastructure necessary for safe handling of farm produce, like pack-houses and ripening chambers, is over 90%.
Table 1: Gaps in cold chain infrastructure (2014)
| Facility | Required | Available | Gap | % gap |
| Cold storage (in million MT) |
35.1 |
31.8 | 3.2 |
9.3% |
| Pack-houses |
70,080 |
249 | 69,831 |
99.6% |
| Reefer vehicles |
61,826 |
9,000 | 52,826 |
85.4% |
| Ripening chambers |
9,131 |
812 | 8,319 |
91.1% |
To minimise post-harvest losses, the Standing Committee (2017) recommended that a country-wide integrated cold chain infrastructure network at block and district levels should be created. It further recommended that a Cold Chain Coordination and Monitoring Committee should be constituted at the district-level. The Standing Committee also recommended that farmers need to be trained in value addition activities such as sorting, grading, and pre-cooling harvested produce through facilities such as freezers and ripening chambers.
Between 2008 and 2017, 238 cold chain projects were sanctioned under the Scheme for Integrated Cold Chain and Value Addition Infrastructure. Grants worth Rs 1,775 crore were approved for these projects. Of this amount, Rs 964 crore (54%) has been released as of January 2018. Consequently, out of the total projects sanctioned, 114 (48%) are completed. The remaining 124 projects are currently under implementation.
Transport Facilities: Currently, majority of food grains and certain quantities of tea, potato, and onion are transported through railways. The Committee on Doubling Farmers Income had recommended that railways needs to upgrade its logistics to facilitate the transport of fresh produce directly to export hubs. This includes creation of adjoining facilities for loading and unloading, and distribution to road transport.
Mega Food Parks: The Mega Food Parks scheme was launched in 2008. It seeks to facilitate setting up of food processing units. These units are to be located at a central processing centre with infrastructure required for processing, packaging, quality control labs, and trade facilitation centres.
As of March 2018, out of the 42 projects approved, 10 were operational. The Standing Committee on Agriculture noted certain reasons for delay in implementation of projects under the scheme. These include: (i) difficulty in getting loans from banks for the project, (ii) delay in obtaining clearances from the state governments and agencies for roads, power, and water at the project site, (iii) lack of special incentives for setting up food processing units in Mega Food Parks, and (iv) unwillingness of the co-promoters in contributing their share of equity.
Further, the Standing Committee stated that as the scheme requires a minimum area of 50 acres, it does not to promote smaller or individual food processing and preservation units. It recommended that smaller agro-processing clusters near production areas must be promoted. The Committee on Doubling Farmers Income recommended establishment of processing and value addition units at strategic places. This includes rural or production areas for pulses, millets, fruits, vegetables, dairy, fisheries, and poultry in public private-partnership mode.
According to news reports, the Supreme Court stayed a Calcutta High Court judgement on the Singur Land Rehabilitation and Development Act, 2011 [Singur Act] on August 24, 2012. The apex court also issued a notice to Tata Motors seeking its response within four weeks, on the West Bengal government's petition challenging the High Court order. In 2008, the Left Front government acquired land in Singur under the Land Acquisition Act, 1894, for Tata Motors to build a Nano car factory. In its first year of coming to power in West Bengal, the Trinamool Congress (TMC) led government notified the Singur Act through which it sought to reclaim this land to return a portion of it to farmers. On June 22, 2012, a Division bench of the Calcutta High Court struck down the Singur Act terming it unconstitutional and void. In its judgment, the Court found some sections of the Singur Act to be in conflict with the central Land Acquisition Act, 1894. As land acquisition is a Concurrent List subject under the Constitution, both Parliament and state legislatures have the power to make laws on it. However, if provisions in the state law conflict with provisions in the central law, then the state law cannot prevail unless it receives Presidential assent. The Calcutta High Court held the Singur Act to be unconstitutional because: (a) it was in conflict with the central Land Acquisition Act, 1894, and (b) Presidential assent was not obtained for the Act to prevail in West Bengal. The central Act mentions that for the government to acquire land, it has to demonstrate: (1) that land is being acquired for a public purpose,[i] and (2) that the government will provide compensation to persons from whom land is being acquired. Provisions in the Singur Act that relate to public purpose and compensation were found to be in conflict with the corresponding provisions in the central Act. The Court was of the opinion that transfer of land to the farmers does not constitute ‘public purpose’ as defined in the central Act. As argued by the Tata Motors’ counsel, return of land to unwilling owners is a ‘private purpose’ or in ‘particular interest of individuals’ rather than in the ‘general interest of the community’. Second, clauses pertaining to compensation to Tata Motors for their investment in the Nano project were found to be vague. The Singur Act only provides for the refund of the amount paid by Tata Motors and the vendors to the state government for leasing the land. It does not provide for the payment of any other amount of money for acquiring the Tata Motors’ land nor the principles for the determination of such an amount. The High Court ordered that these provisions tantamount to ‘no compensation’ and struck down the related provisions. The matter will come up for consideration in the Supreme Court next on October 15, 2012.
[i] According to Section 3 of the Land Acquisition Act, 1894, acquisition of land for ‘public purpose’ includes, among others: provision or planned development of village sites; provision of land for town or rural planning; the provision of land for planned development of land from public funds in pursuance of a scheme or policy of the Government; and the provision of land for a corporation owned or controlled by the State.
