Open market behind Himachal's apple prices crash

Open market behind Himachal's apple prices crash

Those ridiculing farmers' agitation on the pretext that open markets in the absence of MSP will boost farmers' incomes, must learn lessons

Farmers find themselves compelled to sell their apple produce at prices decided by big market players and traders. Credit: iStock Images

The tale of an apple farmer's woes, especially in marketing, is agonising. In the early 1990s, apples were marketed mainly in open markets in Chandigarh and Delhi. With the opening of APMC (Agricultural Produce Marketing Committee) markets in the state, it was thought that apple producers would get better prices. However, with the apple marketing processes mostly unregulated, the apple-producing farmers remain a harried lot.

Big market players and traders play an important role in deciding the prices of apples, and farmers find themselves compelled to sell their produce at prices these traders decide. The government plays no role in determining the prices, and this year there has been a massive crash in the prices of apples.

Himachal Pradesh has a nearly Rs 5,000 crore apple economy. It comes to an economy of almost Rs 28,000 crore annually if one includes the ancillary add-ons of 'apple production and trade', according to Professor Vijay Thakur, former VC of Nauni university.

The success story of apple production in Himachal dates back to the early 1970s when YS Parmar, first chief minister of the state, promoted apple plantations with massive state support. 

Opening horticulture universities, motivating people to plant apple saplings with the help of extension centres, subsidised pesticides and insecticides and above all intervening in the market were all crucial interventions at the government's behest. The government had even purchased cold storage outlets in Bombay (Mumbai) and Madras (Chennai) to ensure that farmers get a good price.

However, post-1990s, with the neoliberal era setting in, the support of the state withdrew in a phased manner, and the cost of production of apples increased substantially. (Take, for example, in the current period, just the spray cost in an apple orchard bearing 1,000 trees is nearly Rs 1,70,000. A minimum of 10 sprays with each drum consuming 200 litres (17 drums consumed) with an average price of Rs 1,000 per drum, the cost shoots to such an exorbitant amount. The same drum cost Rs 300-400 a few years ago.)

According to studies done by various farmers' groups and experts, the current cost of apple production is nearly Rs 34 per kilogram. However, the government has announced a support price of culled and tabled apples at Rs 9.50 per kilogram.

Why big market players play a key role in deciding the prices is quite interesting to note. There are different categories of apples depending upon their size, quality, etc. The Adani Group has opened a chain of CA (controlled atmosphere) stores in the state but buys only high-quality apples. Though its total purchase is not more than 5 per cent of the total marketed apples, it plays an important role in deciding the prices. This is how it happens.

Before Adani opens its store for purchase, the small traders start buying apples in various APMC markets in the month of June. Big players like Adani announce their purchase rate later, and the price offered per kilogram is far less than the open market sale. This year Adani announced Rs 18 less than the open market. This leads to a cascading effect, and the price in the open market crashes and falls lower than Adani's offer. This is how big players play a critical role in suppressing the prices.

Those who argue for an open market and ridicule the present farmers' agitation on the pretext that open markets in the absence of MSP (minimum support price) will boost the farmers' incomes must learn lessons from the Himachal experience.

The government's intervention, as pointed out earlier, is negligible. Though the state government has opened several APMCs in the state, appointing BJP leaders as its chairpersons, it hardly intervenes in the markets to ensure fair play in trading.

The apple production in itself is an ecosystem that earlier was duly supported by the state. With the disruption in many layers from production to marketing, the challenge faced by the farmers is enormous, especially by the small and marginal farmers who constitute almost 90 per cent of the total apple producers. 

Their capacity to organise and form cooperatives, if not in production, at least in marketing, is limited. Some experiments, such as leasing a CA store, were done in the past, but only the wealthy farmers did these, but they too were unable to counter the existing system.

Anger among farmers is simmering. A few days ago, state horticulture minister Mahender Singh was picketed and not allowed to come out of the meeting hall in Theog till he promised to look into their grievances. 

However, the BJP government is showing a lackadaisical attitude towards the apple prices fall. One of the reasons is that since the inception of the BJP, or its transformation from its earlier avatar, the Jan Sangh, it has opposed the formation of the state of Himachal Pradesh and is not as popular in the old Himachal - the region with bulk apple production.

Secondly, the BJP is ideologically against subsidies. BJP's Shanta Kumar, chief minister of the state in the 1990s, withdrew the MSP on apples. In the subsequent agitation, three farmers were killed in police firing.

But none of this can take away from the fact that this year there is a bumper harvest. More than four crore boxes, as against three crore last year, are expected. 

In such a situation, farmers not getting a good price could be perilous for the current state government. Is it any wonder then that the BJP was not, for the time being, keen to have four by-elections (three Assembly and one Lok Sabha) that were due in Himachal.

(The writer is a former deputy mayor of Shimla)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH. 

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