The sordid saga of Rs 92,651 crore post-harvest losses

It is that time of the political cycle when the political class sows slogans to harvest votes invoking the name of farmers and farmers’ interests.

Published: 22nd January 2017 04:00 AM  |   Last Updated: 21st January 2017 11:33 PM   |  A+A-

It is that time of the political cycle when the political class sows slogans to harvest votes invoking the name of farmers and farmers’ interests. This spring, poll-bound states include India’s granaries Uttar Pradesh and Punjab, Uttarakhand, an agrarian money order economy, and Goa and Manipur where rural incomes depend on cash crops and horticulture.

It is also Budget time, that time when governments try and spend their way out of trouble, the occasion when outlays are laced with the promise of outcomes. It is the season of reforms, the prime time for big numbers.  

In this confluence of politics and economics, lets place a number in public discourse. The number: `92,651 crore. It is, according to the Ministry of Food Processing, the value of post harvest losses—that is, cereals, milk, meat, fruits, vegetables, cash crops and oilseeds wasted between the farm and the market. It is money that farmers lose annually to what can only be described as systemic sloth.

What does `92,651 crore translate into? If the money was spliced into the per capita income of all Indians, it would have been the income of roughly 10 million Indians.  If this money was to be divided on the basis of rural per capita income, it would fund the annual per capita income of 20 million Indians in rural India (Dholakia et al 2014) or 30 million persons in rural Punjab and nearly 40 million persons in rural Uttar Pradesh. 

At a macro level, `92,651 crore is roughly 60 basis points or .6 per cent of India’s GDP. It is more than the `87,765 crore allocated to the entire rural sector in Budget 2016-17. It is over four times what was allocated for the Pradhan Mantri Gram Sadak Yojana. It is more than twice the `35,984 crore  allocated by the Centre for agriculture and more than the outlay for MGNREGA in 2015-16 and 2016-17.The history of post-harvest losses is a sordid saga that dates way back to the sixties. A committee, headed by Dr V G Panse, in 1968, had estimated the post-harvest losses of food grains—including by rodents and insects—at 9.33 per cent, triggering a Save Grain Campaign in 1969. There have been a parade of reviews and committees since, but the problem persists—in harvesting, drying, process, storage, transport.  

In 2015, the loss in cereals ranged around 6 per cent, in pulses about 8 per cent and in oilseeds up to 
9 per cent of output. The total output of cereals, pulses and oilseeds is around 280 million tonnes. For a perspective assume an average level of 6 per cent wastage and loss for the math on the quantum of waste.

It is not just cereals, pulses and oilseeds. Almost every segment of agricultural produce is afflicted by known problems with known solutions. Take fruits and vegetables—the worst afflicted produce. The CIPHET study puts the post-harvest waste and loss in fruits and vegetables segment at `40,811 crore. Indeed, depending on the crop and geography between 5 to 16 per cent of perishables like fruits and vegetables are ruined in transit or on farms. The problem of waste in fruits and vegetables has survived studies by committees and commissions. 

Typically in government, the answer to a problem lies in creation of a department. In 1988, the Rajiv Gandhi government came up with the bright idea of creating a ministry for food processing. It was supposed to propel the idea of creating the forward linkages for enhancing the life and value of agricultural produce. Nearly two decades later, the total quantum of agri produce, that was processed, stood at 2.2 per cent and the losses at `58,000 crore. In 2015, barely 6.5 per cent of farm output is processed.

Last year, 23 Members of Parliament asked the government what was the value of post-harvest 
loss and what was being done about it. The answer, spread over six pages, listed the losses and 
step being taken. This included central funding for states to enable food processing. Between 2013-14 and 2016-17, a princely sum of `475 crore had been allocated for creation of cold chains and preservation infrastructure. In December, 12 MPs asked the government to reveal funding of states for food processing. The answer: between April 2013 and December 2016, `410 crore had been released to states.  

Money is important but it is not just about money. The state governments have paid scant attention to the issue of sloth that leads to waste. The crux of the matter is in liberating the sectors, to create forward and backward linkages connecting the producers with buyers, to enable the logistics for farm to fork economics. 

Without a feasible PPP that 
will give farmers access to markets, allow buyers the flexibility of contracted purchases and is enabled by dynamic regulation by government, the idea of food processing will struggle to take off. Earlier this year, the government announced that it would be setting up an e-commerce-like platform for public procurement. The idea is inspired by the reach and transparency afforded by technology. Why not upgrade the e-National Market for Agriculture to an Amazon-like platform, preferably run by a farmers’ cooperative like Amul—at least for perishables.

What is most surprising about the wastage is that it persists despite the political imperative that it presents. The problem involves the largest political constituency—the farmers and the consumers.  This is a political economy where the “seasonality” of food price inflation is a permanent fixture and where parties have lost power due to rising onion prices. This is a country that enacted a justiciable right for food security, where nearly 300 million cannot afford two meals a day.

The point is about the humongous wastage of `92,651 crore. The point is also about leveraging output to enhance the income of farmers and affordability for the consumer.

Shankkar aiyAr Author of Accidental India: A History of the Nation’s Passage through Crisis 
and Change


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