The Grey Areas in TOP Zones

growers’ income will rise four times if their produce is processed and marketed as puree or ketchup. Onions can also, likewise, be sold as paste or powder. But the question is: How much demand exists for that? At the end of the day, the bulk of TOP produced by farmers will have to be consumed as plain tamaatar, pyaaz and aloo.

A more sensible approach may be reviving the old idea of instituting a Market Intervention Agency (MIA), on the lines of the National Dairy Development Board vis-à-vis oilseeds and edible oils during the late-Eighties and early Nineties.

Today, we have no organised players in fruits and vegetables big enough to influence prices.  Reliance Fresh does an annual business of 250,000-300,000 tonnes in this segment. The corresponding volumes of Aditya Birla Retail (More) and Mother Dairy (Safal) range from 100,000 tonnes to 150,000 tonnes each, and 50,000-75,000 tonnes for Big Bazaar and BigBasket.

The largest onion and potato trader/commission agent at Lasalgaon or Agra, too, will not handle more than 150,000-200,000 tonnes in a year. This is unlike, say, milk, where organised dairies, both cooperative and private procure about 30 mt, a fifth of India’s production. The presence of organised players reduces price volatility to that extent.

A well-funded MIA would procure TOP crops in major mandis during the peak harvesting/marketing season and offload the produce gradually in the lean months. Such a pan-India agency must not, however, end up displacing private trade, like the Food Corporation of India did. Its role should be only to curb extreme price volatility, a la the RBI’s interventions in the foreign currency market. The MIA should buy potatoes from Agra at Rs 15/kg in February-March, to sell not at Rs 4-5 but maybe Rs 20-25/kg in July-August.

The government could also do away with stockholding, export and other trading restrictions. Once this happens, other government initiatives — be it promoting farmer producer organisations or connecting mandis through an electronic national electronic market to allow seamless flow of price information — will fall in place and pave way for a genuine Operation Greens.