Unstable prices: Barely 0.5% of Operation Greens funds released since launch 31 months ago

September 21, 2020 7:30 AM

Data gathered by FE shows that under the Rs 500-crore Operation Greens, only five proposals worth about Rs 124 crore have been approved so far; worse, as little as Rs 2.4 crore was released under the programme till July, and this amount went to a Gujarat-based company.

Also, post-harvest losses are to be curbed by incentivising creation of farm-gate infrastructure, agri-logistics and storage capacities.

By Prabhudatta Mishra

The recent surge in mandi prices of the three all-season vegetables – tomato, onion and potato (TOP) – and the wide disparities in their prices across key regions and production centres (see chart) lay bare the fact that the much-touted Operation Greens scheme launched 31 months ago in the FY19 Union Budget has made little difference on the ground.

Data gathered by FE shows that under the Rs 500-crore Operation Greens, only five proposals worth about Rs 124 crore have been approved so far; worse, as little as Rs 2.4 crore was released under the programme till July, and this amount went to a Gujarat-based company.

Incidentally, finance minister Nirmala Sitharaman expanded the ambit of the scheme in May, by extending it to all fruits and vegetables.

The stated aim of the scheme is to achieve a reasonable degree of stability in the prices and supplies of TOP through the year and across regions; it seeks to ensure remunerative prices to farmers, reduce wastages and at the same time, targets to insulate end consumers from price shocks.

Despite the Operation Greens, for the second year in a row, the government has had to ban onion exports to check rising prices of the vegetable. It has been employing such market intervention tools recurrently to quell domestic prices as and when they skyrocket, although the efficacy of such steps has remained doubtful.

Last year, for instance, the government imposed minimum export price for onion in October, put stocking limits on wholesalers and retailers and later banned its exports altogether. However, these steps yielded little and the retail prices went up to even the Rs 100-120/kg range in many places, including Delhi, by December-January.

Currently, retail prices of onion are Rs 30-40/kg in most of the places across the country, including Delhi, which is the largest consumption centre, according to the consumer affairs ministry data. Tomato prices, too, continue to be high and touch prohibitive levels of Rs 70-100/kg in retail markets very often. And the wide price disparities persist: For instance, the average mandi rate of tomato was Rs 1,733/quintal at production Kolar cluster in Karnataka on September 16, while it was as high as Rs 3,000/quintal at Dehradun, Uttarakhand, another key production centre. The rate was an even higher Rs 5,000-6500/quintal at many mandis in West Bengal and Odisha on the same day.

While the price disparities are hurting consumers, the farmers are not benefitting much either. This is because in areas where the prices are high, the market arrivals are low. In fact, the low arrivals inflate the prices. For instance, the mandi arrivals of tomato dropped 40% to 4,067 tonne in Odisha and by a half to 1,841 tonne in West Bengal during September 1-19 from the year-ago period, according to Agmarknet portal.

The arrivals of tomato in Odisha and West Bengal together is a tenth of what Karnataka’s mandis received (58,000 tonne) during September 1-19. The lower mandi prices in large production centres seem to suggest that farmers need support to fetch decent rates.

The situation clearly proves that the Operations Greens objective of augmenting supplies in all areas is not met.

“Why farmers of one state are selling at such low prices when there is shortage in another state? There is something wrong in the distribution system and information network which the government should try to fix,” said Rakesh Agarwal, a tomato trader in Dehradun. Since tomato is perishable, even a production centre would depend temporarily on another centre for supplies, given that harvesting periods vary among different areas.

Operation Greens aimed to ensure that farmers and consumers of tomato, onion and potato are connected in a manner that both communities benefit. Under the scheme, 50% subsidy is supposed to be given on transportation from surplus to deficient markets. Also, post-harvest losses are to be curbed by incentivising creation of farm-gate infrastructure, agri-logistics and storage capacities.

The idea is to promote Farmer Producers Organisations (FPOs), agri-logistics, processing facilities and professional management of the supply chains.

The subsidy is also subject to certain conditions prices in a cluster being lower than preceding 3 years’ average market price at the time of harvest or the price is over 15% lower than year-ago level or the rate is below the government-fixed price. The beneficiaries will be eligible to claim subsidy if they transport a minimum 100 tonne in case of individual farmer/FPO/co-operatives and 500 tonne for food processors, exporters and commission agents. For retailers and state marketing federations, the minimum threshold is 1,000 tonne.

“The objective was noble, but it is a badly managed scheme. The guidelines were such that no farmer will get the subsidy and it will be cornered by traders and companies without any benefits for the consumers,” a government official said, requesting anonymity. There are several other long-term schemes of the agriculture ministry which are meant to promote establishment of infrastructure while Operation Greens could have been limited to increasing availability of these key staples in all regions, he said.

Among other rules, the ministry has fixed the normal truck rate at Rs 2.84/tonne per km and reefer van at Rs 5/tonne per km to claim subsidy while in case of transportation by railway and air (Air India), the actual freight amount is considered. Storage charge has been fixed at Rs 345/tonne per season and cold storage at Rs 2,000/tonne per season.

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