With wild swings in vegetables prices becoming common, there is a need to focus on food processing to mitigate volatility, says Ashok Gulati, chairman, Commission for Agricultural Costs and Prices (CACP), in an interview to FE?s Sandip Das. Excerpts:
Prices of all key vegetables have fallen sharply over the last month. Will it impact farm income going ahead?
Earlier, consumers were complaining about high vegetable prices. now, it is the farmers? turn to cry about low vegetable prices. The wholesale price of onion is
already below R10 in many markets and, as arrivals rise, it is likely to go down even further. This will hit farmers badly. Remember, when prices were high, most of the benefits were reaped by traders, both wholesale and retail. But, when prices fall, almost the entire burden of adjustment falls on farmers. The farmer loses whether it?s heads or tails.
What should be the government?s policy for promotion of food processing so that price fluctuations can be curbed?
High price volatility is the hallmark of all fresh perishable commodities. There are three solutions ? to have more storage facilities, to have more processing or to have more free trade. Since storage facilities for fresh foods cost a lot, food processing has been developed the world over to stabilise prices.
If, say, next week, onion prices in wholesale markets fall below R8, which is likely, that?s the time to buy it in bulk and process it to the dehydrated form. The technology is there, you can have nicely chopped dehydrated onions, almost 8-10 kg can be reduced to just 1 kg. It will require much less space, have a much longer shelf life, all without losing any pungency.
We need to make the consumer aware of these innovations. Traditionally, all of us have been consuming fresh foods, but, over time, all countries have been moving towards processed foods. India is still much behind: less than 5% for fruit and vegetables compared with 20-50% in south-east Asian countries.
We need to give much more priority to food processing. It will help the farmer as well as the consumer. Also, we need to keep the trade doors open. It is high time we had Free Trade Agreements, at least with South Asia, for fruit and vegetables. And, definitely, the minimum export price (MEP) for onion needs to be abolished, or onion farmers will suffer.
For vegetables like potato and cauliflower, can the government chalk out
policy to boost processing?
Almost 90% of the country?s cold storages store only potato. But cauliflower can certainly be dehydrated and kept for a longer time. But these things have to be promoted through an awareness campaign, where the public and private sectors join hands. The same is true of other vegetables.
How does inflation look
for the next two months as vegetable prices cool?
Food price inflation will moderate, provided the state does not pump in more liquidity through several freebies on the election eve. That would be a spoiler. Else, globally and locally, prices of edible oils, pulses, coarse cereals, and sugar have already moderated. If the rupee had not depreciated, these prices would have been falling significantly. Inflation in wheat and rice can be easily controlled by liquidating excess stocks with the government, which are at least 20 million tonne at the moment.
