The solution to farmers' woes lies in agro-processing and creation of cold storage capacity for handling perishable produce, right? Well, not really.
Take sugarcane, where more than three-fourths of India's crop is "processed": Mills not only produce sugar, but even convert the by-products of cane crushed - molasses, bagasse and press mud - into alcohol, paper, electricity and fertiliser. Yet, that hasn't stopped Uttar Pradesh mills from accumulating unpaid cane dues of Rs 9,501.49 crore to growers in the 2018-19 crushing season (October-September) till April 15.
No less revealing is potatoes, where a single district in UP - Agra - now has an estimated 280 cold stores. Given an average capacity of 10,000 tonnes, these sheet bhandar, as they are called, can handle roughly 28 lakh tonnes (lt) of produce. This is nearly twice the district's estimated potato output of 15.57 lt for 2017-18 (see table).
Click here for more election news
The same goes for Hathras and Aligarh, which together have some 300 cold stores with 22.50 lt aggregate capacity (average of 7,500 tonnes), or Firozabad (200 cold stores with 15 lt total capacity and 7,500 tonnes average). These again are in excess of their respective annual potato production.
Simply put, there's no dearth of cold storage capacity at least in India's main aloo bowl, just as ganna farmers aren't today suffering for lack of mills to process their cane.
In potato, a lot of cold stores have actually come up in the last two decades. According to Rajesh Goyal, president, Cold Storage Association of UP, Agra district had only 10 sheet bhandar till about 1990, which rose to 40-50 by the decade-end.
The real boom, however, happened after a Supreme Court judgment in response to a petition seeking to protect the Taj Mahal from environmental pollution. The ruling banned the use of coal/coke by industries within a defined Taj Trapezium Zone of 10,400 sq km around the protected monument after January 1, 2001. These industries were mainly iron foundries - Agra was a major castings hub after Coimbatore, Rajkot and Batala - that were asked to either shut down or switch to natural gas.
"There were about 250 foundries, especially in the stretch from Rambagh to Khandauli. Their numbers fell to hardly 100, as most units weren't prepared to run using a new feedstock. Many foundry owners, then, set up cold stores. They were encouraged by the Atal Bihari Vajpayee-led NDA government's scheme in 1999, providing a 25% subsidy (subject to a cap of Rs 50 lakh) on the fixed capital investment in cold stores," explains Goyal, who started his unit in 2000 and still operates a foundry.
As a result, the number of sheet bhandar in Agra soared almost six-fold within the next two decades. While their owners were initially Banias and Jains, it did not take long for many from farming community backgrounds to also enter the sector. R K Jain, an Agra-based chartered accountant, reckons that over 50% of the cold stores in the last 8-10 years have been put up by large farmers.
One of them is Doongar Singh Chaudhary, a Jat farmer from Khandauli village in Agra district's Etmadpur tehsil. His sheet bhandar, established in 2007 at a cost of Rs 4 crore and Rs 50 lakh capital subsidy, can store 12,500 tonnes of potato. Chaudhary himself produces 11,000-odd tonnes from 90 acres, which includes 60 acres owned and 30 acres leased land.
Jain pegs the current capital cost, excluding land, for a new cold store at Rs 8,000 per tonne, translating into Rs 8 crore for a 10,000-tonne facility. And there are sops galore: The original 25% investment subsidy is now 35% and given on the capital cost, taken at Rs 8,000/tonne for capacity of up to 5,000 tonnes, Rs 7,600 for 5,001-6,500 tonnes, Rs 7,200 for 6,501-8,000 tonnes and Rs 6,800 for 8,001-10,000 tonnes.
It raises the question: Given so much of already-created capacity - India has 7,000-plus cold stores, of which UP accounts for around 1,800 and the Agra-Aligarh pision alone close to 1,000 - is there sense in promoting more of the same?
Cold stores, no doubt, enable potato growers to harvest their crop from mid-February to mid-March and make staggered sales till November-end. The sheet bhandar maintain a temperature of 2-4 degrees Celsius, thereby preventing the tubers from sprouting. Farmers can, then, keep 80-85% of their produce for sale at a later date than immediately after harvest.
But the above stratagem hasn't particularly worked in the recent period - for the simple reason that prices haven't risen enough in the off-season. In 2016, 2017 and even 2018, the sheet bhandar owners were saddled with unsold aloo stock that farmers had kept and did not reclaim towards the season-end. The prevailing prices couldn't cover even the cold store rentals.
Creation of more cold storage capacity, in other words, cannot be an effective solution to the current crisis facing potato farmers - which has basically to do surplus production. This applies equally to sugarcane. When there is too much of sugar, from current production as well carryover stocks, setting up more mills to "process" all the ganna in fields cannot be an answer.
"We need crop planning. Right now, there is no mechanism to assess the stock of potatoes lying with cold stores across India at any given time. If we know the stock position in UP as on April 1, for instance, that information can be useful to farmers in Hassan (Karnataka) to plan their sowing operations accordingly. The present scenario of production being completely out of sync with demand is not sustainable," says Goyal.
Ajay Gupta, a leading cold store owner of Agra having two units with 20,000-tonnes capacity each, goes one step further: "The government should make it compulsory for all cold stores to declare their potato stocks, just as hotel are required to furnish information before the 7th of every month on the number of visitors during the previous month".
Goyal also feels that the government should encourage investment in multi-commodity cold stores with multiple chambers. "85% of cold stores in India are only dedicated for potatoes. We don't need more of them. While potatoes are stored at below four degrees in order to keep them for up to eight months, these could be 12-15 degrees for a range of fruits and vegetables whose shelf life does not have to be extended beyond 1-2 months. Only those cold stores whose refrigeration system is designed to adjust to different temperature, atmosphere and humidity conditions, which are product-specific, should be extended subsidy," he adds.