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Ind. Jour. Agril. Mktg., 35(3), 2021 1

MARKET VULNERABILITIES AND POTENTIAL OF

HORTICULTURE CROPS IN INDIA:
WITH SPECIAL REFERENCE TO TOP CROPS

ABHISHEK TIWARI, SAAD BIN AFROZ AND VINOD KUMAR

Dept. of Economic Analysis and Research
NABARD., Mumbai-400051
India is the second largest producer of fruits and vegetables in the world,
contributing about 9.3 per cent share of total world production. In
2020-21, the production of horticultural crops has been pegged at a
record 326.6 million tonnes (MT) which is more than total foodgrain
production. The production of vegetables, especially tomato, onion
and potato has increased significantly over the years, making India
the second largest producer of all the three vegetables in the world.
Increase in production of TOP crops are mainly due to increase in
area while productivity is stagnant. Horticulture is increasingly
recognised as a sunrise sector, owing to its potential to raise farm
income, provide livelihood security and earn foreign exchange through
export. However, marketing of horticulture faces major problems like
large post-harvest loss, lack of infrastructure development, price
seasonality and volatility, etc. In this paper, we try to understand
trends in overall production, price volatility and issues related to
marketing of horticulture produce with special emphasis on TOP
crops. Historical price volatility measurement of TOP crops suggest
that price volatility is highest among the onion followed by tomato while
price seasonality is highest in tomato. As potato has the highest storage
capacity, it has lowest volatility among the TOP crops. Horticulture has
been recognized as one of the rapidly growing and evolving sectors having
the potential to lead us to our goal of doubling farmer’s income by 2022
through backward and forward linkages. Unless the increase in production
is met with sizeable increase in cold storage capacities and transportation
to the consumer base, the farmers will not be able to receive their fair
share of income. Government of India has taken various initiatives to
address the problems pertaining to horticulture sector like Operation
Green, Agriculture Infrastructure Fund, PM Kisan SampadaYojana, etc.

Keywords: Trends in horticulture production, TOP crops, Price seasonality

and volatility.
2 Ind. Jour. Agril. Mktg., 35(3), 2021

INTRODUCTION: their crop or discarding them on roads.

India is the second largest producer The current market situation begs the
of fruits and vegetable in the world, question as to why, despite record levels
contributing about 9.3 per cent of production, we have not been able to
share of total world production. It do justice to our farmers. The market
is the largest producer of several of horticulture crops are characterised
horticultural commodities like mango, in India by fragmentation, high price
banana, okra, papaya, lime & lemon volatility, substantial quality and quantity
making it an important country in losses and low levels of processing.
the horticulture sector. Even though Prevalence of these problems has not
fruits and vegetables occupy only 4.9 only weakened India’s potential in global
percent* of the gross cropped area of trade of horticultural crops, but also
India, value of output exceeds that of resulted in low returns to the farmers
cereals. Over the years, horticulture growing these high value crops.
has overtaken foodgrains output and
Unlike cereals and dairy, where
today it is contributing a higher share
procurement and marketing is quite
to agricultural GDP and earning higher
developed, a decent value chain in fruits
foreign exchange value. In 2020-21,
and vegetables is missing. The reason
the production of horticultural crops has
for that lies in the perishable nature
been pegged at a record 326.6 million
of the crop, regional and seasonal
tonnes (MT) as per the First Advance
concentration, associated losses and
Estimates - 1.8 per cent higher than the
lack of storage infrastructure facilities.
final estimates of 2019-20 (320 MT).
The production of vegetables, especially It is essential, therefore that the fruits
tomato, onion and potato has increased and vegetable value chain be made
significantly over the years, making market demand- driven, where the
India the second largest producer of farmers do not face the problem of
all the three vegetables in the world. plenty. In order to do this, it is imperative
During 2020-21, tomato, onion and that various kinds of losses, wastages
potato production was 20.1 MT, 26.2 MT and inefficiencies along the value chain
and 53.1 MT, respectively. be reduced. First step in this regard
would be to minimise harvest and post-
However, this does not bring much
harvest losses, by bridging the storage
optimism to the vegetable farmers.
infrastructure deficit and correcting
Reeling under over production, they
the spatial mismatch. Secondly, we
are resorting to distress sales, burning
need to eliminate the inefficiencies in
* Data have been taken from Land Use Statics (LUS) for comparing area under different crops, even though there is
anomaly in horticulture acreage data in LUS and Horticulture Statistics.
Ind. Jour. Agril. Mktg., 35(3), 2021 3

the marketing chain by considering collected from Horticultural Statistics at

alternate marketing models or channels. a Glance, 2018, a Ministry of Agriculture
In a typical fruits and vegetable value and Farmers’ Welfare publication,
chain, high margins appropriated and area under different crops was
by intermediaries lead to low share taken from Land Use Statistics data,
of the farmer in consumers’ rupee. Directorate of Economics and Statistics,
Innovative models like linking organised Ministry of Agriculture and Farmers’
retail directly with farmers, farmer- Welfare. An attempt has been made to
consumer markets, contract farming capture the trends in the area, production
and so on, have come up as a solution. and productivity of horticulture crops
Since Agriculture is a state-subject, in India. Through standard statistical
the states play a key role in ushering tools, we try to bring out the extent of
in these reforms. Finally, developing price volatility of the TOP crops besides
markets for the farmers is also crucial highlighting other major issues with
in ensuring stable and profitable marketing of horticulture crops. Paper
remuneration. To this end, efforts have has used historical volatility model
to be made in earnest to develop our to calculate price volatility. Historical
processing abilities and export market volatility is the range of price of a
for both fresh and processed fruits and commodity over the period in the past.
vegetables. This paper is an attempt to Historical volatility permits us to realise
analyse the changing pattern and trends price behaviour under known market
in the growth of the horticulture sector, conditions.
the lessons that can be imbibed from
FINDINGS AND DISCUSSION:
the growth saga hitherto and suggest
broad policy contours required to Overview of the Horticulture Economy
further the horticultural growth in tune in India:
with changing demands. An attempt has Horticulture is increasingly recognised
also been made to focus on the issues as a sunrise sector, owing to its potential
in the present horticulture marketing to raise farm income, provide livelihood
channels. The vulnerability and volatility security and earn foreign exchange
in prices of horticulture commodities is through export. The diverse agro-
also brought out with special emphasis climatic conditions and rich diversity in
on the Tomato, Onion and Potato (TOP crops and genetic resources enable India
crops). to produce a wide range of horticultural
crops round the year. To cite an example,
DATA AND METHODOLOGY:
India produces a tropical fruit like mango
The paper uses mainly secondary data
and sub-tropical fruit like apple at same
collected from various government
season in a year. Horticulture sector
sources. Data on production were
encompasses a wide range of crops
4 Ind. Jour. Agril. Mktg., 35(3), 2021

like fruits, vegetables, flowers, spices, more than doubled from 146 MT in 2001-
plantation crops like coconut, beverages 02 to 326.6 MT in 2020-21 whereas
like tea and coffee and some medicinal the production of foodgrain increased
and aromatic plants (Jha et al, 2018). from 213 MT to 305.4 MT tonnes during
the same period. India is now self-
India is the second largest producer of
sufficient in foodgrain production and
fruits and vegetables and contributes
is the largest global producer of farm
9.3 per cent of the world’s total fruits and
products like pulses, jute, buffalo meat,
vegetable production. India’s position in
milk, and poultry. It is also the second-
the world in major horticulture crops is
largest producer of several horticulture
given in Table 1.
products, especially fruit and vegetables.
Status of Horticulture in India: The National Horticulture Mission (NHM),
Horticulture production in India has a centrally sponsored scheme, was

Table 1
India’s Position in the World in Major Horticulture Crops
(Million Tonnes)
India’s
Items India World
% Share Rank
Fruits & Vegetables
Vegetables & Melons 120 1075 11.2 Second
Okra 5.5 9 62 First
Potatoes 44 377 11.6 Second
Tomato 18.4 177 10.4 Second
Onion (dry) 19.4 93.2 21 Second
Cabbages & other Brassicas 9 71.2 12.3 Second
Cauliflower & Broccoli 8.2 25.2 32.5 Second
Brinjal 12.6 51.3 24.5 Second
Fruits excluding Melons 91 866 10.5 Second
Banana 29.1 113.2 25.7 First
Mango, Mangosteen and Guava 18.8 46.5 40.4 First
Lemon & Lime 3 17.3 17.2 First
Papaya 5.6 12.6 44.4 First
Total Fruits (excluding melon) 90.9 865.9 10.5 Second
Total Vegetables (including melon) 119.9 1075.2 11.2 Second
Source: Horticulture Statistics at a Glance, 2018.
Ind. Jour. Agril. Mktg., 35(3), 2021 5

launched in 2005-06 with one of its major produced 314 MT. However, the area
objectives being to increase horticulture under total foodgrain declined from 129
production and doubling farmers’ million hectare in 2016-17 to 124 million
income. Just before the launch of the hectare in 2018-19.
NHM, the production of horticulture crop
The most notable factor behind this is
was about 167 MT, using only 9.7 per
that the productivity of horticulture has
cent of the cropped area (18.5 million
increased from 8.8 tonnes per hectare
hectare), the total foodgrain production
in 2001-02 to 12.3 tonnes per hectare in
was 198 MT, covering 63 per cent (120 2018-19 while the productivity of total
million hectare) of total crop area of the foodgrain increased from 1.7 tonnes per
country. Horticulture has registered hectare to 2.3 tonnes during the same
a sharp rebound in production and period. Higher productivity in horticulture
acreage, far outpacing the foodgrain as compare to foodgrains caused more
production since 2012-13. In 2012-13, production of horticulture crops than
total horticulture production at 269 MT, foodgrains (Table 2). Horticulture crops
surpassed total foodgrain production are characterised by high-value crops,
at 257 MT. The area under horticulture higher productivity per unit of area
crops increased to 25.5 million hectare and lower requirement of irrigation and
in 2018-19, which is 20 per cent of input cost. Table 3 indicates area and
the total area under foodgrain, and production of major horticulture crops.

Table 2
Production of Horticulture vis-à-vis Foodgrains
Production (In Million Tonnes)
Triennium Ending
Total Horticulture Total Foodgrins
TE2005-06 167.7 206.7
TE2008-09 205.9 227.5
TE2011-12 240.3 240.6
TE2014-15 275.7 258.2
TE2017-18 295.8 270.5
TE2020-21 315.9 285.2
CAGR (%) 4.34 1.87
CV (%) 25.64 14.33
Note: Fourth Advance estimates for the year 2019-20 and First Advance Estimates for the year
2020-21 are used to calculate TE2020-21.
Source: Foodgrains: Directorate of Economics and Statistics; Horticulture: NHB.
6 Ind. Jour. Agril. Mktg., 35(3), 2021

Table 3
Production of Horticultural Crops
TE2020-21
Particular
Area (Million ha) Production (MT)
Fruits 6774 101074
Vegetables 10362 188562
Tomato 806 20109
Onion 1415 25067
Potato 2157 50622
Aromatic and Medicinal Plants 640 780
Flowers 315 2901
Plantation Crops 4087 16014
Spices 4276 10014
Note: Honey production at TE2020-1 is 120 MT while area data for the same is not available.
Source: Area and Production of Horticulture Crops for 2020-21 (1st Advance Estimate [AE],
National Horticulture Board, Ministry of Agriculture and Farmers’ Welfare, Government of India.

In 2020-21, the production of Trends in Area, Production and

horticultural crops has been pegged at Productivity of TOP Crops:
a record 326.6 million tonnes as per the Although Indian farmers grow 175 va-
first AE, 1.8 per cent higher than the final rieties of vegetables but tomato, onion
estimates of 2019-20. This was driven and potato contribute 51 per cent of
mainly by the step-up in production total vegetable production in which po-
of fruits and vegetables. Production tato contributes maximum 27 per cent
estimates for aromatics, medicinal followed by onion (13.5%) and tomato
plants and plantation crops have also (10%). The area, production and pro-
been pegged higher than the previous ductivity of TOP crops grew continuously
year by 10.6 per cent. Among the three at the All-India level during the last 10
key vegetables (TOP), – production of years. Onion production has increased
from 14.9 MT during TE 2011-12 to 25.3
potatoes and onions has jumped by 9.4
MT during TE 2020-21. Similarly, toma-
per cent and 0.8 per cent, respectively,
to production has increased from 16.0
spurred by increased acreage. This may
MT in TE2011-12 to 20.2 MT in TE2020-
soothe price pressures going forward.
21and Potato production increased from
Tomato production has fallen by 4.8
40.1 MT in TE2011-12 to 50.7 MT in
per cent, despite an increase in acreage
TE2020-21. All three crops have also
because of the price crash during the
shown an increase in productivity over
COVID-19 induced lockdown leading to
the same period (Table 4).
lower realisation by farmers.
 Table 4
Area, Production and Productivity of TOP Crops
Area: 000’ha
Production: MT
Onion Tomato Potato
Triennium
Produc- Produc- Produc- Produc- Produc- Produc-
Ending Area Area Area
tion tivity tion tivity tion tivity
Ind. Jour. Agril. Mktg., 35(3), 2021

969 14.9 15 802 16.0 20 1869 40.1 21

TE2011-12

1143 18.4 16 843 17.8 21 2014 45.0 22

TE2014-15

1304 22.2 17 787 19.7 25 2146 47.8 22

TE2017-18

1430 25.3 18 805 20.2 25 2147 50.7 24

TE2020-21

4.8 6.4 1.5 0.1 3.0 2.9 1.6 2.7 1.2

CAGR (%)
Source: National Horticulture Board, Ministry of Agriculture and Farmers’ Welfare, Government of India.
7
8 Ind. Jour. Agril. Mktg., 35(3), 2021

Table 4 suggests that increase in MAJOR ISSUES:

production in TOP crops are mainly due a) Post-Harvest Losses:
to increase in area especially in onion. The food loss is segmented into 3
Productivity of onion has just increased categories: Production loss, post-harvest
by cumulative growth of 1.5 per cent loss, and retail and consumer loss. The
while CAGR of tomato and potato post-harvest period exists from the time
productivity is 2.9 per cent and 2.7 per the food is harvested till the time it
cent, respectively. Productivity in onion reaches retails markets for consumption.
needs to be increased through high Post-harvest loss of food is defined as the
quality seed intervention and decrease measured loss of quantity and quality in
in the impact of excessive rain through the harvested food commodity before
better rainwater harvesting techniques. it reaches the retail market. According
to UN’s FAO report, globally around 1.3
Issues with Horticulture Marketing:
billion metric tonnes of food, which is 33
Marketing of horticultural crops is quite
per cent of the total produce, is lost in
complex and risky due to the perishable
the post-harvest stage and it predicts
nature of the produce, seasonal
that if the current practices continue
production and bulkiness. The spectrum
then the loss would be around 2.1 billion
of prices from producer to consumer,
metric tonnes by 2030. In India, as per
which is an outcome of demand and
the latest report, food worth of Rs.92651
supply of transactions between various
crore is lost in post-harvest processes
intermediaries at different levels in the
before it reaches the consumer. This
marketing system, is also unique for
monetary value is approximately 40
fruits and vegetables. Moreover, the
per cent of the total produce in India,
marketing arrangements at different
making India one of the few countries
stages also play an important role in
to have higher post-harvest losses while
price levels at various stages viz. from
the government spending is just about
farm gate to the ultimate user. These
1 per cent of the country’s GDP in food
features make the marketing system of
distribution.
fruits and vegetables to differ from other
agricultural commodities, particularly in India is the second largest producer of
providing time, form and space utilities. fruits and vegetables in the world with
While the market infrastructure is better a combined production of about 326.6
developed for foodgrains, fruits and MT during 2020-21. The post-harvest
vegetables markets are not that well processes for fruits and vegetables
developed. involves harvesting, sorting and grading,
transportation to pack-houses and cold
stores, storage and then transporting to
Ind. Jour. Agril. Mktg., 35(3), 2021 9

the retail market. There are a multitude Cold storage infrastructure is one of
of challenges and problems in this the most important factors in the post-
area, which give rise to the losses and harvest process because it is where the
opportunity to curb them. commodity spends most of its lifetime.
In India, there are about 7600 cold
A comparative study by the Central
storages which account for 34.9 million
Institute of Post-Harvest Engineering and
metric tonnes of storage capacity but
Technology (CIPHET), Ludhiana ((2015),
their distribution is inequitable among
reported that about 16 per cent of fruits
the states. Around 59 per cent of the
and vegetables are lost in the post-
storage capacity, which comes to 21
harvest. While it is important to focus on
million metric tonnes, is present only in
reducing food loss across various different
the 4 states of Punjab, Uttar Pradesh,
commodities, this huge gap emphasises
Madhya Pradesh and Gujarat. Of the
the need to focus on reducing wastage in
cold storages, 96 per cent are privately
the fruits and vegetables sector. Among
run and government bodies, institution
major agriculture produce, wastage
and co-operatives run the rest. About 75
is maximum in fruits and vegetables
per cent of the cold stores are dedicated
followed by fisheries and poultry.
only for potatoes, which signify the
Wastage in fruits and vegetables varies
dearth of availability to other products
from 4.58 to 15.88 per cent. While,
while also stressing the importance of
cumulative wastage in cereals and
potatoes for Indian consumers. About
pulses range between 4.65 to 8.44 per
5000 cold stores that were built much
cent and in oilseeds the range is 3.08 to
before have no integrated pack houses
9.96 per cent.
or ancillary units to assist food storage.
Within the total horticulture crops, the Most of these cold stores are located
post-harvest losses is amongst the very near to the production centres and
highest in the TOP crops. The post- thus depend heavily on transportation to
harvest losses are the highest in tomato reach the consumers.
(12.44%) followed by onion (8.2%)
A cold storage of about 5000 metric
and potato (7.32 %) and the same is
tonnes requires an initial capital
presented in Table 6.
investment of about Rs.40 million
b) Infrastructure Availability excluding land. The high real estate
In India, because of imperfect costs lead to setting up of cold storages
coordination between supplies and very far from the urban centres. Electric
demand, seasonality and perishable power is another major factor that adds
nature of horticulture crops, storage to the problems in setting up stores in
plays an important role in the marketing. the initial stages. India experiences
 10

Table 6
Harvest and Post-Harvest Losses of TOP Crops at National Level (In %)

Operations Total Storage Channel Total

Over-
Loss In Gow- Loss
Har- Sort- Re- Pro- all
Crop collec- Pack- Trans- Farm down/ Whole- in
vest- ing/ Farm tail- cesing Total
tion aging port opera- Cold saler Stor-
ing Grading er Unit Loss
tions Store age

Onion 2.62 0.44 2.35 0.12 0.51 6.05 0.35 0.3 0.77 0.72 0.01 2.16 8.21

Potato 2.58 0.25 2.93 0.06 0.72 6.54 0.15 0.17 0.34 0.11 0.02 0.78 7.32

Tomato 3.16 0.52 3.74 0.24 1.75 9.41 0.12 1.26 1.63 0.02 3.03 12.44

Source: CIPHET (2015).

Ind. Jour. Agril. Mktg., 35(3), 2021
Ind. Jour. Agril. Mktg., 35(3), 2021 11

about 9 per cent peak power deficit fluctuate in accordance with their
even today and this forces majority of supply and demand situation, which, in
the cold stores to run on backup power turn is characterised by seasonality of
using diesel or kerosene, which raises production and marketing. Horticulture
the cost of storage and the operational commodities are produced seasonally
costs. From a technical standpoint, a and are perishable. On account of
multi-commodity cold storage requires these characteristics, such commodities
different conditions such as temperature register fluctuation of prices from
and humidity for each commodity and month to month. All India seasonality
there are not enough efficient systems of Tomato, Onion and Potato crops on
marked paucity in the availability
to handle that in a cost-effective of advanced systems that helps
10 years in increasing
average the shelf
and 5 years life ofis
average
manner. This stored
the commodity results in the
inside many of the
storage. given in Figures 1, 2 and 3, respectively.
cold storages being single commodity
Figure 1 revealed that tomato prices are
facilities thatMarket
c) Prices and helps Volatility
in bringing down
highest during the period of July to August
the operational costs because of scale.
All India as this period is the lean production
There is Price
also aSeasonality
marked paucity in the
period. December to March is the period
availability of advanced
Prices of agricultural systems
commodities that in accordance with their supply and demand
fluctuate when tomato prices are trading at their
helps in increasing the shelf life of the
situation, which, in turn is characterised by lowest. seasonality
Amongof production and seasonality
the TOP crops marketing.
commodity stored inside the storage.
Horticulture commodities are produced seasonally in and
tomato price is maximum
are perishable. On accountbecause
of these of
c) Prices and Market Volatility higher perishability.
characteristics, such commodities register fluctuation of prices from month to month. All India
All India Price Seasonality
seasonality
Prices of of agricultural
Tomato, Onion commodities
and Potato crops on 10 years average and 5 years average is
given in Figures 1, 2 and 3, respectively.

Figure 1: All India Price Seasonality of Tomato

3500

3000

2500
Prices in Rs/Qtl

2000

1500

1000

500

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

5 Year's Average 10 Year's Average

Source: agmarknet.gov.in
Source: agmarknet.gov.in
Figure 1 revealed that tomato prices are highest during the period of July to August as this
period is the lean production period. December to March is the period when tomato prices are
12 Ind. Jour. Agril. Mktg., 35(3), 2021

Figure 2: All India Price Seasonality of Onion

3000
2500
Prices in Rs/Qtl

2000
1500
1000
500
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

5 Year's Average 10 Year's Average

Source: agmarknet.gov.in
Source: agmarknet.gov.in

Figure 2 2indicates
Figure that onion
indicates that prices
onionstarts moving available
prices upward from July because
in cold storages. rabiAfter
crop Punjab,
arrivals
starts moving
have ended upward
by this from
time and theJuly because
country fresh
completely reliescrop from
on rabi Uttar
stocks till Pradesh
September. followed
Prices
rabi crop arrivals have ended by this by West Bengal, Bihar and Gujarat starts
start coming down in October as fresh kharif and late kharif crop starts arriving in the market
time and the country completely relies coming into the market. Fresh crop is
from major onion producing states, i.e.,
on rabi stocks till September. Prices start
Maharashtra and Karnataka. In August–September, a
available in the market till May and after
smaller quantity
coming down inofOctober
crop also
as comes from Andhra
fresh kharif thatPradesh and plays
cold store, a significant
potato role in
is consumed.
and late kharif
controlling the highcrop starts
prices. Thus,arriving
any damagein to Smaller
the onionquantity of fresh
crop in Andhra potato
Pradesh from
or lower
the market from major onion producing the hilly states of Himachal Pradesh and
production in Andhra Pradesh could result into uncomfortably high prices during August to
states, i.e., Maharashtra and Karnataka. Uttarakhand comes to the market during
September.
In August–September, a smaller quantity June to October but their prices are high
of crop also comes from Andhra Pradesh compared to the cold store potato.
Figure 3: All India Price Seasonality of Potato
and plays a significant role in controlling
2000prices. Thus, any damage to the Price Volatility of TOP Crops
the high
Price volatility in this paper is concerned
onion crop in Andhra Pradesh or lower
1500 with the monthly variability of the retail
Prices in Rs/Qtl

production in Andhra Pradesh could

prices of Tomato, Onion and Potato
result1000
into uncomfortably high prices
around its central value i.e. the tendency
during August to September.
500 for retail crop price to vary from its mean
The figure 3 depicts the potato price value of 5 years monthly prices. The
0
seasonality. Prices normally starts historical volatility is observed on the
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
rising from June onward and are firm past prices. It indicates how volatile a
5 Year's Average
till October. Prices start coming down price10has
Year's Average
been in the past. In this paper,
from November as fresh crop from
Source: agmarknet.gov.in we are interested in measuring only the
Punjab starts coming in markets and realised volatility based on past 3 years’
The figure 3 depicts the potato price seasonality. Prices normally starts rising from June
in few regions, stock of rabi crop is still monthly price movement of TOP crops.
onward and are firm till October. Prices start coming down from November as fresh crop from
Punjab starts coming in markets and in few regions, stock of rabi crop is still available in cold
smaller quantity of crop also comes from Andhra Pradesh and plays a significant role in
controlling the high prices. Thus, any damage to the onion crop in Andhra Pradesh or lower
production in Andhra Pradesh could result into uncomfortably high prices during August to
Ind. Jour. Agril. Mktg., 35(3), 2021 13
September.

Figure 3: All India Price Seasonality of Potato

2000

1500
Prices in Rs/Qtl

1000

500

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

5 Year's Average 10 Year's Average

Source: agmarknet.gov.in
Source: agmarknet.gov.in

The figure
Price 3 depicts
volatility the potatoin price
is presented terms seasonality.
of Prices normally
in prices starts rising
in July-August 2017 from June
and price
onward
the and are firm
annualised till October.
standard Prices start
deviation of coming
risedown fromsame
in the November
months as fresh crop from
in 2019 and
percentage price in
Punjab starts coming changes. Wein have
markets and 2020.
few regions, stockRise in crop
of rabi prices of available
is still tomato in mainly
cold
focused on the standard deviation of transpired during the monsoon season
storages. After Punjab, fresh crop from Uttar Pradesh followed by West Bengal, Bihar and
prices, which expresses the standard as high rainfall in large producing areas
Gujarat starts coming into the market.
deviation as a percentage of the sample Fresh crop is available
affect in the
the crop market till May and after
production.
mean.
that cold store, potato is consumed. Smaller quantity of fresh potato from the hilly states of
Potato is the least volatile among the
Finally, the question is whether to 59 TOP crops mainly because it has higher
calculate the volatility on nominal or real processing-to-production share (7%).
prices. However, in the case of real prices, On the other hand, onion has 3 per cent
it means that we have to deflate a series and tomato has 1 per cent processing
and this introduces another uncertainty to production share (Gulati et.al.,
in the measure of volatility. There is no 2019). Storage facilities for potatoes are
consensus on the best deflator to use comparatively more than onion. Usually,
and due to data constrained decided to potato crop has witnessed increase in
work on nominal price data in this study. price volatility between November to
January as prices go up in the month of
Figure 4 shows monthly retail price
October-November and come down in
movement of TOP crops in last 5 years.
December-January as new crops arrived
It may be observed from the figure that
into the market. However, spike is more
it is very much visible that volatility in
in year 2021 as price shot-up sharply
onion price is comparatively more than
during October-November as market
that of tomato and potato. However,
arrival was lower for this year due to
tomato prices have seen sharp increase
nation-wide induced lockdown and
uncertainty in the measure of volatility. There is no consensus on the best deflator to use and
due to data constrained decided to work on nominal price data in this study.
14 Ind. Jour. Agril. Mktg., 35(3), 2021

Figure 4: Monthly
Figure Average
4: Monthly Average Retail Prices
Retail Prices at India
at All All India
Level Level
100
90
80
70
60
50
40
30
20
10
0

Jun-19
Aug-19

Jun-20
Aug-20
Oct-20
Jun-16
Aug-16
Oct-16

Jun-17
Aug-17

Jun-18
Aug-18
Oct-17

Oct-18

Oct-19
Feb-19

Feb-20
Apr-16

Dec-16
Feb-17
Apr-17

Dec-17
Feb-18
Apr-18

Dec-18

Apr-19

Dec-19

Apr-20

Dec-20
Feb-21
Tomato Onion Potato

Source:
Source: Department of Consumer
Department Affairs, GoI.Affairs, GoI.
of Consumer

Figure
prices 4fell
shows monthly after
drastically retail price movement the
harvesting of TOP cropsininonion
volatility last 5 price
years.isIthoarding
may be
observed
of new from
cropstheinfigure that it is very muchand
December-January. visible
lack that volatility facilities
of storage in onion inprice is
major
Table 7 shows the availability of storage producing states. Storage capacity for
comparatively more than that of tomato and potato. However, tomato prices have seen sharp
infrastructure for potato in the major onion is much lesser than the potato
potato producing states. 60 in major producing states, like Uttar
Pradesh (largest producer of potato)
Unlike potato and onion, tomato is also
has 154 lakh tonnes storage capacity
very perishable commodity and it has
of potato while Maharashtra (largest
immediate effect of seasonality and producer of onion) has just 47 lakh
production of crops. Price volatility index tonnes storage of onion (Table 8). Low
of tomato suggests that prices have storage reduces the buffer, which causes
changed up to 100 per cent in June-July jump in price during slack production
2017 and June-July 2020. Apart from year.
that, prices of tomatoes change bit more
Another important reason of price
frequently than potato. As data suggests
volatility in onion is the production
that spike in tomato prices is due to lower
cycle. Onion is produced during (a)
supply from major tomato producing
Rabi season-which is produced between
states like Maharashtra and Karnataka
March to May. It is mainly produced
owing to heavy rainfall.
in Maharashtra and Madhya Pradesh.
Price volatility of the onion is the highest (ii) Kharif season-which is produced
among the TOP crops. Main factor behind between September to November and
 Table 7
Storage Capacity of Potato in Major Producing States
(In Lakh MT)

2018-19 2016-17 2017-18

State Potato Capacity Potato Capacity Potato Capacity

Potato Potato Potato
Storage Utilized Storage Utilized Storage Utilized
Stored Stored Stored
Capacity (%) Capacity (%) Capacity (%)
Ind. Jour. Agril. Mktg., 35(3), 2021

Uttar Pradesh 154.55 129.82 84.00 142.18 111.1 78.14 126.41 124.62 98.58

West Bengal 70.62 57.91 82.00 70.62 65.31 92.48 69.81 65.76 94.19

Bihar 11.85 8.03 67.78 11.85 8.66 73.10 15.27 12.14 79.53

Punjab 19.66 14.4 73.27 19.66 18.87 96.00 19.5 19.36 99.27

Gujarat 28.75 25.7 89.38 28.75 22.18 77.17 28.5 25.28 88.12

Total-above
285.43 235.86 82.63 273.06 226.12 83 259.49 247.16 95
states
Source: State Horticulture Department, Agriwatch Research.
15
16 Ind. Jour. Agril. Mktg., 35(3), 2021

Table 8
Storage Capacity of Onion in Maharashtra and Madhya Pradesh
(In lakh tonnes)
State 2018 2017 2016
Maharashtra 46.70 44.15 36.10
Madhya Pradesh 10.86 11.04 16.51
Source: State Horticulture Department, Agriwatch Research.

(iii) late Kharif season which arrives rainfall in major producing regions of
from mid-December until late February. Madhya Pradesh, Gujarat, Karnataka
The contribution of the onion production and Maharashtra damaged the kharif
for these seasons is roughly 60 per crop and affected late kharif production,
cent, 20 per cent and 20 per cent, resulting in lower market arrivals. To
respectively of the total production. The contain the escalation in prices, the
uncertainty arises whenever there is Government imposed an export ban on
negative uncertainty regarding Kharif onions in September 2020 (removed
crops (i.e. damage or delay in arrivals). in January 2021), increased imports,
If there is significant damage to the released buffer stocks and imposed
Kharif crop due to uncertain monsoon, stock holding limits on wholesalers
it increases the burden of supply on the and retailers under the Essential
stored Rabi crop. Production of onion in Commodities Act. These steps, along
Rabi season or late Kharif season crop with fresh arrivals, led to onion prices
are comparatively more manageable. moving into deflation during November
2020-January 2021. Onion prices picked
Trends in Prices of TOP Crops during
2020-21: up again in February 2021, however,
Potato price inflation reached a peak due to drop in arrivals on account of
of 107 per cent in November 2020. unseasonal rainfall in January 2021 in
Higher imports and fresh arrivals of Maharashtra. In the case of the third
early rabi production in the market key vegetable, i.e., tomatoes, low
led to a sharp easing in prices during arrivals from the key producing regions
December 2020-February 2021, with in Karnataka and Maharashtra on the
a deflation of (-) 21.3 per cent in back of excess rainfall pushed inflation
February 2021. Inflation in onion prices, to a peak of 54.5 per cent in September
which was in negative territory during 2020. Thereafter, with an increase in
August-September 2020, witnessed fresh arrivals, prices eased beginning
substantial price pressures during October 2020.
September-November 2020 as excess
Ind. Jour. Agril. Mktg., 35(3), 2021 17

Overcoming the Marketing Challenges • MoFPI is providing 50 per cent of

for Horticulture Crops: Recent the subsidy on the following two
Government Initiatives
components:
Operation Greens
i. Transportation of TOP Crops from
Government of India announced
production to storage
‘Operation Green’ in the year 2018-
ii. Hiring of appropriate storage
19 on the lines of operation flood
facilities for TOP Crops
(AMUL Model) under Ministry of Food
Processing Industries (MoFPI) with (II) Long Term Integrated Value Chain
an outlay of Rs.500 crore and the aim Development Projects
of strengthening the TOP production i. Formation and Capacity Building of
clusters and their FPO, Agri logistic, FPOs
processing facilities and professional ii. Quality Production
management. The three major objective
iii. Post-harvest processing facilities -
of the scheme were (i) containing price
At Farm Level
volatility, (ii) reducing post-harvest
losses by setting up the essential farm iv. Post-harvest processing facilities -
gate infrastructure like warehouses, At Main Processing Site
cold storages which better link the v. Agri-Logistics
consumption centres and FPOs, and vi. Marketing/Consumption Points
(iii) building efficient value chains which
increase the food processing capacities In June 2020, MoFPI extended the
of TOP crops and help the farmers get Operation Green from Tomato, Onion
the larger share of income from the and Potato (TOP) crops to all fruits and
consumers spending. vegetables (Total). The scheme was
extended for a period of six months as
Strategies for Achieving the Laid Down
part of Aatmanirbhar Bharat Abhiyan
Objectives:
as per the budget of 2021 it will be
The operation is implementing two-
further extended. The intervention was
pronged strategy of price stabilisation
aimed at protecting the interest of fruit
measures (for short term) and integrated
and vegetable farmers and prevent
value chain development projects (for
them from making distress sales due
long term).
to lockdown. Operation Greens Scheme
(I) Short Term Price Stabilisation from TOP to TOTAL provides 50 per
Measures cent subsidy on transport and storage
• NAFED is the Nodal Agency to of notified fruits and vegetables if
implement price stabilisation prices of such fruits or vegetables are
measures. below the trigger price. The 50 per cent
18 Ind. Jour. Agril. Mktg., 35(3), 2021

transportation subsidy is available for • Food Safety and Quality Assurance

air transportation for 41 notified fruits Infrastructure
and vegetables from North-Eastern • Human Resources and Institutions
and Himalayan States to any place in The scheme addresses the issue of
India. The transportation subsidy has underdeveloped supply and value chains
been extended for Kisan Rail Scheme in and aid in developing supply chains with
December 2020. Any person, including effective forward and backward linkages.
farmers can transport any notified fruits The grave problem of postharvest losses
and vegetable crops through Kisan Rails. will be tackled by integrated cold chains
Railways would charge only 50 per cent and value addition infrastructure. The
of freight charges on these fruits and scheme will provide huge impetus to
vegetables. MoFPI will provide remaining employment generation especially in
50 per cent of the freight charges as rural areas. The farmers can have better
subsidy to the Indian Railways. bargaining powers and receive higher
PM Kisan SAMPADA Yojna: share of price to the consumers.
PM Kisan SAMPADA Yojna is a central
PM Kisan SAMPADA Yojana is expected
sector scheme with a corpus of Rs.6000
to leverage investment of Rs.31400
crore under MoFPI. It is a comprehensive
crore for handling of 334 lakh MT
package which will result in creation
agro-produce valued at Rs.104125
of modern infrastructure with efficient
crore, benefiting 20 lakh farmers and
supply chain management from farm
generating 530500 direct/indirect
gate to retail outlet.
employment in the country by the year
The following schemes are being 2019-20.
implemented under PM Kisan SAMPADA Agriculture Infrastructure Fund (AIF):
Yojana: A Rs. one lakh crore Agriculture
• Mega Food Parks Infrastructure Fund for creation of farm-
gate infrastructure for farmers has been
• Integrated Cold Chain and Value
operationalised by the government. This
Addition Infrastructure
scheme will be operational from the
• Creation/ Expansion of Food
year 2020-21 to 2029-30. The scheme
Processing/ Preservation Capacities
provides for medium to long term debt
(Unit Scheme)
financing facility for investment in viable
• Infrastructure for Agro-processing projects for post-harvest management
Clusters infrastructure and community farming
• Creation of Backward and Forward assets. Under the scheme, Rs. 1 lakh
Linkages crore will be provided by banks and
Ind. Jour. Agril. Mktg., 35(3), 2021 19

financial institutions as loans to primary productivity compared to the food

agricultural credit societies (PACS), grains and its high export value helps in
marketing cooperative societies, farmer earning voluminous foreign exchange.
producers organizations (FPOs), Self The increase in horticulture production
Help Group (SHG), farmers, joint liability has brought in light the lacunae in the
groups (JLG), multipurpose cooperative market infrastructure concerning it,
societies, agri-entrepreneurs, start- more so with the ongoing fight with
ups and central/ state agency or COVID-19 pandemic and the roadblocks
local body sponsored public private that are being faced while tackling its
partnership project, etc. All loans under effects on the economy. Better storage
this financing facility will have interest facilities, organized supply chains,
subvention of 3 per cent per annum up regulated markets and better linkages
to a limit of Rs.2 crore. This subvention have not accompanied the increased
will be available for a maximum period production between processing and
of 7 years. Further, credit guarantee organized retailing. It has resulted in
coverage will be available for eligible distress sale or even disposal by farmers
borrowers from this financing facility during a bumper production and high
under Credit Guarantee Fund Trust for price volatility during shortages. Better
Micro and Small Enterprises (CGTMSE) storage facilities and focus on post-
scheme for a loan up to Rs.2 crore. harvest management will reduce price
The Agriculture Infrastructure Fund will volatility among TOP crops. This will
go a long way in creating the requisite not only reduce price seasonality and
post-harvest infrastructure at the farm volatility in TOP crops but also improve
gate level and hence go a long way profitability on crops resulting in better
in enhancing bargaining power of the price realisation for the farmers.
farmers.
It is imperative that government
CONCLUSION AND POLICY interventions are sought in creating
SUGGESTIONS: the necessary infrastructure. The
Horticulture has been recognized as government schemes like Operation
one of the rapidly growing and evolving Green and PM Kisan SAMPADA Yojana
sectors having the potential to lead are a step towards achieving the goal
us to our goal of doubling farmer’s of developing the horticulture sector
income by 2022. It has the potential to especially TOP crops and providing
generate large number of employment the farmers the means to handle their
opportunities. Its key role is to provide crops. With proper implementation,
raw materials for various industries the number of intermediaries between
and is highly profitable owing to higher the production and consumption
20 Ind. Jour. Agril. Mktg., 35(3), 2021

centres can be reduced. Value chains - (2021 b), First Advance Estimates
can be developed by increase in food of Production of Foodgrains 2020-
processing industries. Forward and 21, Department of Agriculture,
backward linkages thus developed will Cooperation and Farmers Welfare,
lead to better price realisation for the Ministry of Agriculture & Farmer
farmers and bring us closer to our goal Welfare, New Delhi.
of Doubling Farmers’ Income.
Jha, Girish K, A Suresh, Bhoopesh
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(2014), Multi-Asset Risk Modeling,
Gulati Ashok, and Wardhan, Harsh
Science Direct.
(2019), “Govt Needs to Find
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