Context

• The increasing cost of production and the increase in GST on apple cartons has triggered protests in Himachal Pradesh’s apple farmers.

What is the issue?

• The cost of production of agricultural items increased substantially, denying remunerative prices to the poor and marginal apple farmers.

Reason for crisis in apple farming

• Increase in cost of production: The input cost of fertilizers, insecticides, and fungicides has risen in the last decade by 300%, as per some estimates. The cost of apple cartons and trays and packaging has also seen a dramatic rise. In the last decade, the cost of a carton, for instance, has risen from about ₹30 to ₹ The cost borne to market the Produce has also risen.
• High taxation: The increase in the Goods and Services Tax on cartons from 12% to 18%. This was done to ensure that farmers are forced to sell their produce to big buyers instead of selling it in the open market. Just as the three farm laws were designed on the pretext of getting rid of the middlemen, the argument here was that commission agents, who fleece the apple farmers, will be forced to exit the picture. But this leaves the apple growers at the mercy of large giants in procurement, who have precedence of even deciding the procurement price.
• No MSP in Himachal: Unlike in Jammu and Kashmir, where there is a minimum rate for procurement, there is no such law in Himachal. The government also does not seem prepared to bring in such a law. The farmers are demanding that legally guaranteed procurement at a Minimum Support Price (C2+50%) should be ensured to improve apple farmers condition.

How to address this issue?

• Need for a regulator: What is required is an independent body that is duly supported and trusted by the farmers. Such a body should have representatives of apple growers, market players, commission agents and the government. This must be a statutory body that is also given the task of conducting research in the apple economy.
• Directional efforts: Issues such as high input cost, lack of fair price and unavailability of infrastructure such as cold chains should be addressed.
• Required research to support improvements in apple farming systems: Over the past few decades, the priorities in research projects and government policies on apple production were focused on the improvement of tree productivity and product quality. This was important to enhance the net incomes and living standards of apple producers in India. This research should be further enhanced by introducing European varieties in India.
• Focussing on Alternative Market Channels: The alternative market channel works on the principles of decentralisation and direct-to-home delivery. The idea is to create smaller, less congested markets in urban areas with the participation of farmers’ groups and Farmer Producer Companies (FPCs) so that farmers have direct access to consumers.
• Logistics transformation: To sustain the demand for agricultural commodities, investments in key logistics must be enhanced. Moreover, e-commerce and delivery companies and start-ups need to be encouraged with suitable policies and incentives. The small and medium enterprises, running with raw materials from the agriculture and allied sector or otherwise, also need special attention so that the rural economy doesn’t collapse.

Conclusion

• Agriculture is dying, not as in the production of food but as a desirable profession. One bad yield, whether due to errant rains, pests, etc., and most farmers have no buffer available. The last point worth considering is that food and agriculture are not the same. Expenditures on food span the value-add, including processing, preparation, service in restaurants, etc. Farmers in India merely get paid for their product and not for the food we eat.

Mains question

Q. Do you think there is urgent need to extend MSP to horticulture sector also? Discuss what can be done to solve the apple farmer crisis in Himachal Pradesh.

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