Financing
horticulture
A
multi-pronged approach is required to make horticulture crops more
commercialised and export-oriented. Dr GD Banerjee explains
The
Government during the last one and a half-decade has laid emphasis
on development of horticulture. The existing area under fruits and
vegetables stands at 45 and 55 lakh hectares, while production hovers
around 470 and 810 lakh tons respectively. The area under floriculture
is around 35,000 hectares. All horticultural crops put together
envelope 0.8 per cent of cropped area and 10 per cent of the gross
agricultural output of the country.
Horticulture
produce is highly perishable with short harvest seasons. Arrivals
of large quantity in a short period result in a glut and low remunerative
returns to the growers. To avoid such situations, it is necessary
to identify alternate markets for fresh produce and also emphasise
on establishment of processing units. Penetration in non-conventional
markets requires detailed study, pertaining to commodities in demand,
desired specifications, seasons during which supply and demand position
would ensure better returns and wherein the nation's entry would
be relatively easy.
Initiative
and Strategies
At
present, India is the second largest producer of fruits and vegetables.
Because of lower import needs, reasonable labour costs and a diverse
agro-climate, India possesses a natural advantage in agricultural
exports. But although Indian food processing technology has seen
rapid growth in the recent past, it is yet to match international
standards. India hardly processes 1.0 to 1.5 per cent of the total
production of fruits and vegetables as against 52 to 67 per cent
by other countries. India's share in the world market is just about
1.0 per cent. There is a great need and urgency to modernise food
processing technologies.
To
boost exports, the Ministry of Commerce, has identified few products,
which have the potential to achieve at least 30 per cent annual
growth in exports in value terms. These are mango, grape, pineapple,
banana, pomegranate among fruits; mushroom, garlic, okra, asparagus,
cucurbits, coleenaps, onions among vegetables; rose, chrysanthemum
and carnation among flowers. Besides, there are potential customers
for other fruits like aonla, guava, sapota, orange, watermelon,
copra, cashewnut, nutmeg, cinnamon, clove, cardamom, kokam seeds
and tamarind powder. Processed products out of the above also have
a demand if processing and packaging is done following international
standards.
Consumers
in international markets are, however, very choosy and selective.
The specifications and regulations for imports of fresh products,
are, therefore, very stringent. In order to ensure customer attraction,
prescribed regulations and planned efforts on all fronts are imperative.
Since export encompasses benefits, such as, foreign exchange earnings,
remunerative returns to growers, encouragement to farmers to go
in for quality production, wasteland utilisation and employment
generation, there is a felt need to exert for promoting exports.
Any delay on this account, would make our penetration rather difficult
since countries like Brazil, China, Malaysia, Thailand, Philippines,
among others, have captured a lion's share of the European markets
and other developing nations are in the process of landing the remaining
portion. The scenario would be crystal clear if opportunities in
export of horticultural products and processed products are effectively
explored. There lies a great opportunity for India to promote tropical
fruits and vegetables, taking advantage of a stable political climate,
changing food habits in European countries, our capacity to produce
significantly large quantities under low input conditions and our
obvious proximity to South East Asia and far East. We can also optimize
our large domestic market and emergence of new high consumption
markets worldwide, logistical advantage vis-à-vis the Middle East
and South East Asia as compared to Chile, South Africa and Australia,
reduction of tariff and non tariff barriers, liberalisation of the
economy and credit incentives for promotion of horticulture produce.
Factors
non-conducive to exports
Unavailability
of varieties which are in demand in European Nations, inadequate
facilities in respect of mechanisation, storage, packaging, ignorance
of borrowers about the expectation of consumers regarding quality
standards and packaging, inadequate research about quality production
are the difficulties faced at the grassroot level. Absence of export
promotion advertisements, lack of attention towards quality parameters
and unhealthy competition amongst exporters, inadequate facilities
of pre-cooling units, cold storage, modern processing units, refrigerated
containers and space for air cargo are some of the factors non-conducive
to export promotion.
Future
strategy for growth
Instead
of trying to promote all crops, which are grown in India, it is
essential that we fix priorities and try to promote export of limited
commodities. Grape, mango, pomegranate, pineapple, onion, okra,
beans, gourds, rose, carnation, chrysanthemums are the crops which
India should prioritise. Once the crops are decided, the next step
is to import the varieties, which are or would be acceptable to
consumers and plant them at various locations. It is also essential
to standardise a package of practices that would involve less cost
on inputs, without affecting the yield and quality of the product.
In order to ensure that the produce reaches the consumer in a fresh
condition, facilities for grading, packaging and storage, have to
be provided. All the above requires a lot of research and hard work
from all the sectors.
Role
of financial institutions
Keeping
in view the openness of the economy with the rest of the world and
emergence of global competition, there is a re-look in financing
argi-exports. The financial institutions must strengthen their base
in these regards so as to enable them to explore the possibility
of financing high-tech agriculture like floriculture, horticulture,
milk and milk products, meat and products, fish and fish products,
consumer goods and processed food. The financial institutions may
take the following initiatives:
Identification of potential borrowers possessing a good exposure
and experience in the field of argo-based units, with competence
to undertake the venture and the capacity to repay and earn profit.
- Selection
of agro-based units with due weightage to various factors like
backward and forward linkages, and preference patterns of consumers
in the domestic and international markets.
-
Provision of assistance in preparation of project reports in consultation
with entrepreneurs and related sources.
- Setting
up specialised branches for agri-export oriented projects with
adequate support services.
- Liaise
between various government departments and other agencies engaged
in this area.
- Formation
of effective supervisory and inspection services for monitoring
projects.
- Extending
adequate grace periods based on production cycle and facilitating
working capital requirement.
- Tailoring
repayment schedules, taking into account the economic life of
the assets, status of the entrepreneur, volume of net income or
net incremental income.
-
Increasing accessibility to rural cadres by creating a motivated
cadre of field animators, who act as a link between the financial
institutions and rural clients.
- Further
simplification of loan formalities, speedy loan evaluation, loan
decisions and spread of rural outlets.
- Tactfully
handling delinquencies.
- Flexibility
in genuine cases and strict enforcement in the case of willful
default.
Hence,
in order to survive in international markets, synchronization between
market trends and production systems is imperative. All this calls
for a concerted effort by institutions, the industry, the farmers
and above all the government.
The
author is Deputy General Manager, Nabard
