Indo-Dutch Companies Offer Solutions to Help Indian Farmers Struggling with Low Potato and Onion Prices

The Netherland Government's Agriculture Attaché Network (LAN), which works for the internationalization of Dutch agriculture, has published an article about farmers in India incurring losses due to the bountiful harvest of tomatoes, onions, and potatoes (TOP) on its Agro Message Abroad website. The article analyzes the storage and exports of these farm products.

Talking to a few representatives of Dutch companies dealing in farm sector equipment and solutions in India, the analysis suggests that Dutch technology - already widely available in India - can help solve some of the issues Indian farmers are facing:

Introduction

A bountiful harvest would have been a joyous moment, especially coming after a year when food scarcity was rampant across the world.

However, there’s no joyous moment as such for many Indian growers who recently harvested their potato and onion crops this season, as prices crashed for both the crops. Farmers of Uttar Pradesh (UP), the largest potato growing region in India are staring at a loss, as the current market prices are around 25 – 30% of the cost farmers incur in growing.

Growing the same variety (table potatoes)

According to an article published by the Indian Express, the reasons for the drop in market prices are manifold. Even though UP has the largest number of cold storages in the country, last year’s stock is still available, which makes it difficult to create more storage space for the harvest this year.

Farmers also have increased the production of new varieties of table potatoes that have a shorter growing period but also shorter shelf life. Many farmers of Madhya Pradesh and Rajasthan (the adjoining states of Uttar Pradesh) have also shifted to growing the same potato varieties, whereas earlier they used to grow garlic.

The farmers interviewed for the Indian Express article mentioned that the retail companies like Mother Dairy and Reliance have also not approached them to buy potatoes.

Usually, these retailers buy the produce for their stock. Farmers in Punjab, the other potato growing state mostly known for growing seed potatoes that are supplied across the country, are earning less than half of last year’s price.

In Gujarat, the state that houses the largest number of potato processing companies of India, farmers have approached the Government to discuss how the Government can support growing of processing varieties. Farmers in Gujarat are taking a learning from this year and are planning to shift to cultivating processing varieties.

Onion bringing tears for farmers in India

At a time when onion shortages might prelude a new chapter in the world food crisis, according to a Bloomberg article, Indian farmers are getting a raw deal on the sale of onions and are making bonfires in protest against the crash in prices.

The reason for the crash in onion prices was due to the sudden rise in temperature in February in Maharashtra, a state that accounts for 40% of India’s annual onion production. The sudden rise in temperature leads to quality deterioration of onions which has high moisture content. Farmers were forced to offload their stock at a time when there was enough stock available from the last harvest season.

Riding the wave with International cooperation

For this article they reached out to a few (Indo-)Dutch companies that have been working for more than decade in providing technological solutions for cold storages, equipment for potato processing companies and planting materials.

Mr. Hemant Gaur, Managing Director, SV Agri, representing Mooij Agro, Agrico and Kuipers in India feels that the glut that the Indian potato sector faces today brings many lessons that can be learned.

He shares a few news articles mentioning that while many potato farmers in UP are not able to recoup the prices of producing potato, farmers who have grown processing varieties are reaping a reward as the local government is helping them to export not only to neighboring countries but also to Malaysia and UAE.

Mr. Gaur says that it is easy to export potatoes to other countries only when varieties are grown that are internationally known, and the Dutch companies have the largest number of varieties that are internationally known.

So if the Indian Government allows and promotes growing varieties that are internationally accepted it will help to open markets in more countries and Indian farmers are always open to grow new varieties.

In a book published on Agricultural Value Chains in India (Page 38), the authors have mentioned that India’s share is only 2% in export of value added products like potato flour, meal, powder, flakes, granules and pellets. India is a net importer of potato starch.

On this Mr. Gaur mentioned that for making the above products, India needs a bigger volume of potatoes to be processed but also companies who want to manufacture value added products need to have equipment that can handle such volumes efficiently.

For this Mr. Gaur thinks that the Dutch companies supplying equipment will be the right partners for Indian processors. Mr. Mohd Faruk, Sales Head, Allround and Ms. Bhavana Vishwanath, CEO, Kiremko India, a subsidiary of Kiremko B.V. echo Mr. Gaur: Indian potato growers should be encouraged or incentivised to grow processing varieties.

But Ms. Vishwanath further suggests that Indian companies or farmer producer organisations who want to set-up potato processing plants should be able to avail interest subvention schemes that will help them in purchasing the right equipment and inspire them to invest.

However, when it comes to onion there are no short-term solution that will be possible through international co-operation. Onion storage is still a concern, as there is little involvement of the private sector in setting up storage facilities.

Hence, the Indian government has requested NAFED (National Agricultural Cooperative Marketing Federation of India Ltd.), a Government backed organization, to buy onions at a price above the prevailing market rate to create a buffer stock.

The Agriculture Ministry of India has set-up a price stabilization fund scheme to enable organisations like NAFED to intervene in the market to create buffer stock when there is a glut in the market.

Inspiration from tomato sector

In the tomato sector there are examples where with collaboration with the private sector, World Economic Forum and Maharashtra government, farmers have been able to ride the wave of tomato production.

Such an example has been an inspiration for the Agriculture Department of the Netherlands Embassy to work with the local government, civil society organisations and the private sector in conceptualizing initiatives in Madhya Pradesh, an adjoining region of Maharashtra on how farmers can improve and increase the tomato production. The World Resource Institute has taken similar initiatives in Madhya Pradesh.

Conclusion

Surfing in the ocean required surfers to perform a balancing act to ride the waves. It requires training, practice and perseverance. Similarly for Indian farmers to ride the wave it is essential that farmers along with other stakeholders – policymakers, private sector companies and financial organisations plan on how to ride the wave of TOP production, which will require effort, perseverance and patience.

Slowly and surely that can be achieved, ideally with Dutch partners that support Indian farmers with the right varieties, storage facilities and processing equipment.