India’s fruits and vegetables sector (F&V) is growing faster than cereals, contributing roughly 30 per cent to the value of crop agriculture. It is also more nutritious. Yet, it receives far less policy focus and institutional support compared to cereals. Without organised value chains, proper storage, or adequate processing facilities, the F&V sector remains highly vulnerable to seasonal gluts, price crashes, and post-harvest losses. Around 8.1 per cent for fruits and 7.3 per cent for vegetables are lost in the post-harvest value-chain, amounting to 37 per cent of total post-harvest losses of Rs 1.53 trillion annually (NABCONS, 2022). Moreover, with highly fragmented value chains, farmers typically receive about 30 per cent of what the consumers pay for F&V. But what if these small holders join hands and float farmer producer companies, the way it was done in case of milk?
The milk story is well known. The milk cooperatives under the leadership of Verghese Kurien changed India’s milk landscape from a highly deficit country to the world’s largest producer of milk with 239 million tonnes, followed by the US at 103 million tonnes in 2023-24. More interesting is the fact that brands like AMUL claim that their milk farmers receive between 75 to 80 per cent of the consumer price.
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The big question for policy makers is why India cannot replicate this success story of milk in the F&V sector? It is surely challenging. Unlike dairy, where a single commodity (milk) was efficiently organised, F&V involves multiple commodity value chains, each requiring specialised infrastructure. F&V are highly seasonal and often concentrated in specific regions, making them susceptible to extreme price fluctuations. The only way to stabilise their prices is by integrating farmers into well-structured value chains that include aggregation, assaying, grading, sorting, packaging, processing, and then having direct market linkages in both domestic and export markets.
This is where the role of Farmer Producer Organisations (FPOs) becomes critical. Sahyadri Farmer Producer Company Ltd (SFPCL) is one such company operating in Nashik district of Maharashtra, which provides a blueprint for success. Founded in 2004 under the leadership of Vilas Shinde, SFPCL started with just 10 farmers. It has grown into a network spanning 252 villages, 31,000 acres, and over 26,500 registered farmers in 2023-24. SFPCL’s annual turnover skyrocketed from Rs 13 crore in 2011-12 to Rs 1,549 crore in 2023-24 (Figure 1).
Of SFPCL’s total revenue, 64.6 per cent comes from the domestic market, while exports contribute 35.4 per cent, reaching 41 countries worldwide. Grapes and tomatoes lead the total revenue mix, together accounting for 51.7 per cent of the revenue, followed by citrus, dry fruits, and mangoes (Figure 2). However, in the total export revenue, grapes have the dominant share (63.9 per cent), followed by mango and other fruit slices (18.2 per cent) and banana (12.8 per cent). At the core of Sahyadri’s success is its ability to bridge the gap between small farmers and global markets by integrating aggregation, value addition, processing, and direct market linkages. SFPCL has built strong relationships with international buyers, ensuring that Indian farmers get access to premium markets by adhering to stringent quality and traceability standards following Good Agriculture Practices (GAP). SFPCL is the largest grape exporter of the country. It exports 90 per cent of the procured grapes to the EU and UAE, and farmers receive, on an average, about 55 per cent of the FOB price.
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Another crucial aspect of SFPCL’s success is also its investment in processing infrastructure. Tomatoes dominate SFPCL’s domestic revenue at 35 per cent, with the entire produce going for processing into ketchup, tomato puree, and sauce production. This has ensured price stability for farmers even during glut periods. Because of the expansion of the processing units, SFPCL could also generate 6,000 plus jobs out of which 32 per cent is women employment in 2023-24.
The success of Sahyadri Farms gives us a blueprint for scaling it up to the entire F&V sector. As of August 2024, the government of India has a target 10,000 FPOs, of which 8,875 FPOs have been successfully registered across the country. If India can scale up 10,000 high-impact FPOs like SFPCL, it could redefine the F&V sector, as was done in the milk sector. Sahyadri Farms could be the divadandi (lighthouse), as AMUL was in the milk sector. This requires interventions in three key areas. First, strengthening FPOs through institutional support by providing working capital, infrastructure development, and digital integration. Linking FPOs with platforms like the Open Network for Digital Commerce (ONDC) that can enhance market access, while blockchain technology can improve transparency and traceability in transactions. Second, reviving and expanding Operation Greens and the National Horticulture Mission. The GoI launched Operation Greens in 2018 to stabilise perishable prices. But with a modest Rs 500 crore allocation under the Ministry of Food Processing, it lacked both a visionary leader like Kurien in Operation Flood and clear accountability. Third, a commodity-specific value-chain approach must be prioritised, ensuring at least 10 to 20 per cent of F&V produce is processed, preventing distress sales and stabilising prices.
What India truly needs is a National Fruit and Vegetable Board, akin to the National Dairy Development Board (NDDB), to streamline market linkages, promote efficient value chains, and integrate retailers like SAFAL, ensuring better price realisation for farmers. The question remains: Can Vilas Shinde be the Verghese Kurien of India’s F&V sector? The Sahyadri experiment has already cracked the code. What we need now is scale, policy backing, and a champion to drive this growth. The aim should be to ensure that farmers get at least 55 to 60 per cent of the price being paid by consumers. If India can do it, it will transform its F&V sector.
Gulati is Distinguished Professor and Das, research fellow at ICRIER. Views are personal
