A way out to strengthen the price volatility in the prices of Tomato, Onions and Potato is strengthening TOP Scheme. Discuss

In the budget of 2018, the government had announced “Operation Green-TOP” with an allocation of Rs 500 crore to build value chains of Tomato, Onion and Potato (TOP) to ensure a higher share of consumer’s rupee goes to farmers and stabilises their prices.

Strengthening TOP Scheme

Storage Infrastructure

There is a need to create ample storage for buffer stocks. But the repeated stocking limit on onion traders discourages private investments in modern cold storages. Hence to attract large private investment in storages, the Essential Commodities Act needs to be amended.

Processing Facilities

There is a need to increase processing capacities for TOP. Buffer stocking of tomatoes is not possible, processing remains the only solution.

To support the processing the GST for tomato puree and juice should be reduced from 12 per cent to 5 per cent similar to Milk and most milk products which attract 0 to 5 per cent GST.

To popularize the use of processed products (tomato puree, onion flakes, powder) among urban and bulk consumers (hospitals, schools, armed forces), the government should run campaigns in association with industry organisations, as was done for eggs.

As the relative purchasing power of common Indian is increasing it is time India will start using these relatively new products, like dehydrated onions, tomato puree, shredded potatoes and frozen tikkis/french fries, similar to the way they adopted milk powder, ginger-garlic paste, and frozen peas.

Farmer Producer Organisations and Streamlining APMC

The retailers must be encouraged to buy directly from farmer producer organisations (FPOs) through contract farming, bypassing the mandi system. Similar to dairy cooperatives, TOP cooperatives and retail outlets like Safal across the country should be opened.

This would require value chain development starting with market reforms along with overhauling the infrastructure of existing APMC mandis in the country. Most of the APMC mandis are running over their capacity with crumbling infrastructure. For better functioning APMCs require at least two to three times more land and much better infrastructure. These reforms and investments can be undertaken on a public-private partnership (PPP) basis, commissions can be reduced, contract farming can be encouraged, along with setting up of private mandis for better efficiency.

Way Forward

Knee jerk reactions like export bans or stocking limits on traders only show the hollowness of policies. The government needs to find a sustainable solution for price stabilisation of TOP, rather than taking temporary ad hoc measures. It is time to TOP up scheme.