Why fruit production needs to fillip to maintain a healthy supply rate

India’s horticulture production in 2023-24 as per the first advanced estimate will be around 355 million tonne, almost at the same level as the previous year, said the government recently.

Production in 2022-23 was 355.48 million tonnes. Within this, vegetables production in 2023-24 is estimated to be around 209.39 million tonnes, which was 1.5 per cent less than the previous year while fruits production is estimated to be around 112.08 million tonnes which was 1.7 per cent more than the previous year.

The production of vegetables like cabbage, cauliflower, pumpkin, tapioca, tomato and banana, and mango in fruits will increase in 2023-24. The area under horticulture crops marginally increaseed to 28.77 million hectares in 2023-24 from 28.44 million hectares in 2022-23, according to an official statement.

The estimated 355 million tonne production in 2023-24 means that horticulture would overtake food grain output, which in 2022-23 was projected to be around 330 million tonnes.

Food grain production in 2023-24 – as per preliminary estimates without factoring in summer crops -- is estimated to be around 310 million tonne.

Horticulture production outstripping food grain holds lessons for the ongoing farmers protest and their demand for a guaranteed minimum support (MSP) price for all the 23 crops for which the government declares the floor rate.

Horticulture, in the broader agriculture and allied activities sector, does not have the protection of MSP or a structured procurement mechanism. Most trading in horticulture crops is done through private channels with limited government market intervention and is subject to demand and supply dynamics.

This is not to say that farmers growing horticulture crops aren’t subject to price fluctuations and business losses. As horticulture crops are perishable and facilities to store them are limited, farmers are susceptible to price fluctuation and production losses.

With extreme weather becoming a critical factor in harvests, production losses in horticulture have become more frequent. Recent incidents of farmers dumping chili crops or running tractors over kinnow are some examples.

The recent Monthly Per Capita Consumption Expenditure (MPCE) report for 2022-23 shows an interesting trend in the share of expenditure on vegetables and fruits in rural and urban India.

In rural India, the share of monthly per capita consumption expenditure in vegetables has declined from 8.29 per cent in 2009-10 to 5.38 in 2022-23 while that of fruits has risen from 1.93 per cent in 2009-10 to 2.54 per cent. Several experts have attributed to the trend of spending shifting to fruits and vegetables from basic grains as incomes rise.

In urban India, the MPCE showed that the percentage share of vegetables in the monthly expenditure has dropped from 5.67 per cent in 2009-10 to 3.80 per cent in 2022-23 (same trend as in rural India).

Urban India’s expenditure on fruits between 2009-10 and 2022-23 was fairly stagnant at 2.5 per cent.

In short, while the percentage expenditure on vegetables has seen a decline both in rural and urban India between 2009-10 and 2022-23 as per the MPCE data when it came to fruits, the expenditure rose in rural India while remaining near stagnant in urban India during the same period.

The trends show the shape of the future demand and supply matrix for fruits and vegetables.

A recent report of a NITI Aayog working group on demand and supply of all crops showed that by 2047-48 (that is in the next more than 20 years), demand for vegetables is expected to be around 365 million tonnes in the ‘Business as Usual’ (BAU) approach while the production is estimated to be 367 million tonnes, reflecting a minor surplus.

In the case of fruits, though, the surplus is expected to give way to a deficit, and production is estimated to be 214 million tonnes in the same approach while demand is projected to be 233 million tonnes.

Business as Usual approach where the overall food demand is expected to grow at an annual rate of 2.44 per cent by 2047-48 and economic growth averages around 6 per cent.

Clearly, between vegetables and fruits in overall horticulture crops, it is the supply of the latter that should raise some eyebrows given the changing consumption pattern.