The yearly spike in vegetable prices — particularly onions and tomatoes — forces dietary changes for families across India.

According to the Crisil “Rice Roti Plate Report,” prices for onions and potatoes in September 2024 were 53 per cent and 50 per cent higher, respectively, compared to September 2023. Such price hikes directly impact household budgets, particularly for marginalized communities, leading to reduced vegetable consumption and poorer nutrition outcomes.

The Reserve Bank of India has highlighted that food inflation is largely driven by climate change. Unpredictable weather and disruptions in the supply chain are pushing up vegetable prices. Additionally, India’s food supply systems face several challenges, including inadequate storage infrastructure and significant post-harvest losses. A 2022 study by Nabard Consultancy Services estimated that 5-12 per cent of vegetables are lost after harvest due to poor storage conditions, contributing to wastage and price volatility.

Production clusters

A potential solution is the creation of large-scale vegetable production clusters near major consumption centres, as outlined in the Union Budget for FY 2024-25. The government aims to improve the vegetable supply chain by promoting Farmer Producer Organizations (FPOs), agricultural start-ups, and cooperatives, which would enhance the efficiency of collection, storage, and distribution.

The benefits of such a move are substantial. First, developing storage infrastructure — cold storage and warehouses — can significantly reduce post-harvest losses. With improved storage facilities, farmers can hold their produce until market conditions improve, stabilizing prices. Additionally, these facilities can reduce transportation and storage costs, further lowering vegetable prices. Another benefit is the reduction in input costs. By organizing farmers within clusters, agricultural inputs like seeds, fertilizers, and pesticides can be procured at scale, leading to cost savings and facilitate access to quality inputs at lower prices, boosting farmer profitability.

However, the success of this initiative depends on effective implementation. Many FPOs, despite their potential, struggle due to poor management and a lack of understanding among farmers, particularly smallholders. To ensure success, farmers need to be collectivized effectively at the grassroots level.

Self help groups

Our experience has shown that leveraging women-led Self-Help Groups (SHGs), which have a proven track record in financial management and collective decision-making, is a promising model. Typically small, SHGs — composed of 10-15 members from agricultural backgrounds— can be federated into larger organizations like Village Organizations (VOs) and Cluster Level Federations (CLFs). These community institutions have deep ties to rural areas, access to credit, and experience in business planning, which can be invaluable in creating functional and sustainable FPOs.

In the medium to long term, capacity-building efforts can help FPOs diversify into value-added activities, such as processing vegetables.

With technical support, FPOs could also build and maintain their own storage infrastructure, improving the supply chain and further reducing wastage. This women-led model also provides significant social benefits. It enhances household decision-making and economic empowerment for women.

Apart from FPO, start-ups are also vital for the success of the initiative. They can develop market linkages, provide crop advisory services, offer insurance, and introduce sustainable farming practices.

Creation of vegetable production clusters is a potentially game-changing development. Not only will it strengthen the vegetable supply but also enhance farmer incomes, making farming viable again.

The writer is Manager – Research of Sambodhi Research & Communications, a Social Impact Advisory