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Storage Facilities Matter

Post-harvest Management and Farm Outcomes

An evaluation study across Bihar, Uttar Pradesh, and Odisha, finds that post-harvest management of crops plays a crucial role in both value generation as well as value distribution along crop value chains, by mitigating post-harvest losses, in the main. However, while post-harvest loss is an undeniable constraint to farm income in India, the role of post-harvest management is more complex, and its implications go well beyond merely arresting post-harvest losses.

Over the past two decades or so, India’s food system has been transitioning with a declining demand for cereals and pulses and ­increases in the demand for high value horticulture and livestock products with rising incomes, urbanisation, and female labour force participation. Farmers, in this demand-led system, however, have not ­received commensurate benefits from this transition, leading to an incre­asing rural–urban divide. Value chains remain poorly developed, in terms of storage ­facilities at the farm level, transportation, and food processing units, especi­ally in case of the perishables. Due to this, farmers incur higher losses compared to wholesalers, processors and ­retailers. Indian agriculture seems to have hit the frontier in intensive margin.

Over time, the government has introduced several schemes to lift the rural economy. The agriculture sector, in the recent years, has seen successive central- and state-promoted schemes like Mantri Kisan Samman Nidhi, Natio­nal Agriculture Market (eNAM), Pradhan Mantri Krishi Sinchayee Yojana, and Pradhan Mantri Fasal Bima Yojana to boost farmers’ outcomes. In 2016, the Government of India also stated its goal of doubling farmers’ income by 2022.

Notwithstanding the policy thrust, the agriculture sector has, by and large, shown a lackluster performance with a meagre 2.9% growth rate during 2014–15 to 2018–19 (GoI 2019–20). Farmers’ inco­mes have fallen progressively below that of the non-farm sectors. Most farmers in India remain stuck in a low-income trap. In 2015–16, about 68% farmers with marginal landholdings earned an annual income of `33,636 from farming, which translates into a monthly income of `2,803, which is barely one-fifth of the national average (GoI 2015–16). Further, between 2014 and 2016 period, the farm revenue fell by 6% per year because of low market prices (OECD/ICRIER 2018).

While several reasons—ranging from fragmentation of landholdings, lack of public investment, plateauing of technological gains, to underdeveloped and fragmented agricultural markets—frequently come up as the factors contributing to farmers’ low incomes, an important aspect that receives rather inadequate attention in the literature is the role of post-harvest management (PHM) in determining farmer income.

Much of the existing literature on PHM focuses on its role in reducing post-­harvest losses, which indeed affect farmers’ returns. However, in mitigating these losses, PHM works in more complex ways that go beyond merely arresting post-harvest losses. By empowering farmers in choosing the time and location of sales, influencing the product quality, fostering product differentiation and, hence, better price discovery, PHM plays an important role in both value generation as well as value distribution.

What Is PHM?

After production, agricultural produce undergoes a series of post-harvest operations, handling stages and storage ­before they reach the consumers. Each post-harvest stage results in some losses and has an effect on the value distribution. These are the factors that determine the gap between consumer and farmer prices of a product.

Post-harvest food is one of the many direct ways in which value distribution between the consumer and producer is affected. This is defined as the measurable quantitative (decreased weight or volume) and qualitative (unwanted cha­nges in the cosmetic features of food and reduced nutrient value) losses along the supply chain that can occur at any stage, starting from the time of harvest till the end uses (Hodges et al 2011; De Lucia and Assennato 1994; Buzby and Hyman 2012). Such losses can reduce the value of the produce below its market value (Hodges et al 2011).

An assessment of crop losses conducted by the Indian Council of Agricultural Research in 2016 revealed that about 3.9% to 6% cereals, 4.3% to 6.1% pulses, 2.8% to 10.1% oilseeds, 5.8% to 18.1% fruits, and 6.9% to 13% vegetables were lost during harvesting, post-harvesting activities, handling and storage (Jha et al 2016). On the other hand, as per the estimates of the Committee on Doubling Farmers’ Income (2019), at the all-India level, farmers are unable to sell about 40% of the total fruits and vegetables produced in the market or lose around `63,000 crore every year for not being able to sell their produce for which they have already made investments (Pandey 2018).

With about 80% of the Indian farmers being small and marginal, the post-­harvest losses have first-order effects on them. Beyond post-harvest losses, poor storage facilities compel smallholder farmers in India to sell their produce at low prices soon after the harvest. On the other hand, quality and quantity losses due to poor storage, of particularly the high value crops, has possibly been the major contributor of low farmers’ ­income and seasonal food deficits at the household level. Simultaneously, with storage facilities per se and PHM in general, the possible stranglehold of the middlemen and traders can be weakened by empowering the farmers in terms of their choice of markets.

Case of TARINA and PHM

To address the issue of losses and weak bargaining power of the farmers, the Tata-Cornell Institute, under its flagship project Technical Assistance and Research for Indian Nutrition and Agriculture (TARINA), introduced post-harvest interventions in various states of India, namely Bihar, Odisha and Uttar Pradesh (UP). The study explored various pathways to examine the impact of PHM interventions on farmers’ welfare and how it is reflected in farmers’ choices and outcomes. The objective was to move away from the technical issue of food losses per se to economic losses, while understanding that the former is nested in the latter.

Data and methodology: The intervention was carried out in four districts, namely Munger in Bihar, Kandhamal and Kalahandi in Odisha, and Maharajganj in UP. There were 450 households in the treatment group and 450 households in the control group in each of the four districts of the three states. It was ensured that, on an average, the household characteristics of both the groups were similar, and that the treatment and control groups reacted similarly to the intervention. For instance, among other indicators, the socio-economic profile of the households was considered. Both the treatment and control groups fared similarly on these indicators and therefore would have had similar responses to the intervention.

A baseline survey of 3,600 households was conducted in 2017 and an end line survey of 3,275 households, with an approximately 10% attrition rate, was conducted in 2019 to assess the impact of the intervention. Attrition was due to ­either migration, or households not available during the time of the surveys. There was no random assignment of beneficiaries, in order to assess the causal relationships, and a double difference propensity score matching (PSM) across two time periods has been used in the study. The analysis also includes multivariate regressions on the matched sample.

As part of the intervention, households who were a part of the treatment group were provided with PHM techno­logies and demonstration on application of these technologies. Many households were given training on best practices for cleaning, sun-drying and storing of grains. These trainings were like the Krishi Vigyan Kendra’s archetype, where farmers are provided with trainings and on-field demonstrations about the latest technologies in agriculture.

Different types of PHM technologies were distributed to households depen­ding upon their farm produce. Some households were provided with a single technology while some were given a combination of technologies. Largely distributed PHM technologies included grain-pro bags or hermetic bags, with a combined storage capacity of 70–75 kilogram (kg) per bag of crops, such as pulses (chickpea and lentils) and wheat. In some locations, multigrain threshers (both power and pedal operated) and spiral graders for cleaning and grading of pulses and grains were also introduced. This was done to assist the farmers in creating value for their produce right at the farm level. Other PHM technologies and equipment included moisture meters, metallic storage bins, solar driers, and vegetable stands among others. A total of 13 PHM technologies and equipment were distributed to households in the four intervention districts of TARINA.

Storage Loss Matters

With the focus on storage practices as part of post-harvest intervention, Table 1 presents the economic effects of post-harvest losses—the reduction of which is the quintessential target of PHM. Most of the post-harvest technology (PHT) that we examine in our project is related to storage. Hence, the point that we emphasise here is that storage loss has material consequence, and thus forms the basis for our storage-based post-harvest intervention. The questions that we explore are: how important is storage? and, what is the importance of storage failure that would make a case for storage-based intervention?

Here, in terms of farmer outcomes, we examine the household expenditure as a measure of welfare. Since we are examining the rural households, variability in income and its sources mandates proxying household income with household expenditure. Taking household expenditure as a marker of household welfare, in two commodities, that is, green gram as well as paddy, with storage loss, there is significant reduction in household ­income (proxied by expenditure) (Table 1). Hence, there is a basis for PHM from a welfare standpoint. In per capita monthly expenditure, post-harvest loss is asso­ciated with a reduction in household expenditure to the tune of `317 per individual, that is, about `1,600 at the household level assuming an average family size of five.

The interaction term is the variable capturing the impact of storage. Asse­ssed as the impact of storage on the treatment group (income/expenditure of the treated farmers), conditional on storing in the end-line period, the interaction term captures the treatment effect on the treated.

PHM and Farmers’ Outcomes

Since storage loss has a material consequence for the farmers, we examined its effect on the price realisation of the farmers. How do the farmer outcomes differ in terms of improving the bargaining power across space and time?

An a priori assumption is that with improved PHT like storage, farmers can store optimally with flexibility in marketing in terms of when to sell, thus supplying the produce as and when the market demands. This can minimise distress selling in which the farmers get a raw deal. PHT thus helps farmers to explore markets and optimise the timing of sales to get optimum prices. This, thus, translates into better price realisation and higher income.

The impact of PHM can be gauged by comparing treated farmers with the control farmers. With two periods of data, we use double difference PSM and regression on the matched sample to assess the impacts on household incomes. Notwithstanding the roles played by crop-specific factors in estimating an impact and the fact that it does not work uniformly for all crops, in Table 2, we present the estimate of causal impacts for only three commo­dities, namely, wheat, pigeon pea and ­potato. Given that storage leads to better price discovery, we find that household expenditure is higher for those who adopt storage-based PHM practices in the case of wheat, ­pigeon pea and potato.

Particularly, we want to make a point for potato. Potato is a perishable crop and its storage is very important since it has significant issues, including the choice of markets and the optimal timing of sales.

The study thus attempted to test the hypothesis whether investment and improvement in PHTs like storage helps farmers to mitigate losses and improve their economic gains. Results from the study show that when farmers can use PHTs like storage bags and drums and are able to apply post-harvest loss management practices, there are positive outcomes. These outcomes are in terms of positive impacts on farmers’ price realisation.

In the project locations, farmers who applied PHM practices for crops like wheat, potato and pulses like pigeon pea, lentils and chickpea witnessed some association for higher price effect. Though the order of magnitude of price effect ranged from just `4`5 per quintal, it does reveal the price effect pathway for storage-based post-harvest practices (PHPs). This was largely due to the imp­roved PHPs and storage technology, which helped farmers in ­improving their bargaining power and timing of sale. Farmers who stored paddy for at least a week, largely refrained from distress selling and fetched better prices, compared to the ones who did not store. In the case of wheat, pigeon pea and potato, though households experiencing storage loss tend to be characterised by lower household expenditure, the effects are statistically not significant.

Way Forward

The prototype in this study characterises most of India, where 60%–70% of the foodgrains produced is stored at the household level in indigenous storage structures (Kanwar and Sharma 2003). Farmers with limited resources, use locally available raw materials to develop traditional structures differing in ­design, shape, size and functions. The material used includes paddy straw, wheat straw, wood, bamboo, reeds, mud, bricks, cow dung, etc, depending on the geographical location. These traditional storage structures do not guarantee protection against major storage pests, deterioration, shrinkage, spoilage, moisture and time (duration), leading to a high percentage of grain losses (Channal et al 2004).

In the case of perishables, approximately 370 million tonnes of perishable food at the risk of wastage, with only 10% receiving cold-storage facilities (Biswas 2014). In a storage ­facility, perishables require cleanliness, optimal temperature, space and regular monitoring. Most small and marginal holder farmers are not able to afford these sophisticated technologies, leading to high food and income losses.

This article looks at the role of storage facilities in understanding the impact of post-harvest loss management on farmers’ economic welfare. Lack of proper storage infrastructure and technology, along with the absence of market information, leads to distress selling by farmers. Improper handling of the produce also causes damages and affects the quality of the produce, which can result in signi­ficant post-harvest losses (Kasso and Bekele 2016). PHM entails minimising losses, maintaining better quality, thereby leading to better product differentiation. Only when product differentiation exists, farmers can realise a higher price for the same volume of the produce.

Intuitively, farmers can benefit only when the wedge between the wholesale and retail prices is reduced. This will happen by enhancing the bargaining power of farmers in terms of optimisation of timing and the market for sales, and hence, better price discovery. Thus, PHM leads to farmer empowerment in terms of improved time of sale, flexibility in marketing and scouting for better markets that could translate to higher income, thereby supplying produce as and when the market demands.

This article suggests that technical issues like food loss is nestled in the economic issue of farmers ­incomes and overall welfare. Thus, there is a need for proper assessment of farmers’ risk-taking behaviour for policies and investments in technologies and practices for mitigating post-harvest loss, which will drive efficiencies across the entire value chain, leading to improvements in farmers’ income. It can be said that as market forces move towards creating more differentiation, the movement towards greater use of post-harvest systems should gather pace.

References

Biswas, A (2014): “India Must Tackle Food Waste,” World Economic Forum, www.weforum.org.

Buzby, J and J Hyman (2012): “Total and Per Capita Value of Food Loss in the United States,” Food Policy.

Channal, G, S Nagnur and C Nanjayyanamath (2004): “Indigenous Grain Storage Structures,” Leisa India.

GoI (2015–16): State of Indian Agriculture, Ministry of Agriculture and Farmers Welfare, Department of Agriculture, Cooperation and Farmers Welfare, New Delhi, Directorate of Economics and Statistics.

— (2019): Agricultral Census 2015–16, Agriculture Census Division, Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture & Farmers Welfare.

— (2020): Economic Survey 2019–20, Department of Economic Affairs, Ministry of Finance, Government of India.

Hodges, R, J Buzby and B Bennett (2011): “Postharvest Losses and Waste in Developed and Less Developed Countries: Opportunities to
Improve Resource Use,” Journal of Agricultural Science, Vol 149, No S1, pp 37–45.

Jha, S, R Vishwakarma, T Ahmad and A Rai (2016): “Assessment of Quantitative Harvest and Post-Harvest Losses of Major Crops/Commodities in India,” ICAR.

Kanwar, P and N Sharma (20o3): “An Insight of ­Indigenous Crop Storage Practices for Food ­Security in Himachal Pradesh,” SAARM, India.

Kasso, M and A Bekele (2016): “Post-harvest Loss and Quality Deterioration of Horticultural Crops in Dire Dawa Region, Ethiopia,” Journal of the Saudi Society of Agricultural Sciences.

M De Lucia, D A (1994): “Agricultural Engineering in Development: Post-harvest Operations and Management of Foodgrains,” Food and Agriculture Organization (FAO).

OECD/ICRIER (2018): Agricultural Polices in India, Paris: OECD Food and Agrcultural Reviews, OECD Publishing.

Pandey, K (2018): “Poor Post-harvest Storage, Transportation Facilities to Cost Farmers Dearly,” 28 August, https://www.downtoearth.org.in/news/agriculture/poor-post-harvest-storage-transportation-facilities-to-cost-farmers-dearly-61047.

 

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Updated On : 20th Apr, 2020

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