Why the Centre is betting on horticulture clusters to cool food prices
The Centre is preparing a ₹2,000 crore horticulture cluster scheme to bring fruit and vegetable production closer to cities and curb food inflation. The plan aims to cut logistics costs, reduce wastage and improve farmers’ price realisation, but its success will depend on execution and private sector participation.
Food inflation has a habit of resurfacing when supply chains are weakest, and India’s latest policy response is aimed squarely at that fault line. The Centre is preparing a ₹2,000 crore horticulture cluster programme that would bring fruit and vegetable production closer to large urban markets, with the twin goals of lowering retail price swings and lifting farm incomes, according to Mint.How the cluster model is expected to workMint reported. Private players, farmer producer organisations and cooperatives are expected to be eligible to develop the clusters, giving the plan a mixed implementation model rather than a purely state-run format.Why policymakers are focusing on perishablesMinistry of Agriculture and Farmers Welfare’s second advance estimates, released on 11 June, project horticulture production at 377.77 million tonnes in 2025-26, up by 7 million tonnes from 2024-25. Fruit output is expected to rise to 121.4 million tonnes from 117.6 million tonnes, while vegetable production is projected at 221 million tonnes, up from 217.8 million tonnes.supply chain management, and that the result has been sharp retail volatility in major urban centres such as Delhi-NCR, Mumbai, Kolkata, Bengaluru, Hyderabad, Pune and Chennai. Tomato, potato and onion prices have been especially sensitive to these bottlenecks.What the government says it will addressThe economics behind the inflation betArcus Policy Research, told Mint that the plan can work as a win for both sides of the market. She argued that moving production closer to consumption would lower freight costs and post-harvest losses, encourage demand-linked production and help consumers receive fresher produce while farmers earn better returns.S.P. Singh, senior fellow at IFTRT, a Delhi-based transport research organisation, said logistics account for 15 to 20 per cent of the total input cost in fruits and vegetables because production is often far from consumption markets. Singh added that supply chain inefficiencies raise wastage as agricultural output is less predictable than manufacturing output.Why the plan could matter beyond city prices