The political turmoil of the past eighteen months has hit Kashmir’s apple industry hard. The entry of the NAFED and the import of duty-free Iranian apples through the Afghanistan route is being seen as interventions that will upset the apple-cart further, reports Yawar Hussain
When Jammu and Kashmir administration signed a memorandum of understanding (MoU) with the National Agricultural Cooperative Marketing Federation of India (NAFED) in January 2020, it was expected to promote the state’s horticulture produce and take it to the global market. A year later, the NAFED has done little to help the apple farmers. On the contrary, it has shaken up the already smooth and profitably functioning decades-old setup of the Rs 9000 crore worth horticulture industry. The entry of duty-free Iranian apples through the Afghanistan route has only further detracted from the profitability of the apple.
Kashmir’s apple growers who produce nearly 20 lakh metric tons of apples every year, more than two-thirds of India’s total apple production, have been expressing concerns about the issues that threaten the basic foundation of the apple industry in the coming years.
Upsetting the Apple Cart
When the NAFED was brought to Kashmir, it was expected to cover 5,500 hectares at a cost of Rs 1,700 crore in the next five years with a major focus on apple, walnut, cherry, pear and other significant horticulture produce. The Federation had to also set up 20 Farmer-Producer Organizations, one in each district in addition to three cold storage clusters, one each in the north and south Kashmir and one at Kathua, Jammu at a cost of Rs 500 crore.
Prior to the signing of the MoU, the Union Cabinet had given its nod to NAFED to buy 12 lakh tonnes of apples in Jammu and Kashmir in 2020. In 2019, the agency had managed to procure only about one per cent of its target of 13 lakh tonnes accounting for 15,770 tonnes of fruit valued at Rs 70 crore, according to the official data of the Ministry of Home Affairs.
In 2020, the Centre had allowed NAFED to use a government guarantee of Rs 2,500 crore and the losses incurred, if any, would be shared by the Centre and the Jammu and Kashmir administration on a 50:50 basis. Procurement had to be done directly from apple growers and the payment was to be made into their bank accounts via direct benefit transfers.
However, the local growers have suspicions about the NAFED. They think that the agency has been brought in to disrupt the existing local set-up, which for decades has been yielding profits for the rural Kashmir populace employed in the trade.
Former Finance Minister and noted economist Haseeb Drabu said he believes it is “problematic” if the NAFED becomes the sole marketing agency for Kashmir apple.
“In the recent union budget, the Finance Minister has announced monetization of almost all Public Sector Undertakings (PSU). But is it then that PSUs like NAFED are being brought in through backdoor into Jammu and Kashmir,” he said, asking why the NAFED is being made a key player in Kashmir’s crucial apple industry.
Questioning the marketing skills of PSUs, Drabu said that the government should provide at least one example of a semi-government company being successful at this job. He said the apple the industry of the Valley predates partition and has a network of its own which has been built for over 100 years.
“These networks are very important not just for economic purposes but for the larger social purpose also. If these are disturbed by coming in of the NAFED then that is going to be critical,” Drabu said, adding that the new networks would take “ages” to be built.
Drabu said he doesn’t have a problem if the NAFED builds infrastructure in the apple sector but the success story of apple in Kashmir valley is because the government never intervened.
“If there would have been government intervention in the apple industry, it would have never succeeded. It has always been a private enterprise,” he said adding the horticulture is the prime driver of the Kashmir economy. “More than seven lakh families are dependent on it which is 35 lakh people if the average size of the family is taken as five people. That is 1/3rd of the population of Jammu and Kashmir and nearly 50 per cent population of the Valley. That is in terms of just the share and the livelihood impact of it”.
In the larger context, he said, Jammu and Kashmir on its own is the 6th largest producer of apples in the world and by virtue of that India is the 5th largest producer in the world.
“India can become 2nd largest apple producer in the world in the next three to four years if everything is done right. This is how crucial Kashmir valley’s apple industry is,” Drabu said.
President Cold Storage Association Majid Aslam Wafai said that they don’t see the building of cold storage by the NAFED as a “threat” to the existing infrastructure in Kashmir.
“Let them come and set up storage facilities here. We won’t be sitting ducks. Our units are in the organized sector and we have full confidence in ourselves to fight any competition,” Wafai said, adding that their deliberations with the top-level officials of NAFED had put their fears to rest. “The NAFED has just a complementary role.”
Dangling Import Sword
The imported apples particularly from the central Asian nation Iran is also posing stiff competition to Kashmiri apple. This came amid pressures from the American government that Delhi must reduce the anti-dumping duty on American apples.
This forced the growers to write a letter to the Delhi Chief Minister Arvind Kejriwal last month seeking a ban on the import into the national capital.
“Apples from Iran arrive in our country via Afghanistan unauthorizedly,” the letter sent by Kashmir Valley Fruit Growers Cum Dealers Association (KVFGDA) reads. “They are illegally auctioned at New Sabzi Mandi, Azadpur -Delhi. The illegal sale of imported apples in New Fruit Market Delhi has had an adverse impact on our produce. Plus the import and sale of fruits in APMC Mandis are not allowed under the provisions of law.”
Seeking a ban on the import of Iranian apples, the KVFGDA letter added that the imposition of the ban to restrict entry and sale of proxy fruits and sale thereof is, therefore, very necessary. Amid the controversy, the union budget was presented earlier this month in which the union Finance Minister Nirmala Sitharaman announced the imposition of an Agriculture Infrastructure and Development Cess which will be charged at the rate of 35 per cent on apple imports on the customs side.
However, on the other hand, basic customs duty rates have been cut on apple imports by 15 per cent.
With India being Asia’s largest apple importer, as per Commerce Ministry data, the imposition of 35 per cent cess sounded like the much-needed relief for the Kashmiri apples because the rates on the imported apples were expected to go up.
However, stakeholders in Kashmir believe that the cess imposition is a hoax as the reduction of 15 per cent customs duty on imported apples is likely to make them cheaper.
Former Kashmir Chamber of Commerce and Industry (KCCI) president and Srinagar-based lawyer, Faiz Bakshi, said: “The 35 per cent cess is surely on imported apples but on the other hand, the duty has been reduced by 35 per cent on non–American imports and 55 per cent on apple imports from the USA. Despite the levying of cess of 35 per cent, the imports have become cheaper by more than 30 – 50 per cent. That does not help local apple growers.”
Bakhshi said in the earlier duty structure the apple Freight on Board to India would mean that if the basic cost was Rs 100, the + duty of Rs 50 would raise the cost per kg of the imported apple to Rs 150. “In the new structure if the basic cost is Rs 100, with the addition of Rs 15 more, the total cost will be Rs 115 per kg,” he said, insisting that coupled with 35 per cent cess on duty (Rs 5.25), the total cost could be Rs 120.25 per Kg. “It means imports have become cheaper by about Rs 30 despite 35 per cent cess. In the case of the USA, it has become cheaper by about Rs 50.”
Pertinently on the very next day of imposition of 35 per cent cess on apple imports, the Finance Ministry issued a corrigendum exempting select imports from five neighbouring countries from the customs duty announced in the Union Budget 2021-22 including on the apples originating from Afghanistan, and entering India through the Wagah-Attari border. As per the corrigendum, the countries exempted include Bangladesh, Bhutan, Maldives, Nepal and Afghanistan.
The exemption is already impacting the profitability of Kashmiri apples with the ‘illegal’ import resuming just two days after the Kashmiri traders were assured by officials in Delhi that the practice would be curbed.
Ghulam Mohammad Bhat, a fruit grower from north Kashmir whose two-thousand odd apple boxes are in cold store is worried because the huge quantity of Iranian apples is forcing the Kashmiri apple growers to sell their produce for a very less price.
“The illegal Iranian apples are hurting us. We had very less produce last year and there was widespread scab disease. I stored my produce from last year to get a better price this year which, however, seems unlikely now,” Bhat said.
Even though Afghanistan’s total annual apple produce is just one lakh metric tons, the country exported about six lakh metric tons of apples to India between the months of October 2020 and January 2021 alone.
The passing off of apples from Iran and other adjoining countries under an Afghanistan label through the Wagah-Attari border is also a concern for the Kashmiri apple growers and traders while the government’s silence is being viewed by them as a “deliberate” ploy.
“They (government) want to destroy the Kashmir apple industry. We are fighting a multi-pronged assault,” Abdul Rashid, a fruit grower from central Kashmir’s Budgam, said.
The growers allege that the apple industry which contributes eight per cent to Jammu and Kashmir’s Gross Domestic Product (GDP) is being “deliberately dismantled” by the federal government and Jammu and Kashmir administration, Chairman Kashmir Valley Fruit Growers Cum Dealers Association Bashir Ahmad Bashir said the NAFED along with the exemption of import duty on Afghanistan, apples are not good for Kashmir’s apple industry.
“The NAFED would dismantle our existing structure. They will monopolize the apple industry in particular and horticulture sector in general,” Bashir said, adding that the government wants to bring in outside private players in the apple industry. “NAFED wasn’t needed for high-density trees or even other things. The government could have strengthened the existing set up which is built by locals”.
It is worth mentioning here that almost a dozen local initiatives are engaged in the conversion of the traditional apple orchards into high-density plantations. They have put in almost a decade in planning these initiatives and have created the supply chain set up with strong nursery back-up. Now, NAFED intends to jump into this sector because this is almost Rs 30,000 crore business over the next 30 years.
Bashir said the exempting of the Afghanistan route is “unfortunate” for the Kashmiri apple industry. “We wrote to everyone from the Agriculture Minister to the Finance Minister and the Delhi Chief Minister but to no avail,” he said.
Nazir Ahmad Rather, another Kashmiri apple trader said: “We will face the heat of competition sooner or later. These import barriers won’t be there forever. Improving the quality and competitiveness of Kashmir apples is the need of the hour rather than disturbing the grower with these new things.”
“Every trade needs to raise its bar. The Kashmiri apples are no exception. But the government is more focused on bringing us down rather than facilitating our growth. We should have been preparing to compete on the international level but we are suffering at the national level as well,” Rather said.
While Kashmir apple exporters and cold storage owners had put in a lot of effort in lobbying to ensure that the recently-announced customs duties were levied uniformly on apples, sources in the Horticulture department reveal that the larger international trade considerations with the neighbouring countries forced the government to make an exception for some countries.
With Kashmir’s apple industry fighting losses post-August 5, the Covid-19 pandemic last year led to the fall in the cultivation of apples in the valley. The farmers couldn’t spray the apple orchards due to the lockdown which resulted in less apple cultivation as well as unhealthy apples on trees.
Abdul Gani, an apple farmer from south Kashmir’s Anantnag said that they incurred huge losses due to the Covid pandemic. “The apple box which used to sell for Rs 800 was sold for Rs 100-150. People who took the produce outside also faced issues. We requested the government to help but nothing happened,” Gani said.
While the pandemic did play a big spoiler last year for the apple farmers, the weather in Kashmir was also not favourable for them. Despite all these woes, the apple-growers in Kashmir state that they receive little support from the government.
“For years, we have been raising the issue of crop insurance with different companies but no one is ready to offer insurance services to us,” said Bashir. “Even the government-owned Jammu and Kashmir Bank did not devise an insurance scheme for the growers”.
Chopping of Orchards
With the Kashmiri apple being at the receiving end from all sides, the government’s axe this year fell on full blooming orchards in Pulwama and Budgam districts where under the pretext of retrieval of “encroached” forest land, the government started to chop apple trees.
The viral pictures of axed apple trees from Sangarwani and adjoining villages in the upper reaches of the Pulwama and Budgam created a backlash on social media. Locals alleged that the government-issued eviction notices to them citing that their orchards fall under “encroached” forestland.
“They cut down our trees. We had planted them very long ago. It takes almost a decade to have a good fruit-bearing orchard,” a resident of Sangarwani said. “The department did issue eviction notices but till we could reply, they came and destroyed our trees,” locals from Kanidajan said, adding that their forefathers had planted these trees.
Similar notices were issued in Budgam district’s Jabbad Branwar, Nagbal, Yusmarg, and Darwan villages where the locals fear similar action on their apple orchards.
Chairman of Right To Information Movement Dr Raja Muzaffar Bhat said the action by the Forest Department was an open violation of the Forest Rights Act as the said law provides “legal protection” to forest dwellers like Gujjars, Bakarwals, Chopans, and even Kashmiri or Dogri people living in forest areas for more than 75 years.
The Lethpora attack in February 2019 on the CRPF convoy had an adverse impact on apple transportation from Kashmir with the government banning the movement of civilians on the national highway-44 for two days a week.
A large chunk of apples harvested in the fall season of 2018 were mostly put in 20 Cold Storage facilities in Pulwama’s Lassipora for transportation later in January and February 2019. However, with the imposition of a ban on the movement of civilian traffic from February 2019 onwards for two days a week, the Kashmiri apples couldn’t reach mandis under the 36-hour time frame required for the fruit to remain fresh after being taken out from a cold storage unit.
With the highway ban hitting the apple industry in the first half of 2019, the major blow came on August 5, 2019, when Article 370 was revoked. Kashmir valley witnessed a lockdown for around six months. It was during this time that NAFED was first roped in to buy the Kashmiri apples, of which they just bought 1 per cent in 2019.
“Horticulture sector has been hit hard since the beginning of 2019. We faced losses in 2018. 2019 was worse for us. But now the produce of 2020 is also meeting the same fate,” Rouf Ahmad, apple farmer from Budgam said. “The government is planning to destroy the industry by intervening in matters which require no attention,” Ahmad said.
Director Horticulture Kashmir Aijaz Ahmad Bhat said the MoU with NAFED was taken as a policy decision by the Jammu and Kashmir government and the union. the government in which his divisional level office had no say. “I second the government decision but I wasn’t part of it. The government intervention in any sector is for people’s betterment in the longer run,” Bhat said.