'DNA' Special: Agents decide how much you will pay for Kashmiri apples

Have you ever wondered why Kashmiri apple costs Rs 105/kg in Delhi, Rs110/kg in Mumbai and Rs 120/kg in Bangalore even though its production cost is just about Rs 35/kg? It’s all thanks to agents who on the one hand rob the orchard owners of their earnings and fleece the customers on the other.

Commission agents in major cities such as Delhi manipulate the market and hoard apple to create artificial scarcity and sell it at a high price. For this, they resort to self-buying – they themselves buy the apple in their own name or their men instead of selling it to market immediately.

The draft report of the National Bank for Agriculture and Rural Development (NABARD) on production and marketing of apple in Jammu and Kashmir – a copy of it is exclusively available with DNA – says, “Supply is manipulated in artificial manner generally at agents level through hoarding of apple in cold stores for short duration and controlled atmosphere stores (CAS) for long duration up to 6-9 months.”

The report says that if a kilo of apple is sold at Rs 100 in market, the grower gets only Rs 26, while the rest goes to retailers and agents.

The commission agents start self buying the apple in July/August, the report says. In Azadpur mandi, around 20% of these agents are big, 20% small and 60% medium in terms of turnover and financial power.

“Price manipulation takes place by artificially quoting price so high so as to attempt exclusion of other smaller buyers from auction and then bringing it down next day/next time to self-buy at whatever price, mostly reduced price because bigger ‘lots’ of boxes cannot be purchased by smaller buyers even if price is low,” the report said.

Even large open auctions are manipulated. “Largely, open auction takes the shape of self buying or buying by market functionaries of agents like ‘fixed match’,” the report says.
Once the auction is manipulated and the apple is bought at a cheap rate, the agents store it in the CAS units to manipulate the supply in market. According to the NABARD report, agents are now setting up cold stores and CAS to store self purchased apple from market.

This trend started with Delhi and has spread to all other parts of the country. Though the agents adopted this CAS system in the late 2000s, the scam became big after 2010 when big agents expanded their CAS capacity in Delhi and Kundli (Industrial Growth Center, Sonepat). “Now CAS units are becoming a craze among CAs,” said an area marketing manager of the J&K horticulture marketing and planning department.

“The existence of seven cold storages within Azadpur market yard of Delhi and about 100 CAS at Kundli in Haryana (25 km from Azadpur market) is leading to a sort of ‘hoarding’ of Kashmiri apple before it enters Delhi market for auction,” the report added. Incidentally, the governments of Delhi and Haryana are providing subsidies for setting up these cold storages, which is also working in the favour of agents.

Another modus operandi of the CAs and their trade associations is that they advise the transporters to release maximum number of trucks (carrying apples) into the market to cause steep fall in prices. “Despite persisting huge demand in November, current wholesale price in the market does not rise; any deviation is brought to equilibrium by augmenting supplies and maintaining glut like conditions. Traders Association (basically association of commission agents) create conditions of steep fall in prices by advising to release,” the NABARD report says.

The trick
The NABARD says in the report that it observed direct unloading of apple trucks from Kashmir to Kundli (Industrial Growth Center) CASs in Sonepat district of Haryana on the border of Delhi before entering Tihri Khampur check post. In this way, not only is the market fee avoided but the market price mechanism is also deprived to the grower/seller/captive orchard owner.

@paisandy