Centre plans ₹2,000 crore horticulture clusters to tame food inflation

The Centre is developing a ₹2,000 crore scheme to create horticulture clusters for fruits and vegetables within a 100-km radius of major consumption centers, aiming to curb food inflation and boost farmers' incomes, according to two sources familiar with the initiative. The five-year central sector scheme, set to launch in phases, will involve private players, farmer producer organizations (FPOs) and cooperatives in developing Peri-Urban Vegetable Clusters.

The initiative aims to reduce supply chain distances, lower transportation costs and minimize post-harvest losses, as vegetables and pulses account for 6.82% and fruits for 3.70% of the Consumer Price Index (CPI 2024), making supply disruptions a key driver of food inflation. The scheme's rollout will start with state capitals and cities with populations of 1.5 million or more, followed by cities with populations exceeding 1 million, and finally cities with populations up to 1 million.

Agriculture economist Shweta Saini notes that the scheme will strengthen farm-to-market linkages, improve logistics, and moderate seasonal price volatility, potentially leading to fresher produce for consumers and better returns for farmers. The Ministry of Agriculture and Farmers Welfare expects horticulture production to reach 377.77 million tonnes by 2025-26, with fruit production increasing from 117.6 million tonnes to 121.4 million tonnes, and vegetable production expanding from 217.8 million tonnes to 221 million tonnes.

However, supply chain inefficiencies and high logistics costs remain key bottlenecks, contributing to price volatility in retail fruits and vegetables, particularly in urban centers.