Speculative Storage

A significant portion of Kashmir’s apple produce has reportedly languished in cold storage units for an unusually extended period due to ‘low demand’. Nearly 10 months have passed since these apples were stored, and approximately 10 percent of them remain unsold, unable to reach Indian markets. This situation has caused considerable concern among growers and traders, as the next season has already commenced with plums arriving in stores and the high-density apple season expected to begin shortly. Typically, the apples stored during the main season from October to November would have been cleared by April or May. However, this year has seen a ‘drastic decrease’ in prices, contributing to the extended storage of the produce. Even C-grade apples fetched better returns during the main season as per the growers. They claim that the presence of foreign apples in the local market has significantly impacted demand for Kashmiri apples. The influx of foreign apples, particularly from South Africa, Iran, and Washington, has exacerbated the situation. These imported apples have flooded retail supermarkets and e-commerce platforms across the country, reducing the market share for Kashmiri apples and pushing prices to an all-time low for produce kept in cold storage units. Cold storage unit managers have also expressed their challenges in managing the stored apples alongside other fruits, such as plums, which have started arriving in the market. Usually, these storage units are cleared from April until the end of July, but this year, around 10 percent of the apple produce remains in storage. The prolonged storage period, which has already exceeded the typical shelf life of five to six months. In response, growers have repeatedly appealed to the authorities to impose import duties on foreign apples to protect the local industry. Some have even advocated for a ban on imports. However, it is crucial to critically examine whether such protectionist measures are a viable solution. While imposing import duties might provide short-term relief, it does not address the underlying challenges faced by the local industry. To achieve long-term sustainability and competitiveness, the focus should be on improving the quality and marketability of Kashmiri apples. Also, traders in Kashmir often employ the strategy of storing apples in cold storage units when prices are already high, anticipating that they will peak even further. This speculative approach is based on market trends and the assumption that delaying sales will yield higher profits. By keeping the apples in cold storage, traders can control the supply, limiting market availability to drive prices up. However, this strategy carries significant risks. Prolonged storage can lead to increased costs and potential quality degradation, especially if the peak prices fail to materialize as expected. Moreover, such speculative holding can contribute to market volatility, as sudden releases of large quantities of apples can lead to sharp price drops, harming the overall market stability. While this tactic can sometimes lead to higher returns, it requires precise market insights and carries inherent risks that can affect both traders and the broader agricultural economy.