Why are tomato prices still high
Context:
- The most recent monthly bulletin from the Reserve Bank of India indicated that as tomato prices vary between 100 and 200 in different regions of the nation, their volatility has historically contributed to overall inflation levels in the nation.
The tomato business in India:
- The States of Andhra Pradesh, Madhya Pradesh, Karnataka, Odisha, and Gujarat produce close to 50% of the nation’s total tomato crop, according to statistics from the Ministry of Agriculture and Farmers Welfare.
- There are two big tomato harvests each year: kharif and rabi.
- The rabi crop can be purchased from March through August of every year, whereas the kharif crop can be purchased beginning in September.
- Some regions in Maharashtra and Himachal Pradesh’s Solan are able to grow tomatoes during the monsoon season, while Andhra Pradesh’s Madanapalle region alone grows all of the country’s tomatoes during the summer.
- The production of tomatoes peaked in 2019–20 and has since been in decline.
Reasons behind the price hike:
- The primary reasons for the general drop in tomato production this year are extreme weather conditions and low commercial realisation of the crop for farmers in the months before to June as well as last year.
- Heat waves and high temperatures in April and May, together with the delayed monsoon rains in southern India and Maharashtra, all contributed to pest attacks on tomato crops.
- While some farmers gave up on their farms, many turned to selling their crops for these sums.
- As a result, there was a shortage. Later, prolonged rains in tomato-growing areas significantly worsened the damage to the new crop.
- The problem was made worse by the fact that, because it happens between yields, tomato output is at its lowest in July and August.
- As a result of the higher prices beans brought in the previous year, many farmers in the Kolar area of Karnataka, which generally supplies a considerable quantity of tomatoes, reportedly shifted to cultivating them.
Whether a momentary or recurring issue:
- The Centre has described this sudden and substantial rise in tomato prices as a “seasonal” and temporary issue.
- According to Rohit Kumar Singh, secretary of the consumer affairs ministry, tomatoes have a seasonality.
- However, over time, policy experts, including the RBI and the National Bank for Agriculture and Rural Development (NABARD), have voiced concerns about this considerable seasonal price variation of tomatoes and its effects on the overall Consumer Price Index (CPI).
- The most variable of the three TOP (tomato, onion, and potato) agricultural commodities, according to a NABARD study from last month, is the tomato.
- While the food and beverage component of the combined CPI has a weight of 45.86, vegetables only account for 6.04 of that, and the TOP commodities account for even less of the total, 2.20.
- Despite its tiny weight, the TOP has had a highly unpredictable impact on the overall CPI.
- It is more perishable than an onion or a potato, which is just one of many reasons for this.
- The issue is made worse by issues with the supply chain that is used to transport the produce from the places where it is grown to the places where it is not.
Reducing turbulence:
- Policy experts claim that by making a few adjustments, high volatility can be decreased.
- A market-focused alliance of several businesses working together to successfully and efficiently produce, process, and market goods and services is what is meant by an organised value chain.
- According to an ICRIER study, tomato processing capacity should be increased. More processing facilities and connections to tomato value chains may be required in order to convert at least 10% of tomato production into tomato paste and puree during peak seasons and use them in the lean season when fresh tomato prices soar.
- The establishment of integrated cold chains is also recommended.
Moving forward:
- Only 32% of the money people spend for tomatoes goes to the producers, according to a 2022 study. It has been suggested that middlemen be eliminated, that Farmer Producers Organisations be encouraged to sell produce directly, and that agricultural produce market committee rules be changed to reduce commission and other expenses.
