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Tomato
prices have skyrocketed by more than 400% in recent past as the country faced
a nationwide scarcity. Being a curry improving, and salad vegetable in Indian
cuisine, Tomato has become a cause for concern due to s soaring prices.
While
the internet is having hilarious memes for the sudden hike, it's high time to
identify the culprit.
The
sudden increase in tomato prices from ₹20 -- ₹40 per kg in June 2022,
reaching ₹100 per kg in July 2023, has raised questions about the
reasons behind this price volatility.
Despite
the soaring prices, the inflation rate for tomatoes is surprisingly
negative, creating a puzzling economic phenomenon known
as #Tomato-nomics.
Why are
Tomato Prices got High? We will try to find out in the following paragraph.
Tomatoes
Production in India:
Tomato
production is regionally concentrated in states like Andhra Pradesh,
Madhya Pradesh, Karnataka, Odisha, and Gujarat, collectively accounting
for approximately 50% of total production.
India
witnesses two main tomato crops annually - Kharif and Rabi.
The Kharif
crop is available from September, while the Rabi crop hits the market around March and
available till JUNE.
Mid July-August
is a lean production period for tomatoes as they fall between yields.
REFER THE ANNUAL SUPPLY CURVE ATTACHED
Despite
being one of the most cultivated vegetables, tomato production has
been declining since its peak in 2019-20 at 21.187 million tonnes (MT). production, it has been declining since. In 2021-22, it dropped
to 20.69MT and 20.62MT in 2022-23.
Reasons
Behind the High Tomato Prices:
1.Extreme
Weather:
Heatwaves and delayed monsoons in April and May led to pest
attacks on tomato crops, affecting their quality and commercial realization.
As a
result, farmers received low prices for their produce in the months leading
up to June.
2.CMV
and ToMV Virus:
The
recent decline in tomato crops and the surge in tomato prices in Maharashtra,
Karnataka, and other South Indian states can be attributed to the infestation
of two plant viruses: the Tomato Mosaic Virus (ToMV) and the Cucumber Mosaic
Virus (CMV).
These
viruses have caused partial to complete crop losses in tomato
plantations over the last three years in some areas.
As both
viruses have a broad host range and can lead to nearly 100% crop loss if
not treated in time, they have significantly impacted tomato yields,
resulting in a rise in tomato prices.
3.Low
Commercial Realization:
Farmers
faced the challenge of low commercial realization for their tomato
crops in the recent months leading up to the price surge.
Between
December 2022 and April 2023, many farmers received prices as low as ₹6
to ₹11 per kg for their produce.
This
led to a situation where farmers had to sell their crops at unprofitable
rates or even abandon their produce, resulting in a shortage of supply.
4.Farmers
are shifting from Tomato Production:
The low
prices received by farmers in the previous year led to a
significant impact on cultivation patterns.
Many
farmers who contribute substantially to tomato
supplies shifted their focus to cultivating other crops which fetches
higher prices in the market, motivating farmers to opt for alternative
crops.
This
shift in cultivation resulted in reduced tomato production, further
aggravating the Demand--Supply GAP and contributing to the surge in prices.
Inferior-quality
tomatoes forced many farmers to sell the product at low prices or
abandon their crops, resulting in a crunch in tomato supply.
5.Incessant
late rains further impacted the new crops and transportation to non-growing
regions.
6.Regional
Drop in Production:
Tamil
Nadu, Gujarat, and Chhattisgarh witnessed a 20% drop in tomato
production, exacerbating the shortage.
7.Inflationary
Pressures: The volatility of tomato prices has historically contributed
to overall inflation levels in the country, affecting consumers' purchasing
power.
Consequences:
-
Tomato's
price fluctuations have significant implications for the Consumer Price Index (CPI), making it a challenge for
policymakers to control inflation.
Economic
Distress: The high prices put a strain on households' budgets,
especially for low-income families heavily reliant on tomatoes as a
dietary staple.
Possible Solutions for Reducing
Tomato Prices:
Improve
Storage, Value and Supply Chains: Enhance storage facilities, value and
supply chains to address perishability and transportation issues.
Increase
Processing Capacity: Convert tomatoes into paste and puree during peak
seasons to ensure adequate supply during lean periods.
Encourage
Direct Sales: Promote direct sales by Farmer Producers Organizations to
provide farmers with a larger share of consumer prices.
Promote
Cultivation in Poly Houses and Greenhouses: Encourage
cultivation in controlled environments to control pest attacks and increase
yields.
Why is
the Inflation Rate for Tomatoes Negative?
High
Base Effect:
The
negative inflation rate is a result of a high base effect. The
index value for tomatoes in June 2022 was significantly higher due to
soaring prices at that time.
In June
2023, despite a spike in prices, the index value was much lower compared
to the previous year, leading to negative inflation.
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