From being dropped from the McDonald’s menu to being stolen from shops and carts, tomatoes in India are definitely in the race for newsmaker of the month. The reason for this is that the price of tomato, an important commercial crop and daily staple in Indian households, witnessed a four-fold increase in just a month. According to the Department of Consumer Affairs, the daily average retail price of tomatoes went from Rs 56.95 per kg on June 30 to Rs 126.18 per kg on July 31, this year. However, in many of the shops across the country, the maximum retail price of the fruit (yes, tomato is a fruit not a vegetable) ranges from Rs 160 per kg to Rs 220 per kg. Exactly a year ago, on July 30, the average retail price of the tomato was just Rs 33.
Various reasons ranging from extreme weather conditions to market factors have been attributed to the exorbitant rate of tomatoes over the past month.
A huge chunk of tomato production in the country is concentrated in the states of Andhra Pradesh, Maharashtra Karnataka, Odisha and Gujarat. Policy experts point out that unfavourable weather conditions in these states, starting from the high temperatures in April and May, along with delayed monsoon showers to the heavy-rain induced floods in some of these states contributed to the price surge.
“Tomatoes have this phenomenon called the cobweb phenomenon. This means that when the supply increases, demand and price collapses. And when the supply decreases, demand stays the same or increases and price increases,” says RS Deshpande, former professor Agricultural Economics.
Speaking to TNM, Deshpande, who was also the former Director of Institute for Social and Economic Change (ISEC) in Bengaluru, says that this cobweb phenomenon is applicable to most seasonal commodities like tomato. “The prices of those commodities which are produced industrially remain stable as their production supply is controlled and known beforehand. However, it is not the same case for seasonal commodities like tomatoes, whose production and supply depends on various other external factors,” he said.
India basically has two types of tomato crops – Rabi or the winter crop, which is grown in states like Karnataka, Maharashtra, Andhra Pradesh and Kharif or monsoon crop, which is grown in places like Uttar Pradesh.
The supply of Rabi crop tomatoes usually takes place in the months of March and August, while the Kharif crops hit the markets from September. However, the heatwaves and the hot weather during the months of April and May in parts of south India and Maharashtra led to pest attacks on these tomato crops, resulting in reduced supply and higher market rates. After this, the heavy rainfall affected the production and logistical side of the tomato business.
Professor Venkatesh Athreya, a development economist based in Chennai, says that there is a fundamental reason for the exorbitant price rise. Speaking to TNM, he says, “ India is an inflation prone economy. The reason for this is that structurally, there is a great deal of monopoly both in Industry and agriculture. Land is owned by a small proportion of people and industrial production is also dominated by a few sets of big companies. Secondly, Indian government policies in recent years have focussed on increasing GST and other indirect taxes.” This, according to Professor Athreya has a harsh impact on the farmers and the poor as a major share of their budget goes into competing with the big players in the market as well as into paying GST, all of which can lead to surge in prices.
The Union government has termed this abnormal increase of tomato price as a “seasonal” and “temporary” issue and that the prices of tomatoes would come down in a couple of months when the supply increases. As per reports, Rohit Kumar Singh, Secretary of the Consumer Affairs Ministry said that the data on tomato prices over the last five years showed that the prices increased during the same time every year.
Ashwini Kumar Chaubey, India’s Minister of State for Consumer Affairs had also told the Rajya Sabha that tomato prices will come down upon the arrival of new crops in the month of August.
Meanwhile, in order to tackle the vegetable supply crisis, the Department of Consumer Affairs, in mid July, had directed agricultural and consumer cooperatives to “immediately procure” tomatoes from high production states and distribute them to places with less production.