Tomato, an essential vegetable in Indian households, has recently been a topic of concern due to the unexpected surge in its prices. Between June and July of 2023, the cost per kilogram shot up from ₹20 to ₹100, initiating conversations about the causes behind such price volatility. Despite the increase, the inflation rate remains surprisingly negative, a curious economic scenario termed #Tomato-nomics, which raises further questions.
Regional Tomato Production in India
Tomatoes are primarily produced in Indian states such as Andhra Pradesh, Madhya Pradesh, Karnataka, Odisha, and Gujarat, accounting for nearly 50% of the total output. Two significant crop seasons occur annually – kharif and rabi. The kharif crop is available from September, while the rabi crop arrives in markets between March and August. However, production has seen a decline from its peak in 2019-20 at 21.187 MT (million tonnes), impacting supply and affecting prices.
Exploration of Reasons Behind High Tomato Prices
The rise in tomato prices can be attributed to various factors. Unpredictable weather patterns, such as heatwaves and delayed monsoons, have led to pest infestations affecting tomato crops’ health and quality. Additionally, the attacks from two plant viruses, Tomato Mosaic Virus (ToMV) and Cucumber Mosaic Virus (CMV), have resulted in substantial to complete crop losses, contributing to the surge in prices.
Farmers are also grappling with low commercial realization, often forced to sell their produce at meager rates leading to supply shortages. The inadequate remuneration coupled with the shifting focus of many farmers to other more profitable crops has aggravated the already strained supply.
The Impact of Decreased Production & Supply Crunch
Regions including Tamil Nadu, Gujarat, and Chhattisgarh have experienced a 20% dip in tomato production. The deteriorated quality of crops has forced farmers to sell at lower costs or abandon the produce altogether, resulting in a severe supply deficiency. Excessive rainfall has further affected new crops, hindering transportation to non-growing regions, thereby complicating the situation.
Consequences of High Tomato Prices
The erratic nature of tomato prices has added to the country’s overall inflation levels, affecting the purchasing power of consumers. Fluctuations affect the Consumer Price Index (CPI) significantly, posing a challenge to policymakers trying to control inflation rates. High prices have also put undue pressure on household budgets, particularly impacting low-income families who rely heavily on tomatoes as a dietary staple.
Possible Solutions to Mitigate High Tomato Prices
Several potential solutions could help decrease tomato prices. Improving value and supply chains can address issues related to perishability and transportation. Increasing processing capacity by converting tomatoes into paste and puree during peak seasons can ensure steady supply during lean periods. Encouraging direct sales through Farmer Producers Organizations could provide farmers with a larger share of consumer prices. Additionally, promoting cultivation in controlled environments like poly houses and greenhouses could help check pest attacks and increase yield.
Negative Inflation Rate for Tomatoes Explained
Even though tomato prices have surged, the inflation rate remains negative due to a high base effect. Inflation in India is calculated yearly, comparing the index value for a specific month to the same month in the previous year. Despite a significant price increase in June 2023, the index value was much lower than that of June 2022, leading to a negative inflation scenario. Notably, the drastic price increase was not sustained, and prices began to fall afterward, contributing to this economic anomaly.
