Why consumers are seeing red over tomato prices

As a Mint article pointed out last week, a primary culprit for the surge in tomato prices has been crop damage caused by a mix of unusually hot weather in the main growing areas such as Karnataka, along with incessant rain. In mandis in Maharashtra, till a few weeks ago, farmers were dumping tomatoes because of extremely low prices. Since then, there has been a dramatic turnaround.

In June, according to government data, the average price of tomatoes across 518 centres increased from ₹25 per kg to ₹57 per kg. However, the rise in prices has to be seen in perspective. As high as prices have gone, they are still lower than what prevailed in 2022 at the same time of the year. In fact, daily average prices at the start of June were almost half of what prevailed last year. But as prices have surged, the year-on-year gap has narrowed significantly in recent days to less than 10%.

Fewer arrivals

An important reason for the spike in prices has been a fall in ‘arrivals’—the quantity of tomato produce that farmers bring to mandis (wholesale markets) across the country. Daily mandi arrivals of tomatoes have fallen from an average of about 12,500-13,000 tonnes in mid-June to about 9,300 tonnes in end-June.

Again, however, arrivals in June (till 28 June) were significantly higher than what came into mandis in the corresponding period of 2022, shows government data. Between 1 June and 28 June, a total of 346,100 tonnes of tomatoes came into mandis across India. By comparison, in the corresponding period of 2022, farmers brought around 290,000 tonnes of tomatoes to mandis. The difference is in the trend. Last year, daily mandi arrivals of tomatoes in early-June were around 6,000 tonnes, and started gathering pace later to cross 14,000 tonnes by the end of the month.

State stress

This June, mandis in just six states accounted for close to three-quarters of tomato arrivals across India. The three biggest states were Karnataka (18% of all-India tomato arrivals), Maharashtra (16%) and Andhra Pradesh (15%). Each of these three states saw a dip in tomato arrivals in their mandis, though of varying degrees.

Daily average arrivals between 20 June and 29 June fell by as much as 46-47%, as compared to the earlier days in the month, in Maharashtra and Uttar Pradesh (which accounted for 12% of mandi arrivals in June). These two states accounted for a bulk of the fall in mandi arrivals in the latter part of June. Their shortfall was made up only partly by an increase in daily average arrivals in Karnataka towards the end of June. Other states that saw declines in daily average arrivals during 20-29 June, compared with 1-9 June, included Andhra Pradesh (-11%), Gujarat (-28%), and Telangana (-39%).

Longer-term Picture

Seen in a longer-term perspective of monthly averages over two years, the latest spike looks far less extreme. In November 2021, June 2022 and October 2022, tomato prices rose far more. In November 2021, the all-India monthly average price rose to ₹58 per kg, whereas the current average price is ₹32 per kg.

For Delhi, average prices then were ₹63 per kg, compared with around ₹31 per kg for June as a whole. Cities such as Bengaluru, Kolkata and Chennai also saw their highest tomato prices over that period. At that time, weak rains in Maharashtra and Gujarat had caused prices of tomatoes to skyrocket. Mumbai’s monthly average price peaked in June 2022, at ₹72 per kg—a time when shortages were caused by crop failures in the south. As and when arrivals increase, the expectation is prices will cool down.

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Updated: 02 Jul 2023, 07:22 PM IST