Code red. Tomato-nomics —  Behind the kitchen staple’s soaring prices

Would the late American novelist and food column writer Laurie Colwin review her comment “a world without tomatoes is like a string quartet without violins” in today’s Indian situation if she were alive?

Tomatoes are currently hogging the limelight in the media with prices ruling at an average ₹97.98 a kg, according to the Department of Consumer Affairs. The kitchen staple is quoted at ₹170 in Nagpur, Maharashtra, and in Ramgarh, Uttarakhand, the price is ₹18 — the lowest in the country. 

Also read: Going beyond tomatoes into serious research

A fall of about 20 per cent in tomato production in Tamil Nadu, Gujarat and Chhattisgarh has aggravated tomato supplies in the 2022-23 crop year (July-June), says Bank of Baroda (BoB) economist Dipanwita Mazumdar. 

3rd consecutive drop

The decline is the third consecutive one after production peaked at 21.187 million tonnes (mt) in 2019-20. In 2020-21, it dropped to 21.181 mt before slipping to 20.69 mt in 2021-22 and 20.62 mt in 2022-23. This means tomato production has dropped over 2.5 per cent in the past three years!

“State-wise data reveal that Madhya Pradesh, Karnataka, Andhra Pradesh, Gujarat, and Odisha contribute 51.5 per cent of the total production of tomato,” she said.  

Also read: Tomato trouble: Big Mac slices off the pricey vegetable from its burgers

In Tamil Nadu, the production dropped by 26.1 per cent and in Gujarat by 23.9 per cent. The decline in Chhattisgarh has been estimated at 19.7 per cent, Mazumdar said.

Though Karnataka reported a 23.1 per cent rise in tomato output, the increase follows a 1.3 per cent hike after a 24.2 per cent fall in 2020-21. Similarly, Odisha’s production increased by 25.1 per cent but after a 20 per cent drop the previous year. Similar is the case with Bihar, where the output increased by 11..2 per cent but after a fall of 13.3 per cent the previous year. 

Weather impact

During the just-ended rabi season, the crop could have been affected by erratic rainfall, witnessed in March, or heat wave, seen in late April-early May. 

“But with the July-November arrival of the crop, some easing of the trajectory might be seen,” Mazumdar said.

Analysing the impact of soaring tomato prices, she said the “unanticipated price shock has resulted in an upswing in vegetable inflation”.

Also read: Editorial. Tomato inflation must be viewed in perspective

“Further, the tomato price spiral is visible in months such as June, September and November. Hence, there is a seasonal trend in tandem with the harvesting and arrival of the vegetable,” she said. The cycles of price increase are short-lived, not exceeding 4-5 months generally. “Hence, what comes as a comfort in this case is that the current upswing may soon see a reversal,” the Bank of Baroda economist said.

Wholesale-retail margin

Pointing to the Department of Consumer Affairs data, she said the average retail price of tomato in June was ₹32.60/kg, whereas wholesale price was ₹24.90. The gap between the two prices in June was ₹7.70 — higher than the gap seen in the long-term at ₹7.20. 

A feature noted by Mazumdar is that ever since prices started rising from mid-June, the wholesale-retail margins widened to reach ₹12.5/kg on June 30. 

Also read: High tomato, pulses prices raise average cost of Indian thali in June: report

“Quite clearly, the margins being charged at the retail end have increased continuously,” she said.

An economist termed the rising gap between wholesale and retail tomato prices as “volatility premium” in view of the anticipated shortage in the vegetable. 

But Mazumdar holds hopes for consumers saying, “with July-November arrival of the crop, correction in prices might be seen in the second half of 2023.”

COMMENT NOW