Both seasonal as well as shock components contribute to the spike in prices of tomatoes and onions and variability in prices resulting from seasonal production patterns require policy attention. Strategies to incentivize production during lean season should be designed, the Economic Survey 2021-22 released on Monday suggested.

Investments in processing of surplus production of tomatoes, and processing and storage infrastructure of onion must be promoted. Cutting wastage of the production, better supply chain management will also help in meeting the demand, the Survey added.

Food inflation remained benign during the year at 2.9 per cent (April-December) as against 9.1 per cent in the corresponding period last year. While prices of onions and potatoes remained under control, retail prices of tomatoes witnessed an uptick during September to November 2021 due to untimely rains in major producing States, according to the Survey.

Spike in tomato prices

During 2021-22 (April to December) inflation in ‘vegetables’ remained negative at (-)11.3 per cent contributing negatively to the overall retail inflation. “Tomato prices spiked after end of September 2021 owing to crop damage and delay in arrival of produce in mandi because of unseasonal heavy rains in producing States of Punjab, Uttar Pradesh, Haryana, and Himachal Pradesh,” the Survey mentioned.

Pressure on tomato prices was further exacerbated due to disruption of tomato supply by heavy rains in in producing States of Tamil Nadu, Andhra Pradesh, Telangana and Karnataka. In December 2021, tomato prices have moderated with the arrival of fresh supplies, the Survey added.

The Consumer Price Index inflation remained range-bound as food prices eased considerably due to the supply management response by the government, the Survey claimed. Inflation of onion and potato remained negative throughout the year. Both seasonality and exogenous shocks impact retail prices of tomato and onion. The government has created onion buffer of 2.08 LMT in 2021-22 and released in a calibrated and targeted manner to contain price rise.