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Escalating tomato prices in India: Causes, impact & mitigation strategies
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Wednesday, 30 August, 2023, 08 : 00 AM [IST]
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Laltu Sinha
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Thwarting the seasonal steep price rise in tomatoes across India requires a multipronged approach comprising effective policies, climate change management, storage solutions, and high adoption of cutting-edge technologies.
Tomatoes, along with onions and potatoes, hold a paramount position in both Indian cuisine and the nation's economy. The vibrant fruits are not only a culinary staple, but they also contribute significantly to India's agricultural and economic landscape. Their vibrant colour, tangy flavour, and versatility have made them an integral ingredient in a plethora of traditional dishes, from curries to chutneys. Beyond their gastronomic role, tomatoes play a pivotal role in the livelihoods of millions of farmers and traders across the country.
The tomato market's robust presence in the economy generates employment, income, and trade opportunities, thereby impacting rural and urban communities alike. However, in recent times, there has been a steep and concerning rise in tomato prices across the country. This surge in tomato prices has not only captured public attention but has also raised pressing questions about its causes, effects, and potential solutions. The following sections delve into the intricacies of the tomato price surge, exploring the underlying factors, its socio-economic repercussions across India, and the strategies that could mitigate its impact.
Tomato: A Love All Apple for its Versality
Tomato fondly called love apple, a native of South America, came into India and other parts of the world by European conquests during the 16th century. It is an edible part of the tomato plant (Solanum lycopersicum). When it ripens, tomato is red in colour. People consume tomatoes in several ways: eat directly as a raw vegetable, salads, cooked, pickled, sauces, ketchup, and drink as juices. Though tomato is classified as a fruit (berry) in the scientific or botanical parlance, it is widely considered as vegetable. In less than four centuries of its introduction in the country, tomatoes have become an integral part of Indian kitchens. In fact, tomatoes come first in the TOP three staple vegetables of India. The others are onions and potatoes. These three vegetables form TOP (Tomatoes, Onions, and Potatoes) vegetables of India. Price hikes in these three vegetables caused unrests and changes in governments across states and federal levels in India. Hence, the recent surge in tomatoes is a significant cause of concern for home makers to ministers in state and Central governments and farmers to Governor of the central bank of India (RBI).
Unveiling the Price Surge
• Climate Vulnerability: Tomato prices in India have surged dramatically, reaching INR80 per kg in Delhi-NCR and even higher in Bengaluru and Kanpur, exceeding INR 100 per kg in some places. The rise in prices can be attributed to the absence of rains, resulting in intense heatwaves from April to June in 2023. Experts link these extreme weather patterns to climate change, which has a profound impact on agriculture. A study titled Impact of Climate Change on Vegetable Crops and its Mitigation highlights the vulnerability of the agricultural sector to climate change. Changing climate conditions lead to crop failures, yield shortages, reduced quality, and increased pest and disease attacks, making vegetable cultivation less profitable. The tomato crop's susceptibility to high temperatures affects fruit quality, with colour and size impacted. The reproductive development of tomatoes is more sensitive to high temperatures than vegetative growth. Even a slight temperature increase of 2–4ºC affects pollination and fruit development, leading to reduced yields. Excessive heat also interferes with floral bud development and photosynthesis. Low temperatures and other factors, such as flooding, salinity, and waterlogging further exacerbate these issues.
• Changing Consumer Habits: Escalating prices of staple commodities are prompting Indian consumers to adapt their purchasing patterns, resulting in a transformative shift within the market. As household budgets tighten, individuals are favouring convenience through small packets and sachets over bulk buying. This financial strain has led to changed spending habits, evident in the switch from fresh tomatoes to compact tomato puree cartons and single-use sachets of ginger paste and cumin powder. This change reflects the repercussions of erratic rainfall-induced price hikes on fruits, vegetables and spices. Essential to the Indian diet, items, like cumin powder and ginger-garlic paste, are now packaged in smaller quantities due to their rising costs. Also, an unprecedented demand for tomato puree is observed, with manufacturers strategically offering economical alternatives to fresh tomatoes. The availability of affordable sachet products further adds to the evolving consumer behaviour, driven by both practicality and affordability. This shift underscores the dynamic strategies consumers adopt in response to the fluctuating costs of vital commodities.
• Pest and Disease Incidences : India's recent tomato price surge has also been aggravated by a concerning influx of pests and diseases, disturbing the market equilibrium. Pests such as the aggressive tomato fruit borer and diseases like bacterial wilt and early blight have significantly curtailed yields and quality, creating a complex dilemma. This disruption has subsequently shattered the delicate market balance, leading to supply shortages that subsequently drive-up prices. Conventional pest management methods have proven inadequate against the relentless assault of the tomato fruit borer. Simultaneously, the soil-borne nature of bacterial wilt has further amplified the challenges of eradication. The repercussions of these intricate issues resonate across the tomato industry, intensifying the strain on both supply and consumer confidence. In anticipation of price fluctuations, farmers opted for premature sales, inadvertently deepening scarcity and subsequently inflating prices. The confluence of pest-related crop losses and market dynamics has forged a challenging landscape for both producers and consumers.
Socio-Economic Ramifications
• Impact on Households : The surge in tomato prices in India has significant socio-economic consequences, particularly for households. A recent survey by LocalCircles, covering 11,000 households across 309 districts, found that one in three households paid over INR 200 per kilogram last week, reflecting the unprecedented escalation and its impact on consumer behaviour. Findings show 10% paid over Rs 250/kg, while 23% paid between Rs 200 and Rs250/kg. Alarmingly, 17% of households halted tomato purchases due to the price surge. Despite interventions by entities like the National Cooperative Consumers' Federation of India (NCCF) and the National Agricultural Cooperative Marketing Federation of India (NAFED), prices have continued to rise. The Reserve Bank of India (RBI) expressed concern, attributing the spike to supply disruptions from adverse weather and pest attacks. The historical significance of tomato price volatility is acknowledged, affecting inflation and prices of other vegetables in retail and wholesale markets. With logistical issues affecting government-supplied tomatoes, 89% of households bought tomatoes for over Rs 100/kg, and a third paid over Rs 200/kg.
• Food Security Concerns: As tomato prices reach alarming levels - Rs 120, 150, and even Rs 250 per kg - questions arise about the state of Indian agriculture. Recalling recent scenes of farmers discarding surplus produce in protest, one wonders at the underlying issues. City dwellers are not immune to this crisis; exorbitant prices risk triggering malnutrition, especially among the urban poor. Even fast-food giant McDonald's has had to remove tomatoes from its offerings due to their inflated cost, reflecting the far-reaching consequences. The crisis stems from more than a simple "supply and demand" equation. Unpredictable climate patterns this year, marked by untimely rainfall and cyclonic storms, have disrupted tomato cultivation, particularly in southern and coastal regions. These areas typically contribute substantially to the tomato supply during this season. However, excessive rain has harmed plant growth, causing yield losses due to disrupted pollination during flowering and fruiting. India's lack of climate contingency plans for vital food crops and food security further exacerbates the issue. The government's attempts to counter the problem, such as the TOP programme under Operation Greens, focus on creating efficient supply chains and reducing post-harvest losses. By offering subsidies for transportation and proper storage facilities, this programme aims to address the structural flaws in the supply chain and alleviate the burden on consumers. However, the broader socio-economic impact of this tomato crisis on food security remains a complex challenge.
Rooting Out Causes and Solutions
• Addressing Climate Vulnerability: Amid the looming challenge of climate change impacting agricultural yields and pest vulnerabilities, particularly evident in rain-fed farming due to erratic rainfall patterns, the Indian government's proactive measures stand out. The establishment of the National Research Foundation (NRF) with a substantial INR 50,000 crore allocation underscores the recognition of climate-smart agriculture's (CSA) importance, aiming to tackle climate adaptation through dedicated research. To mitigate greenhouse gas emissions associated with imbalanced chemical fertiliser use, a cap of INR 3.69 lakh crore over three years for fertiliser subsidies has been enforced, redirecting potential savings towards bolstering climate-resilient agricultural practices. Highlighted by the National Innovations in Climate Resilient Agriculture (NICRA) study, projected adverse effects on crop yields, exemplified by Punjab's declining wheat production, call for heightened attention. Addressing the meagre INR 8,368 crore allocated for agricultural research and development in FY 2021–22, efforts need to align with crop specifics and regional contexts, combatting challenges, such as land degradation, soil fertility loss and waning productivity. In this context, harnessing innovative technologies like drones, sensors, artificial intelligence (AI), and the Internet of Things (IoT), offers potential for enhancing agri-food production, post-production management, and agro-processing, vital for steering India's agricultural sector toward sustainability and resilience in the face of impending vulnerabilities.
• Promoting Dietary Variety to Mitigate Tomato Price Impact: Amid the challenges posed by fluctuating tomato prices, the imperative of promoting dietary variety to counter these effects gains significance. Encouraging consumers to diversify their food choices by embracing a spectrum of fruits and vegetables beyond tomatoes presents a resilient strategy to mitigate the repercussions of price volatility. By raising awareness about the nutritional advantages and culinary adaptability of alternative produce, individuals can reduce reliance on tomatoes and alleviate the strain of escalating costs. Government initiatives and community endeavours hold pivotal roles in furnishing resources and knowledge regarding accessible, nourishing substitutes. Fostering a culture of dietary diversity empowers individuals to navigate market instabilities adeptly, thereby bolstering food security and elevating overall well-being. This approach aligns with the ethos of initiatives like "Operation Greens," launched to strengthen the value chain of TOP crops, sustainability, and consumer resilience in the face of market dynamics.
Government Policies and its Role
• Price Stabilisation Mechanisms: The recent surge in tomato prices, even surpassing apple prices, has underscored the urgency of effective government interventions to maintain stability in the agricultural market. This phenomenon highlights the need for strategic measures to ensure consistent pricing. Historical patterns reveal that periods of low prices often lead to decreased arrivals and subsequent spikes in prices, a cycle witnessed recently in the tomato market. Addressing these challenges, economists frequently propose solutions, such as cold storage and tomato processing to alleviate price fluctuations. However, translating these remedies into practice encounters intricacies, as seen in instances like potatoes, where cold storage has not fully mitigated price slumps. Additionally, the viability of tomato processing is hampered by factors like varying harvest times and consumer preferences for fresh produce. Despite market liberalisation and private sector involvement, the influence on farmers' price realisation remains limited due to existing norms and occasional Government interventions. The absence of structured mechanisms for price discovery and volatility management perpetuates an uneven playing field, leaving farmers at a disadvantage. In response, innovative approaches like bargaining councils are being explored to establish equitable negotiations and reserve prices, fostering stability. Drawing inspiration from models like the US Agricultural Fair Practices Act, India is contemplating the creation of a Collective Bargaining Council (CBC) to advocate for farmers and enforce negotiated reserve prices. Achieving enduring price stability necessitates robust government policies. By redressing bargaining imbalances and empowering farmers, comprehensive regulatory frameworks can cultivate a resilient agricultural sector. The ability to navigate the volatility of tomato prices demands concerted efforts from policymakers, agricultural stakeholders, and regulatory bodies.
• Research and Development: In the realm of agricultural research and development, innovations play a pivotal role in cultivating resilient tomato varieties. As climate change disrupts traditional farming practices, the need for adaptive solutions has intensified. Initiatives like the National Innovations on Climate Resilient Agriculture (NICRA) project, spearheaded by the Indian Council of Agricultural Research (ICAR), are aimed at enhancing agricultural resilience to changing climatic conditions. Innovation takes center stage in the pursuit of developing tomato varieties that can withstand the challenges posed by erratic weather patterns, increased pest infestations, and fluctuating market demands. Research efforts are directed towards creating tomato strains that exhibit traits, such as drought tolerance, disease resistance, and prolonged shelf life. These innovations are a response to the urgent need for sustainable agriculture practices and the assurance of a stable tomato supply in the face of mounting uncertainties. By leveraging technology, scientific expertise, and collaborative efforts, the development of resilient tomato varieties contributes not only to food security but also to the broader goal of building a climate-resilient agricultural sector. As research and development continue to evolve, innovative solutions pave the way for a more sustainable and secure future for tomato cultivation and beyond.
• Supporting Farmers: The escalating prices of tomatoes, a kitchen staple in India, highlight the need for solutions to ensure their affordability and availability. Unpredictable weather patterns and pricing uncertainties often lead to supply shortages and price hikes. Leveraging technology presents a promising solution. By utilising data analytics and predictive tools, farmers can anticipate optimal cultivation times, manage weather-related challenges, and stabilise yields. To facilitate this transformation, financial and technological support is crucial. Government role is vital in creating awareness and ensuring farmers' access to these tools. Additionally, the establishment of post-harvest infrastructure and subsidies for technologies such as drip irrigation can aid in expanding cultivation areas and improving yields. Collaborative efforts, including farmers' collectives, are essential to drive this change and enhance food security. Through innovative and precise technological interventions, tomato cultivation can be empowered, addressing challenges and paving the way for a sustainable agricultural future.
The Path Ahead: Collaborative Solutions to Address Tomato Price Surge
The surging tomato prices in India underscore the intricate dynamics of the agricultural sector and the broader economic implications of food price volatility. A culmination of factors, including climate variations, supply chain disruptions, and regional production disparities, contributes to the instability in tomato prices, impacting both consumers and farmers alike. In response to this challenge, the Consumer Affairs Ministry has taken a proactive stance by launching the Tomato Grand Challenge.
This forward-looking initiative seeks to enhance tomato production, processing, and storage through innovative and cost-effective solutions. By encouraging collaboration and innovative ideas, the challenge aims to minimise losses and elevate the overall value within the tomato supply chain.
The scope includes advancements in tomato varieties, distribution of crop planning information, improved post-harvest techniques, and novel storage technologies. With price volatility affecting consumers and farmers adversely, this initiative aims to foster price stabilisation through effective storage and processing mechanisms. Also, the evolving landscape of climate change and market dynamics demands innovative strategies that encompass predictive tools, enhanced storage infrastructure, and informed cultivation practices.
Concurrently, the endeavours by state governments in Tamil Nadu, West Bengal, and Andhra Pradesh exemplify the potential of localised interventions to alleviate the impact of price surges. The prevailing tomato price surge serves as a compelling reminder of the necessity for a comprehensive approach that involves strategic government intervention, technological innovation, and community involvement.
By aligning these elements, India can effectively navigate the complexities of the tomato market, mitigate the consequences of price fluctuations, and ensure continued access to this staple vegetable for all segments of society.
(The author is research director at Blueweave Consulting. He can be reached at info@blueweaveconsulting.com)
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