Rising prices: Why India is in tomato trouble again

Rising prices: Why India is in tomato trouble again

Reports indicate that tomato prices have jumped 445 percent, surpassing the cost of petrol. McDonald’s also announced the removal of tomatoes from their burgers due to the skyrocketing prices

As many of our pockets bleed, paying Rs 120, 150, and in some parts Rs 250 for one kg of tomatoes, one must question what is wrong with Indian agriculture. It wasn’t long ago when farmers from across the country resorted to throwing tomatoes and other vegetables on the roads and fields. Tractor loads and truckloads of healthy tomatoes were destroyed in protest, as market economics failed them once again. Many farmers were burdened with deep debts as tomato prices dropped to Rs 1-2 per kg.

Now, onion prices have also doubled in some markets, and the general price trend for most vegetables such as pumpkin, ridge gourd, bottle gourd, and ginger (Rs 250) is very high. This puts city dwellers, especially the poor, at risk of malnutrition once again. However, there is a silver lining for some off-season tomato farmers in Himachal Pradesh who are experiencing above-average returns. Unfortunately, the new spell of heavy rain raises questions about how long the winning streak will last.

Initially, city dwellers were quick to dismiss the farmers and their tactics, believing that confrontational displays would not affect the food economy. But time has proven that rural agrarian discontentment spreads rapidly to cities in the form of hyperinflation and smaller meal portions. It’s not just the thalis (plates of food) affected by this crisis; McDonald’s also recently announced the removal of tomatoes from their burgers and wraps due to the skyrocketing prices. Reports indicate that tomato prices have jumped 445 percent, surpassing the cost of petrol.

Economists often attribute the problem to a simple “supply and demand” issue, but there may be more underlying factors. Firstly, this year’s erratic climate trends, including untimely rainfall and cyclonic storms, have disrupted tomato production in southern and coastal areas. These regions typically supply a significant portion of India’s tomatoes during this time of year, but the excessive rain has wreaked havoc. Tomato plants do not thrive in waterlogged conditions during the flowering and fruiting stages. Excessive water has disrupted pollination and caused significant yield losses.

Considering the already low overall acreage under tomatoes for this season, the rapidly changing climate has resulted in a major disruption. India lacks climate contingency plans for key food crops and food security, leading to anarchy in the open markets. Consumers bear the brunt of this situation.

The supply chain and post-harvest losses are significant problems affecting our food security. The government recognises that the issue is structural, which is why they have been working on a freight subsidy scheme for the past few years. The TOP (Tomato, Onion, and Potato) program aims to create efficient supply chains and reduce post-harvest losses. Under Operation Greens, this program provides up to 50 percent subsidies for transportation and appropriate storage facilities for eligible crops.

The erratic climate has become a real litmus test for the TOP program. At this stage, the bureaucracy responsible for this mission needs to answer to the government. Why has the scheme failed? It has been over two years, so where are the results? If there are failures and gaps, how can they be corrected? This bureaucratic blunder may lead to electoral damage, especially when tomato and onion prices are at stake. Rising onion prices previously caused the downfall of Sheila Dixit’s government, serving as a reminder of the political impact of such issues.

Solution

Agriculture is not an industry and therefore requires special contingency plans and safeguards because it largely depends on nature. However, that does not mean we should not prepare plans to cope with erratic weather or plant diseases as a nation.

Firstly, the government needs to assess its TOP scheme and identify why Operation Greens has failed and what lessons can be learned from this scheme. Multi-stakeholder meetings should be conducted at the village level, involving farmers, Farmer Producer Organisations (FPOs), Mandis (wholesale markets), traders, and freighters. Efficient transportation systems should also be included as a key aspect of the discussions.

The government should identify pre-existing tomato clusters and invest in infrastructure development in those regions. Infrastructure includes decentralised cold storages at the block or village levels, supported by solar dryers and cottage-level processing plants. Farmers should have the option to store fresh tomatoes or engage in value-addition activities. Sun-dried tomatoes present a viable and low-cost alternative to fresh tomatoes during periods of hyperinflation. There is also a healthy demand for dried tomatoes in the processing industry and potential for exports. Farmers should be encouraged to utilise drying facilities to extend the shelf life of their harvests. Reviving the tradition of using dried vegetables in off-season months can benefit farmers, consumers, and reduce the energy footprint of tomato crops.

The next crucial step is to improve connectivity in hilly areas such as Himachal Pradesh, Uttarakhand, Kashmir, and parts of the Northeast. Train connectivity to these regions can facilitate major off-season production. By enabling farmers to shift from traditional crops to newer ones, this approach will alleviate pressure on southern vegetable farmers and provide a secondary supply of off-season vegetables, especially during the monsoon season. Increased income for farmers and price stabilisation can be achieved through this measure.

The government should consider establishing a special minimum support price (MSP) for TOP crops, supported by government-led procurement. Tomatoes, onions, and potatoes are essential staples in the Indian diet. Anticipating extreme weather events and potential supply chain disruptions, the National Agricultural Cooperative Marketing Federation of India (NAFED) or another government agency should procure TOP crops. An independent agency comprising all stakeholders can be created to manage supply chain and procurement. TOP farmers should be identified and given production quotas under strict systems. Providing financial incentives for greenhouses and polyhouses can also increase tomato production.

This agency would have two primary purposes. First, it would regulate internal production, supply, and storage of TOP crops. In years of excessive production, it should seek export markets worldwide, including the Indian subcontinent. Additionally, the mandate should include value-addition through small-scale processing.

At the micro-level, the government should encourage direct market links between farmers and consumers. Residential welfare associations (RWAs), housing societies, clubs, and other organisations can partner with farmers to supply their yearly quotas of tomatoes, onions, and potatoes. This arrangement would benefit farmers by providing them with stable incomes while offering consumers healthier and more affordable food options. Direct markets combined with decentralised vegetable storage facilities can help combat hyperinflation and food insecurity in India.

Source – Rising prices: Why India is in tomato trouble again (firstpost.com)

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