Tomato Prices Hit Record Lows at Rs 2 Per Kg, Farmers Throw Away the Stock

In a swift turn of events, the price of tomatoes, once considered a luxury for many households just a month ago, has plummeted to such an extent that farmers are being forced to discard their produce to avoid incurring heavy losses in storage and transportation. This unsettling price volatility in the market has become an all-too-familiar cycle, impacting both consumers and growers on a recurring basis.

Tomato prices, which had soared to exorbitant levels in July, resulting in a significant spike in consumer inflation, have now crashed in major markets due to an oversupply situation. In a matter of weeks, prices have dropped from nearly ₹8000 per quintal to a mere ₹200-300 per quintal in certain markets, as reported by farmers and intermediaries in the supply chain.

The issue at hand sheds light on several critical factors, including the lack of accessible price information for farmers, insufficient levels of food processing infrastructure, and a phenomenon known as the 'cobweb phenomenon' by economists. This phenomenon, not unique to agriculture and also observed in some industrial goods, occurs when high prices during a scarcity season encourage increased production, ultimately leading to a surplus.

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Back in July, the average retail price of tomatoes tripled from approximately ₹30 per kilogram in June to a staggering ₹109 per kilogram, contributing to a 7.44% surge in consumer inflation, reaching its highest level in 15 months. However, the scenario has since shifted, and retail inflation in August eased to 6.83%, largely due to declining vegetable prices.

As of September 12, the minimum wholesale rates of tomatoes in various markets have reached alarming lows, with Pune recording ₹200 per quintal (₹2 per kilogram), Hyderabad at ₹400 per quintal, and Mumbai at ₹800 per quintal. In response to these unviable rates, farmers in some regions have resorted to disposing of their tomatoes or selling them as cattle feed.

Price instability in perishable goods like tomatoes remains a significant political risk, as fluctuations can lead to public outcry, particularly among the urban middle class. Past experiences, such as the impact of onion prices on election outcomes, serve as a reminder of the political sensitivity surrounding these commodities.

To address this ongoing challenge, experts emphasize the need for substantial investment in food processing infrastructure and urge farmers not to overreact to sudden price surges by hastily shifting to crops that have experienced abnormal price increases.

The core issue lies in the inherent characteristics of tomatoes—high perishability, a short growth cycle, and limited storage capabilities due to their susceptibility to spoilage. These factors, combined with production concentration in a handful of states, contribute to the recurrent glut in the market and subsequent price crashes, as highlighted in a recent paper by the National Bank of Agriculture and Rural Development.

The situation underscores the importance of finding sustainable solutions to tackle the price volatility of essential commodities, ensuring stability for both farmers and consumers alike.

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