Decreased Volumes of Tomatoes and Peppers Are Pushing Prices up in India
The wholesale prices of fresh tomatoes in India skyrocketed in June, reaching USD 0.21/kg in W1 of Jul-23, marking a 110% WoW change. The government is dealing with the problem by organizing a Grand Tomato Challenge, a hackathon to help with supply throughout the year. The state government's agriculture marketing department (AMD) has also begun selling tomatoes for INR 50/kg in 103 rythu bazaars across the state. To accommodate the people's requests, the state administration has set a daily objective of buying 50 metric tons (mt) of tomatoes. This consistent supply of tomatoes will ensure that customers can access this critical food without breaking the bank. Tomato growers in India, on the other hand, have been tackling climate change and the impact of various pests and diseases, and at the same time, low purchase prices from private dealers. In W4 of Jun-23, the maximum retail price of tomatoes reached INR 122/kg, while farmers were forced to sell them to private dealers at a maximum wholesale price of INR 10/kg.
Source: Tridge
Tridge closely monitors weekly movements of tomato prices in India, and more on price data analysis can be found in the Tridge Analysis & Reports section. For a detailed analysis of tomato prices in India, click here. Several factors affected the price surge of tomatoes in India. Adverse weather conditions caused a lower volume of available tomatoes, while at the same time, certain pests and diseases like the curl leaf virus affected both the volume and quality of tomatoes.
Climate change influenced vegetable price spikes in Telangana, India as unpredictability, heatwaves, and delayed monsoons reduced agricultural output. Prices increased due to delayed rainfall and unexpected temperature surges, which severely influenced blooming, pollination, and fruit development, resulting in lower crop yields. Vegetable crops, like tomatoes and chili peppers, are very vulnerable to weather changes. In India, 20.69 million metric tons (mmt) of tomatoes were produced in 2021/22, while 20.62 mmt are expected in 2022/23. Conversely, the discrepancy between wholesale and farmgate prices has pushed farmers to cut costs, limiting pesticide treatments and lower investment in tomato production. Plastic low tunnels, walk-in tunnels, net shade houses, and insect-proof net houses are all needed to reduce the risk of virus occurrence and pest damage. Experts also point out much-needed investment in the cold-chain supply network. Cyclone Biparjoy affected the coastal area of Gujarat and Rajasthan and delayed monsoon activity while also affecting the overall rain activity across India, causing disturbance for agricultural production and tomatoes, among others.
Other vegetables, such as green chili pepper prices have risen in some parts of India due to a supply shortage. Green chilies sell for INR 100/kg in Chennai but have reached INR 350/kg in Kolkata. Due to low prices for chilies in the previous harvest, farmers in Andhra Pradesh switched to other crops, resulting in a drop in supply.
Given the abovementioned factors, and based on the statistical data, Tridge predicts that the price of tomatoes and green chili peppers will stabilize in the following period and begin to fall. Mainly due to government measures and based on improved weather conditions affecting vegetable production. Another point is the farmers' profit margin. Due to the low purchase price, tomato producers in India will remain in a constant loop between subordinate profit margins and high investment costs.