After a sharp rise, tomato prices to come down soon, here is why

Tomato prices are on the rise for almost two months now, which started to increase since the end of September. The rise in tomato prices was first caused by unseasonal rains in northern producing states of Punjab, Uttar Pradesh, Haryana and Himachal Pradesh, which led to damage of crops and delay of arrival of tomatoes from these states. This was followed by heavy rains in southern states like Tamil Nadu, Andhra Pradesh, Telangana and Karnataka, which again resulted in crop damage and led to disruptions in tomato supply.

Retail tomato prices are hovering around Rs 80 in most of India, but the situation is worse in southern states where the crop is retailing at around Rs 120. According to reports, the situation in major tomato producing state Karnataka is so grim that the state is now getting the vegetable from Nashik in Maharashtra.

This has led Crisil Research to predict that tomatoes will continue to be a costly vegetable for two more months. The agency has said that standing crops have been damaged because of excess rains in Karnataka, Andhra Pradesh and Maharashtra, the key supplier states during the October-December period.

Crisil Research said that Prices have risen 142% as of November 25 and will remain elevated for two more months till harvest from Madhya Pradesh and Rajasthan starts reaching the markets from January. It said that prices will come down by 30% once the fresh arrivals start.

However, the union govt is much more optimistic about the tomato price scenario and says that prices will start to fall from December itself. According to a note prepared by the Department of Agriculture and Farmers’ Welfare, Tomato arrivals from the north Indian States will start from the beginning of December 2021 which will add to availability and lead to fall in prices.

According to the department, the all-India average price of Tomato was Rs.66.61/kg on 25^th November, which was 62.66% higher than that of last year and 125.41% higher than the five-year average price.

Tomato price is highly volatile as slight disruptions in the supply chain or damage due to heavy rains result in a spurt in prices. On the other hand, bulk arrival and logistics problems have the potential of creating a situation of a glut in the market which can cause a reduction in retail prices.

A report by the Department of Agriculture estimates that the Kharif production in the current year will be 69.52 Lakh metric tons, which is comparable with 70.12 LMT produced last year. According to the report, the harvest of tomatoes in November will be 19.62 lakh ton, and the same will be 17.21 lakh ton in December, up from 14.79 lakh ton in October. While this represents a dip in November harvest by around 2 lakh tons in November compared to 2020, the production in December will be similar to the 2020 level.

With this increase in harvest in the current and the next month, the availability of tomatoes will go up substantially and will result in a drop in prices, according to the estimates by the department.