Tomatoes hit Rs 100/kg due to farmer strike, floods, GST; kharif produce may bring relief soon

Demonetisation impacted procurement, GST hit transportation and during the strike farmers destroyed the produce in protest

Sulekha Nair and Kishor Kadam July 26, 2017 14:38:28 IST
Tomatoes hit Rs 100/kg due to farmer strike, floods, GST; kharif produce may bring relief soon

There is no let-up in tomato prices across the country yet. The prices of the much-sought vegetable have soared to Rs 120 a kg in Mumbai. According to a PTI report, there has been four such spikes since the beginning of June when tomatoes were being sold at about Rs 25 per kg in the Delhi-National Capital Region market, where the rates are now at Rs 100 per kg.

As per the consumer affairs ministry's data, the average price of tomatoes stood at Rs 80 per kg on Tuesday across major cities in the country while the maximum price was Rs 95. Price of tomatoes in Delhi was Rs 83 per kg, while in Mumbai it was Rs 88, Chennai Rs 80 and Kolkata Rs 95, according to government data. In the Vashi wholesale market in Navi Mumbai, the prices rule between Rs 60 and Rs 80.

Tomatoes hit Rs 100kg due to farmer strike floods GST kharif produce may bring relief soon


Shankar Pingale, a trader in the Vashi market, said the tomato prices have shot up because of shortage. “The farmer strike in Maharashtra and delayed rains have delayed the planting of the crop. The new crop will take some time to harvest,” he said. The tomato crop in Karnataka and Gujarat too have been delayed and it has impacted tomato supply in the market, said Pingale.

Contradicting Pingale, an economist said rains haven’t been inadequate in the state. She termed the shortage ‘man-made’, as the farmers dumped tomatoes on the street earlier this month demanding a farm loan waiver and also better procurement prices.

The supply of all vegetables has been affected, not just tomatoes. Usually, around 550 trucks and tempos arrive in the Vashi market on a daily basis carrying vegetables and fruits. This has now now come down to 450 and 500 trucks. Though prices of all vegetables except onions and potatoes have gone up, tomatoes have shot up also because it is a highly perishable commodity said an analyst. The fastest spurt in prices in tomatoes – a vegetable of daily use - has hit consumers, he said.

The supply crunch is also on account of to damage caused to the crop by heavy rains in several parts of the country which has led to a sharp rise in prices, they said.

The government’s newly introduced goods and services tax (GST) has affected the sale and transport of vegetables. Many traders and wholesalers who do business running into crores have been habituated to showing a small percentage of their income on paper.

“The GST has been a jolt and it has impacted the supply chain. Wholesalers and truckers are cautious and are hoping that the old model of business can still work, said Sachchidanand Shukla, Chief Economist, Mahindra & Mahindra. “People have been doing business in wholesale and transport for generations where they could get away by showing very few things on paper,” said Shukla. But with GST, they have to show tax receipts to avail the input credit.

The entire fleet of trucks are not out on the road and their numbers have decreased, as Pingale pointed out, because they too have to carry e-way permit if they carry goods above Rs 50,000. The mood is to wait and watch.

Large procurers and wholesalers are hesitant to buy goods only in cash as the Income Tax department has warned people against indulging in cash transactions of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

However, a section of the experts believe that tomato prices will stabilise soon, local vendors said.

“It is a temporary phenomenon and we face this periodically with onions and tomatoes,” says Pradeep Shetty, honorary secretary of the Hotel and Restaurant Association of Western India (HRAWI). Hence, prices of food items in restaurants haven't been hiked due to rise in prices of vegetables, said Shetty.

According to an analyst, kharif crop is being harvested and the produce has begun moving into sabzi mandis. He expects the prices to soon stabilise.

Last week, agriculture secretary Shobhana K Pattanayak also had assured of this. "This is a lean season for tomato. The price rise is a temporary phenomenon and it will fade out soon," Pattanayak has been quoted as saying in a PTI report.

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