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Tomato prices shoot to double; likely to spiral further if supply falls
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Friday, 24 June, 2016, 08 : 00 AM [IST]
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Pushkar Oak, Mumbai
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fiogf49gjkf0d Prices of tomato, a key ingredient for both food production and food processing, have doubled reaching the Rs 80 to Rs 100 per kg mark in most states across the country. Not only that, the prices are likely to rise further if supply is affected due to the rise, caution experts.
Citing reasons for the unprecedented hike, Abhishek Mahadik, special member, Nagpur Vendor Association, Nagpur, stated, “The rise in price is recorded due to the increase in drought-like situation in the last two years. The price hike may only be controlled with the next season's output which will be in the market by September. Until then, the situation will be tight as supply in the market is low.”
As for prices in wholesale markets, Mahadik informs, “The wholesale markets have also been hit which has led to low supply in the market. The wholesale market prices for ketchup producing companies are high compared to those three months back, specially from the states of Karnataka, Maharashtra and Telangana. The procurement is a major concern as the tomatoes are base raw material for ketchup producing units in the region and the state. There has been a high demand in the retail markets in the ketchup category while this has led to the pressure on the wholesale prices of tomatoes. More supply of tomatoes in the market could only address this issue in a better way.”
He cautions, “The major concern is that if prices don't fall in the next month it will lead to lesser supply and will lead to rise in wholesale and retail prices again. The industries are procuring tomatoes in the states of Maharashtra and Karnataka presently but will soon experience fall in the quantity if the prices keep on increasing with this momentum.”
Mahadik points out that several farmers complained of failed tomato crop infested with disease. Several farmers in Maharashtra raised questions with regards to seeds which were brought by farmers in Western Maharashtra of being infested leading to severe drop in production of tomatoes at a flowering stage over 20,000 acre area. The total area under tomato cultivation in Maharashtra in 2013-14 was 1.23 lakh acre or 50,000 hectare.
Meanwhile, speaking from the point of the hospitality industry, Sudeep Sharma, director, operations, Courtyard by Marriott, Ahmedabad, states, “The prices we hear are rising due to the severe heat in most states of India that has resulted in an average yield to the farmers, hence impacting production and increasing prices. Surely, the rising costs of fruits, vegetables and pulses have impacted us, we are witnessing a higher food costs and lower margins.”
Sharma adds, “We as a market player cannot charge more than the printed prices on the menu, and a lot of thought and steps go behind the process of changing menu. Even if we look at it as an option, the price rise is in the basic ingredients which can’t be avoided in even basic menu, so the menus remain same, more or less. As a reputed establishment, we usually keep more than one suppliers/vendors for most of our raw material. These include contract and direct sellers. The supply rarely becomes an issue but during these times the price, quantity and the quality is a challenge."
Sharma reveals, “Since we do not pass on the cost burden to the customer immediately, our margins have started to shrink. A consistent rise in price however may push us to revise our menu pricing. A lot of price points for bigger caterings and large food and beverage orders are contracted with the customers well in advance so not much can be done. Smaller steps like reconsidering the buffet menus on a daily basis to optimise costs are taken, but this has very little impact. Wholesale price contracting with our produce vendors helps to some level.”
Assocham survey
An ASSOCHAM (The Associated Chambers of Commerce & Industry of India) survey points out that the demand for tomato puree and ketchup has shot up by 40 per cent within one month as people have curtailed the use of tomato and prefer dishes which do not require much use of tomatoes, like lady finger or pumpkin. Prices have gone up because of tight supply from the major growing states of the south where the Rabi crop has been damaged during the flowering stage because of severe drought.
As per a recent government estimate, the country’s tomato output is pegged at 18.28 million tonne in the crop year 2015-16 (July-June) as against 16.38 million tonne in the previous year. Karnataka, Andhra Pradesh, Telangana, Madhya Pradesh, West Bengal and Odisha are the major tomato growing states. In the last one month, the rates have gone through the roof and the key vegetable is being sold at Rs 80 to Rs 100 per kg by local vegetable vendors depending on the quality and locality, reveals the paper.
Further, “The rise in pulses price has come as a double-shocker for the denizens. Vegetables are increasingly becoming ‘unaffordable’ as the prices have skyrocketed particularly in metros and major cities,” said D S Rawat, secretary-general, ASSOCHAM, while releasing the findings of the survey.
Household budgets affected
As per the survey, about 78% of households find difficult to manage their household budget and squeezing families' finances to the lowest level due to sudden rise in price of tomatoes, pulses and so on.
The survey was conducted in major cities like Delhi-NCR, Mumbai, Kolkata, Chennai, Ahmedabad and Hyderabad. Over 1,500 hosewives took part in it. The maximum impact was felt in Delhi-NCR followed by Mumbai and Ahmedabad.
This being the scenario, local grocers have increased stock of tomato puree/ketchup. For them, in the last two weeks, there has been a rise in sales of products such as puree, ketchup as one spends less on buying puree/ ketchup than a kilo of fresh tomatoes.
About 56% of the respondents said that they have curtailed the use of tomatoes and prefer dishes which do not require much use of tomatoes, like lady finger or pumpkin and some are substituting it with raw mango to get that sour taste.
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