Tomato inflation in June touched a y-o-y high of 158.8 per cent based on the Consumer Price Index (CPI) and 281.1 per cent based on the Wholesale Price Index (WPI). At 8.9 per cent, tomato has the largest contribution among 299 commodities in the CPI basket; whereas in WPI, it has a contribution of 5.7 per cent, the highest among all agricultural commodities. Although, the average retail price of tomato in June was hovering around ₹52 per kg at the all-India level (DoCA, 2022), it had shot up to ₹100/kg in several urban markets of India.

Tomato prices follow a cyclical phenomenon, a clear case of price-production cobweb with same situation arising every alternate year. In 2021, tomato witnessed negative inflation with wholesale prices touching as low as ₹2-3/kg (Agmarknet, 2022). The steep decline in prices resulted in huge losses for small and marginal farmers, and many of them could not afford to cultivate the crop in the following months.

According to market intelligence, due to low price realisation, farmers planted lesser area under tomatoes last year and shifted towards crops like soya, cotton and corn. As tomato is a short-duration crop, the impact of supply shortages get reflected in the prices in the next 2-3 months.

Besides, heatwave in northern India and unseasonal rain and cyclone in Karnataka resulted in diminished tomato yields in these areas. Resultantly, production estimated for 2021-22 came down to 20.3 million tonnes (mt) from the 21.2 mt produced in 2020-21 (MoA&FW, 2022a). Hot spell in the North also forced farmers to delay plucking of the crop, resulting in lesser supply in the markets.

Besides tomatoes, potato prices are also on the boil, while onion prices are stable. But all the three TOP (tomato, onion and potato) crops face similar issues with respect to price volatility. One of the critical reasons for this is fragmented markets and an inefficient value chain system.

The presence of a large number of intermediaries further raises consumer prices and reduces farmers’ share. Gulati 

TOP initiative

The government launched ‘Operation Green-TOP’ in the 2018 Budget with a financial outlay of ₹500 crore. The objective was to build value chains for TOP on the lines of ‘Operation Flood’, to ensure farmers get a higher share of the price (MoFPI, 2019).

The Ministry of Food Processing Industries had also extended the scheme to all fruits and vegetables (TOTAL) for a period of six months on pilot basis as part of the Aatmanirbhar Bharat Abhiyan w.e.f. June 2020 (MoFPI, 2020). The objective was to prevent the growers from undertaking distress sale during the lockdown and reduce post-harvest losses. Unfortunately, the progress in taming tomato inflation and ensuring cultivators get a reasonable return has remained unsatisfactory.

In order to ensure that tomato prices remain stable for farmers as well as consumers, the government should undertake the following measures: First, promote the use of processed products like tomato paste and puree through massive campaigns. Also, the processing capacity has to be enhanced so that at least 10 per cent of the tomato produced goes for processing. This will help excess supply to be processed during peak season which can be stored and consumed during lean season. The GST on processed tomato should be reduced from the current 12 per cent to 5 per cent.

Second, reforms in Agriculture Produce Marketing Committee (APMC) will allow large buyers to directly purchase from farmers and farmer producer organisations (FPOs), bypassing the 

Third, to enhance tomato yield, the government should promote polyhouse cultivation on a large scale. It will help create a continuous cycle of crop and provide protection against pest attacks. The government can provide subsidy to help farmers and FPOs shift to such cultivation.

The writers are Fellows, ICRIER. Research excerpts are from AF-TAB bulletin