NEW DELHI: Retail prices of commonly used vegetables have spiked over the past month at a time when household incomes have been severely impacted by the pandemic induced job losses and pay cuts. While potatoes are retailing at over ₹40 per kg, onions are selling anywhere between ₹70 and ₹100 per kg depending on quality. Tomatoes too are selling at ₹50-70 per kg, forcing poorer households to slash consumption.
In September, retail inflation in potatoes stood at 102%, the highest in five years, while tomatoes were 55% expensive year-on-year. Only onion inflation was negative but that was due to high prices around this time last year. Overall, retail food inflation was seen at a steep 10.7% driven by higher prices of vegetables, pulses and animal proteins.
Worryingly, prices of onions and potatoes are likely to stay firm till January. Potato prices have maintained their upward trend this year due to lower plantings and production which was impacted by adverse weather during harvest season in February-March in the potato growing regions of Uttar Pradesh. Excess rain during the harvest of kharif onions in October led to significant damages across states like Maharashtra and Karnataka, forcing the government to impose a stock limit on trade and allow imports.
According to Bhuvesh Agarwal, vice president of the Cold Store Association in Agra, Uttar Pradesh, storage volumes of potatoes were lower in 2020 by around 20 million bags (of 50 kg each) due to fall in production. The state government ordered that stocks stored by farmers has to be emptied by end October but this is likely to happen only by mid November. “Despite arrival of potatoes from Himachal Pradesh and Punjab in November-December wholesale prices are unlikely to fall below ₹25 per kg. By February (next year) prices should fall to ₹15 per kg with the arrival of the new crop," Agarwal said. This means consumers will have to shell out around ₹40 per kg for another month or two.
Onion prices too are unlikely to cool down anytime soon. “Due to excess rains more than half of the crop is damaged in Maharashtra," said Deepak Pagar, an onion grower from Nashik. According to Pagar, wholesale onion prices are ranging between ₹40 and ₹70 per kg depending on the quality. “Farmers can recover their losses only if the government does not allow free imports and we receive at least ₹55 per kg of onions," Pagar said.
In the face of recurring weather risks, the government is finding it tough to lower consumer prices, often angering farmers. In September, onion exports were banned even though the Centre brought in a new set of laws to free farmers from trade restrictions. In October, it imposed stock limits on onions invoking the Essential Commodities Act. Last week it slashed import duty on potatoes from 30% to 10% and decided to import a million tonnes of the tuber by end January.
However, if imported potatoes arrive that late, instead of lowering prices now, it could lead to a crash in prices during the harvest season next year.
The challenges illustrate the vulnerability of the TOP (tomato, onion, potato) supply chain to seasonal factors and weather risks. For instance, between June and September retail inflation in potatoes jumped from 54% to 102%. In June retail inflation of tomatoes was in negative territory (-31%) due to lockdown induced supply disruption but prices have shot up by 55% in September.
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November 02, 2020 at 05:38PM
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Retail prices of tomatoes, onions, potatoes may take time to cool down - Livemint
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