New Delhi: The Charkhi Dadri mandi in Haryana, about three hours from Delhi, wore a forlorn look on 30 April: quiet and clean except for some tomatoes littering the ground, an old woman scavenging the good ones, and some crates of tomatoes left behind by farmers.

It is here that hundreds of farmers staged a protest a few days ago as wholesale tomato prices crashed to as low as less than a rupee a kg. Later during an auction at the mandi (wholesale market) on 30 April evening , a small truck of tomatoes sold for Rs6 per crate of 25 kg—or about 24 paisa per kg. The same evening, tomatoes sold in Delhi’s retail markets between Rs15-20 per kg. It takes at least Rs4 to grow a kilo of tomato, and between Rs5-7 when grown on leased land using hired labour.

“Due to a bumper harvest in Haryana and other states prices have crashed... we are getting fewer calls from buyers from outside the state," said Ajay Punya, a trader at the mandi. The glut has reached a point where goshalas—shelters for abandoned cows —are flush with so much free tomatoes that they are refusing to take anymore. “The cows are suffering from loose motions after eating too many tomatoes," quipped another trader.

Rakesh Sangwan’s farm is half-an-hour’s ride from the mandi. A week back Sangwan, 27, took a tough decision: he stopped irrigating his seven-acre tomato field. “Current prices will not pay for plucking and transport costs... so no point in wasting water, I am letting the crop wither on the field," said Sangwan, who increased the area under the vegetable, partly because he had earned a handsome profit last year.

Sangwan is not the only farmer reeling under a price crash. Consecutive years of record harvests of foodgrain, oilseeds and perishable horticulture crops have led to a crash in prices, fuelling distress in India’s farms in a year when several agriculturally important states such as Karnataka, Madhya Pradesh, Chhattisgarh and Rajasthan go to polls.

Data on the wholesale price inflation in tomatoes shows wild fluctuations with prices crashing during harvest season and peaking during lean months.
Data on the wholesale price inflation in tomatoes shows wild fluctuations with prices crashing during harvest season and peaking during lean months.

In March this year, wholesale food price inflation turned negative: a 0.3% decline year on year. “We haven’t seen this kind of food price deflation in over a decade... For the third time in the last four years, wholesale food inflation went into negative territory. While record harvests (driven by normal rains) is a reason, food prices are also low due to poor demand as rural incomes are hit," said Himanshu, associate professor of economics, at Jawaharlal Nehru University, Delhi.

Further, prices have seen recurrent fluctuations for major crops like potatoes, onions, and tomatoes. The past months were replete with images of onion farmers in Madhya Pradesh and potato growers in Uttar Pradesh dumping their produce for want of better prices.

Data on the wholesale price inflation in tomatoes shows wild fluctuations with prices crashing during harvest season and peaking during lean months (see table). The crisis could be resolved in part by smoothening supplies through processing, say making puree out of fresh produce and supplying these during lean months when retail prices are high.

“It is possible to repeat the success of frozen peas which are now available through the year at reasonable prices for other vegetables, if the government promotes marketing of new products like pureed tomatoes and processed onions," said Siraj Hussain, former agriculture secretary and currently a fellow at the Indian Council for Research on International Economic Relations, Delhi.

There’s more. Farmers usually make crop choices based on previous year’s prices as there is almost no crop specific market intelligence which can provide a clue to future prices and demand. For instance, in Charkhi Dadri district of Haryana, a hub of tomato production in the state, the area under the crop doubled last winter as the government provided financial incentives to farmers. “May be we should have promoted musk melons (selling at Rs30 per kg in wholesale markets now) instead of tomatoes... but we had no idea how much tomatoes were planted in other states," said Surender Sihag, district horticulture officer.

To stem the fall in the prices of perishables, Haryana announced a price support scheme called Bhavantar Yojana for vegetables in December, the first for perishables by any state government. For tomatoes, support prices were fixed at Rs4 per kg. Farmers who have registered for the scheme are promised a cash transfer when they sell at prices below R.4.

A woman scavenges tomatoes at the Charkhi Dadri Mandi in Haryana where a glut has led to a steep fall in wholesale prices to as low as 25 paisa per kg.
A woman scavenges tomatoes at the Charkhi Dadri Mandi in Haryana where a glut has led to a steep fall in wholesale prices to as low as 25 paisa per kg.

While the scheme provided a sense of relief to those who registered under the scheme, it also depressed wholesale prices for the likes of Sangwan who missed out on the deadline to register. Wholesale tomato prices were at Rs4 per kg in Karnataka’s Kolar and at Delhi’s Azadpur mandi on Monday, substantially higher than the pitiful 50 paisa per kg rates at the Dadri mandi. This indicates a possible collusion by traders to purchase cheap from farmers who are registered under the scheme, pulling down average wholesale prices locally.

“A price deficiency scheme (as introduced by Haryana for vegetables, and pulses and oilseeds in Madhya Pradesh) can function only if spot markets are not rigged," said Pravesh Sharma, former head of Small Farmers’ Agribusiness Consortium, and currently CEO of Kamatan, an agriculture supply chain startup.

“Government’s should instead advise farmers on crop choice and timing in sync with market conditions," Sharma said. “In about a month from now tomato prices will soar as harvest from the (warmer) plains are exhausted and we depend on meagre supplies from the hills."

Close