The rise in tomato prices was driven by a sharp drop in supply and when demand picked up, traders and retailers increased their mark-ups
in November, Vegetable prices fall by 13.6 percent compared to last year, With eggs, these were the only two items that registered a decline. However, not all vegetables followed this trend. There was an astonishing increase of 31% in the price of tomatoes. their bloated cost Were driven by a sharp drop in supply. Furthermore, when demand increased, merchants and retailers increased their mark-ups, further raising prices.
ups and downs
India’s retail inflation rate, as measured by the Consumer Price Index, stood at 4.91% in November. Oil and fat, fuel and light, and transport and communication prices rose the most in November. At the same time, the prices of vegetables have declined by 13.62 per cent.
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due to external factors
The chart plots the retail inflation rate of vegetables in November against their assigned weighting in the inflation calculation. Two of the three main vegetables, which carry more weight in the calculations – onion and potato – have registered a decline of 30% and 45%, respectively, from a year ago. However, the vegetable which had the third highest weightage, tomato registered a 31% increase over the last year’s prices. No other vegetable has registered an increase of more than 20 per cent.
expensive vs cheap
A look at the retail prices shows that there is no discrepancy in the inflation figures. The chart shows the retail prices of major vegetables for the last two years. Tomato prices have been rising since October, while onion and potato prices have moderated. A kg tomato, which cost ₹41 in November 2020, was ₹58 in November 2021 – an increase of 42%.
across the centers
In November and December, the price of tomatoes became expensive at all the centres. In Amritsar it crossed ₹83/kg in December and in Guwahati it touched an average of ₹76/kg. On an average, a kg was bought in Bhubaneswar in December for ₹70, while in Bengaluru and Lucknow it crossed ₹60.
Arrival and Mark-up
There was a sharp fall in their arrivals in the markets before the sharp November prices of tomatoes. The colored lines in Charts 4A, 4B and 4C show tomato arrivals in select cities in the last few November months. The colored lines in the chart show the average prices in November. Across all cities, a clear pattern emerges from the chart – if arrivals go down, prices go up. However, how is this price hike being managed and who benefits from it? Charts 5a, 5b and 5c show the difference between the wholesale price and the retail price for all the months between January 2017 and November 2021. As can be seen, the price gap again peaked in November 2021. This indicates that as demand increased and supply declined, retailers increased their mark-ups and sold at much higher multiples than what they bought. The graphs show that this is a routine practice almost every year at the end of the year when supply falls and demand peaks.
targeted mark-up
The graph shows the % of mark-up set by merchants and retailers for food products in Indian cities. The data is based on the 2019 survey conducted by RBI. For example, in the case of tomatoes, traders increase the price by about 20% and retailers by 40%.
farmers do not benefit
However, these markups do not translate into higher profits for farmers, especially in the case of vegetables. RBI Survey Results:
a regular occurrence
Vegetable prices are highly volatile and rise towards the end of the year due to short supply. A similar trend was observed for onions in September 2019, when prices crossed ₹100/kg. But the farmers are not getting its benefit. According to RBI survey, farmers felt that reliable weather forecast and better storage facilities would help in better price realization
Source: National Horticulture Board, MoSPI, RBI
Read also: data | Onion price came down to ₹100 due to reduced supply in the market
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