Sharp rise in tomato prices after Maharashtra rains hit supplies, but unlikely to affect value-added food items

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A vegetable seller in Mumbai, India's commercial capital. Photo/IAC

While tomato prices had doubled in the last one month after supply reduced from Maharashtra, owing to incessant rains across major growing regions. However, the prices in the domestic market have started to cool from the highs it reached after massive crop loss due to floods and heavy rainfall in major producing states. The impact of squeezed supply is likely to impact the prices of food items in its value chain.

Maharashtra is one of the largest growers of tomato. Data compiled by Nashik-based National Horticultural Research & Development Foundation (NHRDF) showed almost 100 per cent increase in tomato model prices in September to Rs 24 a kg from Rs 14.50 a kg in the beginning of the month. Meanwhile, stockists ramped up supply to take advantage of the price rise. Thus, total tomato arrivals jumped to 519 tonnes towards the end of September from 368 tonnes in the beginning of the month.

Interestingly, quality of the current harvested crop is also poor with high moisture content, thereby reducing the shelf life amid fears of spoilage.

Meanwhile, tomato processors, including chips and ketchup makers, have deferred their fresh purchases at this price. These large corporates normally purchase good quality tomato for future use. “There is no order from large buyers at this price. They fill their cold storage during peak arrivals when prices fall sharply,” said a large tomato supplier in Vashi, near Mumbai to Business Standard.

Apart from being used in raw form for cooking vegetables, tomato is processed to make ketchup, sauce, puree etc. Market players expect their prices to increase 5-10 per cent owing to short supply and higher procurement costs. However, the quantum of the possible upward revision in prices would be known in the coming weeks or months, since most producers keep a backup inventory apart from tomato paste for production.

Both the wholesale and retail prices had shot up over the past few weeks, especially after above normal rainfall was witnessed in September across India, destroying several agricultural and horticultural crops, including tomato, sugarcane, paddy etc.

“Fortunately, we keep adequate stock of tomato paste for manufacturing ketchup etc. However, those companies who do not have a robust backend supply would be hardest hit,” a manufacturer told Business Standard and forecast there could be minor hike of 5-8 per cent in the prices of tomato processed food items.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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