Wayward rains keeps vegetable prices in India on the boil

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A vegetable seller at work in Mumbai, as monsoon rains drench India's commercial capital

From south-west to north-east, a stretched monsoon has pushed vegetables in India into an unsavoury stew of high prices, ratings agency CRISIL said in a report, adding that any respite in the short-term will be a function of how it pours from here.

“First came the erratic and often copious summer spells that delayed arrivals at mandis and lit up prices. Then the north-east variant rained pain. With cumulative rainfall between October 1 and November 24 as much as 47% above normal, vegetable arrivals at mandis are once again severely curtailed, and once again prices are aflame,” CRISIL said.

Prices of tomato, which accounts for 10% of the total vegetable production in India, may stay elevated for two more months, the report said, as supply is down sharply after standing crops were damaged by excess rains in Karnataka (105% above normal), Andhra Pradesh (40% above normal) and Maharashtra (22% above normal). The sthree state are key suppliers of tomato during October-December.

“Our on-ground interactions indicate that the situation is so grim in Karnataka that tomatoes are being sent from
Nashik in Maharashtra. Not surprisingly, prices of tomatoes have increased 142% on-year as on November 25 and are expected to remain elevated for the next 45-50 days till the harvest from Madhya Pradesh and Rajasthan reach markets across the country beginning January,” the report said.

The prices are expected to decline by ~30% from the current high levels of around Rs 47 per Kg in the coming 2 to
3 months, it added.

Similarly, the onion crop, which accounts for 14% of the total vegetables produced in India, has also been affected.
Transplanting was delayed in the key growing regions of Maharashtra because of deficit rains in August. That delayed arrivals in October, leading to a 65% increase in onion prices compared with September.

“The good part is, fresh arrivals are expected from the northern states such as Haryana in the next 10-15 days,
which should douse prices across India. However, since 70% of onion production happens in the rabi season —
November is the major sowing month — rainfall will be the key monitorable for both arrivals and prices.
Water logging may raise potato price,” the report said.

Potato (27% share in production), a rabi crop with sowing season spread over October and November, has been
hit hard by excessive rains in the key growing states — Uttar Pradesh (162% higher), West Bengal (52% higher),
Bihar (184% higher), and Gujarat (42% higher).

CRISIL said its on-ground interactions suggest excessive water logging in the fields may warrant resowing of potato tubers, adding to the cost of farmers.

“Currently, thanks to 10% higher vegetable production in the last rabi season, potato prices are hovering around Rs
18 per kg (38% lower on-year as on November 25). But if the heavy rains continue, sowing and output may be
impacted, pushing up prices in the next couple of months,” it said.

Okra prices could begin easing in three weeks

Okra, or lady’s finger, an early kharif crop with a 3% share in total vegetable production, has also been hit by heavy
rains during the sowing and early vegetation stage in Andhra Pradesh (accounting for ~21% of okra production),
which received 23% excess rains in August. Heavy rains in Gujarat during the fruit-setting stage has also added to
supply woes. That said, prices of okra, which are 57% higher on-year as on November 25, are expected to be tamed in the next 20-25 days with fresh arrivals, the report said.

Among other vegetables, capsicum and cucumber, which cumulatively have ~1.5% share in total vegetable
production, have also been hurt and their prices have also risen sharply.

With rains beating a retreat, prices could follow suit

Any respite in vegetable prices in the short-term will be a function of how it pours from here. Hopefully, as
the north-east monsoon beats a retreat, the worst may be over for vegetable prices, the report said, while warning that there could be fresh spike in prices of tomato if heavy rains once again lash Karnataka and Andhra Pradesh, the key tomato-growing regions,

Similarly, the onion crop in Maharashtra bears watching as 70% of the annual production of the bulb in India
happens during the rabi season, it added.

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