Tomatoes: Squashed By The Rear View

July 3, 2023

GS Paper III Indian Economy

Context:

Retail prices of tomatoes in major cities of India have increased significantly.

Reasons for Increasing Prices:

Cobweb Pattern: Tomato prices follow a typical price-production cobweb pattern. In May 2022 and June 2022, tomato inflation spiked to 135.6% and 158.6% respectively.
- Cobweb pattern is a phenomenon where the prices of certain goods witness fluctuations that are cyclical in nature.
Reduced Cultivation: The decline in prices from November 2022 resulted in significant losses for small farmers, leading to reduced cultivation and switching to other crops like beans, soya, and corn.
Other Factors: Factors like attacks of leaf curl virus in major tomato-producing districts and low yield compared to global standards also contribute to the price fluctuations.

Way Forward:

Promote Processed Tomatoes: Encourage the processing of fresh tomatoes into tomato paste/puree. This allows consumers to shift to processed tomatoes during price surges and stabilizes farmer prices.
- Reducing the GST rates on processed tomatoes from 12% to 5% can enhance affordability.
Market Reforms: Implement reforms that promote direct marketing, contract farming, and private mandis. This reduces intermediaries in the supply chain, leading to lower prices for consumers.
- Market reforms also improve competition, infrastructure, and reduce post-harvest losses.
Leveraging e-NAM: Utilize the national agricultural markets (e-NAM) platform to streamline trading procedures, bring transparency to Agricultural Produce Market Committee (APMC) mandis, and enable online trading for farmers and traders.
- Spatial integration for TOP commodities (tomatoes, onions, and potatoes) can help reduce inefficiencies and benefit both farmers and consumers.
Promote Polyhouse Cultivation: Encourage the usage of polyhouse cultivation for tomatoes.
- This modern cultivation technique can significantly enhance yields, stabilize prices, and ensure a continuous tomato supply.
- A polyhouse is a specially constructed structure like a building where a specialized polythene sheet is used as a covering material under which crops can be grown in partially or fully controlled climatic conditions.
  - It is covered with a transparent material to permit the entry of natural light.
Subsidies: Subsidies for Farmer Producer Organizations (FP0s) and farmers can help them afford the capital-intensive technology.

Additional Information:

Tomato (Lycopersicon esculentum):

It is the second most important vegetable crop next to potato. Present world production is about 100 million tons of fresh fruit from 3.7 million hectares.(FAOSTAT, 2001).
It is a rabi crop and can be grown on a wide range of soils but a well-drained, light loam soil with pH of 5 to 7 is preferred.
India is the 2nd largest producer of tomatoes after China.
Madhya Pradesh, Andhra Pradesh and Karnataka are leading producers of tomatoes in India.

e-Nam:

An important initiative of the Indian Government to use pan-India electronic trading portal for bidding and network the existing APMC mandis to create a unified national market for agricultural commodities.

Agricultural Produce Market Committee (APMC):

A statutory market committee is a committee constituted by a State Government.
It operates under the Agricultural Produce Market Committee Act which is issued by the state government.
The primary objective of these committees is to regulate the marketing of notified agricultural produce and livestock in physical, electronic or other such mode.

Operation Greens:

Announced to promote Farmer Producer Organizations (FPOs), agri-logistics, processing facilities for integrated development of Tomato-Onion-Potato (TOP) value chain.
The idea behind this Operation is to double the income of farmers by the end of 2022.

Tomato Grand Challenge (TGC) Hackathon (2022):

Led by the Department of Consumer Affairs and in collaboration with the Ministry of Education (Innovation Cell), with an aim to revolutionize the tomato value chain in India.

News Source: Times of India