Govt may buy tomatoes to help farmers as prices fall

Govt may buy tomatoes to help farmers as prices fall

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  • September 20, 2023
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NEW DELHI : A crash in tomato prices in parts of the country has prompted the government to consider purchasing them to protect farmers, two officials aware of the matter said. The idea is to use the consumer affairs ministry’s price stabilization fund (PSF), typically used to cool vegetable prices, to lift stocks from areas flooded with tomatoes and sell them in markets nearby where prices are more remunerative.

The development comes against the backdrop of reports of distressed farmers in some states dumping produce and using them as cattle feed after tomato prices plunged to as low as 3-10 a kg last week from more than 250 a kg a month in August. The lowest prices have been seen in the biggest markets of Maharashtra, Karnataka and Andhra Pradesh after a bumper yield sparked an avalanche of tomatoes.

The agriculture ministry expects tomato production to rise significantly in key producing states such as Himachal Pradesh, Karnataka, Tamil Nadu, Maharashtra, Andhra Pradesh, Telangana and Madhya Pradesh in the August-October period, which would put more pressure on prices. Production is expected to reach 956,000 tonnes in September and 1.3 million tonnes in October.

“The horticulture department is in discussions with the department of consumer affairs, food and public distribution to do a small intervention worth 10-20 crore to help tomato farmers in some pockets get out of the glut-like situation, as prices are not falling across the country. The initial discussion indicates that the intervention could be under PSF like we did for onions,” one of two officials said on condition of anonymity.

Tomato prices began rising in the last week of June and crossed 260 in some markets in North India in July, prompting the government to take measures, including importing it from Nepal before Independence Day. The intervention cooled the market, but the bumper crop of tomatoes that followed led to a crash in prices.

Agitated farmers in Karnataka’s Kolar dumped their produce on streets after finding no buyers in auctions, while those in Andhra Pradesh’s Papili discarded them as cattle feed as the prices offered were insufficient to even pay for transport.

“The (horticulture) department’s argument is that when market prices shoot up, department of consumer affairs (DoCA) intervenes. Similarly, when prices fall, DoCA should come to farmers’ rescue, which is fair. Stabilization means balancing. So, we must intervene in both situations,” the official cited earlier said. “When prices go up, and DoCA intervenes, people criticize how farmers’ interests are being hurt. The nature of PSF is changing. Now, both the agriculture department and DoCA are working towards securing the interests of farmers as well as consumers, which is good.”

Average wholesale and retail prices of tomatoes stood at 30 and 15.8 per kg, respectively, on Tuesday, data from the National Horticulture Board showed. According to data from the price monitoring division of the consumer affairs department, all-India average wholesale prices were down 63.3% from the previous month and nearly 18.4% lower from a year earlier, while the retail price was down nearly 61% month-on-month and 17.5% year-on-year.

“If there’s a glut-like situation in a region, what the government does is to buy the crop from the farmers and transport it to a market where the price is remunerative. This often corrects the market price, especially in the regions where prices of a commodity crashed,” the second official said.

Under the government’s TOP (tomato, onion and potato) scheme, farmers enjoy certain benefits, including a 50% upfront subsidy on freight, meaning farmers are charged only half the actual freight for the consignment. The subsidy is borne by the ministry of food processing industries under its Operation Greens-TOP to Total scheme.

“These queries don’t pertain to the ministry of agriculture and farmers’ welfare. The relevant department in this regard is the department of food and public distribution,” an agriculture ministry spokesperson said, replying to Mint’s queries.

Queries sent to the ministry of consumer affairs, food and public distribution remained unanswered at press time.

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Updated: 20 Sep 2023, 12:46 AM IST

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