A friend who owns a small farm on the Delhi border calls me to bring a large bag as we prepare to meet at a mutual friend's place. He loads me with four kilos of ripe tomatoes, and I have to say “Stop” while others before and after me get parts of the rich harvest.
Tomatoes are aplenty and selling cheap this summer across India, and, as they say, there is a problem of plenty, thanks to crop rotation, hybrid seeds and nature's bounty. Wholesale prices have crashed in many places, putting farmers in a state of distress, which has, in turn, blessed the country's wholesale price index to benign territory.
Retail prices vary between regions. As I write this, it is as high as Rs 90 a kg in Himachal Pradesh but only Rs 19 in Tamil Nadu and Rs 30 in Chennai. Others fall in the middle. Online retailers are selling it at around Rs to 25 a kg.
Less than a year ago, late in 2024, tomato prices had surged across India, to Rs 65 in Delhi and beyond Rs 100 in some places. By and large, tomato prices have been manic-depressive in recent years and farmers are a confused lot.
Wholesale prices in interior mandis range between Rs 7 and 27 a kilogram. Reports from Karnataka's Kalaburgi said a few weeks ago that the price had dipped to as low as Rs 2 per kg and Rs 6 in Tamil Nadu's Dharmapuri.
What's Really Happening?
Tomatoes are not the only vegetable crop that brings pain to farmers. I see potato farmers from across the Delhi border riding bullock carts from rural Uttar Pradesh to sell potatoes at Rs 8 a kg this month. In Bengal, wholesale prices of capsicum crashed to Rs 6 a kg, prompting government action to help farmers with a minimum support price (MSP) programme, a rare occurrence for vegetables in India. In Punjab, farmers sold capsicum at Rs 2 a kg last month, down from Rs 25 a year ago, and compared it to a free giveaway.
To cut the long story short, vegetable farmers in India do not enjoy the price support enjoyed by wheat, rice, pulses and oilseeds, and that results in gambles with nature and high-yielding variety seeds.
Learning From Amul
The Amul story is part of Indian folklore now, with milk growing from scarcity to plenty. It was all thanks to a cooperative movement, combined with procurement prices and logistics for milk, which helped farmers prosper and consumers evolve from a struggle for mother's milk substitutes to easily and cheaply available ice cream.
What we need now is a similar mechanism for vegetables. But that is not easy. Vegetables are perishable, like milk. Cold chain logistics are only just taking off in India, and they anyway add to the carrying costs of farmers, who are more often than not short of cash or staying power. They gamble with nature and unload their products at the best available price as soon as possible.
I have seen recent reports of Tamil Nadu farmers throwing away unsold tomatoes because the price is not right. That brought back evocative memories of the European Union in the 1980s, when “butter mountains” and “wine lakes” became popular expressions, thanks to price support offered by European governments. Wastage of agricultural products was common. I never thought then that India, with its underfed millions, would reach that stage so soon.
Farm products, especially vegetables, can be erratic in supply, thanks to the vagaries of nature, such as unpredictable rains and pests and difficulties of transport and sales methods. What R.K. Narayan said of ‘God's ways' with crops in a Second World War short story about a rice trader rings even more true for vegetables: “His bounty was as unacceptable as his parsimony.”
A New Variation Of 'Green Revolution'?
Can the government do something about this? The recent West Bengal example of capsicum and the Amul story give us some inspiration. However, the government has to worry about both the fiscal costs and storage logistics. Grain storage has been challenging enough. What we could do may be a market-making mechanism, in which state-supported cooperatives notionally buy and sell vegetables at a marginal profit. That cannot happen, however, if the consumption is too low, as there would be no takers for the produce. What the government can perhaps do is to blend easier credit facilities with what I would call “proxy pricing” - offering interest rate subventions of the kind offered to exporters and link it to credit for crop insurance. I am just doing some loud thinking here - with the idea that the government should now put experts on the job to fashion a new variant of the Green Revolution.
Agriculture walks a tightrope between the consumer and the farmer. The old adage, “One man's price is another man's income”, needs to be borne in mind because a glut is bad news for the farmer, and so is scarcity, because what she needs is an ideal price-volume combination. Here is where the government needs to start a combination of storage support and fallback price mechanism - and integrate the country in a logistical network to avoid gross divergences in prices that is so common in vegetables.
Beware Of The 'Cobra Effect'
One recalls how Prime Minister Narendra Modi was forced to withdraw controversial bills related to agricultural trade because it was widely perceived as handing over trade to big retailers.
However, a Reserve Bank of India (RBI) study last year said that farmers get only about 33% of the price a retail consumer pays for fruits and vegetables, while it is as high as 70% in the case of dairy products. The Amul model, in which farmers and cooperatives gain significant value, should work if designed well.
There is also the “Cobra Effect” that must be taken note of - a reference in management science to a situation from the British Raj when a government plan to kill cobras with a price incentive for dead snakes led to cobras being bred! Punjab's recent capsicum glut has been linked to government efforts to boost crop diversification. We need an efficient transition from a glut to a middle path where consumers and farmers are in harmony.
(Madhavan Narayanan is a senior editor, writer and columnist with more than 30 years of experience, having worked for Reuters, The Economic Times, Business Standard, and Hindustan Times after starting out in the Times of India Group.)
Disclaimer: These are the personal opinions of the author
