Prices of three key vegetables unlikely to go down for now
Will the production of potato, onion and tomato, which together account for 44% of the typical household budget for vegetables, show an improvement in 2019-20 over 2018-19?
At various times of the year, particularly in December 2019 and January, supply shocks caused the price of onion to soar.
In the 2019-20 crop year, the good news is that the output of these vegetables is projected to rise marginally over 2018-19, according to the first advance estimates of the farm ministry. Onion production is expected to increase as much as 7%. Potato by 3.49%, and tomato by 1.68%.
Those estimates, however, don’t match the situation on the ground. The winter onion crop of 2019-20 is yet to be harvested and a nearly 25% fall in summer output, as estimated by the farm ministry, coupled with lower production in 2018-19, have kept prices high. This means that the ministry is expecting a big increase in winter output, which will compensate for the lost output from the summer crop.
And if the final estimates for 2018-19, which are now out, are any indication, a shortfall could well be on the cards in the current year.
According to the data, production of major horticulture crops touched a record 310.74 million tonnes during 2018-19, but the output of the three key vegetables – onion, potato and tomato – was lower than the previous high in 2017-18, according to final data from the agriculture ministry.
Interestingly, the final production figures for onion, potato and tomato in 2018-19 show a considerable gap between what was initially projected by the farm ministry and the final output. This shortfall has impacted market supplies and is a key reason for high vegetable prices.
For instance, the initial forecast for onion production in 2018-19, made in the first advance estimates of January 2019, was 23.62 million tonnes. Actual production output was 3% lower, as the final estimates now show.
Similarly, the forecast for potato production in 2018-19 was 52.58 million tonnes, while actual output is now pegged to be 2.39 million tonnes lower. In the case of tomato, the initial forecast for 2018-19 was 20.51 million tonnes. Actual output is now estimated to be 1.5 million tonnes lower.
When compared to 2018-19, the total horticulture production in 2019-20, according to the advance estimates, is expected to be just 0.84% higher at 313.35 million tonnes.
According to the first estimates for 2019-20, onion production is expected to increase 7% to 24.45 million tonne, while potato production is expected to be 51.94 million tonne, an increase of 3.49%. The projection for tomato output is estimated to be 19.33 million tonne, an increase of 1.68%.
Onions are the second-most consumed vegetable in the country after potatoes. An average Indian household spends 13% of its total vegetable bill on onions alone, according to HT Research. Potatoes are the most consumed vegetable in India, with a share of 20% in total vegetable spending.
Onion production in 2018-19 was 22.82 million tonnes, which is lesser than the production of 2017-18 of 23.26 million tonnes. The output of potatoes in 2018-19 was 50.19 million tonnes, lower than 2017-18’s 51.3 million tonnes. Tomato production in 2018-19 was 19.01 million tonnes, which is lower than the production in 2017-18 of 20 million tonnes.
Despite projection of slightly higher output in 2019-20, according to information received from states, price volatility remains a major risk because of post-harvest losses and a lack adequate food processing infrastructure, said Anand Kumar Sood of Comtrade, a commodity trading firm.
A delayed June-September monsoon last year, followed by floods in several states, had led to crop damage in major states, leading to a spike in prices. According to government data, food inflation rose 14.12% in December 2019 as against a 10.01% rise in the previous month.