Weather, flooding hit supply, raised price of vegetables
For vegetables like onion and tomato, market arrivals are estimated to have reduced 10% and 16% respectively in 2019 which has led to a 58% and 46% rise in wholesale prices respectively, according to Crisil Research.Updated: Jan 14, 2020 06:02 IST
A rise in prices of vegetables, which surged a staggering 60.5% in December against a 40% increase in the previous month, propelled the country’s retail inflation rate in December to 7.35%, according to data released by the Central Statistics Office (CSO).
Extreme weather and flooding in six states disrupted supplies of commonly consumed vegetable items such as onion and potatoes, leading to a sharp increase in prices. Several states have seen widespread damage to both output and crop productivity. “The key states which are estimated to witness a decline in crop productivity and output are Maharashtra, Bihar, Madhya Pradesh, West Bengal and Odisha,” said economist Hetal Gandhi of Crisil Research.
A drought-like situation in June 2019 quickly turned into surplus rainfall by September. The Southwest monsoon was 28% below normal on 30th June and 9% below normal on 30th July, leading to delayed onset of kharif crop sowing.
According to estimates of the agriculture ministry, surplus rains have damaged 25% of the summer onion crop in Maharashtra and Karnataka.
Paddy, sugarcane, soybean and urad (black lentils) are other commodities that have been impacted, according to Crisil Research.
“Stakeholder interactions indicate that crop output for paddy is estimated to be 5-6% lower on-year on account of delayed sowing and shift from medium duration high yielding varieties to short duration low yielding varieties and also on account of floods in Eastern UP, Bihar and Odisha,” Gandhi said.
Sugarcane production is expected to decline by over 30% in Maharashtra in sugar season 2020 (October 2019 to September 2020). For soybean, output is estimated to decline 10-12% on-year on account of damage in Madhya Pradesh and Maharashtra amid excess rains.
For vegetables like onion and tomato, market arrivals are estimated to have reduced 10% and 16% respectively in 2019 which has led to a 58% and 46% rise in wholesale prices respectively, according to Crisil Research.
“We expect vegetable prices to stabilise only in February when arrival of fresh onion harvests begin,” said Ajitesh Gupta of Comtrade, a commodities trading firm.