The bright side of increase in tomato prices

THE hyperinflation in tomato prices is drawing an angry reaction from consumers, but there is a bright side to it. Scores of tomato farmers, if not hundreds, mainly from Maharashtra, Karnataka, Andhra Pradesh and Himachal Pradesh, have turned millionaires. It’s the steep rise in tomato prices this season that turned around their fortunes.

Advertisement

Tukaram Bhagoji Gayakar, who has 12 acres under tomato cultivation at Junnar in Pune district of Maharashtra, is among those farmers whose income has gone up astronomically. Selling 13,000 tomato crates in a month (each crate has 20-22 kg tomatoes), he has earned more than Rs 1.5 crore. In the past few days, Tukaram has become a media sensation, and rightly so. After all, for a farming family which has been struggling to make both ends meet, a bout of prosperity is most welcome.

Reports say a tomato grower from Kolar district in Karnataka, who sold 2,000 crates of tomatoes, earned a whopping Rs 38 lakh, and that too in a day. His family has been cultivating tomatoes on about 40 acres for several decades, but the prices he got this time beat previous records. In Andhra Pradesh, a tomato grower from Annamayya district has earned Rs 30 lakh.

In Himachal Pradesh, reports say a steep jump in tomato prices has come as a blessing for thousands of tomato growers in Solan, Sirmaur and Kullu districts. In the Solan market, tomato prices have crossed the average price that farmers received this season for quality apples. Against Rs 100 per kg for apples, tomato farmers received prices that were as high as Rs 102 per kg. Depending on the quality, tomatoes fetched prices ranging between Rs 1,875 and Rs 2,400 per crate (Rs 90-120 per kg) on certain days, against last year’s price of Rs 5-8 per kg.

Now, before you build a false impression that it’s easy for farmers to become millionaires, let me make it clear that this is one of those rare occasions when the higher retail price has been passed on to farmers. Only a few months back, news reports of tomatoes being fed to cattle or thrown into rivulets in Chhattisgarh, Maharashtra, Madhya Pradesh and other parts of the country had appeared. Even in early June, before the tomato prices spiked, Maharashtra farmers were finding it difficult to realise even a price of Rs 2 per kg. Farm distress has been the norm rather than the exception.

In Haryana’s Bhiwani district, a progressive farmer, who has 42 acres under tomato cultivation, rues he missed the opportunity. “After four months of low prices, I disposed of my entire crop about two months back, incurring a loss of roughly Rs 8-10 lakh. If I had known that prices will skyrocket after mid-June, I would have certainly made a fortune,” Ramesh Panghal told me, adding: “My stars were not with me.” This only shows that a large number of farmers, perhaps several times more than the few on whom lady luck smiled, must be watching the unprecedented tomato price spiral in disbelief.

Instead of just counting the chickens, as they say, let us try to draw some important lessons from the steep price rise. Perhaps, it will help reform the dominant economic thinking that has primarily led to the worsening of farm distress. While we agree that the tomato prices for consumers have steadily shot up, it is evident that low prices have dealt a strong blow to millions of farm livelihoods over the decades. That is why I have always maintained that agriculture has been deliberately kept impoverished. Farmers are not inefficient as is generally made out but are victims of improper macroeconomic policies, denying them an economically viable livelihood.

Take the case of tomato cultivation — farmers have adopted high-yielding varieties, including buying extravagantly expensive hybrid seeds, as part of the package of practices that have been promoted. Every technology being sold to farmers comes with a promise of increasing productivity and, thereby, yielding higher income. But that didn’t happen. On the contrary, a farmer uses technological inputs, puts in hard family labour and harvests a record crop, only to find that market prices have crashed. Often, the output price is unable to cover even the cost of production.

Business and management schools have often blamed farmers for not being part of efficient agricultural supply chains. Unless a farmer does value-addition, there is no way a tomato farmer — or, for that matter, others — can make reasonable profits. That is why the underlying emphasis is to discard the Agricultural Produce Market Committees (APMCs) and move on to the corporate ladder. The Niti Aayog recently came out with a working paper, redrawing attention to the need to further liberalise and privatise agriculture to bring in farm prosperity, not realising that even in the US, from where we borrow farm policies, corporatisation of agriculture hasn’t helped increase farm incomes.

The tomato price spiral has shown that the answer to the vexed farming crisis lies elsewhere. The APMC mandi system that is often decried, and which is crying for reforms, is where farmers got an exceptionally high price. No private company or organised retail outlets gave a higher price to tomato growers. Similarly, the prosperity that some tomato growers have reaped this season has not been driven by efficient supply chains.

It’s all price-driven. The tomato price spiral tells us that assured and profitable prices can catapult agriculture to new heights. Two seasons of such higher prices, and you’ll see the emergence of a new class of prosperous tomato growers.

While legalising MSP to ensure that prices don’t fall below the benchmark, the authorities must ensure that farmers get at least 50 per cent of the end consumer price. It is time consumers realised that paying a higher price is essential to keep farmers alive.