Top prices soften since early November; potato slumps by almost 24%

Retail prices of tomatoes, onions, and potatoes see a drop since early November, according to the Department of Consumer Affairs

Pradeep Sharma, a potato farmer in Agra, says the current sharp drop in prices is the handiwork of big stockists and warehouse owners who have colluded with local politicians to ensure that stocks are dumped in the market while the fresh harvest is not purchased.

Talking to Business Standard oven the phone, Sharma said potato prices had dropped by almost 50 per cent in the past 14 days and the sole reason was that owners of big cold storages and warehouse operators were unwilling to buy the crop from farmers, citing scarcity of storage space.

“The truth is somewhere in between. Yes, the warehouses are full but it is not that some crops can’t be adjusted. Also there are fresh arrivals from West Bengal (which is another major potato-growing state, apart from Uttar Pradesh), which is keeping prices weak,” Sharma complained, adding that fodder was selling at Rs 15 per kg while his potato was finding it difficult to Rs 10 per kg.

The unit-level retail data furnished by the Department of Consumer Affairs shows potato prices in the Delhi retail market climbed to Rs 37-38 a kg around early November from Rs 30 in the first week of October, before they slumped almost 24 per cent to around Rs 29 per kg on November 19.

Traders said even as the planting of the new potato crop had started in October, there were adequate stocks in warehouses, which would help tide over any shortage.

The retail prices of all three major vegetables -- tomatoes, onions, and potatoes -- have dropped since early November, according to the Department of Consumer Affairs website (see chart).

This could have a salutary impact on food prices, which have shown some signs of cooling in the past few weeks.

The weighting of tomatoes is 0.57 per cent in the consumer price index, while that for potatoes is 0.98 per cent and for onions 0.64 per cent.

According to the latest data, the wholesale price index-based inflation rate in food items in October was 8.33 per cent as against 11.03 per cent in the previous month.

Inflation in vegetables was at 17.61 per cent during the month against 39.66 per cent in September.

“Onion prices in wholesale markets are at Rs 500-600 and Rs 1,000-1,100 per quintal, depending upon the quality, while the new crop has started arriving from Rajasthan. We expect prices to firm up around the middle of December to, say, Rs 2,500-3,000 per quintal but the upside will be limited because the stocks with traders and government agencies are sufficient,” Surinder Budhiraja, a trader in Delhi’s Azadpur mandi, told Business Standard.

In the case of tomatoes, traders said the prices, which had reached record highs in the middle of October to around Rs 60 per kg in Delhi markets, had cooled considerably since the start of November.

They are trading at Rs 35-40 per kg in Delhi markets.

Meanwhile, the Central government a few weeks ago was confident that the prices of pulses and onions, the two main commodities which seasonally show a spike with the advent of winter, would not rise much this year because it has adequate stocks to intervene.

In the case of tomatoes, another commodity that has shown a rising trend in the past few months, the government has said prices may remain volatile for some time because the crop is perishable and difficult to store or process.

For onions, the government had said that time that it had stocks of around 250,000 tonnes, of which about 54,000 tonnes have been liquidated in a calibrated manner in states where price increase has been witnessed in the past few months.