Why are vegetable prices soaring?

Updated: Dec 19, 2021

India is a land of diversity. Multiple cuisines, different food habits, diverse preferences all contribute to the food frenzy. A vegetarian or a non-vegetarian, a vegan, or a lacto-vegetarian, the terminology doesn’t dictate that a significant portion of their meal is undeniably going to be some form of vegetable-based delicacy. Plethora of taste buds and no one suffers disappointment because our farmers grow varieties of vegetables, ranging from the king, potato, to the layered onions. Tomatoes, peas, beans, gourds, herbs, roots, shoots, kale family, you name it, we have it.

However, a book shouldn’t be judged by its cover. In its quest to bring the vegetables from the farms to people’s plates, India fails on several fronts. One of the biggest causes of concern plaguing this cycle of production and consumption is the rising inflation and occasional skyrocketing in the prices of vegetables. Here are a few examples (3) that represent the same:

The most recent can be the harrowing example of the onions’ prices, but we’ll come to it later. Let’s discuss first what leads to such bizarre pricing.

The first factor that has the most potential to affect the prices of the vegetable is its production. The total cropped area for vegetables in the country is 16.495 million hectares in 2018-19 (3). The veggie production in the same year stood at 187.5 million tonnes. (3)

Dividing the production quality of the year with the population of the year (1.354 billion), you get a per capita availability of 379.4 gms per day. However, the inherently perishable nature of the products at hand leads to rotting/damaging during the processes of harvest, storage, grading, transport, packaging, and distribution. Due to improper practices, the per capita is reduced up to 70% of the original, i.e., 265.6 gms per day against the 300 gms as recommended by Indian Council of Medical Research, New Delhi and National Institute of Nutrition, Hyderabad.

We suffer losses of over 15 thousand crore rupees (3) annually due to such wastage of vegetables due to the poor in house facilities of storage and post-harvest management eventually paid by the consumers’.

We’ll now turn towards the state-wise production of different vegetables. The pie-chart below (3) shows that Uttar Pradesh, West Bengal, Madhya Pradesh, and Bihar account for almost 50% of the vegetable production. Digging deeper, we find that Uttar Pradesh alone produces 48% of the peas grown in the country while UP, West Bengal, and Bihar together produce 76% of the potatoes grown in the country and Orissa alone produces 40% of the sweet potatoes grown in the country. Onions, on the other hand, are grown mostly in Maharashtra, Karnataka and Madhya Pradesh.

Another perspective to analyse states is the per capita vegetable consumption. It indicates the surplus nature of production, which will most likely result in export to other states in case of deficits/additional sales. It speaks volumes about another critical factor to be taken into consideration that affects the prices of the vegetables, i.e., Transportation. Look at the graph (6) for additional details.

Transport in India is mainly dependent on diesel trucks, which after factoring in price fluctuations in different states, import costs and other conditions, end up affecting the vegetable prices. Since the diesel prices aren’t going down any sooner, increase in vegetable prices is imminent.

Other than these, several other minor factors too contribute to the erratic prices, namely:

● Natural/Environmental causes: To cite an example, June 2019 saw an increase of 25-40% in veggie prices due to heatwaves (1) in the northern part of the country due to damage sustained during irrigation. In August 2019, large scale flooding (2) lead to unavoidable price hiking, with onions suffering the worst losses. Similarly, monsoons, hail, water shortage, dust storms, etc. affect crops and lead to sudden price surge. A bountiful harvest on the other hand, will always bring prices down.

● Numerous mediators: From the farmer to the consumer, the product changes several hands. Each pair takes a cut, which eventually adds up to the prices; hence, the farmer pocketing too less and the consumer paying a lot.

● Supply-chain mismanagement/infrastructure: The vast difference of 40%-60% between the wholesale and retail highlights the supply chain mismanagement. Moreover, due to lack/ill-equipped infrastructure, like wasteful mandis, indirect ‘farmers to consumers’, etc. lead to product damage/lost/stolen, hence affecting the pricing.

● Hoarding: A nasty activity practised by goons and sly intermediaries, the produce is stocked during the season and sold when the demand is high. Significant profit margins, this ends up pressuring the buyers to shell out extra bucks.

● Global Inflation: Needless to say, as the currency value changes, the prices go up or down.

That summed up the general case for all vegetables. Now let’s dig deep into the recent case as to how onions transformed to the new status symbol.

So what happened? Onions’s prices jumped from 25 rupees a kg in August to 80-100 rupees a kg in October/November. As of writing this article, onions are at 165 rupees a kg in Panaji, Goa. (7)

Onion, a pan Indian vegetable has witnessed a rise in demand since the past decade. This is despite several communities not consuming it due to religious ideologies, on a permanent basis or certain times dictated by the calendar. Indian onion is also greatly sought after in the global market. It is commonly referred to as a poor man’s vegetable, ah the irony of the statement. India depends on the onion so much that it’s food economy is jokingly referred as Onionomics. Several political parties and governments had to face flak because of mismanagement on their part about the famed bulb.

However, the catch is, onion is a seasonal crop, predominantly Rabi (Summer Crop), Kharif (Early Winter Crop) & (Late Winter Crop). The rabi crop sustains the demand until the early kharif produce reaches the market, i.e., till the months of September-November. Sometimes due to the irregular supply/bad harvest of these early winter months, the demand witnesses a sudden rise with lack of supplies.

The last monsoon months played a spoilsport to onion production. Floods and heavy rains in the major onion producing regions (Maharashtra) and damaged up to 35% of the onions stocks in storage - National Agricultural Cooperative Marketing Federation. This ended up delaying the next round of produce, which was due in September.

The Modi-led BJP government, fearing a backlash banned onion exports to curtail the ever-rising prices yet to no avail.

To conclude, no journey is easy. It changes the traveller in countless ways. Sometimes when the journey is rough, it ends up taking a toll, while during the smooth times, it’s fairly stable. Guess the same applies to veggies too. Better nature, nurture, transport, storage facilities, handling, reduced mediators essentially guarantees a fairer price to the buyer. One or the other thing goes haywire, and we all experience what happens, right?

  1. Economic Times - Heatwave affects veggies

  2. India today - Vegetable prices affected due to floods

  3. Horticulture Statistics 2018

  4. Hindu - Soaring prices of vegetables

  5. Factors affecting vegetable prices

  6. What affects vegetable prices

  7. BBC - India's onion crisis

  8. Economic Times - The onion problem

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