07 August 2017 Business Fickle Mandi

Rain Or Shine, The Glow Eludes Growers Yet Again

Sky-high tomato prices have set off WhatsApp jokes, but the farmer is shortchanged—and left only to weep
Rain Or Shine, The Glow Eludes Growers Yet Again
Fresh
Labourers carry tomatoes at Delhi’s Ghazipur market on July 26
Photograph by Vijay Pandey
Rain Or Shine, The Glow Eludes Growers Yet Again
outlookindia.com
2017-07-29T11:04:40+0530

Ritik and Pawan are aware of the flip side of their arduous journey from the hills of Himachal Pradesh down to the pla­INS of Delhi this monsoon. As tomato growers in Mangarh of Sirmour district, they drive for ten hours to reach the national capital’s wholesale vegetable market at Ghazipur. The entire effort of bringing the fresh produce is worth much more than what they eventually sell it for. The duo also knows that tomato growers bore the brunt of a glut this April, when hundreds of farmers were for­ced to throw away their harvest for want of breakeven rates.

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But now, they are getting Rs 50 a kg, yet Ritik and Pawan are left sour. In any case, they have no choice but to accept what wholesale commission agents at Ghazi­pur offer them. Even during a supply shortfall, as at present, it’s the grower who is being shortchanged. The ‘mandi rate’—the price at which they hand over produce at the mandi via a commission agent—has them chafing all over again. The farmers are highly upset. For, while boarding their truck for Delhi, they saw TV reports pegging the tomato prices above Rs 100 a kg.

Not just Delhi, across the country the juicy vegetable has raced to unheard-of prices at Rs 80 to 120 a kg. The dizzying pace at which the red staple is burning holes in consumer’s pockets had these tomato farmers from Himachal praying for more income than ever this season. That wasn’t to be. “We are getting Rs 50 a kg for our best tomato. For the rate we heard on TV, we should be getting at least Rs 80 in the mandi,” says Ritik. The gap between the anticipated income and real is not inexplicable to him: “Traders and retailers are pocketing the biggest profits the tomato has ever earned anybody.”

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Right now, Himachal’s tomato farmers are among the few bringing their produce to wholesale markets, along with Maha­rashtra’s. The tragedy is no different in western India: even when a Mumbai ret­ail buyer has burned Rs 100-120, farmers there get no more than Rs 50. The local tomato yield is less than half the usual, a farmer with, say, 2.5 tonnes as opposed to 10 tonnes last season, is again left with very little. In Ghazipur, a farmer could sell a 30-kilo crate of tomato to a wholesaler for Rs 1,500 on July 26 morning, depending on the quality and variety, but that is not his ‘profit’. From this income, the farmer adjusts for expenses. Minus the Rs 60 ‘gate fees’ paid to enter the wholesale market and a ‘cutting’ cha­rge (that some farmers allege is illegally ext­racted by commission agents) of Rs 50 per crate, the grower’s proceeds shrink to Rs 1,390 per crate or Rs 46 a kg.

Even this is just the beginning of a spiral of charges, fees, costs and cuts the farmer incurs, raising tomatoes costs between Rs 5 and Rs 15 a kilo. Transpo­rtation costs Rs 80-90 per crate and lab­our Rs 3,000-3,500 per day in transit. Farmers further pay a series of ‘charges’, legal and illegal, all along the highways they traverse, to toll agencies and bribe-­seeking cops. “Around 20-50 km from Delhi, after the Kundli border (off Haryana), policemen repeatedly stop us for bribes,” says Sirmour farmer Vinod Kumar, the pradhan of Mangarh. “Some take Rs 100, others Rs 500.”

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Wholesale agents and tomato traders deny the farmers are under-rewarded. “When supplies are short, it’s natural ret­ail prices rise,” says Satish Gandhi, a trader at Ghazipur. Commission agents refute claims about them charging farmers a “cutting” fees. “It’s we who bear the brunt of wastage or spoilage,” Satish adds. Many commission agents also wish for prices to fall. “If prices today were like last year’s Rs 500 to Rs 600 per crate, I would have been happier,” Satish says. Those rates, which are possible only during normal tomato supplies, would still have kept the farmer’s incomes low but by sheer force of volumes helped traders earn more than today.

The supply disruptions, market analysts say, are the result of crop damage due to heavy monsoon rains and a lower area under cultivation because of a crash in prices three months ago. “Tomato is an open-field crop,” notes Lakshman Singh, deputy director of the National Horticulture Board. “In Karnataka and Andhra Pradesh, rains have damaged up to 30 per cent of tomato crop. Trucks are stranded, so there is a movement disruption. In these situations, middlemen hike margins temporarily.” Singh’s colleague, Rajesh Arya, says the roots of the price spiral ironically lie in the price crash this summer. “India normally produces 18 million tonnes of tomatoes. We foresee a dip in the total sown area because farmers have shifted away from vegetables due to a free fall in prices just two months ago.”

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Wholesale inflation, for instance, moderated sharply to 2.2 per cent year-on-year in May, compared to 3.9 per cent in March. Retail inflation fell to 2.2 per cent this May. That’s a record low, caused mainly by food prices (at -1.0 per cent) turning negative for the first time since 2001. The drop is particularly stark in vegetables (-13.4 per cent).

Himachali farmer Vinod Kumar

Photograph by Vijay Pandey

There is a mad design to the chaos in the tomato trade. It ensures that even if supply fails, while prices spiral, the tom­ato farmer cannot become rich, not even for one season. It also keeps the lower and middle-class customer on the margins of the great consumer market. Take Sharifula, who bought from a wholesaler 25 kg tomato at Ghazipur for Rs 1,300. His cost is lower on account of the variety and quality he picked, a choice driven by the Rs 100 peak in retail price for tomat­oes. As Sharifula sells his tomatoes on a pushcart in relatively less well-off localit­ies of east Delhi’s Mandawali, he can exp­ect to raise no more than Rs 1,800 for the entire lot, or Rs 72 per kg. Some of his lower-quality stuff, damaged or marked, will sell for Rs 60, even Rs 40 a kg.

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Indeed, the notion of market forces, as controlled by the trader-commission agent-driven mandi system, is by its very nature skewed. Sudhir Panwar, an agriculture expert in UP, says the problem with the logic that tomatoes are short in supply is that one can buy as many tomatoes as desired even today—but only at Rs 70-80-100 a kg. “What sort of shortfall is this when there’s full availability, only at a higher price?”

Pradeep and Sanjiv Gupta, who bought tomatoes at Rs 50 per kilo at the Ghazipur mandi on July 26, will ferry their suppl­ies to Seelampur—another east Delhi cluster of mostly working-class neighbourhoods—where they will sell it on a pushcart. “I will mark up the price to Rs 60 a kg,” Pradeep says. “In my locality, people cannot afford to pay Rs 100.” There is a secret to his lower rates than the current peak: ordinarily, he would have picked better-quality tomatoes and slightly more in quantity, but now there’s a dampener: the mandi commission agent’s rate of Rs 50-70.

In Maharashtra, Shriram Gadhawe, who heads the Vegetable Growers Ass­ociation, traces the arc of the ongoing tomato chaos to the demonetisation last November. Since then, several other factors have intervened, sending the market into tailspin. “This year’s tomato plantation is half last year’s,” he says, a problem exacerbated by new pests, viruses and diseases affecting tomato crops. “Erratic weather conditions have caused tremendous losses too.”

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Gadhawe brings forth the commission agents’ role in the reigning mess: “Over the past few months, agents have delayed payments to farmers.” Delhi’s Azadpur wholesale market for vegetables and fruit, one of Asia’s biggest, has added another, albeit local, factor to the price hike. “Nobody is risking the journey to Azadpur, say, from Bangalore, a major source for the Delhi market. This is because two agitations are going on here among rival tomato traders,” says trader Ram Baran, a member of the Delhi Agricultural Marketing Board. The squabble is over space on the mandi’s auction platforms. “One set of agitators are working below capacity.”

Om Prakash, a commission agent, says it is impossible to curtail their 6 per cent fees—the maximum they can charge by the rules—but adds that the supplies from UP, Andhra Pradesh and Karnataka will arrive in about a month, when prices can be expected to ease. “Things will alre­ady be much better by Diwali,” he says. He insists that farmers are rather better off today than a year or a month ago. Joginder Nath Vohra, a commission agent, notes that none will risk their money to bring a truck to Delhi in pouring rain. “The monsoon supplies from Himachal are usually more expensive anyway,” he says. “The farmers are benefiting from the Rs 40-50 rate at Azadpur.” By end-June, tomato retail price in Delhi rose to Rs 80 a kg, double of what it was for two months till then.

Photograph by Vijay Pandey

This year’s tomato plantation is half of last year’s. Exacerbating the problem are new pests, diseases and erratic weather conditions.

Within the mandi, on July 25 evening, prices at wholesale dealers from whom retail pushcart vendors and shopkeepers buy supplies, were as high as Rs 80. As tomato growers usually are small farmers with tiny plots, the commission agents point out it would be impossible for them to sell directly at markets or for consumers to buy directly from them. “The rate is higher than high right now,” says Ashok Kaushik, a commission agent. “With fewer arrivals of new crop, the rate is unlikely to dip before October.”

From Mumbai to Jhansi in UP, the tom­ato grower is not sending good tidings for the future either. Buddh Singh from Jhansi planted 4,000 saplings last winter on a family-owned plot that yields about 200 kg. He typically relies on buyer’s agents visiting his farm to purchase the produce, but this summer nobody came. After ferrying it to a mandi 30 km away (which added to his costs), he finally threw away most of it. Tomato cannot be in cold storage for more than 28 days and will not last even a week in the open. “Buyers come to us only when they can profit,” Buddh notes. This year, wiser from the experience, he sowed only 700 saplings, a tenth of the usual, only to find a massive price rally pass him by.

Not just this. Buddh’s standing crop is wilting from inadequate rain, so he doesn’t expect the price rally to end bef­ore October. “The going rate for tomato growers is Rs 40-50 in our area,” he says. Why can’t the farmer be paid Rs 80 when prices cross Rs 100? “The agents,” he adds, “asked us to sell at Rs 1 to Rs 1.5 a kg or get lost this summer. We had no choice then and none now.”

V.M. Singh, who heads the All India Kisan Sangharsh Coordination Commi­ttee that is a new grouping of 170 farmer bodies across the country, says the government must stop “suppressing” farmers’ incomes as a first step to dilute their haplessness before the mandi comm­ission agents. His recommendation: sho­uld fix prices of all agricultural commodities, including vegetables. “Mandi agents take as much produce as they want for a price they pick. The government should ensure constant, reliable rates for fresh produce too, not let prices fluctuate wildly,” Singh says. This isn’t done for vegetables and fruits, as the government cannot ferry perishable crops to buyers in distant markets, as is done for wheat or pulses. But, says Singh, the government can fix prices regardless, and enforce them through legal sanction. “Buyers at higher rates should be encouraged and consumer inflation should be subsidised by the government. Why suppress farmer’s incomes and fire salvos against inflation from his shoulder alone,” he adds.

One government agency, NAFED, does deal with fresh farm produce in a limited way, through a sole such branch at Azadpur mandi in Delhi. “There has to be a ‘middleman’ in the trade of tomato, like any other perishable commodity,” says Yatendra Singh, branch manager. “The difference between the government and other middlemen is that we strictly follow public auctions, a rule many others flout. Secondly, middleman charge buyers a 6 per cent commission and costs in addition whereas we give farmers a two per cent incentive. That’s why the private sector middleman never makes a loss.”


By Pragya Singh with inputs from Zia Haq and Prachi Pinglay-Plumber

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