homeeconomy NewsGovernment to continue intervention in the market till tomato prices reach a reasonable level, says secretary of consumer affairs
Government to continue intervention in the market till tomato prices reach a reasonable level, says secretary of consumer affairs
According to Consumer Affairs Secretary Rohit Kumar Singh, till now, the government has procured and injected approximately 300 metric tonnes of tomatoes into the market to stabilise prices. Government will continue to intervene till the prices reach a reasonable level, he added.
The government of India on Sunday provided some relief to consumers as it intervened by selling tomatoes at a subsidised rate of Rs 80 per kilogram. Rohit Kumar Singh, Secretary of Consumer Affairs in an interview to CNBC-TV18 stated that the wholesale price of tomatoes have declined post the intervention.
As per data compiled by the Department of Consumer Affairs, the average all-India retail price of tomatoes on Saturday was around Rs 116.86 per kg, while the maximum rate was Rs 250 per kg and the minimum was Rs 25 per kg.
According to Singh, till now, the government has procured and injected approximately 300 metric tonnes of tomatoes into the market to stabilise prices. Government will continue to intervene till the prices reach a reasonable level, he added.
The Union Cabinet on June 7, approved an increase in the Minimum Support Price (MSP) of tur dal by Rs 400 per quintal, setting it at Rs 7,000 per quintal. But the prices of tur dal escalated due to lower crop yields and a reliance on imports. To address this issue, the government has initiated auctions and injected tur dal from the buffer stock into the market to temper the price surge, Singh said.
The significance of agriculture in India cannot be understated, as it contributes around 19 percent to the country's $3 trillion economy and employs over half of its massive population of 1.4 billion. According to recent data released by the Ministry of Statistics, the Consumer Food Price Inflation (CFPI), a sub-index of the CPI, experienced a notable increase of 4.49 percent in June, surpassing the previous rate of 2.91 percent in May. Additionally, India's retail inflation, measured by the Consumer Price Index (CPI), also climbed to 4.81 percent in June.
Below are the excerpts of the interview.
Q: Let us start by talking about the government's intervention when it comes to try and cool down prices of tomatoes. There has been a joint effort of the National Cooperative Federation along with NAFED to sell tomatoes at a discounted price. You are procuring largely from three states, can you explain to us what is the quantum of procurement done so far, what is the loss being absorbed by the government? Who is bearing the loss at this point in time? Also what is the criteria for deciding which are the areas within the country that get access to these subsidised tomatoes?
A: The tomato crop has been affected mainly due to weather disturbances and some white flies' disease that affected some parts of the country. It is a seasonal crop, it's grown in different parts of the country at different points in time. And the arrivals at the markets are at different points in time. So, if there is a disturbance in a certain area, it affects the arrivals and also affects the prices. Also, over the calendar from January to December there are certain seasonality associated with tomato prices. And usually in the month of June and July they are higher because of low availability. This year has been a bad year and prices at some points have gone very high. So, the government had to intervene.
We collect prices from about 518 centers across the country every day on 22 essential commodities and we analyse that at which points the prices are ruling exceptionally high. Then we procure from the places where prices are low at the mandi arrivals and then try and infuse into the markets for consumers where the prices are high.
So, for the last few days, we have been infusing at points in Delhi, NCR Gurgaon, Noida, Lucknow, Varanasi, Allahabad, Patna and many other places. You would also appreciate that some states have also done their local interventions. So, we don't want to duplicate those efforts, because the ultimate idea is to provide relief to the consumers.
Q: You said that you are intervening by way of putting discounted tomatoes in the market where prices are exceptionally high. What is the national average as of today on the back of the prices collected from these 518 centers? What is the national average today?
A: National retail average is still hovering around Rs 120 per kg. The wholesale prices have come down after our intervention by 30-40 days. We are also calibrating at what price we infuse these into the market. We started at Rs 90 per kg and now we are at Rs 80, and we have seen a downward trend in the prices at wholesale mandi's. We will further calibrate it in a couple of days.
Q: You are saying that you've seen a downward trend in the wholesale level, but at the retail level one is picking up from ground reports that there hasn't really been much of an impact as far as the retail level is concerned. So at this point in time, do you intend to continue this intervention? Is there a timeline for how long you will continue with this intervention? And are you likely to extend your outreach as well beyond the cities that have so far benefited from these discounted tomatoes?
A: So, we'll continue our intervention till the time the prices come to reasonable levels. Regarding the question about which points to infuse these products, it is again determined on the daily analysis of these 518 centers and where the prices are ruling high. So, that is the algorithm we follow.
Q: What is the quantum which qualifies as exceptionally high? Because you said those are the regions that are being given the tomatoes at subsidised rates, at discounted rates, what is that price that you consider as exceptionally high?
A: So, there are two parameters that we consider, one is the absolute price and the other is delta? What is the difference in the price compared to what it was last year at the same point? So, we have a particular formula, the absolute price and the delta compared to the previous year, so when we see that these two are resulting in an exceptional pain point. Those are the areas where we start infusion. Of course, there are logistical challenges also, so that has to be kept in mind.
Q: How much has been procured so far and what is the cost of procurement and what is the loss that is being absorbed on a kilogram at this point in time?
A: I would not like to use the word loss because we have a fund mandated by the government which is called the price stabilisation fund. And that fund is precisely for this purpose to infuse commodities in the market for price correction. So, I think as we speak around 300 metric tonnes have been procured and infused. I would also like to assure the consumers through your channel that very soon arrivals are expected in Madhya Pradesh, Aurangabad and some areas of Maharashtra. I think by the first week of August, the prices will start considerably coming down. So, the intervention requirements may not exist. However, as I said earlier, as long as there is a requirement, the government would intervene because the government is committed to provide relief to the consumers to the extent possible.
Q: You said 300 metric tonnes has so far been procured and infused what has been the average procurement price for the government?
A: The government agencies procured it through an auction from the mandi's, and it's based on the most competitive price that we get for the quality. You also have should realise that these are to be transported over long distances, so we also look and ascertain certain quality, so it could be anywhere in the region of Rs 100-130 per kg depending on the day and the time where we procured it from.
Q: You anticipate that things could improve by the first week of August? That's the expectation at this point. But do you believe that given what you are seeing by way of prices across other commodities, and particularly I want to talk about tur dal. Is there a need for any government intervention at this point in time?
A: Tur because of the comparatively low crop output this year and we also have some import dependence every year on tur. So this year, our import dependence would be a little higher. And that is why the prices are ruling high. We have some buffer of tur and coincidentally from today, we have started the auctioning and infusing the tur from our buffer stock into the market, and it would help cool down the prices.
Also, we import tur from two geographies - one is Myanmar, and one is East African countries, both the crops arrive at different points in time. So, from East African countries, the crops will be arriving by the middle or the end of the next month, which is August. Once those arrivals start the domestic prices will start cooling down.
I would also like to mention here just for the benefit of viewers that there is a certain seasonality in terms of consumption, both in tur and other commodities. And throughout India, the festival season starts now, so these are traditionally high consumption months for all commodities, all pulses. So, there is a certain seasonality in terms of consumption-based demand in these months, and hopefully the arrivals from Africa, and what we distribute through our buffer in the market will help lower the prices of tur in the market.
Q: What is the current buffer stock that you are sitting on as far as tur dal is concerned and what has been the price spike that we have seen specifically for tur.
A: All India average is about Rs 130-135 and its considerably higher than what it was at this point in time. But we will try and pull in imports quickly. We are also looking at other geographies where tur can be grown, because from East African countries, the local consumption there is almost nil, everything that is grown there comes to India. So we are also looking at Brazil and some new countries in Africa to help us meet the requirements of tur.
In parallel, since we produce a considerably large amount of chana, and we have about 40 lakh tonnes of buffer stock, we also want to promote consumption of chana, because at the moment, chana's consumption is about 46 percent of the total consumption. Chana is a healthy product, it's a healthy pulse, and it is full of protein and helps contain diabetes and has other health benefits. So, I think we have very actively started promoting the consumption of chana. It's got very tasty products.
Q: I wanted to also ask you how the government is assessing the situation now with Russia withdrawing from the grain agreement that was inked and the concern and the worries around that. Also, what the government is likely to do by way of intervention to mitigate the risks associated with this deal falling through.
A: I think in terms of rice and wheat, there is no risk. We have a considerable amount of the quantities in both commodities. In terms of food security, we are okay. Only in this particular pulse, that is tur, there was a worry with imports arriving from Africa, that is likely to be sorted out by next month.
Q: I want to go back to tomatoes, because you are procuring from states like Maharashtra, Andhra Pradesh and Karnataka but even in those states, Mumbai, for instance, tomato prices, still in excess of Rs 150 or thereabout, but you're not actually distributing the subsidised tomatoes in these regions from the list that I can see so far. Why is that the case?
A: So, as I said, it's based on analysis of the absolute price and what is the delta, how the prices actually behave in this month in previous years. So, if we find the situation to be acute, then only we intervene. In Maharashtra from Aurangabad and other nearby places, the arrivals are likely to be very high very soon. So there is no immediate worry in Maharashtra. In the urban centers prices are generally higher than wholesale.
Q: Some of the measures that have already been undertaken by the government, including for tomatoes chana, tur, but any other measures on the anvil at this point in time to ensure that there is price stability across different commodities.
A: We are also looking at the perishability issue in both onions and tomatoes. Onions have caused some pain in the past, maybe a decade ago. So we have procured almost three lakh tonnes for our buffer this year. And we are also pushing for early kharif and late kharif calibration in terms of the quantities that will be available at the end of the year.
So hopefully by doing that the availability of onions both from our buffer and from the arrivals of early kharif in September and subsequent kharifs, we will be able to sail through without any price rise in onions. And as you would appreciate last year the prices of onions did not go beyond Rs 35 in retail, and the production of onions last year was about 320 lakh tonnes, and this year also it's expected to be around the same number. So, we don't foresee any trouble in onion availability as well as affordability in this year.
(Edited by : Sangam Singh)
First Published: Jul 18, 2023 8:24 PM IST
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