Vegetable prices crash in mandis on bumper crop

Experts estimate 10-15% rise in vegetable production this year; lower food inflation likely

Data compiled by the government-owned National Horticulture Board (NHB) showed 76.19 per cent decline in the price of cabbage, which is trading currently at Rs 2.50 a kg in the Ahmedabad wholesale mandi. Similarly, cauliflower in Kolkata mandi shed 76.74 per cent since December 1 to trade at Rs 5 a kg.Vegetable prices crashed by as much as 76 per cent during the past five weeks due to a sharp increase in arrivals, following harvesting of new season crops and lower inventory building by stockists amid fears of short shelf life.

Despite such a drastic decline in wholesale mandis, retail prices remained elevated, with cabbage in Ahmedabad trading at Rs 15 a kg, six times of the price prevailing in the wholesale mandis. Cabbage in Ahmedabad's retail markets reported a decline of a mere 25 per cent since December 1. Similarly, cauliflower in the Kolkata retail market was trading at Rs 8 a kg, down 73.33 per cent over the past five weeks, but 60 per cent more than the wholesale price.

The sharp decline in prices has brought a much-needed breather for Indian households, as vegetables make up nearly 20-25 per cent of the household budget. It is also likely to bring down food inflation for December 2016 and January 2017.

"Good monsoon rainfall helped improve acreage under vegetables. Since the climatic condition was also good with no crop damage reported anywhere across the country, the vegetable output is likely to remain bumper this year. Also, stockists are facing a huge shortage of liquidity due to demonetisation resulting into lower lifting from stockists," said Shri Ram Gadhave, president, Vegetables Grower Association of India.

Meanwhile, prices of unseasonal vegetables like bitter gourd and okra have moved up sharply. While bitter gourd price reported 43 per cent increase in wholesale Delhi market to Rs 32.25 a kg, the vegetable reported 42.86 per cent jump in Mumbai to trade currently at Rs 20 a kg in wholesale. In retail, however, bitter gourd doubled to Rs 40 a kg in Mumbai. At Rs 55 a kg in Delhi retail markets, bitter gourd posted 22.22 per cent increase in the last five weeks.

"Most seasonal vegetables have plunged since December as stockists remained absent from the market. Owing to high moisture content, stockists await a change in climate from extremely cold weather to a warm weather to start procurement for stocking. This will start mostly in the third week of January after the Makar Sankranti, the one day winter festive after which hot weather normally begins," said Sanjay Bhujbal, a vegetable trade in Vashi mandi.
 

A senior trade official, however, attributes the massive vegetable price falls to a sharp increase in arrivals over the last one month due to peak harvesting of winter crops. Data compiled by the APMC office showed total arrivals of 3522 tonnes (178 trucks of average 9 tonnes each and 480 tempos of average 4 tonnes each) on Tuesday on Vashi mandi compared with 3144 tonnes (112 trucks and 534 tempos) a month ago. The same scenario prevails across the country.

"The sharp decline in prices indicates huge production this year. Normally, vegetable prices decline only in case of bumper supplies and lower purchases. Currently, the market is also facing demonetisation issue," said a senior government official on condition of anonymity.

Many farmers especially of potato and onion across the country, have started going their crop unharvested due to realisation fetching lower than the cost of harvesting and transportation to mandis. For farmers, therefore, onion and potato are fetching Rs 1-2 a kg at the farm gate.

"If this trend continues, farmers will not cultivate vegetables next year," said Gadhave. Experts estimate at least 10-15 per cent increase in vegetables' production this year.