Tomato price crisis: Solutions to alleviate implications on India’s supply chain and trade operations

financialexpress.com:

– By Nirav Choksi

The unbelievable rise in tomato prices has been making headlines in the last few weeks.From McDonald’s taking the call to temporarily drop tomatoes from their menu items to local farmers reporting large-scale thefts of tomatoes worth Rs 2.5 lakh – the surging prices have sent shockwaves across India. Moreover, this has placed an additional financial burden on households forcing them to cut down their tomato consumption.

What is the magnitude of this price surge? Reports state that tomato prices have jumped by a whopping 445 per cent, surpassing the costs of petrol.

As a result, while tomatoes were previously sold at Rs 15-20 per kilogram – the wholesale price has now touched an astounding Rs 250 per kg. The rise in tomato prices has disrupted the supply chains and is posing significant challenges to trade operations in India. In this article, we will understand the ramifications of the price surge, its effect on trade operations, and viable supply chain financing solutions that will help mitigate the impact.   

What has led to the steep rise in tomato prices?

Globally, India ranks high as the second largest producer of tomatoes. Among the major producers of tomatoes in the country are the southern and western states such as Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Madhya Pradesh, and Gujarat. The unprecedented rise in tomato prices is not just another case of a ‘supply and demand’ issue. Cyclonic storms and untimely rainfall in the states of Karnataka, Andhra Pradesh, and Maharashtra, have contributed significantly to the sharp rise in prices. Excessive rain has wreaked havoc causing significant yield losses. 

The post-harvest losses and supply chain disruptions have resulted in anarchy in