Data | Why are tomato and onion prices fluctuating?

The unexpected price shocks to onions and tomatoes are triggered by unseasonal rains and prolonged drought

In tears After tomatoes, the price of onions has shot up in the recent weeks and has hit the consumers hard. M. Periasamy

The prices of tomatoes and onions are the most volatile in Indian markets. The Economic Survey 2021-2022, released on Monday, explores the reasons behind the variations in the prices of these two staple vegetables. The survey argues that seasonality in production and irregular shocks contribute equally to volatile prices. The unexpected price shocks to these two perishable commodities were triggered by unseasonal rains and prolonged drought. A detailed look at the survey's conclusions.

Ups and downs

The graph shows the average retail price of a kg of tomato and onion in India. Sharp spikes can be seen at both regular and irregular intervals.

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Seasonal variation (Tomato)

The graph shows the average change in the retail price of tomato per kg compared to the long-term price trend. As 70% of the total tomato production is harvested between December and June, the prices dip due to a surge in supply. On the other hand, between July and November, as only 30% of the total production is harvested, the prices rise due to low supply.

 

Price shocks (tomato)

The graph shows the average change in the price of tomato after accounting for seasonal changes. The spikes are therefore increases in retail prices over and above the expected rise due to seasonality. The five identified price shocks in the graph were mostly due to drought or heavy rainfall in various Indian States.

 

Seasonal variation (onion)

The graph shows the average change in the retail price of onion per kg compared to the long-term price trend. As 70% of the total onion production is harvested between March and May, the prices dip due to a surge in supply. But in the rest of the months, prices rise due to low supply.

 

Price shocks (onion)

The graph shows the average change in the price of onion after accounting for seasonal changes. The spikes are therefore increases in retail prices over and above the expected rise due to seasonality. The four identified price shocks in the graph were mostly due to drought or heavy rainfall in various Indian States.

 

Source: Economic Survey 2021-2022