Wholesale-retail price gap aggravates essential vegetables prices shocks

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Know the reasons behind surging vegetables prices in India

In the wake of the soaring essential vegetables prices across the cities in India, country’s prominent industry lobby organization Associated Chamber of Commerce and Industries (ASSOCHAM) conducted a study to find out the root causes.

The study reveals that essential vegetables prices have seen a rise between 20 and 100 percent. Also, the study finds out that low arrivals of the harvest in the mandis during the April-July period is the main reason behind vegetables prices hit and what is most worrying is that the trend is visible during the peak seasons of production as well.

At the retail level, potato store went up by over 100 per cent during April-July this year over the same period of 2015, cabbage (49.3 percent), chilly (47.8 percent), garlic (37.0 percent), cauliflower (33.9 percent), tomato local (26.0 percent), tomato hybrid (25.6 percent), potato fresh (25.0 percent), okra (22.3 percent), and brinjal round (20.8 percent).

The study, which covered several mandis noted with concern, “it indicates a worrying situation where market arrivals of vegetables have recorded contraction despite being the peak season for production. In the shorter horizon, there will be more pressure on the market arrivals of vegetables as production season eases”.

ASSOCHAM Secretary General, D. S. Rawat noted another worrying trend emerging out of the study. “There is a huge gap between retail and wholesale price of vegetables. On an all – India average, retailers are selling at more than 52.7 percent of wholesale prices “.

As for the gap between the wholesale and retail prices, it is as much as over 75 in some cases like brinjal (round) and over 62 per cent for tomato (local variety). Likewise, in terms of place gaps, it is notoriously high by as much as over 80 per cent and places like Delhi, Mumbai and Patna while in several other cities, it is well over 50 per cent.

Adding to that, low-level of arrivals of essential vegetables in the mandis even makes the matter worse.

Lack of basic infrastructure puts further strain in the arrival of vegetables, which results in more wastage of vegetables during the peak time of production.The perishable nature of vegetables compels the producers to sell the vegetables immediately. In general, producers do not gain when prices increase.

“Therefore there is an urgent need for building cold storage facilities in production centers. The Government should improve infrastructure facility by encouraging PPP initiative to develop cold storages. Also, there is need to develop infrastructure that could be directly accessible to the farmers and bridge the gap between fields and markets,” the study further noted.