Vegetable Prices Rising Due to Wayward Monsoon: CRISIL
Moneylife Digital Team 26 November 2021
From southwest to northeast, monsoons have pushed vegetables into an unsavoury stew. First came the erratic and often copious summer spells that delayed arrivals at mandis and lit up prices. Then, the northeast variant rained pain. With cumulative rainfall between 1st October and 24 November 2021 as much as 47% above normal, vegetable arrivals at mandis are once again severely curtailed and once again, prices are aflame, says a research note.
In the report, rating agency CRISIL says, “With rains beating a retreat, prices could follow suit. Net-net, any respite in vegetable prices in the short-term will be a function of how it pours from here. Hopefully, as the north-east monsoon beats a retreat, the worst may be over for vegetable prices.”
However, suppose heavy rains once again lash Karnataka and Andhra Pradesh, the key tomato-growing regions. In that case, output could reduce and lead to a fresh spike in prices, the rating agency warns. 
Similarly, the onion crop in Maharashtra bears watching as 70% of the annual production of the bulb in India happens during the rabi season.
As for potato, another major rabi crop, spells of dry weather would be salutary in Uttar Pradesh, the largest producer-state accounting for 30% of India’s annual potato output, where fields have been water-logged, CRISIL added.
Tomato accounts for 10% of the total vegetable production in India. With standing crops damaged by excess rains in Karnataka at 105% above normal, Andhra Pradesh at 40% above normal and Maharashtra at 22% above normal, which are vital suppliers of tomato during October-December, supply is down materially.
“Our on-ground interactions indicate that the situation is so grim in Karnataka that tomatoes are being sent from Nashik in Maharashtra. Not surprisingly, prices of tomatoes have increased 142% on-year as of 25 November 2021 and are expected to remain elevated for the next 45-50 days till the harvest from Madhya Pradesh and Rajasthan reach markets across the country beginning January. The prices are expected to decline by about 30% from the current high levels of around Rs47 per kg in the coming two to three months,” CRISIL says.
According to the rating agency, onion prices should begin easing in two weeks. The onion crop, which accounts for 14% of the total vegetables produced in India, has also been affected.
CRISIL says, “Transplanting was delayed in the key growing regions of Maharashtra because of deficit rains in August. That delayed arrivals in October, leading to a 65% increase in onion prices compared with September. The good part is that fresh arrivals are expected from the northern states such as Haryana in the next 10-15 days, reducing prices across India. However, since 70% of onion production happens in the rabi season — November is the major sowing month — the rainfall will be the key monitorable for both arrivals and prices.”
Commenting on potato, which has a 27% share in vegetable production in India,  the rating agency sees waterlogging to increase prices. Potato, a rabi crop with sowing season spread over October and November, has been hit hard by excessive rains in the key growing states- — Uttar Pradesh (162% higher), West Bengal (52% higher), Bihar (184% higher), and Gujarat (42% higher).
“Our on-ground interactions suggest excessive water logging in the fields may warrant resowing of potato tubers, adding to the cost of farmers. Due to 10% higher vegetable production in the last rabi season, potato prices are hovering around Rs18 per kg, which is 38% lower on-year as of 25 November 2021. But if the heavy rains continue, sowing and output may be impacted, pushing up prices in the next couple of months,” the rating agency says.
Similarly, CRISIL sees prices of okra or lady’s finger easing in the next three weeks. Okra, or lady’s finger, an early Kkharif crop with a 3% share in total vegetable production, has also been hit by heavy rains during the sowing and early vegetation stage in Andhra Pradesh, accounting for about 21% of okra production, which received 23% excess rains in August. 
Heavy rains in Gujarat during the fruit-setting stage has also added to supply woes.
“That said, prices of okra, which are 57% higher on-year as on 25 November 2021, are expected to be tamed in the next 20-25 days with fresh arrivals,” CRISIL says. 
Among other vegetables, capsicum and cucumber, which cumulatively have about a 1.5% share in total vegetable production, have also been hurt. 
Capsicum prices are ruling at Rs53 per kg, which are 17% higher on-year as of 25 November 2021 — again an impact of heavy rain in Karnataka that hindered harvest and damaged standing crops. “However, prices could cool in the next 7-10 days, with supply from Uttar Pradesh and Chhattisgarh starting now, and from Maharashtra in January,” it added.
As for cucurbits such as cucumber, which are very sensitive to rains, crops have been damaged by rains in key growing regions of Karnataka and Madhya Pradesh — 76% and 105% higher than average, respectively — sending prices up 19% on-year in November.
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