Pricey tomatoes offer some policy lessons

Updated November 25, 2019

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EXACTLY a year ago, in November 2018, farmers in Sindh faced one of the worst gluts of tomatoes. A Dawn correspondent reported from Badin at the time that growers were forced to sell tomatoes at throwaway prices — one small grower sold 245kg for just Rs735, or Rs3 per kg.

And now in November 2019, a tomato supply crisis has taken the nation by storm.

However, the ongoing crisis is the symptom of a deeper malady. There’s no denying that imports can mitigate the crisis to some extent, but they don’t offer a perfect solution to this deep-rooted, perennial problem.

Pakistanis have grown accustomed to periodical skyrocketing of vegetable prices every few years, especially potato, tomato and onion. Politicians exploit such crises against the government of the day, and media outlets comment on their immediate causes, but all is conveniently forgotten once prices come down.

Therefore, policymakers must get to the root causes of food crop shortages if they want to address the situation in the long term.

In Pakistan, overall production of vegetables remains in surplus and we routinely export many of them. A crop becomes scarce particularly because of a high percentage of post-harvest losses—30 to 40 per cent in some cases—and a broken supply chain.

Food crop crises will continue to haunt us until root causes are addressed, including post-harvest losses, a broken supply chain and a lack of coordination between provinces and the federal government

Potatoes, tomatoes and onions are essential staples in our nutritional landscape, and a sudden change in their supply (and hence prices) affects our diet in a big way.

Countrywide production of tomatoes has ranged between 500,000 and 600,000 tonnes a year since 2011. No significant measures have been taken to increase the output. Similarly, not much effort has been undertaken to increase the per-hectare yield, which has oscillated between 9.5-10 tonnes, according to the Pakistan Bureau of Statistics.

As expected, domestic demand for tomatoes, and all other food crops for that matter, has increased in the meantime. And there are no prizes for guessing what happens when supply remains low and demand keeps rising — even a small shortfall in production is bound to cause a crisis.

At the same time, post-harvest losses of fruits and vegetables remain high despite several initiatives taken to address the issue.

Such losses remain high not only due to crop mishandling at the farm but also because of poor storage and transportation facilities and inadequate market infrastructure. Improving these areas requires significant investment and effective coordination between federal and provincial governments.

A communication gap among provinces and with the federal government routinely aggravates food crop shortages. And this is what happened this time as well.

The decision to import tomatoes from neighbouring Iran was taken quite belatedly. That, together with the fact that importers/traders indulged in profiteering, explains why consumers got little price relief even after the imports.

Had the federal government ordered imports immediately after the crisis hit the markets towards the end of October, consumers would not have to pay Rs320 to Rs360 for a kilogram of tomato.

According to a Dawn report, roadblocks set up by Jamiat Ulema-i-Islam (F) protestors demanding Prime Minister Imran Khan’s resignation also partially delayed the arrival of tomatoes in Karachi. Roadblocks by political parties or influential interest groups always lead to delayed and pricier supplies of perishable food items to urban markets.

Gluts and scarcity spells of vegetables cannot be checked effectively unless each province forms large purchase centres and wholesale markets at district level, preferably under public-private partnerships.

Onward supplies to other districts of the same province or of another province can be made cheaper by establishing a network of licensed transporters so that at the time of supply shocks they cannot overcharge. To make this happen, provincial governments need to work with local governments.

Provincial governments, with active collaboration of the corporate sector, can also set up large processing units for vegetables under public-private partnerships. At times of peak production of a certain vegetable, these units can get supplies at agreed prices so that growers don’t have to sell their produce for a song. Also, during a lean production period in a certain district or province, processed vegetables can be supplied to retail markets there.

After the devolution of agriculture as a fully provincial subject from the 2010-11 fiscal year, the federal government should not micromanage agricultural markets. However, it must work closely with all the provinces to ensure that none of them suffer from the glut or supply scarcity of a particular crop.

That is where the federal government can provide provinces with a common platform, on the pattern of federal committee on agriculture, to share timely information regarding vegetables as they do on other minor crops. This will help develop an early warning system on abundance and scarcity spells in any part of the country.

Similarly, based on real-time information, the federal government should immediately decide about importing a particular vegetable in times of scarcity or promoting exports when there is a glut.

Besides, effective coordination between federal and provincial governments is a must to stop smuggling of some vegetables to and from neighbouring Afghanistan and Iran to avoid an artificial scarcity. It did happen in August this year in Balochistan where large quantities of tomatoes smuggled from the two countries created a surplus after the arrival of local crop, compelling local growers to sell tomatoes at throwaway prices.

Published in Dawn, The Business and Finance Weekly, November 25th, 2019