A lose-lose situation

Email

Two peasant women hold their harvested green chillies in a field in Mirpurkhas.—Photo by Umair Ali
Two peasant women hold their harvested green chillies in a field in Mirpurkhas.—Photo by Umair Ali

The unusual increase in the prices of vegetables being witnessed in the retail market for the last several weeks is attributed to a shortage of supplies from the farms. Consumers complain of stale veggies being sold at exorbitant rates. Interestingly, regardless of the substantial increase in prices, the basic producers are not benefitting due to market dynamics.

The recent heavy rainfalls trigged floods which caused widespread damage to tomatoes, green chillis, onion, okra and other vegetables in lower Sindh. While their overall share in crops is not substantial, they are grown in large quantities in lower Sindh.

A vital ingredient in the kitchen, the tomato is grown multiple times a year. It is grown in the Oct-Nov period in different pockets of Hyderabad, Tando Allahyar, Sanghar, Tando Mohammad Khan, Matiari and Thatta districts while in the July-August phase it is grown in Badin, Mirpurkhas and Umerkot districts. The Oct-Nov produce was lost because of the pandemic as it could not be transported to the market in time. The floods perished the otherwise good crop.

Consumers complain of stale veggies being sold at exorbitant rates. However, the producers are not benefitting due to market dynamics

“Expenses vary between Rs60,000-Rs70,000 per acre of tomato, which includes the cost of hybrid seeds that range from Rs15,000 to Rs20,000 per acre. The ploughing, land preparation, picking and commodity’s farm-to-market transportation are other heads of expenses,” says Aslam Marri, a tomato producer from lower Sindh.

A farmer can earn a comfortable income for Rs3,000 for 50kgs of tomatoes, he says. There have been instances where farmers preferred to destroy the produce rather than harvest it because that meant incurring further expenses at the grower’s end.

The price of the produce is determined in the wholesale market, irrespective of the per-acre cost of productivity at the farm level. Until Oct 16, tomatoes were sold for Rs150 per kg, okra for Rs160 per kg and onions for Rs80 per kg. Market players believe that onion is being brought in from Iran and some parts of Quetta which has helped stabilise its rate at Rs80-90 per kg. Otherwise, it would have been sold for Rs150.

A farmer sells his produce in the sabzi mandi where large scale auctions determine the price. A further eight to 10 per cent is charged as the auction’s commission. Miscellaneous expenses are added by buyers before it lands in the retail market. “We can’t sell vegetables at a price lower than the one at which we bought it,” insists a retailer.

Retailers and bulk quantity buyers purchase commodities, add their profit margin and overhead cost to increase the per kilogram retail cost. It is in the retail market where consumers pay exorbitant rates whilst the producers have to make do with whatever price is fixed at the auction. Each auction determines a new price.

“We don’t have a value-added sector where we can take our produce as the second option. The wholesale mandi is the only option where we sell produce often at an inadequate price. Ironically, as consumers we also have to pay exorbitant rates,” he says.

Sindh’s indigenous varieties of onion — nasarpuri and phulkara — that survived the rains will be marketed from the traditional sowing areas of Tando Allahyar, Sanghar, Matiari, Hyderabad and Tando Mohammad Khan. Onion producers anticipate a loss in per acre productivity that is cultivated at Rs40,000 to Rs55,000 per acre. Water remains a major expense if canal water is not available. The grower has to lift it from a tube well.

“Even if retail prices for vegetables are higher or mandi players auction them at an expensive rate, we don’t benefit,” says Imran Bozdar, an okra grower. He contends that as growers suffered overall colossal losses, even the unusually higher price of produce did not offset it.

According to Bozdar, okra’s per acre cost of production is Rs70,000-Rs80,000. Usually, an acre produces 100-125 bags of 40kg, taking the cost to Rs16 per kg at the farm gate. “Recently, okra was auctioned for Rs45 per kg in the mandi. Yet, consumers are buying it for Rs90-100 per kg,” he says.

The value-added sector, says Mahmood Nawaz Shah of Sindh Abadgar Board (SAB), has great potential for vegetables of Sindh. It could provide farmers with an alternate venue for the sale of produce. With the rising cost of production, farmers are finding it increasingly hard to earn an income even in normal circumstances.

“It is unrealistic for consumers to think that can buy an onion or a tomato at a decade-old price. For rising inflation, the government needs to regulate to prevent artificial price hikes,” he adds.

Published in Dawn, The Business and Finance Weekly, October 19th, 2020