Hotter Temperatures May Turn Up The Heat On Tomatoes, Perishables

The impending extreme heatwaves in India between April and June may turn up the heat on the prices of fruits and vegetables in the months to come.

While it is still unclear as to how much the rising mercury will impact grain—which policy measures can control—it is likely that the pressure on perishables like tomatoes, onions and potatoes could make Indians sweat.

The Indian Meteorological Department has advised that an extreme heatwave is likely over the next three months, stretching up to 10-20 days as opposed to the usual 4-8 days in central and western peninsular India.

And the states most prone to 'increased heatwaves' are Gujarat, Madhya Pradesh, Maharashtra, north Karnataka, Rajasthan, north Chhattisgarh, Odisha and Andhra Pradesh.

Of these, states like Maharashtra and Andhra Pradesh are important horticulture states in the country.

The impact of extreme weather conditions would cascade to agriculture, power and oil prices, with the former having a deeper impact on thali prices—particularly perishables, according to agricultural observers and economists.

The impact of the heatwave in April and May could be pronounced from May onwards and a severe heatwave can push up prices of fruits and vegetables, Paras Jasrai, a senior economic analyst at India Ratings and Research, told NDTV Profit.

Jasrai said that while it is still early days to give concrete numbers, regional variability of weather will be a key monitorable, going forward.

"Pressure on availability of perishables will put pressure on inflation too as they have a high consumption level,” Jasrai said. “…currently, inflation is at 5.1% and food inflation is at 8.6%. If the heatwaves turn severe, then this impact would be felt on overall inflation, which would go up above 6% (overall) and 9% (food inflation)."

Fruits and vegetables contribute a weightage of 2.89% and 6.04%, respectively, in the CPI basket.

According to the latest household consumption survey (2022-2023), the monthly per capita consumption expenditure on fruits and vegetables combined is less than 10% in both urban and rural areas.

However, the rising prices of perishables will also have an impact on related food processing industries, according to NR Bhanumurthy, vice chancellor at the BR Ambedkar School of Economics.

"I expect a serious cause for concern due to heatwaves and the expected rainfall pattern," Bhanumurthy told NDTV Profit.

The forecast for rainfall this year shows some divergence from normal pattern, with areas that typically receive rainfall expected to get lesser, he said.

In terms of reasons for the heatwave and the weather extremities seen, Bhanumurthy said that the El Nino phenomenon was delayed and would likely prolong into the summer.

Forecasts by the IMD also expect El Nino to continue in April and May, followed by neutral monsoons before the La Nina phenomenon comes along in the second half of the monsoon season (around September).

Lower reservoir levels would also be a concern. According to Gaura Sengupta, economist at IDFC First Bank Ltd., currently, the reservoir levels are lower than last year as well as the 10-year average.

While the real picture of India's groundwater table would be available after the monsoon season, it does raise concerns on whether the summer of El Nino in India will leave throats and fields parched.