Why are tomato, onion, milk prices rising across India? Economic Survey 2024 explains

Economic Survey 2024: The Union Finance Ministry on Monday released the Economic Survey 2024 ahead of the Union Budget for 2024-25. The survey offered an in-depth analysis of the rising food prices for essential items such as tomatoes, onions, and milk across India.

The survey revealed that global food inflation has been a significant issue over the past two years. It pointed to research indicating that food prices are increasingly vulnerable to climate change factors, including heat waves, uneven monsoon distribution, unseasonal rainfall, hailstorms, and extreme dry conditions. These weather-related challenges have notably impacted the agriculture sector, leading to lower farm outputs and escalating food prices.

According to the survey, food inflation, as measured by the Consumer Food Price Index (CFPI), has surged from 3.8% in FY22 to 6.6% in FY23, and further to 7.5% in FY24. This rise in food prices can be attributed to several key factors affecting agricultural productivity and food supply chains.

Tomato price rise

The production of vegetables and pulses has been particularly affected by adverse weather conditions. The increase in tomato prices observed in July 2023 was linked to seasonal variations in crop production and region-specific crop diseases, such as white fly infestations. Additionally, the early arrival of monsoon rains in northern India and logistics disruptions caused by heavy rainfall in isolated areas contributed to the price hikes.

Onion price rise

Onion prices also saw a significant rise due to multiple factors. Rainfall during the last harvesting season compromised the quality of rabi onions. Delays in sowing during the kharif season, prolonged dry spells affecting kharif production, and trade-related measures imposed by other countries further exacerbated the situation.

Milk price rise

The price of milk has been on the rise since early 2023. This increase is attributed to a reduction in artificial inseminations during the peak days of the pandemic and higher costs for animal feed. Consequently, milk cooperatives raised the prices of milk and milk products to cover these increased costs. However, the price increase for milk moderated by the end of FY24.