Vegetables prices volatile:

Solutions to issues in agro products market vital

By Gamini Warushamana

Vegetable prices increased to unprecedented levels in recent months and still remain high. As usual, the main reason for the rise in prices was short supply. However, the prices of this perishable commodity are highly volatile.

Despite various issues in the supply chain, the vegetable trade at the Dambulla Dedicated Economic Centre (DDEC) is competitive and prices are determined by supply and demand.

DDEC is the main wholesale market for vegetables and is usually a busy place from morning till midnight where thousands of lorries, tractors and other vehicles arrive either to sell or purchase vegetables.

However, these days the market is empty and traders said that business activities have come down by around 60 percent. Supplies from Jaffna and Kilinochchi in the North are not coming in as the drought has hit cultivation. There were a few varieties of upcountry vegetables from Kandy and Nuwara Eliya.

Low quality

Large stocks of pumpkin from Villachchiya and Thantirimale in the Anuradhapura district remained unsold. A week ago, the price of pumpkin in the retail market increased to over Rs.160 per kg, one of the highest recorded in recent years.

With the price increase, farmers rushed to harvest and even immature fruits were plucked. The result was a huge supply but of low quality and the price came down to Rs.15 per kg by Tuesday.

On Monday, the price of green chillies was Rs. 520 per kg and on Tuesday the price increased to Rs. 630 due to short supply. These examples show the highly competitive nature of trading in this market. It is clear that the prices are sensitive to market signals. Therefore, the nature of this business should be taken into account in finding a solution to the prolonged issues in the agro products market.

Farmers who successfully cultivated vegetables this season have gained by this price increase. Farmers specially in Nuwara Eliya, Kandy and Welimada got a bonanza this year.

Janaka Weerasinghe, a dealer and farmer from Marassana, Kandy said that farmers earned huge profits after several years. He had brought beans and tomatoes which fetched Rs.130 per kg and Rs.150 per kg, the highest price he had received in the last three four years, he said.

The retail price of vegetables in the retail market just outside the walls of the DDEC is over 100-200 percent higher and traders said that the margin is always over 100 percent because of the perishable nature of the commodity.

Unsold

Trading at the retail market too is low and according to traders, consumers cannot afford the high price. For instance, consumers don't buy green chillies which is now over Rs. 500 per kg and a retailer said that the four kilos he purchased a week ago was still unsold.

P. Prasanna, a mobile trader from Melsiripura, said that they cannot sell vegetables at the present price at rural fairs. "I usually carry 10 sacks of beans and eight boxes of tomatoes and equal quantities of other vegetables to sell at weekly fairs. But now I can sell only three to four sacks of beans and one box of tomatoes," he said. He said that most of the small-scale traders cannot do business under this situation.

This volatility of agro product prices between two extremes is frequent and as a result consumers and farmers suffer. Its impact on the national economy is also huge because agriculture accounts for 10.8 percent of the GDP and contributes 30.6 percent of employment opportunities.

Complex

The DDEC creates newspaper headlines either when prices of vegetables are exorbitantly high as a result of short supply or when prices nosedive due to huge oversupply and vegetables are dumped.

Although the recent price increase is not a surprise, the issues behind the short supply of vegetables is complex.

The drought is not the sole reason for low production and farmers in Matale, Dambulla and Sigiriya said that continuous market failure and huge losses faced by farmers was the main reason for low production.

They said that over the past three to four years they continuously faced losses due to market failure.

The high cost of production was the main issue. High labour costs, the high price of seeds, widespread pest and other plant diseases and the cost of agro chemicals pushes up the cost of production.

However, farmers cannot determine prices and they also don't have bargaining power as the products are perishable.

"We sold our products below the cost of production for several years continuously and therefore, this year we shifted to other crops", said W. M. Tharanga, a farmer in Kandalama.

They now cultivate big onion, soya bean, maize, kurakkan, sweet potatoes and fruits such as papaya, dragon fruit and watermelon. Therefore, vegetable cultivation has declined.

The impact of climate change and resulting extreme weather and changes in the rainfall pattern are also reasons for the present crisis. Farmlands specially in the Mahaweli areas are now experiencing this scenario.

Resident Project Manager of the Hurulu Ela zone of the Mahaweli Authority, R.B. Sirisena said that the impact of climate change has to be seriously taken into account and adaptation is essential to face the new challenges.

This zone is fed by water from Kothmale reservoir through Polgolla and Bowathenna and is one of the main rice and vegetable cultivation areas in the country.

Kalundewa, Sigiriya, Palugaswewa, Galkiriyagama and Madatugama are the main farmlands in this Mahaweli zone. Dambuluoya and Kandalama tanks store water received from the Mahaweli system and feed the farmlands.

Other crops

According to Sirisena, by last week the water level of the Kothmale reservoir was 75 percent of capacity and the water level of the Dambulu Oya and Kandalama tanks were 48 and 46 percent. Water was issued for the Yala season by the end of May and was delayed due to a water shortage in the Kothmale reservoir.

Due to the scarcity of water, paddy cultivation this Yala season was limited and in Madatugama it was limited to 50 percent and in the Galkiriyagama area paddy cultivation has not been permitted.

Farmers have been advised to cultivate other crops that need less water and specially import substitutes so that there will be no marketing issues.

Sirisena said that even under these circumstances uninterrupted water supply to cultivated lands cannot be assured because everything will depend on the water level of the Kothmale reservoir.

"If the water level drops below 40 percent we will stop the release of water to farmlands as we have to ensure the supply of drinking water to the people. We have an efficient water management system and we work closely with farmer organisations.

One relief is that the farmers are now risk averse and a majority of the farmers have willingly cultivated other crops. In this zone, over 2,250 hectares of other crops has been cultivated and we have to supply water to the farmlands until September," Sirisena said.

Rain water

Sirisena said that the Mahaweli zone is experiencing the adverse impact of global warming and climate change since 2012.

"The 2012 Yala season failed totally and we have now named Hurulu Ela and Mahaweli H-zone as water scarce areas. Therefore, we are compelled to reduce rice farming and encourage farmers to shift to other crops. In the Maha season paddy cultivation is not an issue because there is sufficient rain water.

In addition to the water scarcity, the change in the weather pattern is a serious issue and farmers cannot guess and make cultivation decisions," he said.

Farmers too confirm this and said that one major reason for the short supply of vegetables was the unexpected heavy rain in April and early May which destroyed vegetable cultivations in the Matale and Mahaweli areas.

The delay in the issue of water from Dambulu Oya and Kandalama tanks too is a major reason for the short supply of vegetables. According to farmers, traditionally, they do not plant seeds in June, July and August because the dry and windy climate affects the crops.

A farmer in Sooriyagama, S.W. Asela Rupasinghe said that they usually complete the Yala season cultivation before June, but this year they are still preparing the land. Most farmers have abandoned cultivation and even those who cultivate face several issues. Therefore, a decline in vegetable prices cannot be expected in the near future.