Purely Anecdotal - High Prices and Consumption

 Purely Anecdotal - High Prices and Consumption.

I have been thinking whether the high price of vegetables and fruits as witnessed the last few months would be impacting consumption patterns and purchases. And in what manner. Hence the last two days days I went over to four retailers in nearby localities, two sell only fruits while two retailers sell both fruits and vegetables. These were informal conversations as many clam up on seeing a diary. Plus I just wanted it to be comfortable., The fact is that all four are stating that there certainly has been a fall in consumption. One fruit vendor went to the extent of saying he has reduced his orders, this when he retails in an upper middle class locality, as those who would buy say 5 kg of apples earlier are now ordering 2 to 3 kg. The retailer in a middle class locality stated that the sale of Bananas was down 50 % and families were now buying fewer fruits. Apples this year were at Rs 220 / kg, Mango stayed at Rs 120/- plus a Kg, as did pears and plums. In fact both confirmed they never thought they would sell Country Pears at Rs 140/- a kg, customers were driving or walking up,. inquiring about the range of prices, then scaling down or walking away or compromising by buying bananas or papaya only. They were selling even 1/2 Kg at times of fruits., consistently, while this was not so earlier.

The vegetable sellers complained what could they earn with tomatoes touching at one time Rs100/- a kg and beans Rs 140/- a kg and capsicum Rs 160/- a kg. Even now, the decline was not sufficient and was pinching them and the customers. Lemons were just not on the list of buyers. The humble potato and onion were also being haggled over all the time. The most humble cucumber and its high pricing had left them totally puzzled. This was so much a staple but now was being avoided by many customers. However, one vendor did state that sales at the premier stores were less impacted as his brother who doubled as a local supplier found it to be a stable market.

The point is that all four retailers state their pricing power is controlled or rather determined by the prices set by the wholesaler. Secondly, while the weather was certainly harsh from March to June, but could the damage to fruits and vegetables be to the extent that prices have increased by even 40 % to 60 % in some cases. Kiwi they could understand somewhat being too sensitive to hear but not the across the board increase. The fuel price hikes as per them - all have considerable sales and a standing - were just a cover by certain merchants or players within the system to drive up prices massively in general Their sales in rupee terms may reflect they are stagnant or have increased somewhat but in volume terms they have taken a hit. And on their earnings too. I got a unanimous feedback from all four at separate venues that their incomes were certainly impacted for the worse. They do expect a decline if fuel prices moderate or if the stakeholders including the Government intervenes or signals it’s concern. But they fear that some decline and then a plateau will be the new benchmark. We feel the vendors are not informed but I found them quite aware.

As to farmers, my inquiry with two mentors of FPOs yielded mixed results. One mentor told me that farmers gained certainly more this year from coriander and tomatoes (last season and expected next month) as also cucumbers, turmeric and ginger. However he was unaware about the gains to traders. The second mentor stated that while the farmers did gain somewhat but the gain was less as compared to the gain of the wholesaler or trader. This also does underline the need to have a more productive and efficient economy and greater prosperity so as to enhance affordability though the prices as they remain now are certainly a major concern and clearly disproportionate. One area left out is if the wholesalers are having any feedback on lower volumes in retail, if any, and the consequent value chain getting impacted. And on orders to farmers or future expectations. And on prices at restaurants of varied classes and consumption patterns. And Food Processors too. More research required certainly .I only just stood and asked patiently.

PS - The feedback is that prices vary across India and a friend informs that prices are lower at Bangalore than at Chandigarh while the sourcing is from HP, more research required.

DKK

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