Price of tomatoes has fallen as low as INR 2.5 (roughly Rs4) per kg in India currently. In Pakistan, vendors sell between Rs60 to Rs80 in Karachi whereas in Lahore Agriculture Marketing Information Service places its price at Rs53 per kg for bulk purchases.
Given the significant price differences, a case can be made for resumption of import of tomatoes from the neighbouring country.The biggest beneficiary of this decision will be those lower down on the pyramid that will be able to afford the relatively expensive red fruit. However, should Pakistan consider resuming imports?
Historically, the price of tomatoes has always been volatile and prone to controversies and public outrage. From a low of Rs20 per kg at times, it has shot up to as high as Rs250 in times of shortages. Post the ban on import of Indian tomatoes in the second half of the last calendar year, prices rose high enough for cases of profiteering and raids to emerge.
On the other hand, there are some compelling reasons to continue the ban. Restricting imports eases some of the pressure on the current account deficit given that in FY17 Pakistan imported $39 million worth of tomatoes from the neighbouring country, as per the SBP. The hike in regulatory duty from 15 percent to 20 percent last year also acts as a deterrent in this regard.
More importantly, higher tomatoes prices help incentivize farmers from shifting from crops such as wheat, of which we have excess stocks to cultivatable edible crops. Since the supply and demand gap was filled by India over the years, the area, production and yield of tomatoes has not increased significantly over time. More pressing are the lack of facilities for cold storage given the highly perishable nature of the fruit.
Along with lower prices, Indian tomatoes have also brought diseases with them such as leaf curl virus and mosaic virus. The ban on Indian imports will help eliminate the spread of these diseases to various crops.
Ban on Indian tomatoes may pinch consumer’s pockets for now, but in the long run could help improve local supply and spur investment in better storage facilities. Continuation of the ban is the country’s best interests to become more self-sufficient in the agriculture sector.