Sauce, ketchup and Indian tomato prices

They say the prices are cyclical, like they are for all vegetables. They say India grows enough vegetables to provide for our growing population and we have enough surplus to export. Well, if that’s so, then why does a kilo of tomatoes today cost fifty rupees? A few phone calls and visits to local grocery shops (not the supermarkets) confirmed that today, in Bangalore, Mumbai and New Delhi, tomatoes sold for Rs 45 to Rs 55 a kilo.

Sauce and ketchup every which way you look in sizes from 90 grams to 1 kg – that’s where India’s tomatoes are going.

Why are our staple vegetables experiencing such price spikes so frequently (the big onion panic is not two months old)? Here’s what the official numbers look like, from the Ministry of Agriculture, Directorate of Economics and Statistics, Retail Price Monitoring System. This collects prices of food staples every week from 87 urban centres in all 35 states and union territories, and I have used this quite comprehensive data series to examine the ups and downs of the price of the tomato.

The chart above illustrates the price of a kilo of tomatoes in India’s urban centres between the first week of July 2010 and the third week of October 2013 – tomato prices have been recorded for 59 urban centres over 173 weeks. To simplify what is otherwise a maniacal tangle of individual threads (see chart below) I have taken a median price, and urban price at the 80th and 20th percentiles, which together describe the overall movement and variation well enough. The cycles are indeed visible – they are roughly 40 weeks long.

Tomato prices recorded for 59 urban centres over 173 weeks.

But the cycle changed from the first week of April 2013, when the prices of a kilo of tomato rose more steeply than before. And from the first week of August 2013, tomato prices have settled at a new plateau significantly higher than at any time in the last three years.

Why has this happened? The growth of the processed foods industry is the main cause – this industry sector has for the last three years grown (in value) at around 15% per year, which is greater than the GDP ‘growth’ and greater than the growth in value recorded for agriculture in general. For tomatoes, this means that every quarter, more tomatoes exit the stream of tomatoes that would otherwise go to home kitchens and instead enter factories, there to be turned into sauce, ketchup, purée and powder (which you find as flavouring even in those awful noodle ‘tastemaker’ sachets and cup noodle containers). These thousands of tons will become available as packaged and processed goods (the better to accompany the acres of super-fattening industrial pizza being baked every day) and this means less, per capita or per household, is available as primary produce that can be used in kitchens at home.

Does KFC want 13-month-old infants in India to eat its chicken?

A schoolgirl walks under the KFC advertisement in Bengaluru (Bangalore). This hoarding is visible to all traffic on one of the city’s major roads, Richmond Road.

Kentucky Fried Chicken (KFC) in India is advertising a chicken meal that costs 35 rupees (USD 0.67, EUR 0.51). Hoardings such as this one are visible now in all the major metropolitan cities (Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Delhi) and KFC has taken outdoor advertising space along major roads in these cities.

This hoarding advertises “Real chicken” for 35 Indian rupees, “KFC wow! price menu”. In small letters on the lower bottom right of the hoarding the advertisement also says: “Products contain added monosodium glutamate. Not recommended for infants below 12 months”.

There are two culprits here at work to further the interests of the junk food/fast food industry. One is the Food Safety and Standards Authority of India which is nowhere near as vigilant as it ought to be, especially given its ‘Advisory on Misbranding/ Misleading claims’ which invokes the Food Safety and Standards (FSS) Act, 2006, Rules & Regulations, 2011. This has said: “(2) The various false claims made by the Food Business Operator about food articles and consequent violation, if any, are punishable under the provisions fo FSS Act, 2006; (3) Violations related to food items, seriously jeopardize public health as well lead to unfair gains to Food Business; (4) Misleading advertisement related to food items are imputed with malafide intent on the part of person making the claim and is normally made to misguide a consumer to purchase food item without disclosing the complete details on the advertisement. Companies (Corporate bodies including firm or other association, individual) are also covered u/s 66, FSS Act, 2006.”

The objectionable disclaimer is in small letters on the lower right edge of the hoarding, unnoticeable to passing traffic.

The other culprit is KFC and its parent company, Yum! Brands, Inc. Just how important is India to Yum! Brands? Consider the statement by the company’s chairman and chief executive officer, David C Novak (available right now on the company website) in which he has mentioned India and its market:

” …we have made incredible progress in India, opening 101 new restaurants in 2011. Ten years ago, we were essentially just beginning with KFC in India, and now it’s our second leading country for new unit development. In fact, we’re so excited about our prospects in India, and its impact on the future growth of Yum!, that we’re going to break it out as a separate division for 2012 reporting directly to me. It’s encouraging to see that our new unit progress with KFC in India is very similar to what we saw in China during its first 10 years. Our India team has identified the key elements driving success in China and are adapting these strategies in India to leverage our iconic brands and build concepts with broad appeal.”

No thank you. We want 0 such restaurants per 1,000,000 people

India’s business and financial English-language dailies, since they function as mouthpieces of industry and propaganda sheets for industry and trade associations, and since they function as uncritical endorsers of the current ruling regime’s reckless gallop into ruin, have had only laudatory noises to make about the invasion under way by KFC and similar global junk food peddlers.

The Economic Times published a gushing interview with Muktesh Pant, CEO of Yum! Restaurants International, which is described as running “the international operations of US quick restaurant chains Kentucky Fried Chicken, Pizza Hut and Taco Bell restaurants”. The newspaper asked: “How is the Indian restaurant market evolving, compared to say China?” and Pant answered: “If you compare the stats of the two countries, the consumer class of 300 million in China has an access to 3,000+ KFCs, while the consumer class of 100 million in India has access to only about 140 KFC outlets. Hence, there is a huge potential for us to leverage our expertise in the untapped market. Our aim is to have 1,000 outlets in India by 2015 and China has helped us provide a blueprint for this rapid growth.”

The influence of KFC on the diet of India’s urban schoolchildren? See the schoolbuses driving past the hoarding.

The same gushing interview contained answers from Niren Chaudhary, president of Yum! Restaurants India, who was described as “reporting directly to Yum! Brands, Inc, Chairman & CEO David Novak after the world’s largest restaurant company last week made India only the third country after the US and China with a standalone reporting division”. How fabulously exciting for all the 13-month-old infants wetting their diapers in anticipation of their next KFC portion.

The question was: “Will it translate into faster expansion and more hires?” And Chaudhary’s answer: “Our goal is to double our store base to at least 1,000 stores, employing 50,000 people, in three years. The new structure is a change in reporting relationship and reflects the importance of India as a future growth opportunity.”

Now we know why the KFC advertisements say what they do (and hide much). This CEO Pant is reported to have studied at the Indian Institute of Technology Kanpur, and if so that particular IIT – and the IITs and IIMs of Bharat – have much to answer for.