Nepal’s tomato exports to India helped both countries but supply-demand paradoxes remain

On June 18, a group of farmers unloaded truckloads of tomatoes on the road in front of the Kalimati fruit and vegetable market, the largest wholesale vegetable market in Kathmandu.

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It was a very public protest against the meagre price local farmers were getting for selling the vegetable.

The frustrated farmers protested as they were getting as little as ₹10 per kg for their tomato produce while the market price was ₹35 per kg.

Barely two months later, the situation has remarkably changed: The tomato price hit a 10-year high in Kathmandu as the wholesale price reached ₹170-180 per kg.

Even if Nepali consumers have been hard hit by steep price rises, farmers are not complaining anymore. The reason: Massive surge in the export of tomatoes to India last month.

Nepal’s rare largescale tomato export to India impacted domestic prices

The price of tomatoes has now surged both in Nepal and India. First in India because of low harvest due to weather, and then in Nepal because of the sudden rise in exports to India.

Due to substantial tomato exports by Nepalese traders to India, the domestic markets are now grappling with supply limitations, leading to significant price surges. The cost of large tomatoes skyrocketed by a staggering 385% -- skyrocketing from ₹35 per kg to ₹170 per kg.

Now, the wholesale price has come down to ₹120 per kg.

According to traders, after a two-month gap, the supply of Indian tomatoes has again started in the Nepali market since the third week of August. The average wholesale price of Indian tomato in the Kalimati market on August 23 stood at ₹140 per kg.

According to the Nepalese customs department, the country exported 670.52 tonnes of tomatoes to India between mid-July and mid-August. Preliminary statistics show tomatoes worth ₹8.73 million were exported to India during this period.

According to the latest foreign trade data, released by the customs department, Nepal exported more tomatoes in the first month of the Nepalese fiscal year 2023/24 than the country imported.

Nepal exported 670.52 tonnes of tomatoes to India while it imported 38.95 tonnes of tomatoes (valued at Rs.0.989 million) from its southern neighbour.

Earlier this year, India looked to its northern neighbour for to source tomatoes after prices of the vegetable in India surged by more than 1400% to a record ₹140 kg in the past three months.

India temporarily relaxed its plant quarantine rules to facilitate importing of tomatoes from Nepal.

“The relaxation of quarantine rules for Nepali tomatoes will last until October 31,” said Tapendra Prasad Bohara, co-spokesperson at the agriculture and livestock development ministry.

Following the relaxation of quarantine regulations by India, Nepali traders began shipping large quantities of tomatoes to its southern neighbour.

Traders say demand for Nepali tomatoes grew from July onwards after a supply shortage emerged in the Indian market.

According to them, the demand for Nepali tomatoes first increased in Indian cities located along the Nepal-India border.

Past exports of the vegetable were negligible

Since tomato is one of the vegetables that India had placed restrictions on imports from Nepal, its exports in past years have been negligible compared to other vegetables.

Tomato, in fact, never featured in Nepal's major export items list to India though the country exports agricultural items such as tea, cardamon, cabbage, and ginger.

Refined palm oil, soybean oil, and cardamom were the top three exportable items to India in FY 2022/23.

However, tomato exports to India did surge in the last fiscal year to 1094 tonnes compared to 40 kg in FY 2021/22.

Interestingly, these 1094 tonnes of exports happened in Ashar (mid-June to mid-July), which is the last month of the Nepali fiscal year.

Tomato farming in Nepal

Nepali farmers grow tomatoes on 22,600 hectares and produce more than 432,000 tonnes annually, according to the agriculture ministry; in FY 2021/22, Nepal produced 422,703 tonnes of tomatoes on 22,911 hectares.

However, Nepal still imports a large quantity of tomatoes from India every year. The latest data from the customs department shows the country imported 42,105.60 tonnes of tomatoes totalling ₹610.86 million in FY 2022/23.

Ironically, Nepal has to import tomatoes from India as the domestic production is not enough to cater to domestic demand.

Impact of exporting the vegetable

With the surge in Indian exports, the shipment of tomatoes to Kathmandu has declined by 50%.

According to Binay Shrestha, information officer at the Kalimati Fruits and Vegetable Market Development Board, the daily supply of tomatoes to the market has fallen to 35 tonnes from earlier 60 tonnes. Shrestha said that the local market in Kathmandu is currently getting tomatoes from three neighbouring districts -Kathmandu, Bhaktapur, and Lalitpur.

While the recent surge in tomato exports to India has given some relief to farmers, there are questions over the long-term export potential to the southern neighbour. Nepal has long requested India to facilitate the exports of vegetables including tomatoes by adding them to India's plant quarantine order list. Agriculture Minister Beduram Bhusal during his recent trip to India had made the same request to the Indian authorities.

Ironically, earlier this week, Nepal abruptly faced a shortage of onions after New Delhi slapped a 40% export tax on the vegetable.

“The new tariff has severely affected Nepal as several traders in Kalimati fruit and vegetable market… reported a sudden scarcity of onions,” The Kathmandu Post reported.

Nepal, according to reports, imports 99% of its onion requirements from India.

The crisis, however, seems to have eased after Nepali traders resumed importing onion from India on August 24, a Press Trust of India report from Kathmandu said.

It is amply clear that Kathmandu and New Delhi need to work out modalities for a smooth import and export of these two vegetables, which are widely used in both countries.

Mukul Humagain is a Nepal-based journalist

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