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With India reeling under tomato shortage, the export of Nepali tomatoes to the southern neighbor has surged dramatically in the past one month. Nepal has exported 670 tons of tomatoes to India in Shrawan (mid-July to mid-August).

The preliminary data of the Department of Customs shows tomatoes worth Rs 8.7m were exported from Nepal to India. According to traders, the shortage of tomatoes in the Indian market has increased demand for Nepali tomatoes, resulting in a sharp rise in exports. The demand for Nepali tomatoes has increased especially from border Indian cities.

The Customs Department officials said major customs offices saw a huge shipment of tomatoes from Nepal to India in the past one month, especially through Birgunj, Bhairahawa, and Kakarbhitta customs. According to Shovakant Poudel, Director General at the Customs Department, tomatoes were exported to India in high volume in the last one month. According to traders, 15-20 tons are being exported to India from Birgunj, the main custom point of the country.

Due to substantial exports of tomatoes by Nepali traders to India, the domestic markets are grappling with supply limitations, leading to significant price surges. The wholesale price of large tomatoes rose steeply by a staggering 385 percent, from Rs 35 per kg to an astonishing Rs 170 per kg.

With traders preferring exports to India, the supply of tomatoes to Kalimati Fruits and Vegetable Market has declined by 50 percent. “The supply of tomatoes has fallen to 35 tons per day from earlier 65 tons,” said Binay Shrestha, information officer at the Kalimati Fruits and Vegetable Market Development Board. According to Shrestha, the local market in Kathmandu is currently getting tomatoes from three neighboring districts—Kathmandu, Bhaktapur, and Lalitpur.

The tomato exports to India surged in the last two months as the southern neighbor experienced a shortage of tomatoes. While Nepal has been requesting India to facilitate the imports of vegetables including tomatoes, the southern neighbor has restricted the tomato imports.

However, faced with a shortage and steep price rise, India in the first week of August lifted import restrictions on tomatoes. The relaxation of quarantine rules for Nepali tomatoes will last till October 31, according to officials of the Ministry of Agriculture and Livestock Development.

Tomato production decreased in India, especially in the top 10 tomato-producing states - Andhra Pradesh, Madhya Pradesh, Karnataka, Gujarat, Odisha, West Bengal, Telangana, Chhattisgarh, Maharashtra, and Bihar, leading to a steep price rise.

Given the Indian restriction, tomatoes have never been among Nepal’s significant export items to India, despite the country’s export of various agricultural products like tea, cardamom, cabbage, and ginger. In the fiscal year 2022/23, the top three export commodities to India were refined palm oil, soybean oil, and cardamom.

However, tomato exports to India did surge in the last fiscal year to 1094 tons compared to 40 kg in 2021/22.  Interestingly, these 1094 tons of exports happened in Ashar (mid-June to mid-July), which is the last month of the Nepali fiscal year.

Nepali farmers grow tomatoes on 22,600 hectares and produce more than 432,000 tons annually, according to the Agriculture Ministry.

According to the Agriculture Ministry, Nepali farmers cultivate tomatoes across an area of over 22,000 hectares and produce over 400,000 tons annually. In 2021/22, Nepal produced 422,703 tons of tomatoes on 22,911 hectares.

However, Nepal still imports a huge quantity of tomatoes from India every year. The latest data from Customs Department shows the country imported 42,105.60 tons of tomatoes totaling Rs 610.86m in 2022/23.

The Nepal Stock Exchange (NEPSE) plunged by 12. 93 points to close at 1,998.28 points on Monday.

Similarly, the sensitive index dropped by 1. 50 points to close at 382. 62 points.

 A total of 4,163,872-unit shares of 272 companies were traded for Rs 1. 40 billion.

Meanwhile, Laxmi Laghubitta Bittiya Sanstha Ltd and Kutheli Bukhari Small Hydropower Limited were the top gainers today with their price surging by 10. 00 percent.

Likewise, Menchhiyam Hydropower Limited was the top loser with its price dropped by 7. 99 percent.

At the end of the day, the total market capitalization stood at Rs 2. 99 trillion.

The Indian government on Saturday imposed a 40 percent additional duty on the export of onions ‘to check price rise and improve supplies in the domestic market’, sending distress signals in Nepal and other countries in the neighborhood that have been grappling with rising inflation, food inflation in particular. As per the Nepal Rastra Bank’s annual report released on Aug 18, annual average inflation remained 7.74 percent. 

“This notification shall come into force with immediate effect, and will remain in place till 31 Dec, 2023,” reads the Finance Ministry notification. The export duty comes amid reports that onion prices are likely to rise in September.

Media reports quoted Consumer Affairs Secretary Rohit Kumar Singh as saying that the step is meant to improve the domestic availability of onions and contain the price rise.

The move comes amid the Narendra Modi government’s plans to keep a buffer stock of three lakh tonnes of onions for the 2023-24 season against 2022-23’s buffer stock of 2.51 lakh tonnes.

The Indian government has already imposed restrictions on the export of wheat and rice after reducing import duty on edible oils as part of its effort to provide relief to the people.

The export tax is expected to increase prices in countries like Nepal, which depend on Indian onions that cost around Rs 65 per kg in the Kalimati fruits and vegetable market before the tax surge.

With the government of Nepal already imposing a 13 percent value added tax on onions, the price of onions is almost certain to go further up after the Indian move. 

“As Nepal is dependent on India for onions, the latest export duty hike will increase onion prices in the domestic market also. The hike has taken effect from Saturday night, meaning fresh consignments enter Nepal with a hiked price. We don’t have domestic production, so the onion price in Nepal will include the hiked export tax,” says Binay Shrestha, information officer at Kalimati fruits and vegetable market.

Recent days have also seen tomato prices shoot up in Nepal, with the prevailing scarcity in India pushing tomatoes across the border, as if rising prices of rice and wheat were not enough.

With the rise in the prices of onions, tomatoes, rice and wheat along with petroleum products that fuel transportation, the Nepali kitchens are becoming more and more expensive to run.

The gold is being traded at Rs 110, 300 per tola in the domestic market on Monday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, tejabi gold is being traded at Rs 109, 750 per tola.

Similarly, the silver is being traded at Rs 1,390 per tola today.