Economics of the vada pav

Prices of pulses and vatana, ingredients that go into making your favourite vada pav, go through a 150 per cent hike from the farmer's hand till it reaches the retailer

You don't really mind paying the eight or less bucks for your vada pav, do you? But the quick and affordable snack easily found on the city's streets could actually cost you less. But that is in an ideal world.

In this world, you start by considering that the average production cost of a vada pav comes to Rs 3.10 if stall owners use besan (or chana dal flour), the basic ingredient used to make the vada's covering.



But most sellers substitute it with white vatana (peas) flour, because it is cheaper.

"Besan is more expensive. We mix the flour as it does not change the taste too much," admitted a stall owner in Parel.

With the mixed flour, a vada pav's cost is suppressed to Rs 2.50. But the profits are not passed on to you.

However, you don't begrudge the vada pav walla his measly profit because the snack tastes the same and is not any the unhealthier for the substitution.

Now suppose that the seller could get vatana at a cheaper price which is how it would have been had hoarders not cornered the market. Then the snack would cost you less.

But by the time it reaches your household, or the vada walla round the corner, it undergoes a 150 per cent hike in prices.

How does this giant leap come about?

Inflated price


MiD DAY carried out a detailed investigation, identified the main players in the market, and tried arriving at the possible reasons for the prices jacking up.

We traced the entire journey, right from the time is it imported from Canada and Australia until it reaches your neighbourhood grocery store or supermarket.

White vatana, most popularly available as ragda on the street side pani puri stalls in the city is priced between $240 and $280 for a metric tonne, or roughly Rs 11,000 to Rs 13,000 for every 1,000 kg.

This translates to an average price of Rs 12.6 per kg. And, mind you, this is after the cargo is imported, unloaded, and cleared through customs.

Then begins the trade of vatana. Once the consignment is forwarded to small-scale industries in and around Jalgaon and Nagpur for cleaning purposes, a cost of Rs 5 per kg is added to the base price of Rs 12.60.

By the time it is sent back to Mumbai, the base price increases to Rs 18/kg, with transport and other costs.

Then comes its storage. "There are 10 main godowns in the city," informed a trader. Explaining the storage costs incurred, he said the importer pays Rs 6 to store a gunny bag for a month. "The warehousing cost is Rs 5 per bag in Navi Mumbai and a brokerage of Rs 6 is added per bag," he explained.

Hoarding

Here begins the dirty game of hoarding and deliberate price fluctuations. MiD DAY investigations indicated that, to all practical purposes, traders and brokers have cartelised the market. They call the shots and decide the price.

There are four main traders in Mumbai who deal in this volatile market, and they have cornered this buyer's market.

Consignments are not lifted from the godown for months if the prices do not suit the brokers' whims. In fact, an importer is often forced to sell at lesser profits to avoid huge losses.

There have been cases where brokers have rejected entire consignments in a bid to force importers to sell at distress prices.

"It is almost like stocks. The broker keeps fluctuating the prices as per their whims to make a quick buck," said an importer, "It is very likely that importers get caught in a vicious circle after offering credit to the dalals. It is a rat trap. One cannot get out of it," he added.

After all that it undergoes, what do you think happens to the vatana? Its prices balloon up to about Rs 50 for a kg, a straight 150 per cent hike from its base price when it first arrived in the country.

And what about your vada pav? Well, let's just say it could have been cheaper had the seller been able to get the vatana at a cheaper price.

... and also with pulses

The same trade tactics apply to other pulses as well, including tur, moong, and masoor.

In the last two years, the steep prices of pulses made a simple meal of dal chawal somewhat of a choice food when the prices hit the roof. Lentils, a necessity in almost every household, cost between Rs 50-Rs 85/kg.

The cheapest dal, chana dal, costs around Rs 50, and the priciest, tur dal, is the highest at around Rs 85.

The prices of lentils have skyrocketed in only the last couple of years, before which prices varied between Rs 25-Rs 45.

Price stats

1. A 20-foot long container laden with 25 tonnes of loose tur and masoor dal is valued around $2,000 or
Rs 90,780.

2. At the import price, the average cost of white vatana is between $240 and $280 per metric tonne, or Rs 10,897 to Rs 12,712 foru00a01,000 kg.

2.5 lakh
Tonnes of vatana is what the city consumes annually

1,000
Tonnes of vatana is headed for flourmills across the state each day

In a month-long extensive campaign, MiD DAY will trace the tangle of farmer-middleman-hoarder-politician nexus that is ultimately leaving a sour taste in your mouth.