Spiralling Food Price Needs to be Checkmated Before It Crosses the Tolerance Levels!

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  • Not only the global community but also the Indian citizens too should be wondering what is happening in their lives as one disruptive challenge after another keeps bombarding them without any respite. No sooner did the people start heaving a sigh of relief from the debilitating effects of the dreaded novel coronavirus, than the ill-timed Russian invasion of Ukraine has further exacerbated the already dire situation by palpably disrupting the global supply chains on some of the most essential commodities. With the war signing no signs of wrapping up, the global community is justified in showing unbridled apprehensions as to what is in store for them in the coming days. Indian citizens to are feeling the heat as the food prices are on the ascendency. Let’s delve into the same in detail.

PC: V Venkateswara Rao

  • As reported, Punjab is expected to contribute about 13 million tons of wheat in the ongoing procurement exercise of the Union Government. Worryingly, crop arrivals in the market are tapering and as such, it appears procurement is unlikely to exceed 10 million tons. Moreover, Haryana has banned the inter-district movement of dry fodder made of wheat straw and other materials. These developments are sure signs that the agricultural market is tightening as all the stakeholders adapt to both local and international forces. The Food & Agricultural Organisation (FAO) cereal and vegetable oil price indices hit record highs in March partly explaining why some links of Punjab’s agricultural chain are reportedly holding back stocks.
  • Mind you, India’s wheat and edible oil markets are influenced by international events through the trade channel as the Russia-Ukraine war may have undermined global food security because of the region’s criticality in the supply of wheat, sunflower oil, maize, and fertilizer. Nonetheless, the upward trend in agricultural prices predates the conflict hitting an inflection point much before. Reports suggest that food inflation declined between May and September 2021. Since then, it has seen a steady increase as the consumer food price index was 7.68% in March, higher by seven percentage points than September 2021 reading. As such, rising food prices have pushed up the headline inflation as core inflation has been sticky at around 6% for a year.

PC: Money Control

  • Thus, the combined pressure on prices led to headline inflation of 6.95% in March, above RBI’s inflation target’s upper limit of 6%. Food price inflation is worrisome as it has adverse consequences on a large section of the population which has not fully recovered its purchasing power from the economic shock of 2020-21. Unlike oil, the level of domestic control over most items of the food basket is significant allowing the governments to mitigate the impact of food inflation. For this to happen, the Union Government needs to regularly release the food grains to control cereal prices as also persuade states to refrain from bans on movement of agricultural products. This will cushion the worst impact of international trade disruptions as producers prioritise protecting their domestic markets.

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Krishna MV
Krishna is a Post Graduate with specialization in English Literature and Human Resource Management, respectively. Having served the Indian Air Force with distinction for 16 years, Armed Forces background definitely played a very major role in shaping as to who & what he is right now. Presently, he is employed as The Administrator of a well known educational institute in Bangalore. He is passionate about sharing thoughts by writing articles on the current affairs / topics with insightful dissection and offering counter / alternate views thrown in for good measure. Also, passionate about Cricket, Music – especially vintage Kannada & Hindi film songs, reading – non-fictional & Self-Help Books, and of course, fitness without compromising on the culinary pleasures.