Dry spell: Food prices on fire

It's raining worries for the common man.

Prices of essential commodities, including foodgrains, have surged 8-10 per cent in just three days, because of deficient rains and on concerns that the farm output this kharif season would be hit badly.

Prices of rice, wheat, sugar, potato, tur and urad have all gone up sharply (see table).

India Pulses and Grains Association chairman Pravin Dongre said the government was also playing a role in the supply shortage.

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For example, the government was saddled with 10 million tonnes of excess wheat to be supplied through open-market sale, but states and bulk consumers were not lifting this, causing a supply squeeze.

In case of edible oils, prices are moving up in line with global markets. In the US, drought-like weather conditions have pushed oilseed prices.

Around 60 per cent of India's 15.5-mt edible oil consumption is met through imports.

A grain wholesaler based in Navi Mumbai's Vashi said a majority of traders was hoarding foodgrains and other essential commodities like sugar in anticipation of higher prices ahead.

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The food and consumer affairs ministry, on its part, has put exports of sugar and soymeal deoiled cakes under lens.

It is also watching the export pattern of onions and potatoes and may recommend either complete ban or calibration of exports of these commodities through a high minimum export price, or a cap, if domestic prices continue to soar.

Officials, however, add that a higher MEP did not work for onions this year, as global demand was high due to failure of crops in some countries.

Official sources said output estimates for many kharif crops had been hit following a slowdown in the sowing pattern.

On the other hand, most agri-commodities were under open general licence -- or, free for exports.

If the situation warrants, a note may be prepared for the EGoM to decide, though no final decision has been taken so far.
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To contain the domestic sugar prices, the government has decided to release 266,000 tonnes more sugar in the open market by converting levy sugar (for supply through ration shops) stock for the 2008-09 and 2009-10 seasons into non-levy sugar to be sold by mills by August 2012.

For onions, the National Horticultural Research and Development Foundation has reported availability till November would be from stored stock.

This is because the early kharif crop in Andhra Pradesh, Karnataka and Maharashtra's Satara and Dhule districts has fallen due to shortage of underground water/rains.

The seed sowing of kharif onion in the producing states, however, continues.