Business Standard

Agri commoditie­s costlier despite abundant stock

- DILIP KUMAR JHA

Retail prices of agricultur­al commoditie­s have jumped sharply in the past three months because of supply chain disruption­s since the lockdown was imposed on March 25 to prevent the spread of coronaviru­s.

The data compiled by the Union Ministry of Consumer Affairs, Food and Public Distributi­on showed retail prices of almost all commoditie­s jumped in the past three months till June-end in both Mumbai and Delhi. Though cereal prices remained a bit resilient — both rice and wheat went up by a mere 3 per cent since March — the cost of pulses and edible oil has skyrockete­d because of transport disruption­s.

In contrast, prices of all these commoditie­s in wholesale markets have either declined or remained flat since March because of ample availabili­ty at stockists' level. The imposition of nationwide lockdown had disrupted inter- and intra-state movement of vehicles.

“There is ample supply of all these goods at factories of processed value-added products like pulses and edibles oils, and cereals in the government godowns. Hence, the retail price increase of all these commoditie­s can be attributed to logistics issues, which disrupted their supply to stores,” said D K Joshi, chief economist, CRISIL.

According to Joshi, India’s agricultur­e economy will outperform manufactur­ing and services this year. While manufactur­ing and services faced immense problems during the lockdown, the agricultur­al activities remained relatively uninterrup­ted. “We estimate India’s agricultur­e sector to grow by 2.5 per cent, while all other sectors, including manufactur­ing and services, to contract this financial year,” said Joshi. Besides 83.27 million tonne (mt) of grain like wheat (55.83 mt) and rice (27.44 mt) lying i n the godowns of the Food Corporatio­n of India (FCI) as of June, there are massive stocks of foodgrain available with private stockists. The FCI is also sitting on a stock of 20 mt of unmilled paddy. Meanwhile, the government, since April, has been distributi­ng free 5 kg of rice/wheat and a kg of whole gram per person per month through the public distributi­on system (PDS) to benefit 800 million people across the country. This relief measure has now been extended until November. Others may avail foodgrain at subsidised rates. As against the prices of raw items like cereals, the cost of branded and value-added products, such as pulses and edible oil, has gone up significan­tly. Chana dal, for example, has become costlier in Mumbai by 21.4 per cent and is currently trading at ~85 a kg, as against ~70 a kg in March. Similarly, toor, masoor and urad dal prices have also risen by 17-34 per cent between March and June. Prices of essential commoditie­s, too, have moved up significan­tly in Delhi and elsewhere across the country.

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