Food commodity prices coming down: Govt

New Delhi, Mar 10 : Prices of major food commodities, including foodgrains, sugar, onion and potato have started coming down due to concerted steps taken by the government. The likely rise in wheat and pulses production in the current rabi and softening international prices are two important developments that will help in a decisive decline in food prices.

The latest crop sowing data shows that wheat and pulses have been grown in more areas than last year. In fact, last year itself was a year of record wheat and pulses production. The satisfactory area coverage of major crops will result in crop production higher than the target and nearing or surpassing the previous records.

The rise in area is mostly due to a proactive strategy partly adopted by the Centre in close coordination with States to offset the kharif losses [due to drought] in rabi. The main thrust of this strategy was on district level planning, supply of additional quantities of seed and fertilizers, advisories to farmers and close monitoring and coordination at all levels. Late monsoon rains in some parts of the country also helped.

When the crops start coming in the market, it will lead to softening of food prices. Higher production will also lead to increased procurement and sufficient foodstocks with government agencies. In the case of pulses, it will also mean less dependence on imports, though imports will continue to be made because of high consumption of pulses in India [which in turn is mostly because of vegetarianism] coupled with their being grown in marginal lands. In the long run, this will also change because the Government has renewed thrust on pulses production.

International sugar prices have softened significantly over the past week. In barely three trading sessions, white sugar prices have dropped by nearly 12pc in the last five days. May 2010 prices were USD 670 per tonne a week ago and they are now USD 600 per tonne. Raw sugar prices for may 2010 were USD 570 a tonne a week ago and they are less than USD 500 today.

White sugar prices for delivery in October '10 and December '10 were ruling at levels above USD 600 per tonne last week; they are down to USD 520 - 530 per tonne today.

There are clear signs of further softening of international sugar prices in the weeks ahead.

Prices of urad, moong and tur have softened in the international market. The Myanmar crop has come in and deliveries are taking place in Singapore. Prices of urad, moong and arhar dropped by USD 75 to USD 150 per tonne during the last 2-3 weeks. At present, urad is being contracted at USD 900 - 950 per tonne. Moong is being sold at USD 1050 per tonne and arhar at around USD 950 per tonne. Current indications are that prices shall continue to soften in the next few months as increased quantities are delivered by Myanmar as well as after fresh supplies come in from East Africa.

While replying to debate on price rise in Rajya Sabha today, the Agriculture and Food Minister clarified that there are enough stocks to meet the demand of PDS and welfare schemes. He also showed with the help of retail prices of common food items that prices are indeed coming down. He explained that to provide foodgrains at affordable rates to ration card holders, the Centre has not raised Central Issue Price for wheat and rice for the last six years while the minimum support prices (MSP) to farmers have been raised substantially.

Points emerging in AM's reply to debate on price rise in the Rajya Sabha today



· Severe drought and floods led to low kharif production but efforts made to compensate the loss in rabi

· High food inflation is matter of concern but it is coming down

· It is not correct that food inflation is high only in India. As per FAO report, many nations have been reeling under high food inflation

· Foodgrain production rose in 2009 but production of pulses and sugar was down. Luckily, rabi prospects are bright as sowing has been better. The overall crop production scenario is encouraging.

· MSP for crops has been raised over the years: for wheat, from 640/q in 2003 to 1100/q (72pc rise) and for paddy, from 560/q to 1000/q (79pc rise). This has led to rise in production so that we are able to meet the rising demand.

· CIP has not been raised since 2002 despite rise in MSP.

· In the government's minimum programme, it was stated that terms of trade will be made favourable to the farming community. Government achieving that by raising MSP.

· Government wants foodgrains for vulnerable sections of the society. We have sufficient stocks to meet the demand of PDS and welfare schemes.

· Additional allocation of foodgrains is made to states for PDS and through OMSS to bulk users at rates very near MSP. The government flour mills cannot be given wheat at the rates at which wheat is being given to BPL families

· There is shortfall in edible oils, but imports are allowed. All taxes and duties on import have been removed and exports banned. Government provides upto Rs 25 /kg subsidy if states buy imported oils from PSUs for PDS. Some states have made use of it.

· Sugar: against production of 160 lakh tonne, demand is 230 lakh tonne, so there is shortfall. After taking into account the carryover stocks, there will be shortfall of about 50-55 lt. In fact, about 50 lt raw and white sugar has already arrived in India. Retail prices have come down from Rs. 48 to about Rs. 38-40. There has been no scam; governmnet has not imported or sold a single kilo of sugar

Prices of major commodities are coming down.