Prices of agricultural commodities fall

Prices have fallen up to 20% since April despite delay in rains

Prices of agricultural commodities have fallen up to 20 per cent since April, despite the delay in rains and the consequent fall in sowing area this kharif season.

While the price of RBD (refined, bleached and diodised) palmolein plunged 20 per cent to Rs 48.8 a kg on rising imports from Indonesia and Malaysia, maize prices fell 18 per cent to Rs 12.15 a kg.

Abundant supply of rice and wheat kept cereal prices under check. This kharif season, the government released an additional 10 million tonnes (mt) of wheat and five mt of rice into the open markets to create room for procurement in Food Corporation of India godowns.

On several occasions, Food Minister Ram Vilas Paswan has reiterated the government won’t allow prices of agricultural commodities to rise this festive season. By delisting fruits and vegetables from the Agricultural Produce Marketing Committee and bringing onions and potatoes under Essential Commodities, the government has successfully made stockists fear raids and seizures. This has resulted in release of adequate quantities into the market.

A Rabobank report said a bumper crop in the US this season added to the bearish global sentiment, with yields projected to rise to their highest levels. An increase in acreage in 2015-16 was likely to lead to a fall in prices, with wheat prices expected to remain low in the September-December quarter, the bank said.

With a gradual recovery in the monsoon, agricultural production is estimated to be higher than last year’s. For 2013-14, food grain production in India is estimated at 264.77 mt, compared with 257.13 mt the previous year, according to the fourth advanced estimates by the Ministry of Agriculture. As the government has huge quantities of food grains, a bumper crop this season will hit the sentiment.

“Food prices continue to remain high and are likely to put pressure on inflation. The sub-normal start to the monsoon season this year has pushed up the prices of food articles — horticulture crops (fruits & vegetables), milk (partly attributed to increased cost of fodder) and spices & condiments,” said Madan Sabnavis, chief economist, CARE Ratings.

With the monsoon picking up pace, sowing area has seen a steady increase. As of September, 95 per cent of the usual kharif acreage has been sown. However, the area under cultivation this season is three per cent lower than in the previous year.

Abinash Verma, director-general of India Sugar Mills Association, said the country was facing 7.5 mt of carry-over stocks, with 2.5 mt of exportable surplus. In the absence of government support, prices were unlikely to rise, he added.