Statsguru: Are consumers paying exorbitant price for farm products?

Agriculture Minister Shivraj Singh Chouhan recently flagged a gap between prices paid by consumers and those received by farmers. Often, wholesale and consumer food prices are compared to broadly assess this. But the wholesale rates do not exactly reflect the prices farmers receive.

 

While one may take various commodities to gauge the additional prices consumers pay over wholesale rates, here we have assessed seven commodities – wheat and rice (cereals), mustard oil and vanaspati oil (edible oils), tomatoes, onions and potatoes (TOP).

 

Consumer price index (CPI) -based food inflation has been higher than its wholesale counterpart in four of the six years from 2019 to 2024 (Chart 1). Of these, retail inflation was higher by less than one percentage point in one year (2021).

 

Retail prices in cereals were 11-17 per cent higher than wholesale rates (Chart 2). 

 

Consumers paid higher prices for edible oils than wholesale rates by sub-10 per cent in most cases (Chart 3).

 

The difference is much higher in the case of TOP. However, in absolute terms, it never reached Rs 10 a kg (Chart 4). 

 

In the 36 months when retail inflation was higher than six per cent, wholesale inflation was also so, except in 2020 (six months) and 2023 (three months). (chart 5) 

 

In the five months that saw the highest retail prices in TOP, the difference between the two rates in percentage terms remained within the range witnessed by annual average yearly rates. (chart 6) 

 

As such, consumers often do not pay much higher prices than wholesale rates. It is quite possible that price changes between the farm and wholesale centres result in farmers’ plight.