Stabilising food prices: Focus must be on resilient crop varieties

The early arrival of the monsoon, which is expected to be above normal this year, will aid activity in the agricultural sector. However, output depends on several factors, and changing weather patterns can create longer-term challenges. In this context, a new research article, published in the Reserve Bank of India’s latest monthly bulletin, for example, has flagged how weather anomalies, ie deviation in rainfall and temperature from their normal levels, are disrupting supply chains and fuelling sharp spikes in vegetable prices in India. Using the data spanning from April 2014 to March 2024, it concludes that food-price volatility, especially for vegetables, is often exacerbated by supply-side conditions, particularly temperature and weather shocks. Temperature anomalies are found to have an immediate impact in comparison to rainfall vagaries. In fact, estimates suggest that a one unit rise in temperature causes a month-on-month change in the vegetable consumer price index (CPI) to increase by 1.3 per cent, relative to only 1.24 per cent increase in response to a one unit rise in rainfall. Since 2022, temperature movements have assumed an even greater role in influencing vegetable prices.

 

Notably, temperature shocks affect crops during critical growth stages. This year’s Economic Survey also highlighted how extreme weather conditions disproportionately affected perishable food items. Unlike cereals and pulses, vegetables have shorter production cycles and are highly vulnerable to sudden weather fluctuations. An increased incidence of heatwaves and high temperatures leads to water stress in crops, reducing yields. Meanwhile, unseasonal rain and floods tend to damage standing crops and disrupt supply chains, leading to severe post-harvest losses. Vegetable inflation has been the most volatile among all CPI food sub-groups and affects the headline inflation rate immediately. For instance, the 2023-24 El Nino year, marked by high temperatures and erratic rainfall, saw the first drop in vegetable output in a decade. This coincided with high inflation in essentials like tomatoes, onions, and garlic. The decrease was part of a broader dip in overall horticultural production, although fruit output increased. 

India is the second-largest producer of vegetables and fruits in the world, and horticulture production has been steadily increasing over the years, but a sudden drop in output, owing to erratic weather patterns, remains a concern. It not only hurts the end consumer but also reduces farm incomes, especially for small and marginal farmers. What makes price volatility especially concerning is its asymmetric nature. Prices soar quickly during shortages but do not fall as sharply when conditions normalise. This stickiness can be attributed to fragmented supply chains, high post-harvest losses, and inadequate cold-storage capacity. Therefore, to address the issue, India should scale up the adoption of temperature-resilient crop varieties. There is a need to accelerate the deployment of heat- and drought-tolerant vegetable varieties, supported by initiatives like the National Mission on High Yielding Seeds. In addition, there is also a need to improve market linkages through better logistics, storage, and digital platforms. India can also look to international best practices. Countries like Israel and the Netherlands have pioneered greenhouse vegetable cultivation, which moderates the effects of weather and ensures stable yields the year round. Ultimately, stabilising prices can safeguard both farmer incomes and consumer welfare.