Poor Market Intelligence Impacts Food Prices

The frequent rise in the price of commodities, especially onions, has seen little to no effective response from policymakers

- G Chandrashekhar

After two years of subdued market conditions, the prices of several essential commodities — vegetables, vegetable oils, pulses, and sugar, to name a few — are heading northwards. Onion prices, for instance, have gone through the roof, as it were, creating a political backlash. Under the lead of palm oil, edible oil rates are markedly up as compared to even six months ago. Prices of pulses and sugar are rising too.

Will the rising price trend continue? Are high food prices here to stay, or is this just a transient phenomenon? As far as vegetables, pulses, and sugar are concerned, whether aberrations have surely played a significant role in damaging crops this year. An extended SouthWest monsoon and untimely rains during the whole of October have resulted in lower crop harvest, deterioration of quality and tightening availability.

Low production

Without a doubt, vegetables in general — and onion in particular — have faced nature’s fury. Maharashtra, the country’s largest producer of onion and pigeon pea, has faced harvest losses estimated between 30 and 40 per cent. Nationally, in 2019-20, sugarcane output is down to 378 million tonnes from 400 million tonnes, as per the Union Agriculture Ministry’s first advance estimate. At 8.3 million tonnes, Kharif pulses’ harvest is at a four-year low.