India’s food inflation, after decelerating to a 13-month low of about 5.4 per cent in July and 5.6 per cent in August 2024, once again jumped up to 9.2 per cent in September 2024.

The apparent slowdown in food inflation during July and August 2024 was largely on account of high base effect in almost all sub-groups of the Consumer Food Price Index (CFPI).

The inflation of vegetables returned to higher trajectory of 35.9 per cent in September 2024 from 6.8 per cent and 10.7 per cent registered in July and August 2024 respectively, as the high base effect diminished.

Persistence of high food inflation adversely affects vulnerable sections. On the supply side, farm output needs better policy support.

Behind high food inflation

Inflation of cereals and products remained elevated in the range of 7 to 17 per cent for over two years, since August 2022. Further, prices of pulses and products recorded a double digit increase ranging from about 10-21 per cent since June 2023. Tur (red gram), chana (Bengal gram) and urad (black gram) have led this increase.

Similarly, prices of vegetables also registered a steep and persistent increase of more than 20 per cent during most months after July 2023. On the other hand, oils and fats witnessed a deflationary (negative inflation) trend since February 2023 supported by cheap imports with sharp reduction in import duty. However, the inflation of oils and fats turned positive with a 2.5 per cent increase in September 2024.

Further, the increase in customs duty on imports of edible oils with effect from September 14, 2024 may drive the inflation of oils and fats up in the coming months.

To promote domestic production, minimum support prices (MSP) of major pulses and oilseeds were increased significantly by more than 20 per cent, barring chana, during the last five years (see graph). But, only moong (green gram), rapeseed and mustard and soyabean witnessed expansion in their cultivated area by about 13 per cent, 34 per cent and 9 per cent, respectively, while the rest of the major pulses and oilseeds posted a fall their area. Further, MSP of major pulses and oilseeds for kharif 2024-25 was increased by about 6-8 per cent but, the progress in their kharif sowing till October 7, 2024 indicated a limited increase in selected crops. Therefore, the impact of MSP on acreage is somewhat uncertain, while yields have not really risen.

Low yields

The per hectare yields of major pulses and oilseeds including tur, urad, moong, soyabean and sunflower have remained low and stagnant for over four decades compared to the rise in yields of major cereals, groundnut, chana and cotton. The cultivation of these crops is largely confined to un-irrigated and marginal lands. This kharif, area under pulses expanded moderately by 7 per cent, while that under oilseeds increased only by 2.7 per cent over the same period last year. Among major pulses, only tur and moong witnessed a significant increase, whereas urad registered an 8 per cent. Among major oilseeds, only groundnut registered an increase in area by 9 per cent, while soyabean posted marginal increase of 2.5 per cent till October 7.

The apparent reluctance of farmers to shift for cultivation of oilseeds and pulses could plausibly be on account of uncertainties due to lack of procurement at MSP. Prices of oilseeds, particularly soyabean and sunflower have been falling steadily over the past two years, as evident from their wholesale price trends.

There is limited scope to expand pulses imports given their limited global availability. Requisite measures are needed to enhance crop yields with climate change resilient technologies and practices, while promoting optimal use of scarce natural resources like soil and water. It is equally vital to ensure that farmers receive remunerative prices by strengthening post-harvest management, marketing infrastructure and logistics.

Amarender Reddy is Joint Director, ICAR-National Institute of Biotic Stress Management (ICAR-NIBSM), Raipur. Tulsi is Senior Economist, Sustainable Finance and Agriculture, Mumbai. Views expressed are personal

Related Topics