Addressing Rising Food Prices

A Amarender Reddy, Tulsi Lingareddy

Food output needs to be raised with R&D support.

India’s food inflation shot up to a 41-month high of 11.5 per cent in July 2023. It has come down a tad to 9.9 per cent this August. It was 4.5 per cent in June, and 7.6 per cent in August 2022.

Price trends of major food items suggest that food inflation is much more widespread, and may not be as transitory as that of tomato prices.

Also, food grains witnessed high inflation in recent months despite record output of 330 million tonnes in 2022-23, as per the Third Advanced Estimates by the Ministry of Agriculture. Further, uneven distribution of monsoon and prevailing weak El Nino conditions are potential risks to crop production in 2023-24, which could subsequently put pressure on food prices. As high food inflation affects food and nutritional security, especially of the economically weaker sections, there is an urgent need to devise requisite policy measures to address the challenge of self-sufficiency in food production.

The steady rise in the prices of pulses to a high of 13.3 per cent in July and 13 per cent in August, the highest levels since March 2021, is a cause for concern. Although total pulses production was slightly higher at 275 lakh tonnes in 2022-23 (273 lakh tonnes in 2021-22), tur and urad output declined by about 18.7 per cent and 6 per cent, respectively.

Fall in acreage

Further, sowing in the kharif season as of end-August indicates a fall in acreage under urad by 13.8 per cent, moong by 8 per cent and tur by about 8 per cent. These trends suggest that inflation in pulses may gain momentum in the coming months.

Unlike edible oils, the scope for augmenting domestic supply of pulses through imports is limited. Hence, there is an urgent need to expand pulses production through adoption of yield-enhancing technology. Moreover, pulses cultivation can promote sustainable agriculture with tremendous positive externalities including enriching soil fertility, ‘more crop per drop’ , and short crop duration. Hence, pulses production may be adequately incentivised in the short-term, while developing high yielding climate adaptive varieties in the long-term.

Surprisingly, cereals and products also registered double-digit inflation for a year and stood at 11.9 per cent in August, despite record production of rice and wheat at 135.5 million tonnes and 112 million tonnes respectively, in 2022-23. With stagnant yields, increased weather aberrations and limited scope for expanding acreage, it is imperative to develop high-yield and climate-resilient varieties and practices to meet the rising demand and ensuring food security.

Although oils and fats have been showing a deflationary trend for the past 11 months, this may reverse with the start of the festival season. Despite notable increase in oilseeds’ production, about 50 per cent of the domestic demand for edible oils is met through imports. The dependence on imports may rise further, unless domestic production expands.

Indian agriculture is fraught with falling crop yields, deteriorating soil fertility, loss of groundwater, etc. To address these, it is imperative to enhance funding for agricultural R&D to about 3 per cent of agricultural GDP from the existing less than 1 per cent.

Further, the National Adaptation Fund for Climate Change (NAFCC) needs to play a crucial role in equipping Indian agriculture with climate-resilient practices, technologies and crop varieties. But the funds for NAFCC has decreased significantly from ₹118 crore in 2015-16 to ₹34 crore in 2022-23.

Hence, there is an urgent need to enhance the funding for agricultural R&D and NAFCC to tackle the risks associated with climate change and, thereby, help ensure self-sufficiency in food and nutritional security.

Amarender is Joint Director, School of Crop Health Policy Support Research, ICAR, Raipur, and Lingareddy is Consultant Economist – Sustainable Finance, Markets and Agriculture. Views are personal.

The article was first published in The Hindu Business Line as “Tackling food inflation” on September 12, 2023.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organization. 

This article was posted by Mansi Garg, a research intern at IMPRI.

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