INTERVIEW:Consumer affairs secy sees food price mostly stable this yr

Informist, Tuesday, Feb 7, 2023


–Consumer affairs secy: See vegetables, pulses prices stable this year

–Expect wheat prices to fall further

–Will procure tur over MSP via e-auction

–NAFED to procure 250,000 tn onion in FY24 too

–Expect onion crop to be bumper 2023-24

–NAFED to continue procurement of pulses

–Imported tur procurement halt only temporary

–To procure tur, urad irrespective of MSP


By Arunima Bharadwaj, Tanya Rana, and Priyansh Verma           


NEW DELHI – The prices of key food items, including vegetables and pulses, are likely remain stable in 2023 due to prudent policy management by the government, according to Consumer Affairs Secretary Rohit Kumar Singh.


"Prices of commodities that we track will remain stable," Singh told Informist in an interview. The Department of Consumer Affairs tracks prices of 22 commodities, including wheat, rice, pulses, edible oils, and vegetables.

Noting the recent fall in domestic wheat prices, Singh said that he expects them to further ease. "Prices (of wheat) are a function of demand, supply and sentiments, and all three are positive in terms of falling prices. I think prices will fall further," he said.


"I am not the custodian of inflation numbers, but since I deal with onions and pulses, I can assure you that prices of these commodities will not go up again in 2023 because of advanced action and prudent policy management," the secretary said. 


India's Consumer Food Price Index accounts for 40% of the overall CPI. The last two CPI data prints of November and December show that India's retail inflation stayed below 6% primarily due to sharp fall in prices of vegetables.


Singh expects CPI to remain stable in the coming months, unless there's some extremity in the weather. "When the peninsula heats up, vegetable supply goes down. But there's arrival of wheat, rice, and inflow of pulses from other countries, which brings in an equilibrium," he said.


On the cut in outlay of the Price Stabilisation Fund to 100,000 rupees from 15 bln rupees in the Budget for 2022-23, Singh said that the fund doesn’t need any additional amount as it has a corpus of 55 bln rupees. 


The Budget has cut the allocation for the Price Stabilisation Fund to 100,000 rupees for 2022-23 and 2023-24. 


Singh said there was a written commitment from the finance ministry that it will provide additional allocation for the fund after it has exhausted the corpus of 55 bln rupees. 


Following are the edited excerpts of the interview:


Q. In November and December, CPI inflation fell below 6% because of a fall in vegetable prices. Do you expect food prices to stay at this level in the coming months?

A. I am not the custodian of inflation numbers, but since I deal with onions and pulses, I can assure you that prices of these commodities will not go up again in 2023 because of the advanced action and prudent policy management.


Q. Can you tell us about prices of potatoes and tomatoes?

A. Prices of potatoes and tomatoes are almost at last year's level. The cold storage stocks are out in December. New crops have started arriving. West Bengal has a good production this year. So availability will not be an issue and the prices of potatoes will also be stable throughout 2023. Tomato prices are volatile throughout the year. They are highly perishable and susceptible to weather. 


Q. Where do you see the price trajectory of onions?

A. Onions, we kept it (price) stable under 30 rupees per kg throughout 2022 because of the buffer we had. We had a buffer of 250,000 tn with NAFED (National Agricultural Cooperative Marketing Federation of India) which we used to keep prices of onion under 30 rupees per kg. This year also, I expect a bumper crop like last year, and we'll be buying 250,000 tn again. I think prices might come down in March because the bulk of the crop will start arriving then.


Q. Is the government satisfied with the fall in prices of wheat due to open market sales? Do you expect a further fall in wheat prices? 

A. We are very happy. Prices are a function of demand, supply and sentiments, and all three are positive in terms of falling prices. I think prices will fall further.


Q. Can you tell us about your model that predicts prices of key commodities?

A. We have a model that predicts prices of key commodities over the next 60 days. This model is based on Facebook Prophet Library software. You do analytics in terms of how prices behave in the next 45-60 days of any commodity where we have legacy data – from onions to pulses. The predictions that I gave were based on this model.


We've been using this tool since past four-five months. Till now, we have found that our predictions of prices have broadly come true. The error is low. We monitor 12 markets for price predictions in different geographies of the country.


Q. The government was likely to entrust Food Corp of India with price support and buffer stock management operations for pulses. Is the government planning to merge the price support scheme and price stabilisation fund for pulses so that these can be implemented by a single ministry and agency?

A. Things would remain as it is, pulses will be procured through National Agricultural Cooperative Marketing Federation of India followed by National Cooperative Consumers' Federation. 


Q. The allocation for the Price Stabilisation Fund in 2023-24 has been reduced to just 100,000 rupees, down from 15 bln rupees allocated in FY23. Do you expect no price volatility in the next fiscal? 

A. We have a Price Stabilisation Fund corpus which is about 55 bln rupees available with us to procure and build a buffer for price stabilisation. So, we don't need extra allocation because corpus money is there. But there's a commitment from the finance department that if we need more than 55 bln rupees we'll get it. It's not needed right now, there is no point in earmarking for PSF, it can be spent somewhere else in a better way. 


Q. You are saying that the government has a corpus of 55 bln rupees under the Price Stabilisation Fund, which can be used when necessary?

A. The finance ministry has said it will provide us with extra allocation for PSF if required after we've exhausted the existing corpus of 5,500 crore (55 bln) rupees. There is a written commitment from them. The country can't afford to have prices go up. So, if it is not needed right now, there is no point in earmarking for PSF, it can be spent somewhere else in a better way. 


Q. There was a drastic fall in the prices of vegetables due to which the CPI fell significantly. Do you think the CPI will stabilise? Where do you see CPI at, considering vegetable prices?

A. I don't think CPI will change. It'll remain stable unless there's some extremity in the weather. When the peninsula heats up, vegetable supply goes down. But there's arrival of wheat, rice, and inflow of pulses from other countries that brings in an equilibrium. Prices of commodities that we track will remain stable.


Q. Though the Centre is offering chana at a discount of 8 rupees a kg to states and Union Territories, it has surplus stock of about 2.2 mln tn. Does the government have a plan to clear this stock before the beginning of the next season's procurement as the shelf-life of the commodity is six-nine months? 

A. It is very difficult to offload it before the beginning of the coming season because there's a definite appetite in the country; demand cannot suddenly spike up. In terms of pulses consumption, chana is consumed by 45-46% of the population, so there's a certain definite demand. We'll try to push it (demand for chana) but there's an additional push in terms of the food processing industry because it has protein. People have specific tastes, so there are limitations. The government is trying to push chana in schemes like mid-day meals and Integrated Child Development Services.


Q. How successful is this process of giving states chana at a discounted rate?

A. Nearly 300,000 tn of chana has been given. There will be more but like I said, this is a function of requirement and there will be limitations. Some states do pre-cooked meals, so they will not take chana as chana; then it will be routed to the processing mills. 


Q. If by the beginning of the next procurement season, the government is not able to offload this chana stock, will you procure at the same level or are you planning to cut on procurement? 

A. Yes, procurement at minimum support price is our commitment and a mandatory requirement. We cannot go back on that because we have to support farmers. 


Q. Urad and tur stocks with the government are below the buffer norm and now that the government has stopped procurement of imported tur and the procurement from the domestic market is also low, how does the Centre plan to build its pulses stock? 

A. The government has not stopped procurement of imported tur; we have put it on halt temporarily as the domestic crop has started arriving as we don't want our local farmers and producers of pulses to be at a disadvantage vis-a-vis the importer. Now, we plan to procure 200,000 tn of tur and 100,000 tn of urad, irrespective of the minimum support price, MSP, to build the buffer. 


We don't need that kind of buffer because currently we have a free import regime. We are watching and engaging with producers in countries like East Africa, Tanzania, Zimbabwe, Malawi, Ethiopia, Myanmar, for pulses requirements.


Q. Do these countries have the capacity to produce and meet the pulses requirement of India?

A. Yes. These countries produce 1.65 mln tn of pulses on year and they consume very little. Their exportable surplus is around 1.2-1.3 mln tn but we don't need that much. Our requirement is around 1.0 mln tn, so we are comfortable. 


Q. How will the government procure tur and urad when the market price is above MSP? Are you planning to procure pulses at market rates?

A. We'll procure above MSP, there will be an auction based on an electronic platform. Base price will be determined by the last 10 days' average, there's a formula for that. This is only for buffer that is price stabilisation. 


Q. What does the government plan to do to reduce its dependency on other countries and become self-reliant in production of pulses?

A. The only way is to produce more. Farmer decides that depending on prices. The other variable is productivity. From the same set of areas, you should produce more. There are new varieties and seeds being developed. There is GM (genetically-modified) seeds, which the agriculture ministry is handling very well. If that comes into play, then productivity will rise.


Q. India's tur consumption is 4.5-4.8 mln tn and the output this year (2022-23) is pegged at 3.89 mln tn, according to the first advance estimate. Thus, there is a shortfall. Will the government be able to import the remaining quantity of tur and fill the gap?

A. See, there is interchangeability in pulses. If prices go high, people start consuming a parallel pulse. People mix pulses (for consumption). We also do a consumption analytics now regarding what is being used/consumed where. In winters, people eat less pulses because the availability of vegetables and their prices is better in winters. 


There is an availability of 1.65 mln tn exportable surplus (in countries from where India imports). The domestic buffer is not very important now because there is a seamless free import policy.  End


Edited by Ranjana Chauhan



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