The Hindu : New Delhi News : Prices of essentials likely to go up

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Sunday, Feb 17, 2008
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New Delhi

Prices of essentials likely to go up

Gargi Parsai

May impact government during polls

Stock position in the Central pool for PDS will be tight
Surge in global prices of pulses
will continue

NEW DELHI: With the supply positions of rice, pulses and edible oilseeds expected to remain tight, both in domestic and international markets, the Commission for Agriculture Costs and Prices (CACP) has said in its report submitted to the Union Agriculture Ministry, that the market prices of most cereals would remain high in 2008-09.

At the same time, India would experience a tight position in foodgrains stock in the central pool for the Public Distribution System by April 1, 2009.

As on October 1, 2008, the rice stocks in the central pool would be 5.49 million tonnes, which would be only marginally above the buffer norm of 5.20 million tonnes.

The wheat stocks are estimated to be 10.12 million tones, which would be below the buffer norm of 11.00 million tonnes. On April 1, 2009, the 2009, the estimated stock of rice and wheat would be only marginally above the buffer norm. Although the CACP, chaired by T. Haque, has made a major shift from its past practices in computing minimum support prices for farm commodities, observers say the tight supply position and high prices of commodities may not augur well for the government in a year when several States are going to the polls. This year, the CACP has taken into account the cost of production of a high-cost State and not the average cost of all States, as it had been doing in past.

Similarly in the case of cotton, the commission has taken into account the rising incidents of farmers’ indebtedness and suicides and their deteriorating socio-economic conditions.

The MSP for cotton not just covers cost of production but also provides for at least 10 per cent margin over and above input costs.

Rising consumption

These changes have come because it is estimated that the international rice prices, for example, would rise in 2008 mainly because the total volume of rice held by major rice exporting countries would remain unchanged at 24 million tonnes, although their consumption was rising.

Besides, the trade restriction imposed by India, Vietnam and Egypt in the form of tariff and the taxes would result in reduction in the size of trade and increased prices.

The international prices of kharif pulses, including urad, moong and tur, surged towards the end of 2007 and would remain so in 2008. The decline in production and increased demand for vegetable oils for human consumption as well as for bio-diesel requirements would keep the global prices of edible oilseeds and edible oils high.

The world prices of cotton and tobacco were also expected to rise in 2008 due to increasing demand, the Commission said. To mitigate the suffering of the poor, the Commission has recommended that the public distribution system be streamlined.

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