Despite a normal monsoon, food prices are unlikely to come down anytime soon due to institutional factors like rise in minimum support price (MSP) and a depreciating rupee, industry experts said on Tuesday. "Normal monsoons indicate that food production this year will be better than 2012. However, it does not guarantee lower inflation as other institutional factors determine the prices."
"Rise in MSP, hoarding by procurement agencies and a depreciating rupee are a few of those factors," CARE Ratings chief economist Madan Sabnavis said in Mumbai. A depreciating rupee will keep the prices of imported pulses and edible oils high, he added. Extra demand for rice and wheat would be an additional burden, Sabnavis pointed out at a panel discussion on '2013 Monsoon: Impact on Agriculture and Food Prices', organised by the Indian Merchants' Chamber.
Additional Chief Secretary SK Goel said that prices cannot be controlled unless the value chain is improved, for which private sector participation is essential. "We have a fragmented value chain. Unless that is fixed, prices will not go down despite bumper crops. There is a need for private participation to develop agriculture and agri-business," he said.
Talking about farmers' participation in agri-business, NCDEX Managing Director Samir Shah said, "We see new warehouses coming up in anticipation of good crops after a good monsoon. "We also see farmers' desire to participate in the futures market resulting in better realisation and less distress selling," he added.
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