Global Food Prices Rise 33% in a Year
Recently, a World Bank report was released which said that prices of a number of food commodities have increased sharply over the last twelve months and global food prices are up 33% in July from a year ago. The report says that prices of maize were up 84% in July from a year ago, sugar 62%, wheat 55% and soybean oil 47%. Report further says that “coupled with the fact that the realisation of the forecast yields is itself contingent on benign weather conditions in the major exporting countries, the low stock environment has created a situation in which even small shortfalls in yields can have amplified effects on prices”.
Question: Do the Global food prices affect India?
Considerably not. Food prices in India have been mostly insulated from the world due to restrictions on exports and abundant grain stocks. However, its impact was seen recently when global spike in food inflation forced India to review its food exports policy, when government had gingerly opened rice and wheat exports after food inflation had moderated to less than 8%, but in recent weeks it has accelerated again to nearly 10%. The idea was that farmers must be allowed to reap the benefits of higher prices because their costs have gone up.
The Commission for Agricultural Costs and Prices advocates penning up exports of food items in a calibrated manner.
Please note that so far, government has only allowed limited export of one million tonne (MT) non-basmati rice, 1.5 MT sugar and an unspecified amount of wheat to prevent any speculative flare-up in prices. Currently India’s food grain stocks are also at unmanageably high levels.