Rise in prices of essential commodities to hit common people

There is no respite for common consumers in the near future, it seems. In fact, with fears of further rise in prices of consumer food products looming large, there can be more hardship for the commoners. It is apprehended that heightened volatility in the prices of key agricultural commodities will add to the agony of consumer foods manufacturers in India this fiscal.

Going by the latest Crisil Research study, prices of several key commodities will increase this fiscal - those of wheat and maida by 7-8 per cent, gram and gram flour by 6-8 per cent, and milk and sugar by nearly 1 per cent. Considering the price trends, pressure on raw material cost is expected to be higher for key maida and wheat procurers such as manufacturers of biscuits and ready-to-eat foods this fiscal.

However, some respite may come (or at least the pressures would be less) from the snack manufacturers, especially which have a higher exposure to besan and edible oil. In case of prices of these products, raw material prices would increase only marginally despite a 6-8 per cent rise in besan prices. This can be attributed to a possible fall prices of ley edible oils. These edible oil prices are expected to log a sharp fall. The prices of key oils will trend down on a high base, including palm and soy oil by 16-17 per cent and sunflower oil by 10-12 per cent.

But again key consumers of milk and sugar, such as the ice-cream and chocolate industries, would see some increase in raw material costs.

Actually agri-commodity prices have been extremely volatile in the recent past and now for more reasons than one. The prices of wheat and sugar declined 14 per cent and 2 per cent in fiscal 2021, as the pandemic gripped the country, but jumped 11 per cent and 7 per cent, respectively, in fiscal 2022 as the pandemic impact faded and demand from food processors picked up. Since February 2022, when the Russia-Ukraine conflict began, these commodities have rallied 19 per cent and 6 per cent, respectively. Edible oil prices, on their part, spurted 35 per cent in fiscal 2021, and a further 40 per cent in fiscal 2022, due to the pandemic and lower supply from top oil-producing countries such as South America, Brazil, and Malaysia, and have climbed a further 40 per cent since the onset of the war.

And you just cannot blame it on the government. Such volatility in agri-commodity prices cannot be done away with the changing climatic conditions and increasing geo-political risks. Mind you that 50 per cent of Indian agricultural land is dependent on rainfall for irrigation and any fluctuation in rainfall affects yields to a great extent. Similarly, an increase in the number of cyclones and heat waves also affects agricultural productivity. Heightened geopolitical tensions, on the other hand, impact international trade in commodities such as edible oil and maize, to a great extent. Climate resilience and a robust contingency plan are the needs of the hour.