The Economic Times (ET): As the ongoing geopolitical tensions, particularly the Middle East conflict, continue to disrupt supply chains, how is the government assessing the impact on the prices and availability of the essential commodities in India?
Nidhi Khare (NK): India is uniquely positioned because we are not only one of the world’s largest producers of food commodities, but in many cases also among the largest consumers.
Since the conflict began, we have not seen any major impact on food commodity prices so far. The Department of Consumer Affairs monitors the prices of nearly 40 essential food commodities on a daily basis. This includes cereals, pulses, edible oils, sugar, milk, eggs, vegetables such as brinjal, tomato, potato, and onion, as well as key spices, millets, and other essential items. At present, prices have remained stable, and largely range-bound.
However, India is a vast country, and agricultural produce often travels long distances from production centres to consumption hubs. Therefore, any increase in fuel prices could eventually impact transportation costs, which may in turn affect commodity prices.
ET: How significant could the impact of the ongoing geopolitical uncertainties be on consumers?
NK: We do not expect any major impact. In that sense, I believe consumers will remain largely comfortable over the next two to three months.
ET: So, from a consumer’s perspective, has the situation largely remained stable?
NK: Yes.
ET: While stable retail prices protect consumers, suppressed farmgate prices hurt farmers as input costs rise. How is the government balancing consumer affordability with farmers’ income?
NK: Farmers are also consumers. If they are producing one commodity, they still depend on the market to purchase other essential commodities. Therefore, it is important for everyone that food prices remain stable and within a reasonable range. What we are trying to ensure is that there is no speculative spike in prices or hoarding of food commodities.
At the same time, I would like to assure you that most food commodities have adequate availability and healthy production. We also have a comfortable buffer stock position. This year, for instance, procurement of tur and chana has been phenomenal. Our buffer stock levels are much stronger compared to the past two years. So, overall, the situation remains comfortable.
ET: Talking specifically about pulses, prices have now started rising and returning to MSP levels. How do you see the trend evolving going forward?
NK: Chana harvesting has recently taken place. During the harvest season, prices tend to remain below MSP (minimum support price) because arrivals in the market are high. As arrivals begin to decline, prices generally start moving upward.
As I mentioned earlier, we closely track the seasonal impact on prices. Typically, prices are lowest during the harvest period, while they tend to rise during the peak demand months, especially in winter. So, a gradual increase in prices is expected and is part of the normal seasonal cycle.
We continuously map these trends and compare them with last year’s price movements as well. If the increase is steady and moderate, it is considered normal. That is why I am saying that overall food commodity prices remain stable and within a manageable range, and there should not be any major difficulty.
Our pulses stocks are much higher compared to the past two years.
ET: Amid the global geopolitical tensions and trade uncertainties, has the government changed its strategy regarding the maintenance of buffer stocks for pulses?
NK: Typically, pulses production follows a cyclical pattern. There may be two years of weaker production followed by two years of strong output. The idea is to build buffer stocks during years of good production and utilise them when production weakens in subsequent phases.
That is essentially what we have done. Production has been very good, particularly for tur and chana. As a result, buffer stocks are adequately maintained and will be used as and when required.
ET: When will the pulses buffer stock be liquidated? Is there any tentative timeline?
NK: The buffer stock is maintained specifically to enable market intervention whenever required. Since pulses are non-perishable commodities and can typically be stored for nearly three years, there is no immediate urgency for liquidation.
As and when the need arises, we will certainly release stocks into the market.
ET: Given the current geopolitical tensions and risks of sudden price spikes, has the government developed any early warning system for key commodities, such as pulses, edible oils, wheat, rice, and vegetables?
NK: Yes, we have developed predictive models based on more than 20 years of legacy data. Using these models, we forecast price trends with a fairly high degree of accuracy for the next two to three months. We review these assessments every week and continuously evaluate how accurate our projections have been. So far, our predictions have been correct most of the time.
This tool has given us considerable confidence that the overall situation over the next couple of months is likely to remain comfortable.
ET: Are there any major risks that you currently foresee for India’s food and consumer supply chains?
NK: At present, the biggest challenge we see is the possibility of an El Niño impact. Many forecasts have indicated that risk. However, the positive aspect is that rainfall during June and July is expected to remain good, which means Kharif sowing is unlikely to be significantly affected.
That said, agencies such as the India Meteorological Department (IMD) have indicated the possibility of a warmer and drier phase during September and October. Therefore, we are making efforts to anticipate and prepare for such a situation in advance.
Paddy, which is one of the major Kharif crops, should not face a major issue because a large part of its cultivation is supported by irrigation facilities.
The areas that could see some impacts are vegetables, particularly Kharif onion crops, where sowing typically begins around August-September for harvests in November-December. That window appears relatively more vulnerable. Similar risks could also arise for tomatoes and certain other crops.
However, as of now, rainfall projections for the next two months remain favourable, and the overall situation appears manageable.
ET: There has been a slight increase in edible oil prices recently. How concerned is the government, and what steps are being taken to keep prices under control?
NK: There has been a marginal increase in edible oil prices. One way to address this, of course, is to encourage moderation in consumption. Secondly, we have seen very good mustard production this year, which should help ease some pressure on supply.
Apart from that, alternative options will also be explored. As the Prime Minister recently mentioned, we need to look at the issue in a broader and more balanced manner. But this largely falls under the domain of the Department of Food and Public Distribution (DFPD).
ET: One last question about fertilisers. Though not directly under your department, they ultimately affect crop production. Despite the government assuring adequate availability, do you see any risks to crop production in the coming months?
NK: The Department of Fertilizers has made efforts to ensure adequate availability of fertilisers. They have maintained stocks and taken the necessary measures. However, we must also recognise that there is a degree of uncertainty globally.
At the same time, I believe this is an opportunity that should be used constructively. From the Department of Consumer Affairs, we have written to both the Agriculture Ministry and the Department of Land Resources because nearly 75 districts fall under watershed regions. This is the right time to strongly promote Kharif pulses, such as urad and tur.
We are making efforts through inter-departmental coordination, and the concerned ministries will also take it up with the states. They will facilitate better seed availability, provide handholding support to farmers, and extend other forms of assistance. This can become a major opportunity to gradually shift farmers away from the intensive use of fertilisers and encourage cultivation of pulses, which require much lower fertiliser use.