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Resource centre on India's rural distress
 
 

More bad news for farmers -Ravi Ananthanarayanan

-Livemint.com

The World Food Price Index in August fell to its lowest level since May 2009

Indian farmers are not going to like this. The World Food Price Index, compiled by the United Nations’ Food and Agriculture Organization, in August fell 5.2% to 155.7 points from the previous month. That’s the lowest level since May 2009.

The fall comes in the backdrop of an all-round decline in commodity prices. The cereal price index fell by 7%, vegetable oil price index by 8.6% and the dairy price index declined by 9.1%. The sugar index fell the most, declining 10%.

Weak global food prices do have an effect on domestic prices as well, especially of traded commodities. A weak rupee does act as an offset to some extent. While falling food prices are good for consumers, they lower inflationary expectations and also provide more space to the Reserve Bank of India for lowering interest rates. But the monsoon has disappointed this time. What effect that has on output remains to be seen. But farmers are unlikely to get any relief from rising food prices to counter the effects of a lower harvest.