Monsoon may be affected by El Nino effect, which may increase the price of food items
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According to the Food Ministry, procurement of rice and wheat is being expedited. Rice procurement has so far increased to 5.58 crore tonnes in the current market season 2022-23. On the other hand, in Rabi Marketing Year 2023-24 (April-March), wheat procurement has so far been 26.2 million tonnes, which is more than last year’s total procurement of 18.8 million tonnes. The ministry says that there is enough food grain in the government stock from the current procurement of wheat and rice. The combined stock of wheat and rice has reached 57 million tonnes, which is satisfactory for the country’s food grain requirements. FCI procures paddy and wheat under the Price Support Scheme with state agencies. Paddy is procured and converted into rice in mills.
stock position
According to the ministry, 55.8 million tonnes of rice had been procured till June 19 in the current Kharif marketing year (October-September). About 4.01 crore tonnes of rice has arrived in the central pool. At the same time, 1.5 crore tonnes of rice is yet to be received. Here, according to the third estimate of the Ministry of Agriculture, rice production is estimated to be a record 135.5 million tonnes for the 2022-23 crop year, compared to 129.4 million tonnes last year. In case of wheat, 21.29 lakh farmers have been paid minimum support price of about Rs 55,680 crore.
Fast moving consumer food (FMCG) products like biscuits, bread, packaged food, beverage items can become costlier if El Nino has more effect. There may be a decrease in their demand. According to the report of BNP Paribas, the biggest impact of El Nino may be on the FMCG sector. The demand for these products may slow down. It can at least derail the rural economy. This will of course not affect the margins of the companies. It has been said in the report that if El Nino shows its full effect, then it is sure to affect the country’s economy and market.
Threat of ‘El Nino’ looms over inflation, rising prices of rice, sugar, pulses, vegetables increase tension
How much it will cost remains to be seen. Here commodity market expert S. Vasudevan says that it is being said that El Nino will have more impact on the FMCG sector because if sugar, flour, rice become expensive, then things made from these are bound to become expensive. No company bears the burden of cost escalation on itself. Even if it takes, it does so after calculating its profit margin. In such a situation, FMCG products are bound to be expensive. This will reduce the demand.
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