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India: Fruit and vegetable prices surge nationally

Food inflation is expected to leave prices of fruit and vegetables high until at least July, largely as a result of erratic weather and drought.

Potato prices have appreciated by 30% in the last two weeks while fruit prices have risen 10-40%. "All-India vegetable production is down by at least 25% which is pushing up prices. Middlemen too are playing havoc by jacking up prices. If the water problem continues, vegetable production will take a further hit in April and May," said All India Vegetable Growers Association president Shriram Gadhave.

Fruit production too is down across India due to erratic weather, said Sudesh Sachdev, general secretary, Fruit Merchant Association, Azadpur mandi. In 2010-11, the country produced 230 million tonne of fruits and vegetables and government had indicated that this would go up by 10% in 2012.

Traders say apple production in Himachal Pradesh and Kashmir has dropped by 50% and 25% respectively in 2012 as compared to the previous fiscal due to excessive heat and lack of rains. The orange crop in Maharashtra is down by half. Sweet lime production is less by 30% while the banana crop in Maharashtra has declined by 30-40%.

Watermelon production in Gujarat has taken a hit due to lower rains. Mango production in Andhra Pradesh has also suffered a setback due to inadequate rains and the production could fall by half. Rising vegetable and fruit prices have already begun impacting headline inflation.

"In January, inflation was at 6.55% and in February it had sprung to 6.95%. In March, prices of vegetables and fruits went up significantly and we fear that headline inflation may cross 7% mark due to this," said Anis Charavarty, director and senior economist at financial advisory firm Deloitte Haskins & Sells.

In its mid-quarter policy review in March, Reserve Bank of India left rates unchanged and warned of resurgent inflation risks. India's February headline inflation, which is based on the wholesale price index, rose for the first time in five months to 6.95% from a year ago after a spike in vegetable prices fanned food inflation.

Prices of key vegetables, including tomato and potato, have risen in all the metros as supply is lower than demand. In Delhi, tomato has touched Rs 40 a kg due to late arrivals from Himachal Pradesh while potato, brinjal and green peas are also becoming expensive, traders said.

In Mumbai, potato is selling at Rs 15/kg. The price spike is expected to eventually take a toll on consumer diets.

"Price of vegetables and fruits has gone beyond the reach of the middle class, let alone the poor. It is a matter of real concern because this means that an average Indian will not be able to have a balanced diet," said Dipankar Dasgupta, former professor of economics at the Indian Statistical Institute.

Source: economictimes.indiatimes.com

Publication date: 4/12/2012


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