Supply chain disruptions raise inflationary trends on kitchen staples

Maharashtra is facing an imminent shortage of essential kitchen staples such as sugar, fruits, vegetables, onions, and pulses due to drought-like conditions, as reported by the Economic Times (ET). This scarcity of products is poised to exert upward pressure on prices, amplifying the risk of inflation in the region.

Maharashtra, being a major producer, significantly contributes to the overall output of these agricultural products. The state’s reservoir levels have dwindled by 20 percent compared to the previous year, primarily due to erratic rainfall, impacting the ongoing Rabi season. Onion cultivation, in particular, is expected to decline sharply, with farmers reducing the planted area due to water shortages.

Tur and sugar production are already set to decrease, and indicators for wheat and chana sowings suggest an impending output decline. As per source aware of the matter, the area sown with chana is likely to decrease by 10-15 per cent.

The shortage has led to unprecedented challenges for seed dealers, with some returning a substantial percentage of onion seeds. Lower onion cultivation this year may have lasting repercussions on supply in the upcoming year, contributing to the soaring prices that have already led to a staggering 42 percent increase in retail inflation for this kitchen staple in October.

The deficient rainfall during the monsoon and rabi seasons, especially in key locations like Marathwada, Madhya Maharashtra, and North Maharashtra, has exacerbated the situation, as per the India Meteorological Department (IMD).

 The cascading effects are evident, as lower onion sowings prompt farmers to seek buyers for saplings, and the reduced area under cultivation for various crops points to potential supply chain disruptions.

Wholesale jowar prices have reached an all-time high, reaching Rs 85 per kg. Jowar is the staple food of the farming community in Maharashtra and north Karnataka, with no substitute. However, even urban people now prefer jowar to wheat.

Although Maharashtra’s contribution to total wheat production in the country is negligible, wheat produced in north Maharashtra and Vidarbha meets the needs of these districts for a few months.

The wheat production in the state is projected to fall, it will add to national demand at a time when wholesale prices are expected to remain uncomfortably high at Rs 27-28 per kg for the second year in a row.

These disruptions are anticipated to persist, impacting not only the immediate availability of essential commodities but also potentially elevating national demand and wholesale prices, exacerbating inflationary trends for the second consecutive year.

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