Food Price Volatility in India

Frequent fluctuations in food prices are a matter of significant policy concern. The rising food prices affect the food and nutrition security of the poor. Farmers although benefit from the rising food prices, they also suffer when the prices fall. The high price volatility induces uncertainty in farmers’ decisions regarding crop choice, input use, and farm investment. Prices of perishable commodities are more volatile than prices of nonperishable commodities. Amongst non-perishables, the prices of the commodities with significant government intervention, in terms of price support and procurement, are the least volatile. No size fits all. Managing food price volatility requires differentiated strategies for different commodities. Nonetheless, the need for a market intelligence system for all the commodities to foresee likely changes in production and prices and to track commodity flows and inter-market trade cannot be undermined. I hope this study will be helpful for farmers in deciding their cropping patterns, traders and processors in deciding the stocking and processing levels, and policymakers in taking appropriate measures to contain food price inflation. I congratulate authors for their important contribution.