Rise in food prices is 'temporary': Pawar

Union Agriculture Minister Sharad Pawar on Friday said that the 0.2 percentage point increase in food inflation is 'temporary' as there is no rising trend in food prices.

The annual food inflation rose to 12.81 per cent for the week ended July 3 from 12.63 per cent a week earlier.

"That 0.2 per cent rise in food inflation is temporary... This (rise in food prices) is not the trend," Pawar said on the sidelines of an Indian Council of Agricultural Research Award ceremony in New Delhi.

The country's food inflation came down from 18-19 per cent to 12.81 per cent, he said, adding that vegetable prices have recently risen around Delhi mainly due to floods in Punjab and Haryana.

"I am confident food prices are going down," he noted.

Economists attributed that the about 0.2 percentage point rise in food inflation in the previous week to transport hassles and the hike in fuel prices. This broke the two-week declining trend in food inflation.

Recently, Finance Minister Pranab Mukherjee had exulted hope that inflation would ease after the Kharif season in September.

Asked if the government will consider removing the ban on sugar futures with the fall in spot prices, Pawar said, "We will take a view on this by August-end, when we get the correct picture of the sugarcane production."

Sugar futures was banned in May 2009 and the suspension is valid till September 2010.

At present, retail sugar prices have come down to Rs 30 a kg in the national capital from the high of nearly Rs 50 a kg in mid-January.

Pawar foresees bumper crop

Pawar also expressed confidence that India's foodgrain production would be better than last year despite scanty rain in Uttar Pradesh and flooding in parts of Punjab and Haryana.

"It is true that in parts of Uttar Pradesh, Jharkhand and in some parts of Bihar, there has been insufficient rain. It is also true that because of heavy rain in Punjab and Haryana, there are some damages. However, we will have more production than last year," Pawar said.

India had produced 234.47 million tonnes of foodgrains in 2008-09 and last week, the Agriculture Minister, enthused by better prospect of rain, had said that the country would have "bumper produce" this year.

"The latest sowing report shows that compared to last year, the area coverage is more for rice, oilseeds, pulses, cotton, sugarcane and jute," Pawar said, adding the prospect of monsoon is "quite encouraging" as of today.

The monsoon, however, has started playing truant since the past one week, raising some concerns about lower production.

"Definitely, there is a gap, but there will be continuity (of rainfall) after the gap. I am not worried as this happens sometimes. A year before also there was some gap but we could produce substantially without any problem," he said.

The met department has predicted that rainfall would be 98 per cent in July and 102 per cent in August, he said. Pawar said that though there are "some damages" because of rain in Punjab and Haryana, the farmers and the government of the two states exuded confidence that the production, particularly rice, would not be affected.

"There could be some damages, but they are hopeful of meeting the gap," he said. Punjab and Haryana  contribute maximum foodgrains to the Central pool.

The minister, however, expressed concerns about storage capacity, and said that the government is seriously pursuing state and private participation in the construction of godowns.

Currently, the government's storage capacity is 41 million tonnes against the stock of 60 million tonnes.

"If the assessment (sowing) is correct and the next year production is higher, then storage will be a serious problem. That's why, we are aggressively going with the help of the state governments to construct warehouses in different parts of the country," Pawar said.

Pawar said that his ministry will assess the space crunch in a week's time and if required, might seek more concession from the finance ministry for parties interested in constructing warehouses.