World food prices, as tracked by the Food Price Index of Food and Agriculture Organization (FAO), touched a new high on Thursday, surpassing the previous high recorded in June 2008. The index is at its lifetime high since FAO began tracking records in 1990. Chances are that such price rises will continue for some time.
While this does not pose any immediate problems to India, the convergence of global and domestic food prices seen in recent years requires better planning of imports of agricultural commodities whenever there is a shortfall.
This is especially true of items such as sugar, vegetable oils and foodgrain. With global prices on fire, India’s entry into global markets has the potential to further inflame prices. For starters, the time between arrival of estimates that show a decline in production and the decision to import such items should be reduced.