Pocket pinch: Rising millet prices may raise cost of packaged food

New Delhi: Millets and millet-based foods, gaining popularity in urban homes for their nutritional value, could become costlier in the coming months amid concerns that lower planting this year could further tighten supplies.

The price increase could raise the cost of staples and packaged foods made from these grains, including bread, breakfast cereals, millet cookies, snacks and biscuits, according to experts.

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Millet prices are rising fast as farmers have planted less ragi, bajra and other coarse cereals than they had last year during the main sowing period. This has raised concerns that lower planting could result in tighter supplies and keep food prices elevated.

Jowar prices increased 11% year-on-year (y-o-y) in July compared with 9.7% in June and 2.6% in January, according to statistics ministry data. "Disruptions due to heavy rains and flooding led to a temporary increase in prices," said Madan Sabnavis, chief economist at Bank of Baroda.

Jowar is primarily a rabi crop, and its price could face upward pressure as stocks deplete.

"As the stocks keep getting exhausted, there would be a tendency for prices to increase as the year goes by, since the same stock has to be held till the next year," said Sabnavis.

Prices of small millets saw the biggest increase among the millet categories, with rates in July 21.1% higher than a year ago, compared with an 11.9% increase in June and 0.9% in January.

Till August 7 this year, acreage of small millets had fallen to 330,000 hectares from 388,000 hectares till early August last year, a decline of 14.95%. "For millets, it is a demand-supply thing," said Sabnavis.

Millets are used as ingredients in packaged food products. Inflation in ready-made food products rose to 9% y-o-y in July, up from 6.7% in June, according to ministry data.

Barley and its products also recorded a rise in inflation to 9.5% in July from 8.2% in June. Ragi prices were up 6.4% in July, though slightly lower than 6.7% in June, according to data.

In contrast, bajra and maize prices declined 0.6% and 0.8%, respectively, in July.

Wholesale prices also point to higher input costs for food manufacturers. Wholesale prices of jowar rose 13.7% y-o-y in July, while ragi and barley prices increased 2.7% and 6.1%, respectively.

The divergent price trends come against a mixed sowing and production picture. Maize acreage fell 3.8% y-o-y as of August 7 compared with the corresponding period last year, against a 7.3% decline as of July 31. Ragi acreage declined by 9.94% y-o-y till August 7 this year compared with a 33.2% y-o-y decline as of July 31.