CCI commissions study on agriculture sector

NEW DELHI: Competition watchdog CCI has commissioned studies on the agriculture sector to understand if there are any competition issues involved in the volatility of the prices of essential commodities.

"The purpose of the study is to capture the supply-side dynamics for select agricultural commodities including onion," said Competition Commission of India (CCI) Chairman Dhanendra Kumar.

The study has been taken up suo motto by the Competition Commission, which is already studying the civil aviation, sugar and tyre sectors to understand their market dynamics. Institute of Social and Economic Change, and credit rating agency CRISIL, have been engaged to carry out the analysis for the commission.

"Prices of the agricultural commodities are more volatile than those of the non-farm commodities due to their low price elasticity and income elasticity and inherently unstable agricultural production due to risk and exogenous shocks," said Kumar.

However, he added, the recent spikes in some instances could not be explained fully by the fundamentals of demand-supply and that "underscored the need to study the agri-market structures in the country and pin down the real causes of price volatility in agricultural commodities".

Food inflation, which is marginally down to 8.06% during the week ended May 21, has been the double digits for about a year till March 2011. Food inflation accounts for 15% in the overall inflation basket which is also high at 8.7% in April.