Retail-wholesale gap in prices of vegetables, edible oils widens in Delhi

Price difference stays largely flat for pulses during this period; govt starts cracking down on hoarders and black-marketeers

As the Centre works to control the rising prices of edible oils, pulses and some vegetables during Diwali, one of the most conventional methods it plans to use is to impose stock holding limits either on its own, or by empower states to do so.

The stock holding limit is a tried-and-tested method to check price rise enabled by the provisions of the Essential Commodities Act (which the new farm laws sought to amend to bring a semblance of certainty in the use of the Act).

By imposing stock limits, both the Centre and the states try to check hoarding and black-marketing of essential commodities.

However, data shows that in Delhi markets, the divergence between retail and wholesale prices for perishables such as tomatoes and onions has widened the past one month, while for pulses it has remained fairly stable. (see table)

In the case of edible oils, the gap between retail and wholesale prices as monitored by the department of consumer affairs has widened.

For pulses, the gap in all the major components, such as gram, tur, urad, moong and masur has largely remained flat and has even fallen in a few cases.

Data from the department of consumer affairs shows the gap between retail and wholesale prices of onion in Delhi has moved from about 74 per cent to over 100 per cent, while for tomatoes it has widened from 72 per cent to 103 per cent.

Rising transportation costs due to a spike in diesel prices could explain the widening gap, but in the case of  perishables, particularly onions and tomatoes, a divergence of almost 100 between retail and wholesale prices does call for deeper introspection.

The Centre on its part has started cracking down on hoarders and black-marketeers.

It has empowered states to set the cap on edible oil inventory, while for onions and tomatoes it is keeping a close watch on the price rise.

A few weeks back, it had held a meeting with representatives of most states where 18 of them agreed to impose stock limits in some form to control the price of edible oils.

In the case of pulses, the Centre had imposed stock holding on all pulses in July, except moong held by wholesalers, retailers, importers and millers till October.

As per the order, a stock limit of 200 tonnes has been imposed on wholesalers provided they do not hold more than 200 tonnes of one variety of pulses.

For retailers, the stock limit will be 5 tonnes.

For millers, the limit will be the higher of last three months' output or 25 per cent of annual installed capacity.

Lastly, for importers, the stock limit will be the same as that for wholesalers for stocks held/imported prior to May 15, 2021.

And for pulses imported after May 15, stock limit applicable on wholesalers will apply after 45 days from date of customs clearance, the order had said.

However, following pressure from stockist, it later relaxed the order and allowed wholesalers to hold up to 500 tonnes of pulses if one variety did not exceed 200 tonnes.

Price rise: Edible oils

Prices of all major edible oils have been on the boil for the last few months, particularly after February, mainly due to a sharp rise in global rates (where a part of oilseeds crop has been diverted towards bio-fuel) and on account of low domestic stocks as well.

The Centre lowered imports duties as many as five times since February to cool down prices and in the last cut on October 13, it virtually abolished basic customs duty on crude varieties of palm, soybean and sunflower oil and slashed the agri cess on them till March 2022.

The decision to abolish basic customs duty came days after the Centre had empowered states to impose stock limits on oilseeds and edible oils and directed them to bar anyone from holding stocks equivalent to over two months’ requirement.

The net impact of all the steps was a moderate cooling down of retail prices of edible oils by 1-3 per cent in the past one month. But, as compared to last year, official data shows that prices are still sharply higher.

Pulses 

Around the time that edible oil prices started moving up, those of pulses also hardened, mostly due to a decline in domestic stocks and low production in the previous rabi season and the last kharif season due to uneven rains.

According to the first advanced estimate, kharif output is expected to be 9.45 million tonnes, or 8.74 per cent beyond last year.

In this, tur, one of the biggest Kharif pulses, is projected at 4.43 million tonnes, or 3.50 per cent over last year.

However, experts said that much should not be read into the initial production estimates of pulses and oilseeds as the final harvest might go down in the subsequent estimates when the crop starts hitting the market in full steam.

In 2020-21, pulses production went down by 6.65 per cent between the first and fourth advanced estimate.

To cool down pulses prices, the Centre adopted a multi-pronged approach of first allowing easier imports and then imposing strict stock holding limits.

The measures seem to have had limited impact in moderating prices.

Tomatoes

Among vegetables, tomato had risen sharply in the last few weeks due to damage to standing crops caused by late monsoon in several major growing states.

Tomato prices are expected to be in the range of Rs 30-80 per kg in retail during the coming weeks.

Onions

If high edible oil and pulses prices were not enough, onion rates rose sharply the past few weeks due to damage to standing kharif crop on account of late rains.

An assessment by the ministry of food processing shows that onion prices are expected to be high in the weeks ahead, and will be in the range of Rs 30-60 per kg in retail.

Potatoes

Among the staples, only potato prices are expected to remain subdued during the coming weeks due to excess stocks in the cold storages and new arrivals coming into the markets largely from North India.

As per trade sources, in West Bengal currently about 68 per cent of stored potatoes have been released from cold storage, while across the country 70 per cent has been offloaded on average.

The prices may decrease further in the coming weeks.

Table: Gap between retail and wholesale prices in Delhi over a one-month period

Vegetables	Retail	Wholesale	Difference	Retail	Wholesale	Difference
Potato	19	7.75	145.16%	25	13.75	81.82%
Onion	33	19	73.68%	43	21.00	104.76%
Tomato	43	25	72.00%	60	29.50	103.39%
Pulses	Retail	Wholesale	Difference	Retail	Wholesale	Difference
Gram Dal	73	60	21.67%	75	60.5	23.97%
Tur Dal	110	90.5	21.55%	110	90	22.22%
Urad Dal	125	96	30.21%	118	97.5	21.03%
Moong Dal	100	84	19.05%	105	88	19.32%
Masoor Dal	100	86	16.28%	100	90	11.11%
Edible oil	Retail	Wholesale	Difference	Retail	Wholesale	Difference
Groundnut Oil

187 186.81 0.10% 200 179.48 11.43% Mustard Oil 200 NA NA 208 197.8 5.16% Vanaspati 147 142.86 2.90% 154 140.66 9.48%

Soyoil

158 157.51 0.31% 165 155.31 6.24% Palm oil 133 131.13 1.43% 137 128.93 6.26% Sunflower Oil 186 174.35 6.68% 195 169.96 14.73%

Notes:

All prices in Rs/kg

For perishables, price gap is as of Oct 1 and Nov 1 ; for pulses and edible oil it is Oct 2 and Nov 2
Source: Department of Consumer Affairs