Delay in monsoon to push vegetable prices: retailers

Written by Mona Mehta | Mumbai | Updated: Jun 20 2009, 05:53am hrs
Delayed monsoon in major metros is all set to hit the agri perishables business, such as fruits and vegetables available at organized branded retail stores and hypermarkets across the country by about 45% to 50% during the second quarter of the financial year 2009-10.

Retail majors also fear that if the southwest monsoon continues to play truant prices of various perishable commodities could rise by another Rs 10 to Rs 20 per kg.

Fearing a sharp increase in prices, vegetable and fruit vendors in metros have started insisting customers to buy items in bulk.

We as an industry body fear that the ongoing intense heat and delayed monsoons would have a drastic cascading effect on the agri perishables business during the second quarter of this financial year if the same season continues for some more time. Hence, the major challenge for the organized retailers now would be to communicate with the vendors and know in advance whether they will be able to meet up with the orders for perishable commodities in bulk during the initial second quarter of this financial year, Retailers Association of India (RAI), chief executive officer, Kumar Rajagopalan said.

The organised food retail sector is largely dominated by restaurants, fast food outlets, coffee joints and the like. The Indian food market is estimated at over $182 bn, and accounts for about two thirds of the total Indian retail market.

Further, according to consultancy firm McKinsey & Co, the retail food sector in India is likely to grow from around $70 bn in 2008 to $150 bn by 2025, accounting for a large chunk of the world food industry, which would grow to $ 400 billion from $175 billion by 2025.

Industry experts feel that the rising prices of crude oil and that of foodgrains will continue to remain areas of concern going forward.

Rajan Malhotra, chief executive officer, Big Bazaar told FE, There could be long term cascading effect in agri business in terms of dip in supply of fruits and vegetables from farms to the retail stores if the ongoing season continues till June-end.

According to the met department, India s annual monsoon rains for the week ended June 17 were 51% below normal.

Countrywide rainfall was 17.3 mm during the period against a normal 35.7 mm, the weather office said. Cumulatively, monsoon rains from June 1 to June 17 was around 45% below normal.

Monsoon rains are crucial for Indias summer-sown crops, which accounted for 52% of the estimated food crop output of 229.85 million tonne in the year to June 2009.