India

Consumers paying even more even as wholesale prices continue to drop

By RJ Whitehead

- Last updated on GMT

Consumers paying even more even as wholesale prices continue to drop

Related tags: Supply chain, Marketing, Inflation

The wholesale cost of vegetables might have dropped last year, but the price households are paying for their produce rose rather sharply, Assocham has found. 

On average, retailers are selling vegetables at just over 49.2% of the price they paid through wholesale, the Indian chamber of commerce confederation revealed in a newly launched study

Similarly, it identified that the gap in inflation between wholesale price index consumer price index has been increasing, pointing towards supply chain inefficiencies and too many layers of traders and vendors. 

In a report outlining its findings, Assocham singled out recent onion trends: “Prices dropped by a good 32% in 2014-15 over the previous year in wholesale mandis [markets]; but in the retail market, these were sold at 28.9% higher​.” 

Likewise, the retail prices of other produce have also been moving contrary to their price tags in the wholesale markets. These include ginger, which grew by 16.4% at retail after dropping by over 18% at wholesale; likewise, brinjal long increased by 15.4% at retail against decline of 18.9% at wholesale; and okra’s retail price shot up by 11% compared to a wholesale drop of 10.9 per cent. 

Our research clearly points to inefficiencies and extra layers of supply chain that add avoidable costs for retailers​,” said Assocham secretary general DS Rawat.  

The use of a modern supply chain managed by organised firms but which involves local vendors is the key to structural changes which are required if we want to deal with the issue of inflation​,” Rawat said.    

In a separate paper released this week, Assocham predicted that the price of vegetables will likely jump 20-25% over the coming days following the damage that untimely rains and hailstorms have done to crops. 

At least 25-30% of ready-to-harvest crop have been damaged, impacting wheat procurements that generally begin from April, the study found. 

It also pointed out that horticulture crops such as mangoes, bananas, grapes and channa have been hit and the impact could be seen in their prices firming up soon. 

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