Govt plans to set up real-time agri supply-demand model to predict prices

livemint.com:

New Delhi: The government is planning to create a real-time supply and demand model for select agricultural commodities that will help it plan and evaluate policy for a volatile market. The “mathematical model" will use dynamic and real-time data from high-frequency indicators and historical trends, said a government official requesting anonymity. The step comes at a time when consumers have been battling price volatility in several essential commodities and the government has launched a slew of measures to keep inflation in check.

While inflation in retail cereal prices has been in double digits for several months, recurrent volatility in prices of vegetables like tomatoes and onions has been a sore point for consumers, farmers and inflation managers. A real-time model could also prevent India from mis-steps like last year’s when it miscalculated the size of its wheat harvest which led to a policy flip-flop—of promising to export wheat following the Ukraine war, and then hastily imposing a ban soon after. “The government aims to understand and predict future price behaviour of crops and their key commodities through this model," said the official.

“It wants to assess opportunities for export, windows for import, the expected impact of policy actions, and create a mathematical base for trade policy. This will make policy rule-based wherever possible," the person added. According to the official, sugar, maize and edible oils are likely to be the first three commodities for which the model will be built.

Sugar is a global crop with both consumer and industrial demand. India is one of the largest producers of sugarcane globally. In the case of maize, it caters to the feed, food and starch industry.