Commodity markets influencing food prices: RBI

Hyderabad, Jun 6: Differing with the view that rise in living standards in India and China has exerted enormous pressure on prices of food items, Reserve Bank of India Governor Y V Reddy opined the 'financialisation' of commodity trade and current extraordinary conditions in global financial markets could have influenced spurt in prices.

The recent reduction in interest rates in the US and injection of liquidity have resulted in investors moving to new avenues such as commodity markets, in view of turbulence in financial markets and low returns in treasuries, he said last night during the 40th convocation address of the Acharya N G Ranga University.

Dr Reddy, who called for a second green revolution with emphasis on diversifying agricultural sector to capture new market opportunities, opined India could become ''Annapoorna'' of the world and Andhra Pradesh, the ''Annapoorna'' for the country.

Quoting Food and Agricultural Organisation estimates, he said wheat output is set to achieve a new record this year, despite backdrop of depleted stocks. Global rice production is expected to be marginally better. However, oilseeds and edible oil prices are expected to remain firm.

Enhanced demand could not explain a sudden spurt in prices in one year since India and China have been growing at accelerating levels for over a decade, he said, adding that China has been a net wheat exporter.

''India is an exporter or an importer at the margin, except with regard to vegetable edible oils where it has been a consistent net importer in recent years and also to a small extent with regard to pulses,'' Dr Reddy said.

UNI