Economy
Mint Primer: Red hot prices and other effects of the heatwave
Summary
- While farmers aren't currently planting any major crops, their transportation and storage gets affected by the heatwaves
The heatwaves sweeping India can lead to a spike in food inflation, especially vegetables and mangoes where prices are already steep. After a prolonged spurt in cereal and pulse prices, are we facing a volatile new front in the battle against inflation? Mint explores.
What’s a heatwave and how bad is it?
The heatwaves sweeping eastern, central and southern states began two weeks back. A heatwave, the India Meteorological Department (IMD) says, happens when a rise in air temperature turns fatal for humans exposed to the heat—when maximum temperatures are at least 4.5-degree Celsius higher than normal. In coastal areas, where humidity is high, heatwaves can be declared if temperatures cross 37 degrees (delete). On Tuesday, maximum temperatures were in the 43–46-degree Celsius range in parts of Telangana, Odisha, Jharkhand and Maharashtra, and 4-8 degrees above normal in parts of West Bengal and Bihar. IMD has forecast more than usual number of heatwave days in May, across several states.
Will this hit crops and food prices?
The heatwave is unlikely to impact the wheat crop as harvesting is on. Other winter crops like pulses and oilseeds have been harvested already, and the upcoming Kharif crop season only begins with the onset of the south-west monsoon in June. But the heatwave can severely hit production, storage, and transport of perishable crops like fruit and vegetables. Short duration vegetables are not only susceptible to heat, but also among the most volatile elements in the food inflation basket. Data shows that retail food inflation was at a high of 8.5% in March. Consumer vegetable prices were already 28% higher year-on-year.
Which items can see a supply crunch?
As on Tuesday, tomato prices were 62% higher than last year. In the summer, tomatoes from cooler growing regions feed the demand as supplies from hotter plains dry up. The heatwave is among factors that have impacted production of mangoes in Karnataka, Gujarat and Maharashtra, leading to higher prices of the popular summer fruit.
What about dairy products?
A heatwave reduces milk output due to heat-stress and loss of appetite. Studies have shown that the severe heatwave in 2022 reduced milk yields by up to 15%. While milk supplies fall with rising temperature, demand for milk products and beverages spike in the summer. How cooperatives manage the demand-supply gap will determine if retail prices of milk and milk products rise in the coming months. Other than dairy, egg production also takes a hit due to heat-induced mortality among poultry birds.
What other impacts do heatwaves have?
Heatwaves usually intensify the water crisis in arid regions and cause fatalities. This year, a drinking water crisis has hit Karnataka, Maharashtra and Rajasthan. Rainfall from 1 March to 24 April was 18% less than the long period or 50-year-average, as per IMD. Heat stress also lowers labour productivity, especially in the informal sector. The International Labour Organization says India is projected to lose 5.8% of its annual working hours by 2030 due to heat stress. That’s equivalent to 34 million full-time jobs.
