CCI to look at food price spike

NEW DELHI: The recent spurt in prices of food articles, particularly onions, has come to the notice of fair play watchdog Competition Commission of India (CCI) that is now undertaking an exercise to look into competition issues into the agriculture sector with a focus on tracking down any "distortions and imperfections" in the distribution channel of commodities that could have led to escalation of prices at the retail level.

Apart from the agri sector, CCI will also conduct an in-depth analysis of the steel and paper sectors to identify any anomalies and anti-competitive practices. "To ensure fair and healthy competition in the Indian economy, the CCI is initiating a series of market studies to analyse and monitor the competitive dynamics in various industries. In the initial phase, we have taken up agriculture, steel and paper," outgoing chairman Dhanendra Kumar said.

The agri study, 'Market Structures for Agricultural Commodities in India', has been commissioned to the Institute for Social and Economic Change (ISEC). "The purpose of the study is to capture the supply-side dynamics for select agricultural commodities, including onion," CCI said. Also, the study will analyse the structure, degree and nature of market competition at each stage of the supply chain as well as functioning of the 'mandis'.

Crucial aspects like process of price discovery will be based on direct field investigations and identification of competition and efficiency bottlenecks. The spurt in food inflation in recent months had brought into focus the critical issues of price volatility in agricultural commodities, agricultural market structures and market efficiency, CCI said.

"The recent spikes in some instances could not be explained fully by the fundamentals of demand-supply and that underscored the need to study the agri-market structures in the country and pin down the real causes of price volatility in agricultural commodities."

Kumar said that the objective of the watchdog is to see that farmers got the best price for their produce and the end-consumer paid appropriately. "There should be no imperfections or price fixation in the distribution channel." A preliminary report is expected in the next 45 days. CCI had conducted similar studies in the past on sectors like cement, pharma and civil aviation. The study on steel and papers sectors had been commissioned to Crisil.