Food inflation in India, measured by movement of wholesale and consumer prices indices, has been consistently increasing for last several months, rather for several years, with a few exceptions. Such exceptions (short term negative movement in food prices) are not common, and in addition the decline is seemingly because of seasonality factor and or a very high base in the preceding year. What is, however, important here is that such short term development does not necessarily imply that prices have fallen in real terms in all state or regional markets throughout the country, in four different zones: east, west, north and south. The paper makes an attempt to understand functioning of food markets in four different zones covering six major food items, consumption of which is not seasonal and these are staples in nature. These include cereals (rice and wheat), vegetables (potato, onion and chickpeas), and sugar. To understand zone wise price behaviour, one major market from each of the four zones in India has been selected. These include Patna (in the east); Mumbai (in the west); Delhi (in the north); and Chennai (in the south). The period selected for the study is 2006 to 2011. In addition, the paper also attempts to establish interrelationship between food prices and implementation of the model APMC by different states, especially the four states which are the focus of the paper. Linking the adoption of the model APMC by the four states (markets of which have been analysed in this paper) and the price behaviour of agricultural produce establish the fact that price behaviour has no relation with the adoption to the model APMC Act. Rather, one can also say that, the relationship, if at all, is negative, implying that higher the level of reform implementation, higher the volatility in the market. By this interpretation, Mumbai market which has fully adopted the model APMC is the most volatile. This is despite the fact that in some produce, it accounts for a significant share in India’s total production, and show relatively low vulnerability ratio. In comparison, Patna market, which repealed APMC in 2006, appears to be the least volatile. The findings of the paper need to be probed further to establish credible evidence of its relationship with retail price movement.
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