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News: Commodity prices are increasing globally.
Prices of grains, feed and meat, and edible oils, in particular, are surging.
Russia and Ukraine together contributed roughly one-fourth (or 52 million metric tonnes [MMT]) of global wheat exports of 203 MMT in 2021-22.
What can be done to control inflation?
The main reason behind the upward cycle in commodities was massive liquidity injections by G20 countries through loose monetary and fiscal policies. Thus, the following approach can be adapted to control inflation:
Tightening the monetary and fiscal policies to suck in the excess liquidity from the system.
All exporting countries need to step up their production and exports to fill in the shortfall caused by the Russia-Ukraine war. For example, Europe, Australia, the US, Canada, and Argentina can fill the gap for the shortfall in wheat. Whereas, India can surely play a critical role in Rice supplies till the storm of inflation is over.
In India, the government can procure large wheat stocks from farmers and incentivize them to plant more area under wheat in the next season.
Source: This post is created based on the article “The Problem on Our Plate” published in The Times of India on 11th May 2022.
