Global Food Plenty, Prices Fall
By Shivaji Sarkar
India’s food economy in 2026 looks comfortable. Granaries are overflowing, vegetable prices are slipping, sugar is in surplus, and global food markets are cooling—even as wars rage in Ukraine and West Asia and climate shocks persist. The Food and Agricultural Organisation’s (FAO) Food Price Index has retreated steadily from its pandemic and war-era highs, and the World Bank (WB) confirms easing pressure across cereals, sugar, dairy and vegetable oils.
The paradox is stark: abundance may be easing inflation for consumers, but tightening the squeeze on those who grow the food. Agriculture except for minimum support price (MSP) and procurement depends over 80 per cent in private investment, by the individual farmers. This global easing creates an Indian paradox: what comforts consumers strains farmers. Prices are falling not because of rural prosperity, but because of surplus—global and domestic—long a mixed blessing in Indian agriculture.
The reasons are structural. Bumper harvests of wheat, maize and rice in the US, Canada, Russia and Brazil, sustained Black Sea exports despite the war, lower energy and fertiliser costs, weakened demand for oils and dairy, falling freight rates, and gluts in sugar and dairy have together pushed global food prices down.
The FAO tracks this easing through its monthly Food Price Index. The World Bank broadly concurs—but adds a crucial caveat: global price averages hide local distress. Even as international prices soften, domestic food inflation and food insecurity persist in many low- and middle-income countries due to conflict, currency weakness and climate shocks. Hunger does not automatically recede when global prices fall. India sits squarely inside this contradiction.
Farmers Under Price Pressure
For Indian consumers, softer prices offer welcome relief after years of food inflation. For Indian farmers—86 per cent of whom are small and marginal landholders—the picture is far less benign. When global prices fall, Indian exports lose competitiveness. Sugar, rice and dairy producers face weaker external demand just as domestic supply peaks. Price realisation drops, often below cost of production. The FAO has repeatedly warned that price volatility can push smallholders into poverty traps; even short spells of low prices can force distress sales of assets or higher borrowing.
The problem is compounded by sticky input costs. Fertilisers, pesticides, diesel and electricity prices do not fall in tandem with output prices. Margins are squeezed from both ends. Structural weaknesses magnify the stress: fragmented landholdings, dependence on monsoons, degraded soils, and post-harvest losses that remain severe—up to 35–40 per cent for perishables in some segments.
Market access remains another choke point. Lacking storage and transport, farmers are forced to sell immediately after harvest, precisely when prices are at their weakest. Intermediaries continue to capture a disproportionate share of the consumer rupee, leaving producers exposed and price-takers in their own markets.
Why This Is Not a Collapse—Yet
And yet, this is not a collapse scenario. India differs from many low-income economies in one crucial respect: policy buffers. The MSP and government procurement—particularly for rice and wheat—continue to anchor farm incomes for key staples. The Food Corporation of India’s assured buying absorbs a large share of output, insulating these crops from global price swings.
India’s vast domestic market also matters. Internal demand absorbs much of what is produced, softening the transmission of global volatility. When prices rise, the government intervenes through export duties or bans or price differential payments – bhavantar; when prices fall too sharply, procurement and stockholding provide partial relief.
Foodgrain production itself remains robust. For 2025–26, India is targeting over 362 million tonnes, building on record output the previous year, supported by favourable monsoons and expanded acreage. This ensures food security and price stability—but it also intensifies the surplus-management challenge. The kharif output is estimated at 171 million tonnes.
FPOs: Necessary, Not Sufficient
Farmer producer organisations (FPOs) are often presented as the structural answer—and rightly so. By aggregating produce, 10,000 new FPOs improve bargaining power, enable direct market access, reduce dependence on intermediaries and lower input costs through bulk purchasing. Evidence shows FPO members earn higher incomes and face lower poverty risk than non-members.
But scale and sustainability remain weak points. Many FPOs struggle with access to credit, professional management and working capital. The typical three-year handholding period under government schemes is often insufficient. The FPOs need deeper financial and managerial support.
Infrastructure: The Quiet Stabiliser
Where the outlook turns cautiously optimistic is infrastructure. The Agriculture Infrastructure Fund (AIF) and allied schemes have begun addressing India’s weakest links: storage, processing, logistics and value addition. Over Rs 66,000 crore has been sanctioned for more than 1.1 lakh projects—warehouses, cold storages, grading units, integrated processing facilities. Cold-chain expansion, e-NAM integration, digital public infrastructure, and credit guarantees for FPOs are slowly reducing post-harvest distress sales.
These investments do not raise prices—but they reduce vulnerability. They allow farmers to store, time sales better, access wider markets and capture more value. For consumers, they mean steadier supplies and less wastage. Over time, this is how surplus becomes stability rather than stress.
Difficult or Manageable?
The answer is: difficult, but manageable—if policy discipline holds. Falling food prices do not signal agricultural failure; they reflect surplus, better supply chains and global easing. But abundance without institutions hurts producers. The risk is not low prices, but allowing them to persist without income protection, market access and infrastructure.
The World Bank backs India’s shift from production-led farming to income growth through stronger agribusiness and infrastructure. The real challenge is preventing surplus from turning into rural insolvency—by resisting the illusion of low inflation as success, strengthening MSPs where needed, expanding storage and processing, professionalising FPOs, and letting markets function without exposing farmers to volatility.
India’s challenge is to ensure that surplus does not translate into rural insolvency. That means resisting the temptation to view low food inflation as an unqualified success. It means strengthening MSP operations where relevant, expanding storage and processing faster, professionalising FPOs, and allowing markets to work without abandoning farmers to volatility.
The world may be awash in food. For India, the task is to ensure that plenty does not become punishment—and that consumers’ relief does not come at the cost of farmers’ survival with their Rs 6000 Kisan Samman Nidhi and MSP back-up. That balance, not bumper harvests alone, will determine whether this phase passes as a manageable correction—or hardens into a deeper agrarian stress. — INFA