Agriculture is the heart of India, being a primary source of income for millions and the main contributor to the economy and GDP. The nation is blessed with great geographical and environmental factors that are considered an advantage.

Demand, supply, and price are the driving forces of the agricultural sector. These factors frequently change, and there are various factors affecting them. Let us understand the factors like festivals and exports that majorly affect the cost. The impact of festivals and export demand on crop prices is unpredictable yet important.

Let us split them and understand in detail.

The Impact of Festivals on Demand

Increase in the consumption of specific goods: Various festivals in India, like Diwali, Christmas and various others, in which there is a tradition of welcoming, greeting, and exchanging gifts. This results in an increase in demand for various commodities like sweets, snacks, fruits, vegetables, and flowers.

Pre-festival stocking of crops: Buyers and sellers source products in advance for the occasion. These practices usually increase the demand all of a sudden for a few days. Along with the demand, mandi prices also rise for some weeks when the demand is high. This market situation requires an effective management of resources (crops and money) by farmers as well as buyers.

Decline in product demand: When the festivals are done, the demand for some crops slightly decreases which resulting in higher availability of crops or supply. It also results in decrease in mandi prices.

Regional celebration style: The demand and supply of crops depend on their need and the region where the festival is celebrated. This happens based on the festivals and beliefs of any particular region and tradition.

Export Demand and Its Impact

Global supply and demand: If there’s a decrease in production in major agricultural exporting countries, crop prices rise, making exports of crops in India more competitive and increasing demand. For example, global wheat or rice shortages can significantly boost Indian export opportunities and domestic prices.

International commodity prices: World prices for agricultural commodities act as a standard price. When international prices are high, Indian farmers and traders are advised to export, reducing the domestic supply and boosting local prices. It is an opportunity for farmers to earn high profits and benefits.

Geopolitical events and global crises: Events and happenings in the world can drastically impact the pattern of trading, which can lead to unpredictable changes in the trading policies along with the demand and supply.

Government export policies: The government of India tends to get involved regularly to control domestic food security and inflation. Export bans or export subsidies can change the amount of items available for world trade and thus affect the domestic pricing of agricultural products.

Challenges Faced by Farmers

Income instability: The earnings that farmers get are necessary that keep the agricultural trade going. It is a source which helps farmers upgrade inputs and meet the upcoming costs for farming practices.

Unexpected sales: Due to unexpected conditions and due to some crops having a very perishable nature, farmers feel compelled to sell them quickly after harvesting. This becomes a sale with uncertainty, not to take risks, because it doesn’t let farmers store the crops and wait for better pricing in the market.

Inadequate storage: A good proportion of Indian farmers do not have a reasonable, controlled cold storage or advanced warehousing facility at the village level. If equipped, farmers can hold their crop for longer periods and try for price outcomes.

Limited information: Farmers often have little access to current information compared to the markets. Farmers often lack trust and direct connection with buyers or traders due to the uncertainty surrounding prices. It is recommended that farmers use the Shuru app to stay informed about updates on Gujarat mandi rates or any mandi in India.

Strategies for Price Stability to Minimize Risks

Strengthening Post-harvest Facilities

Cold storage facilities: Expanding accessibility of affordable cold storage facilities that are decentralized at the farm-gate or village level is paramount. This allows farmers to store perishable produce, extending its shelf life and enabling them to sell when mandi prices are more favorable, rather than being forced into distress sales.

Promoting Farmer Producer Organisations (FPOs)

FPOs give farmers greater bargaining power with buyers. They can negotiate for better prices and collectively invest in infrastructure. FPOs can establish direct linkages with consumers, retailers, and food processors, eliminating the role of intermediaries, promoting transparency and ensuring a larger share of the consumer’s rupee reaches the farmer.

Leveraging Technology

E-NAM: The existence and growth of platforms such as e-NAM enable online trading of different mandis, improve transparency in the price discovery process of goods and enable farmers’ products to reach markets beyond their local APMC mandis. It enables farmers and buyers to receive real-time updates on mandi rates through the Shuru app.

Strategic Government Interventions

To help protect food security, ensure availability of consumers at a reasonable price, and create an allowance to export farmers to foreign markets, export and import policies should allow some flexibility and predictability, to allow the government to adjust orderly at correct market levels. The application of restrictions and limits to exports brings unexpected change and affects various factors like demand and price.

FAQs on Impact of Festivals and Export Demand on Crop Prices

1. How do Indian festivals specifically impact crop prices?

Ans. Indian festivals impact on crop prices. They bring an unpredictable increase in demand for certain goods such as sugar, spices, fruits and vegetables. Demand, along with increased consumption, as well as stocking by traders before festivals, also increases mandi prices.

2. Which crops are most affected by festival demand in India?

Ans. The crop items that are affected by festival demand are sugar, edible oils, wheat flour, and pulses. There is also strong demand for fresh produce, including seasonal fruits and vegetables. Spices, including turmeric, chilli, and cardamom, as well as flowers used for religious activities and decorations during festivals, are also affected during festival periods.

3. How does global export demand influence crop prices in India?

Ans. There are many international market factors that are influencing the price of export crops. Some of the common factors are international prices of commodities, trading policies, geopolitical impacts, exchange rates, and many more. High global demand or deficits caused by production shortfalls elsewhere create upward pressure on Indian prices, which is good for farmers.

4. Can festival demand and export demand interact to impact prices even more?

Ans. Yes, these are the different situations of demand, such as festivals and export demand. As the demand is unpredictable, traders and farmers must prepare themselves by producing enough quantities of crops and storing them in advance based on the previous trends. The demand has various impacts, mainly on the price.

5. What strategies can help stabilise crop prices and improve farmer prosperity in India?

Ans. To ensure the stability of crop prices and improvement in farmers’ well-being, there are various strategies to follow. Some of these are strengthening the ecosystem after harvesting by enhancing post-harvest infrastructure, which usually includes cold storage and promoting FPOs for collective bargaining, utilising the facilities of e-NAM, and promoting FPOs.