India’s Food Inflation Hits 30-Month Low in 2025

India’s food inflation dropped to -2.28 per cent in September 2025, marking the lowest level in 30 months. This decline is expected to continue for the coming months. The fall is mainly due to reduced prices of major food commodities and partly because of a high base effect. While consumers benefit from lower prices, farmers face income challenges as prices remain below the Minimum Support Price (MSP). This situation marks inefficiencies in the agricultural market and the need for policy reforms to ensure fair prices for farmers.

Food Inflation Trends in 2025

Food inflation in India fell sharply in 2025, influenced by domestic and global factors. Globally, prices of major foodgrains dropped by about 11.5 per cent. Rice prices fell steeply by 30 per cent, wheat by 7 per cent, and maize by 3 per cent. Oilseeds like soybean also saw a decline. Domestically, wholesale prices of rice, pulses, and oilseeds decreased . For example, rice wholesale prices showed negative inflation in August and September 2025.

Impact on Farmers and Cultivation Patterns

Despite lower food prices benefiting consumers, farmers are discouraged from cultivating pulses and oilseeds. Prices for these crops remain below MSP due to erratic or negligible government procurement. Pulses imports rose sharply, adding to price pressure. Consequently, the area under cultivation for oilseeds declined by 5.3 per cent, and soybean cultivation fell by 7 per cent. In contrast, rice cultivation increased by nearly 6 lakh hectares, reflecting farmers’ preference for crops with assured prices.

Procurement and Market Inefficiencies

Procurement of pulses and oilseeds at MSP has been inconsistent or absent except for limited chana purchases. This lack of support keeps prices low and reduces farmer incomes. Groundnut and soybean prices have suffered due to record output and falling global prices, with procurement failing to stabilise incomes. In contrast, rapeseed and mustard prices rose due to lower output. The current procurement system and market channels are inadequate to support farmers growing pulses and oilseeds.

Policy Measures for Sustainable Agriculture

Short-term policy focus must be on reliable procurement at MSP for pulses and oilseeds to encourage cultivation. Long-term strategies should aim to improve market efficiency by connecting farmers directly to value chains. This would reduce middlemen and increase farmer profits. Additionally, adopting innovative technologies and better cultivation practices can enhance yields and output. These steps are vital to achieve self-sufficiency in edible oils and pulses and ensure farmers’ livelihoods.

Questions for UPSC:

1. Point out the causes and consequences of food inflation fluctuations in India and estimate their impact on rural livelihoods.
2. Critically analyse the role of Minimum Support Price (MSP) in India’s agricultural economy with suitable examples from recent trends.
3. Underline the factors affecting the cultivation patterns of oilseeds and pulses in India and how can policy reforms address these issues?
4. What are the challenges in agricultural market reforms in India? How does improving market linkages benefit farmers and the overall economy?

Answer Hints:

1. Point out the causes and consequences of food inflation fluctuations in India and estimate their impact on rural livelihoods.

1. Food inflation declined to -2.28% in Sept 2025 due to falling prices of major food commodities and high base effect.
2. Global foodgrain prices fell about 11.5%, with rice down 30%, wheat 7%, maize 3%, influencing domestic prices.
3. Domestic prices of rice, pulses, and oilseeds dropped, benefiting consumers but hurting farmers’ incomes.
4. Prices below MSP discourage farmers from cultivating pulses and oilseeds, impacting rural livelihoods negatively.
5. Increased imports of pulses further depress prices, reducing profitability for farmers.
6. Reduced cultivation area for oilseeds and pulses leads to potential long-term supply issues and income instability.

2. Critically analyse the role of Minimum Support Price (MSP) in India’s agricultural economy with suitable examples from recent trends.

1. MSP acts as a price floor to ensure remunerative prices and protect farmers from distress sales.
2. Rice and wheat benefit from consistent procurement at MSP, stabilizing farmer incomes and encouraging cultivation.
3. Pulses and oilseeds suffer from erratic or negligible procurement, causing prices to remain below MSP.
4. Example – Pulses prices fell sharply due to lack of MSP procurement and rising imports, discouraging cultivation.
5. MSP failure in some crops leads to declining cultivation area and threatens self-sufficiency goals.
6. Effective MSP implementation is crucial for sustaining farmer livelihoods and promoting crop diversification.

3. Underline the factors affecting the cultivation patterns of oilseeds and pulses in India and how can policy reforms address these issues?

1. Prices below MSP and lack of procurement discourage farmers from cultivating pulses and oilseeds.
2. Record output and falling global prices of soybean and groundnut reduce domestic prices further.
3. Sharp rise in pulses imports adds to price pressure and reduces domestic cultivation incentives.
4. Area under oilseeds declined by 5.3%, soybean by 7%, while pulses area increased marginally.
5. Policy reforms needed – assured MSP procurement, import regulation, and market support for pulses and oilseeds.
6. Long-term reforms – improve market linkages, reduce middlemen, adopt technology to increase yields and profitability.

4. What are the challenges in agricultural market reforms in India? How does improving market linkages benefit farmers and the overall economy?

1. Challenges – fragmented markets, dominance of middlemen, lack of direct farmer access to value chains.
2. Inconsistent procurement and price support systems weaken farmer bargaining power.
3. Infrastructure gaps and inefficiencies hinder smooth marketing and fair price realization.
4. Improved market linkages reduce intermediaries, enhancing farmer profits and reducing price volatility.
5. Direct market access encourages crop diversification, better quality produce, and investment in agriculture.
6. Stronger markets contribute to rural income growth, poverty reduction, and overall economic stability.