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Higher prices of milk, fruits and pulses pushed food inflation to 17.70 per cent for the week ended March 27. On an annual basis, pulses became dearer by 32.60 per cent, milk by 21.12 per cent, fruits 14.95 and wheat by 13.34 per cent.
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It is difficult to say what proportion of the wholesale price for farm products really reaches the actual grower; a good part of it could go to the long chain of middlemen. Whether a farmer actually reaped gains from soaring prices of agri-produce would also depend on how much of his output he actually managed to save for the market.
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Landless farmers or those with small holdings who are unable to generate a big surplus, would have certainly felt the bite of inflation, as they would have ended up paying more for almost every item of daily consumption. And it is they who may make up a majority of the rural population.
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“The Economic Survey made the valid point that despite the ‘hype’ over food prices, producer prices in agriculture only grew by 6%.”The CPI of Agri Laborers is 17%. So the farmers’ share of 6% in the increase of food prices is only one third of increase in cost of living thus making them poorer to that extent.
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“The government announced that duty-free imports of oilseed and pulses, will continue until March 31, 2011, grown largely in very poor rain-fed areas, dashing the hopes of farmers, hopes for getting better prices this kharif season or even the next rabi season because by March-end the larger cropping decisions will have been made.”
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“In the period April 2009 to July 2009, for which they gave us the latest figures this month, edible oil imports went up by 77.7% and pulses imports grew by 34.6%. Meanwhile, the ministry of shipping was generous in saying that more is on the way. The government not only imports these food products, it also subsidises them. Take pulses, where the numbers are less frightening. The April-July numbers suggest an annual rate of $1.5 billion.”
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| “Since we subsidise farmers in OECD and other countries who sell us these pulses at 15% premium over local market prices, we will give them $115 million. That’s roughly Rs 500 per tonne. If we look at acreage response elasticities, we could probably get 10% growth in pulses, provided we were equally generous to our own farmers” Yoginder K Alagh FE 310310 |
Economic costs of Social Sector Spending: PDS in Shambles
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| Barely a few weeks after a Supreme Court committee comes out with a verdict that the public distribution system is bust and needs a drastic overhaul, the government clears a food security bill that seeks to push more food through this very same burst pipe. |
How the PDS can possibly deliver on its new responsibilities when it is practically non-existent in several states, apart from the huge leaks in it?
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*Currently, 6.52 crore families are covered under the public distribution system (PDS), which may go up to 8.14 crore if Planning Commission approves Tendulkar Committee formula. The National Commission on Farmers (2006), in its recommendations on building a sustainable national nutrition security system, calculated that about 60 million tonnes of foodgrains will be needed to sustain a universal PDS.
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India's food subsidy up 65% in FY10
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India's food subsidy bill is estimated to have crossed Rs 72,000 crore in the 2009-10 fiscal, a 65 per cent jump from the previous year, mainly due to increased procurement and rising cost of foodgrains. In the 2008-09 fiscal, the Centre had to bear Rs 43,668 crore on food subsidy.
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The Centre had procured 59 million tonnes of rice and wheat in 2009-10. Meanwhile, supplies to the states for distribution through ration shops rose to 56.6 million tonnes in 2009-10 from 39 million tonnes in the previous year.
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| The economic cost of rice has now increased to Rs 20.43 per kg from Rs 17.89 a kg in 2008-09, while that of wheat has gone up to Rs 15.43 a kg from 13.92 a kg in the review period. However, rice is being supplied to the states at Rs 3-7.95 per kg and wheat at Rs 2-6.10 per kg under the Public Distribution System (PDS). |
| The central issue prices (CIP) have been kept unchanged since 2002, though economic cost has skyrocketed. PTI 080410 |
| Faulty Sugar production estimates flip flop, sugar prices go haywire |
| If 2008-09 was a year of the Centre and the industry both overestimating the country's sugar output, the 2009-10 season is turning out to be just the other way round. |
| At the start of the 2008-09 sugar season (October-September), the Centre reckoned production at 220 lakh tonnes (lt). However, when the season ended, the final all-India number came to 145lt. |
| Production for the 2009-10 season was pegged at 146lt. By January, the consensus within the trade was a production of below 140 lt, with some even venturing a sub-130 lt number. All that was enough for sugar prices to hit the stratosphere, as ex-factory realisations surged by about Rs 10/kg between Christmas and mid-January. |
| But since then, prices are back to – actually lower than – where they were and, worse, seemingly headed further down. |
| The trigger, again, is production, which is now seen to top 170 lt, with the National Federation of Cooperative Sugar Factories expecting it even higher at 180-185 lt. The way output estimates have been revised upwards – and may well be revised further – is better captured by looking at just Maharashtra and UP. |
| It appears mills simply did not account for the possibility of higher cane yields due to farmers taking extra interest in their crop this time. “We failed to gauge the grower's enthusiasm for applying more fertilisers and other inputs in view of remunerative cane prices, just as we last time underestimated his anger and indifference on not being paid adequately and in time”, a UP miller admitted. BL 050410 |
| NOTE: Government and sugar millers are responsible for the havoc wrought by these faulty estimates of sugar production and therefore should be made to pay for the lower prices of sugarcane in 2008-09 and higher prices of sugar in 2009-10 suffered by sugarcane farmers and consumers respectively. |
Middlemen control the food trade; and farmers and consumers end up getting a raw deal. Food retail chains provide an opportunity to break the stranglehold of middlemen. Contract procurement can work to farmers' advantage if they are a part of a larger body capable of negotiating and standing up to organised retail.
A producer company like Amul has shown results in the dairy sector. Cooperatives have also been successful, to some extent, in the sugar and plantation sectors. Foodgrain and vegetables too need organised farmer bodies. Retailers, in turn, can help farmers access not just the market, but also technology and credit to raise productivity. ET 050410 |
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