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Soaring prices of vegetables pushed the annual rate of inflation for food articles to 19.05 per cent for the week ended Nov 28.
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Prices of potatoes doubled and pulses were costlier by 35 per cent. Onion prices rose by an average 32 per cent. Sugar prices increased about 53 per cent in November against the same month last year
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K.R.S.Reddy December 10 , 2009 ,19:54 IST The FM and the RBI are of the opinion that foodflation is due to supply side constraints, and are clueless as to the origin of additional demand. For example additional demand is coming from sources where money is pumped with out any corresponding increase in value addition such as NREGS where no significant useful assets are created and payment of arrears to Government employees where there is no value addition at all and cost is treated as out put. The cause for both is the government expenditure without corresponding value addition. And the RBI is not ready to mop up excess liquidity lest the GDP growth will be affected. With the result the poor and the middle class are made to pay high prices to food items.
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“The rise in inflation is due to excessive spending by the Union Government before last year’s general elections,”Advani. PTI 121209
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Faulty Sugar Policy-Farmers are the Sufferers :
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Abstract: The price of sugar in the market has shot up to Rs.42 a kg, while the price to be paid to the farmer remains low. Govt. is responsible for sugarcane farmers’ plight-Dr Haque.
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“The Government of India has fixed the fair and remunerative price (FRP) of sugarcane to be paid by the sugar mills for 2009-10 sugar season at Rs.129.84 per quintal linked to a basic recovery rate of 9.5 per cent.
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| The input cost for one quintal of sugarcane is roughly Rs.233.52 now. The price announced by the government does not meet even remotely the input cost. |
“There is no way we can allow the government to play with the lives of 50 million farmers. The government, which claims to be a well-wisher of the farmers, is deliberately destroying sugarcane farmers so it can go ahead and import raw sugar,” said Anil Singh, national secretary of the NAFA. In fact, the contents of the CACP report for 2008-09, which advised the government to increase the price of sugarcane, establish beyond doubt that the government slept over the repeated warnings by experts and that it deliberately pushed things in a particular direction so that import of raw and refined sugar became inevitable.
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| In 2006, India had a surplus sugar stock to the tune of 60 lakh tonnes. At that time the international price of sugar was Rs.20,680 per tonne, while the domestic price was Rs.13,000 per tonne. So if export of sugar was allowed then, the country would have earned precious foreign exchange. But the government banned the export of sugar in 2006. It resulted in a net loss of Rs.4,608 crore in terms of export earnings. In 2007-08, when international prices crashed to Rs.13,000 per tonne, the country exported 68 lakh tonnes! |
In 2007-08, it became evident that the net area under sugarcane production was falling. The CACP warned the government in its report for 2008-2009 that unless it raised the SMP for sugarcane, the net area under the crop would continue to fall. The government paid no heed. The SMP for sugarcane in 2004 was Rs.79.25 a quintal, and in 2008-09 it was Rs.81.18 a quintal, despite the input cost having gone up substantially and despite a massive hike in the minimum support price of wheat and paddy.
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The CACP, which submitted a supplementary report to the Agriculture Ministry on March 21, 2008, highlighting the anomalies in the pricing of sugarcane and other crops, stated: “The SMP of sugarcane would have to be raised to Rs.175 per quintal to restore the inter-crop parity.” In the same paragraph, the report explained how the increase in the support price for wheat and paddy was tilting the balance against sugarcane, the price for which had barely increased since 2004.
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“Instead of accepting my recommendations, the government terminated my services,” says Dr T. Haque, who was the CACP chairman then. Dr Haque says inter-crop disparity has resulted in the diminishing of the area under sugarcane production. I hold the entire UPA [United Progressive Alliance] government, not only the Agriculture Minister, responsible for the sugarcane farmers’ plight today because CACP reports are discussed by the entire Cabinet, which declares the minimum support price for various crops. It is the entire UPA government that has failed the sugarcane farmers.”
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According to him, while deciding the minimum support price for sugarcane, the factors that need to be considered are the cost of production of sugarcane, the price of sugar in the market, inter-crop price parity, and the interests of farmers, sugar mill owners and consumers. But in deciding the FRP for sugarcane, none of this was apparently taken into account – the price of sugar in the market has shot up to Rs.42 a kg, while the price to be paid to the farmer remains low.
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“The only factors determining the sugarcane price should be the economics of sugar, nothing else. Let the price of sugar decide the price of sugarcane, irrespective of other considerations.” Samir Somaiah
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| Excerpts from Bitter story,Purnima S. Tripathi, Courtesy Front Line, I-25/Dec. 05-18, 2009 |
| News Nuggets: |
| Small farmers as the centre of all development efforts-IFAD |
| The IFAD’s programme in India’s hilly regions, tribal areas and the northeast have shown linkages between development and food security, and focusses on putting poor rural people, particularly women (micro-finance) and small farmers at the centre of all development efforts. |
| “Unless you look at the majority of farmers who have small landholdings and who produce most of the food, how can you achieve national development? Does it not make sense to invest in them?” |
| *“Smallholder farmers are the heart and soul of food security and poverty reduction,” Mr. Ban, UN SG declared. |
