FURTURE:
Onions may Spoil Modi Sarkar's Salad Days
JAYASHREE BHOSALE & SUTANUKA GHOSAL
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PUNE | KOLKATA
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TOUGH TIMES AHEAD Despite govt steps to boost supply, onion prices all set to jump to .`100 a kg by October; potato too may play spoilsport
Onion prices are poised to jump to Rs 100 per kg by October while potato rates may fall briefly but rise again despite government measures to boost supply by restricting exports, as hailstorms and unseasonal rain in the past, along with the weak start of the monsoon season has created scarcity and strong inflationary pressures.
(MONSOON)
WHAT GOVT JUST DID?
Well begun is half done, but only half done
- It has slapped high minimum export prices on two staples, onions and potatoes, to discourage their exports.
-It has also advised state governments to exempt perishables like vegetables and fruits from the ambit of the state-administered APMC Act, which gives middlemen a near-monopoly on buying, stocking and trading farm produce. ( The farm trade lobby is powerful, as well as being wealthy.)
Higher food prices, economists assured everyone, would trickle down to create more wealth for farmers. Yet, there is no massive price for the farmer. High prices for the consumers and very low rates for farmers follow from two things.
1.One is a bottleneck at the trading level. This can be addressed by tinkering with the APMC Act and occasional raids on godowns and mandis.
2.But the larger problem is the low productivity of Indian agriculture, inflation in input costs and absent logistics.
This has no short-term fixes:
-India has to grow its yields by adopting new technologies and farm practices.
-The government will have to boost farm research spending massively and train farmers.
- The government should also invest heavily in our crumbling irrigation system, to offset water shortages from a poor monsoon.
Higher food prices, economists assured everyone, would trickle down to create more wealth for farmers. Yet, there is no massive price for the farmer. High prices for the consumers and very low rates for farmers follow from two things.
1.One is a bottleneck at the trading level. This can be addressed by tinkering with the APMC Act and occasional raids on godowns and mandis.
2.But the larger problem is the low productivity of Indian agriculture, inflation in input costs and absent logistics.
This has no short-term fixes:
-India has to grow its yields by adopting new technologies and farm practices.
-The government will have to boost farm research spending massively and train farmers.
- The government should also invest heavily in our crumbling irrigation system, to offset water shortages from a poor monsoon.
Food Prices Up, & Down
Ajay Vir Jakhar
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People are angry about high food prices, the govt is worried, but farm prices have crashed Permanent food imports cannot solve inflation. There are other more credible policy options at hand. The government has to take quick action on these things
Everyone is worried about food inflation, which is now near double-digit levels. But farmers are worried about farm gate price deflation.
-at the farm, most food prices are already very low and the threat of a weak monsoon looms large this year.(E.G.The farmer is worried that gram, or chana, is selling today at same price as it was in 2006. Mustard and barley prices are the same as in 2008.These are non-perishables, under the government-administered minimum support price umbrella.Consider perishables like vegetables: last year bitter gourd or karela, was sold by farmers at Rs 15 per kg.Today , farmers sell it at Rs 4 per kg.there r so many such example )
-BUt do we get it at such low prices ???
The same karela is being sold in Nizamuddin, a locality in New Delhi, for Rs 20 per kg. Sponge gourd, or tori, sold on the farm for Rs 20 per kg last year; today farmers sell it for Rs 6 per kg and consumers pay Rs 30 for it. So, just for selling the same thing from a city pavement after an overnight tempo ride, the seller makes a margin of 500%.
Who's Making Money?
The rate of growth of the food processing sector has slowed over the last 30 years. A few years ago the finance minister did not even find it worthwhile to mention the sector in his Budget speech. Permanent food imports cannot solve food inflation.
There are other more credible policy options at hand.
Who could better hide these windfall margins than the middlemen of mandis like Azadpur, in Delhi and Navi Mumbai, street vendors and shopkeepers? If left unchecked by the BJP, these very profiteers will shatter the dream of millions, who elected a new government to tame persistent inflation.
What to do??
-Some harsh decisions need be adopted, including a law to limit the maximum commission chargeable for a sale of agriculture produce at 2%, instead of today's exorbitant 7%.
-Agriculture is a state subject and most changes have to take place at the state level, but certain things in Delhi can help.
When it invests in cities, it must ensure space for 25,000 farmer markets in the 4,000 census towns across India. We do not oppose middlemen; all we ask is for is enforcing regulations and disbanding trade monopolies.
-Supply-side constraints can be resolved and price volatility of fruits and vegetables can be stemmed with political will and some decisive action.
-More For Every Acre We must increase the yield per acre of each crop. Diversification is not enough: it increases production by transferring area under crops like wheat and rice to other crops. Something else is needed.
-Farming has to be a remunerative profession. Otherwise farmers will use their land for other purposes and India's overall farm output will decline. That would be a disaster.
To avoid that, the government has to ensure reasonably priced perishables for consumers as well as a de cent price at the farm gate. And yields have to increase from the existing area to offset the increasing cost of inputs. Input costs have increased rapidly , far ahead of productivity gains for many years now.
Create Farm Jobs
-There are no short cuts: the finance minister can push us on to that path by boosting investment in farm research and development (R&D) to around 2% of GDP, the developed world average.
-India should triple the spend on activities like horticulture, fisheries, poultry and livestock rearing, not by extra allotment of funds, but by smarter reallocation of existing financial resources.
( well, horticulture generates five times more jobs than any other sector with the same investment.)
Who's Making Money?
The rate of growth of the food processing sector has slowed over the last 30 years. A few years ago the finance minister did not even find it worthwhile to mention the sector in his Budget speech. Permanent food imports cannot solve food inflation.
There are other more credible policy options at hand.
Who could better hide these windfall margins than the middlemen of mandis like Azadpur, in Delhi and Navi Mumbai, street vendors and shopkeepers? If left unchecked by the BJP, these very profiteers will shatter the dream of millions, who elected a new government to tame persistent inflation.
What to do??
-Some harsh decisions need be adopted, including a law to limit the maximum commission chargeable for a sale of agriculture produce at 2%, instead of today's exorbitant 7%.
-Agriculture is a state subject and most changes have to take place at the state level, but certain things in Delhi can help.
When it invests in cities, it must ensure space for 25,000 farmer markets in the 4,000 census towns across India. We do not oppose middlemen; all we ask is for is enforcing regulations and disbanding trade monopolies.
-Supply-side constraints can be resolved and price volatility of fruits and vegetables can be stemmed with political will and some decisive action.
-More For Every Acre We must increase the yield per acre of each crop. Diversification is not enough: it increases production by transferring area under crops like wheat and rice to other crops. Something else is needed.
-Farming has to be a remunerative profession. Otherwise farmers will use their land for other purposes and India's overall farm output will decline. That would be a disaster.
To avoid that, the government has to ensure reasonably priced perishables for consumers as well as a de cent price at the farm gate. And yields have to increase from the existing area to offset the increasing cost of inputs. Input costs have increased rapidly , far ahead of productivity gains for many years now.
Create Farm Jobs
-There are no short cuts: the finance minister can push us on to that path by boosting investment in farm research and development (R&D) to around 2% of GDP, the developed world average.
-India should triple the spend on activities like horticulture, fisheries, poultry and livestock rearing, not by extra allotment of funds, but by smarter reallocation of existing financial resources.
( well, horticulture generates five times more jobs than any other sector with the same investment.)
Centre to rope in States to fight inflation
Fast-track courts to try hoarders, 3 more months for implementing Food Security Act
MODI SAGA (MORE ACTIONS)
1.To keep a check on inflation in the wake of a weak monsoon, Prime Minister Narendra Modi on Thursday pushed for “proactive” coordination between the Centre and States in implementing contingency plans and asked the States to set up fast-track courts to sternly deal with hoarders.
2. reviewed the availability of water and seeds and directed that fodder grids be formed for a long-term solution to the problem of drying grazing lands for livestock in rain-fed areas.
3. decided to extend by three months the period till when States should implement the National Food Security Act, which provides for concessional foodgrains to 75 per cent identified beneficiaries. Earlier, State governments had to implement the Act by July 4, 2014, within 365 days of it coming into force (on July 5, 2013). Only five States are ready for implementation of the Act.
4.It gave a go-ahead for setting a minimum export price of $450 per tonne for potato to discourage exports and check the rising price of the tuber. Onion supplies have improved over the last week easing prices, but the price of potato has gone up by about 30 per cent compared to last year. India exports between one to two lakh tonne potatoes annually.
5.Steps to tackle inflation were yielding results and the Agriculture Ministry was ready with a contingency plan for 500 districts in case the monsoon failed to revive.
6. the government announced only a modest hike in the minimum support price of paddy and pulses to contain inflation.
FOOD INFLATION - Curb Food Prices Without Harming the Farmers
S Sivakumar
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Various measures have been deployed to combat food inflation. Subsidies on food and fertilisers, imports of food as well as regulations to prevent hoarding of farm produce did succeed in stabilising prices from time to time.
But such crisis management has been able to provide only short-lived relief, and prices have gone up from 2007.Bringing down food inflation will benefit the consumer, but make prices unattractive to farmers. This will accentuate poverty . Unremunerative prices discourage investments in agriculture, causing supply-side shortages, fuelling inflation further. So, the most effective way of tackling this issue is to focus on bringing down consumer prices, ploughing a larger share of the consumer spend back to the farmer.
First we need to lower transaction costs. The Agricultural Produce Market Committee (APMC) Acts mandate all farm produce should be brought to mandis for auctioning, making these platforms virtual monopolies. The farmer pays to transport his produce over long distances, before knowing the price at which his produce would be sold, or whether any other market would have paid a better price. The journey from farm to consumer involves multiple levels of transportation, handling expenses, commissions of agents and a mandi cess, adding nearly 20% cost to food prices. This absurdity was acknowledged years ago, and a new Model APMC Act recommended by the Centre in 2003.
This Model Act must be implement ed in all states. Unless farmers have the freedom to sell at farm-gate or other transparent platforms directly to buyers, transaction costs will remain high and drive consumer prices higher. Next, we need to cut wastage. Anywhere from 5% to 40% of food is wasted along the chain, depending on the perishability of the crop and the season. First, market instruments must empower farmers to produce as per tomorrow's demand, rather than be guided by yesterday's prices.
If the Forward Contracts Regulation Act (FCRA) is amended to permit trading in options, farmers are assured of a minimum price when sowing, based on future projections simulated by a market consensus. This will align production volumes to future demand conditions and minimise wastage.
We need large investments to set up climate-controlled infrastructure to enhance the shelf life of farm produce. The private sector has the capacity to invest and add value to such infrastructure. But regulations like the Essential Commodities Act (ECA), which impose stock limits and curb movements, create uncertainty , acting as a deterrent to such long-term investments. We need to add value to farm produce by facilitating food processing on a much larger scale.
Food processors do not find it worth their while to engage with farmers directly due to APMC restrictions. And the ECA does not distinguish between hoarders and genuine market players.
The risk management capacity of food processors is squeezed, because options are not permitted under FCRA.
So, reforms in APMC, ECA and FCRA are critical to mobilise investments in the food processing sector.
India's agricultural yields are far below the best-in-class. Depending on the crop, productivity improvements can range from 20% to 100%. Though Indian farming has seen progress, induction of technology and mechanisation is still below par. Agriculture is still exposed to high climate variation risks. Given that around 65% of India's total sowed area meets its requirements from rainwater alone, it is imperative to invest in technology to make agriculture climateand weatherproof. These include introduction of specially-developed seeds that withstand extreme weather, diverse soil conditions and various biotic stresses.
Solutions like crop and weather insurance are also essential to whet the risk-taking capability of the farmer, who can then invest to step up productivity , participate more effectively in agricultural value chains and garner a larger share of consumer spends.
Market-distorting subsidies have to be rationalised to make agri-business more viable and bring investments into the sector.
Private enterprises engaged in agribusiness must focus on research and innovation to make agriculture remunerative to farmers and ensure the products are relevant to consumers.
But such crisis management has been able to provide only short-lived relief, and prices have gone up from 2007.Bringing down food inflation will benefit the consumer, but make prices unattractive to farmers. This will accentuate poverty . Unremunerative prices discourage investments in agriculture, causing supply-side shortages, fuelling inflation further. So, the most effective way of tackling this issue is to focus on bringing down consumer prices, ploughing a larger share of the consumer spend back to the farmer.
First we need to lower transaction costs. The Agricultural Produce Market Committee (APMC) Acts mandate all farm produce should be brought to mandis for auctioning, making these platforms virtual monopolies. The farmer pays to transport his produce over long distances, before knowing the price at which his produce would be sold, or whether any other market would have paid a better price. The journey from farm to consumer involves multiple levels of transportation, handling expenses, commissions of agents and a mandi cess, adding nearly 20% cost to food prices. This absurdity was acknowledged years ago, and a new Model APMC Act recommended by the Centre in 2003.
This Model Act must be implement ed in all states. Unless farmers have the freedom to sell at farm-gate or other transparent platforms directly to buyers, transaction costs will remain high and drive consumer prices higher. Next, we need to cut wastage. Anywhere from 5% to 40% of food is wasted along the chain, depending on the perishability of the crop and the season. First, market instruments must empower farmers to produce as per tomorrow's demand, rather than be guided by yesterday's prices.
If the Forward Contracts Regulation Act (FCRA) is amended to permit trading in options, farmers are assured of a minimum price when sowing, based on future projections simulated by a market consensus. This will align production volumes to future demand conditions and minimise wastage.
We need large investments to set up climate-controlled infrastructure to enhance the shelf life of farm produce. The private sector has the capacity to invest and add value to such infrastructure. But regulations like the Essential Commodities Act (ECA), which impose stock limits and curb movements, create uncertainty , acting as a deterrent to such long-term investments. We need to add value to farm produce by facilitating food processing on a much larger scale.
Food processors do not find it worth their while to engage with farmers directly due to APMC restrictions. And the ECA does not distinguish between hoarders and genuine market players.
The risk management capacity of food processors is squeezed, because options are not permitted under FCRA.
So, reforms in APMC, ECA and FCRA are critical to mobilise investments in the food processing sector.
India's agricultural yields are far below the best-in-class. Depending on the crop, productivity improvements can range from 20% to 100%. Though Indian farming has seen progress, induction of technology and mechanisation is still below par. Agriculture is still exposed to high climate variation risks. Given that around 65% of India's total sowed area meets its requirements from rainwater alone, it is imperative to invest in technology to make agriculture climateand weatherproof. These include introduction of specially-developed seeds that withstand extreme weather, diverse soil conditions and various biotic stresses.
Solutions like crop and weather insurance are also essential to whet the risk-taking capability of the farmer, who can then invest to step up productivity , participate more effectively in agricultural value chains and garner a larger share of consumer spends.
Market-distorting subsidies have to be rationalised to make agri-business more viable and bring investments into the sector.
Private enterprises engaged in agribusiness must focus on research and innovation to make agriculture remunerative to farmers and ensure the products are relevant to consumers.
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