Food Grain Price Rise

8/7/2019 Food Grain Price Rise

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3 BASIC QUESTIONS

f Why have prices risen?

f Are farmers benefiting from the rise?

f why is the government so helpless?





ACTUAL CAUSES OF PRICE RISE

DECREASE IN PRODUCTION:

f Domestic food production has been adversely affected by neoliberal

economic policies that exposed farmers to volatile international prices.

f

Poor distributionf Inadequate agricultural research.

f Degeneration of soil quality and reduced productivity of land.



POOR DISTRIBUTION

f Growing concentration in the market and inadequate public involvement.

f Inefficiency of public food distribution system

f Failed government policies have helped hoarding and black marketing.

f Increasing marketing margins most of which are garnered by middlemen as

shown in following chart for rice.





f Gap between average wholesaleand retail prices of rice widened

considerably ³ even doubled ³

across the four major zones of the

country.



f In wheat, the pattern is more

uneven but the retail margins are

very large indeed, as expressed by

the difference between the

wholesale price of wheat and the

retail price of atta (which is the

most basic first stage of

processing).



ARE FARMERS BENEFITING FROM THE RISE?

f Marketing margins at both wholesale and retail levels have increased.

f The farmers, do not get the benefit of the rising prices which

consumers in both rural and urban areas are forced to pay since most

of the margin is being eaten up by middle men.



GOVERNMENT POLICY- REAL CULPRIT

f Short sighted government market policies failed to correctly predict the

market behavior.

f Exporting surplus agricultural produce without saving for period with

low supply profits traders.



ROLE OF POLITICS-HELPLESSNESS OF

GOVERNMENT

f Cracking on hoardings may bring some relief temporarily but it·s a

difficult option for the governments at the state government.

f The trading community is a major source of funds and has close

connections with the political parties and politicians.

f Policy of correcting market through import also not helped.



REMEDIES

fFood security bill covers more beneficiaries, thus

decreasing undeserving.

fInvolvement of better-off persons will help in making

sure that PDS works well.fThe distribution should be per individual instead of

per family.

fDistribution should be through a properly funded,

efficient and accountable fair price shops network.

Documents

Food Grain Price Rise