FOOD INFLATION
Food inflation is consistent rise in the price level of all agricultural food items. In India we grow plenty of rice and wheat which are also called cereals and there supply and price are not the main reason of food inflation, however the culprit lies in the supply of non-cereals such as fruits, vegetables, milk and pulses (dal) which causes food inflation.
Now the million dollar question is if prices of fruits, vegetables and pluses are higher then why the farmers are not concentrating on growing those more in order to earn more profits.
Reasons for low non-cereal output are:-
Pulses: - Pulses are fundamentally different from cereals since they need more nutrients and energy for synthesizing both proteins and carbohydrates unlike cereals that need to synthesize only carbohydrates. This makes them more vulnerable to the vagaries of weather than either rice or wheat and thus riskier to cultivate.
In the major pulses production states such as MP, Rajasthan, Maharashtra and UP cultivation has been pushed to marginal, non-irrigated land, farmers has also been reluctant to invest in fertilizers, nutrients or experiment with high yielding more expensive variety of pulses as a results yields have stagnated, the average annual growth rate of pulses is less than one per cent and this is alarming since the major source of protein in India are pulses and the population growth is about two per cent.
In today’s scenario if the production is on the higher side then the farmers will see complete collapse in the prices and if there is a deficit then farmers are not getting the right price even if the retail prices are higher.
Solution:-Marketing of pulses has to be revamped so that producers are assured minimum return on production and a higher share in revenue when prices move up.
Need to develop varieties with shorter cropping cycle so that they can be grown on the same land as wheat or rice without affecting there cropping cycles.
Fruits and Vegetables:- Absence of cold storage and in inadequate food processing industry and because of these reasons farmers are reluctant to follow price signals and commit more land to these items instead of cereals.
Post-harvest waste of fruits and vegetables are as high as 50 per cent and higher output simply translates into wastage and collapse in farm gate prices.
Solution: - A thriving food-processing industry could have provided producers an assured market and relative price stability.
For fruits, vegetables and milk we need large corporate participation in the post-harvest supply chain. This would break the current monopoly of private traders, reduce the tiers of intermediation and ultimately ensure a better farm gate price for the cultivator.
Milk:- India is the largest milk producer in the world with an annual output of 9.6 million tonnes. The per capita consumption is higher and this is because of Amul in Gujrat and some handful cooperatives in some states. A number of states are severely deficit in milk. The result again is sustained high prices of milk and its impact on food inflation. Solution: - We need an “Amul” in every state, providing procurement and marketing support to millions of milk-producers who are now outside any safety net.
Conclusion is we need to de-risk the cultivation of critical items that are in short supply. This would ensure that the farmers are willing and able to use better inputs. The problem of food inflation will vanish by itself.