FOOD GRAIN

PRICE RISE
An insight
 3 BASIC QUESTIONS

 Why have prices risen?

 Are farmers benefiting from the rise?

 why is the government so helpless?

 REASONS FOR RISE IN FOOD GRAIN
PRICES AS GIVEN BY GOVT.

 Natural calamities like drought, floods etc adversely affected production.

 Dysfunction of distribution system
 inability to import food grains from international market , as prices
internationally are higher than in India.
 Cost push inflation.
ACTUAL CAUSES OF PRICE RISE

DECREASE IN PRODUCTION:

 Domestic food production has been adversely affected by neoliberal

economic policies that exposed farmers to volatile international prices.
 Poor distribution
 Inadequate agricultural research.
 Degeneration of soil quality and reduced productivity of land.
 POOR DISTRIBUTION

 Growing concentration in the market and inadequate public involvement.

 Inefficiency of public food distribution system
 Failed government policies have helped hoarding and black marketing.
 Increasing marketing margins most of which are garnered by middlemen as
shown in following chart for rice.
 Gap between average wholesale
and retail prices of rice widened
considerably — even doubled —
across the four major zones of the
country.
 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?
 Marketing margins at both wholesale and retail levels have increased.

  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
 Short sighted government market policies failed to correctly predict the
market behavior.

 Exporting surplus agricultural produce without saving for period with

low supply profits traders.
ROLE OF POLITICS-HELPLESSNESS
OF GOVERNMENT
 Cracking on hoardings may bring some relief temporarily but it’s a
difficult option for the governments at the state government.
 The trading community is a major source of funds and has close
connections with the political parties and politicians.
 Policy of correcting market through import also not helped.
 REMEDIES
 Food security bill covers more beneficiaries, thus
decreasing undeserving.
 Involvement of better-off persons will help in making
sure that PDS works well.
 The distribution should be per individual instead of per
family.
 Distribution should be through a properly funded,
efficient and accountable fair price shops network.