Day 27/ 365 – The rise and rise of food prices


Read in the newspaper yesterday, that the food inflation is now is at a all time high and prices of onion are currently 237% higher than what they were last year. Today onion, one of the most basic commodities costs anywhere Rs. 80-100 per kg, as compared to around Rs. 20-25 per kg. last year. The sad part is no one knows the reason why the prices are so high and the government, as usual, is clueless. The government blames that there is shortfall in supply, however, we keep reading that there onions have  been imported from Pakistan, China, Afghanistan, Egypt etc. But there is still shortfall. Along with the prices of onion, the prices of potatoes have also increased. Couple of weeks ago, I got potatoes for Rs. 24/ kg, a week later my mom got it for Rs. 28/ kg and then last week I got it for Rs. 35/ kg. I asked the potato vendor – whats the reason for this reason. He had no reply. He said the prices would raise in the next few days. It sounded like these guys decide amongst themselves what the prices should be and then sell it to the consumers. Probably there is some cartel sitting and deciding on the prices of onions and potatoes and other veggies.

I feel the issue is with the entire supply chain management that we have in India. There are way too many middle men involved, who need to get their share of money before the goods finally reach the consumer. Consider this, the farmer sells his produce to his local agent, who collects the produce and forwards it on to the APMC level. The wholesalers buy their stocks from the APMC and the retailers buy the stock from the wholesalers and then finally sell it to the consumers. There is money exchanged at all these places and that extra cost is passed on to the consumers. There is also a very good possibility that these agents, wholesalers create an artificial shortage of supply thus reducing the availability of the vegetables in the markets. The government does not help in the matters by making statements like prices will remain high for the next 7-10 days. Such statements further create artificial increase in demand thus raising the prices further. There are statements from the wholesalers like “If people can afford to spend Rs. 200 crore on a movie, then they can very well afford these prices”. Not sure how they decide what we can afford and what we cannot. It is strange that the government acts helpless in such scenarios. We all know what happens once the prices increases – it more or less never rolls back down. The winter months are expected to bring the prices back to normal or reduce them. Let’s see how the scenario plays out. Not too hopeful of the reduced prices though.  However, do feel confident that a lot of people will turn to Jainism if such a trend continues.

 

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