Farmers reaping losses in midst of runaway inflation

If you are in a business where your cost of inputs keeps shooting up but prices for your produce at best  inch up  or mostly  slide. Would you like to be in that business? The answer would be 'No' in most cases. But what if you have no choice. Like it or not, got to live with it.!  No prizes for guessing. That is the enterprise called 'Farming' .

  Those app-driven online stores which have grown into big billionaire leagues  mail you  grocery bills which keep rising every other day, unmindful of your grudges. Most of the price increase is being linked to so-called ''supply bottleneck'' by corporate analysts and those giving tips on stocks,  on television.  

  What is the real story? Let's not depend on any other source than the official  data itself and take a  look at the Wholesale Price  Index for April 2021. If consumer is paying more for his online cart of vegetables, cereals, rice or wheat flour during lockdown, the same is not reflected in the WPI numbers. With exceptions of a few, the wholesale prices for farm produce have either remained static or dropped during April, compared to the same month in 2020. On the contrary, we see a huge rise in prices of commodities or other articles used by farmers either as raw material or for their personal consumption.  

  Illustrations are given below: The year-on-year prices, measured on the WPI , for cereals (-) 3.32 per cent, paddy (-) 0.92 per cent, wheat (-)3.29 per cent, vegetables (-) 9.03 , potato (- and a huge one) 30.44 per cent, onion (-) 19.72. Fruits and pulses were exceptions to this trend with former increasing by 27.43 per cent and latter by 10.74.

 So, a sharp drop in prices of  primary food articles does not resonate with a huge  10.49 increase in wholesale mandis; the benefit of which scarcely accrues to the growers.  

 The opposite is the scenario when we look at increase in input costs.  Diesel prices went up Y-on-Y by 33.82 per cent, chemicals and chemical products 10.24 per cent.

 The official data  shows the pricing power of the manufacturers at the wholesale level itself, which would add up by a hefty retailer margin by the time the goods reach the consumers. The same is not available to the farmers ; as is evident by almost eight percentage point difference between the food articles in the 'primary category' and 'food articles' in the 'manufactured products' category.

 In the primary segments, the WPI inflation for food articles went up by 4.92 per cent in April, Y-on-Y; but the food segment in the manufactured products saw a jump of 12.62 per cent. Where are the margins going is not difficult to guess!

  The story is two-fold: First the prices of farm produce are not increasing. On the contrary, they are  decreasing , with a handful of exceptions. Linked to the first aspect is the fact that  crucial input costs  have sky-rocketed. Second, even if the farm produce is showing negative trend in wholesale mandis, the ''farm fresh'' basket of vegetables delivered at your door step  is costing you a lot more.      

This is the pricing picture of farm produce in the wholesale mandis in April, a month which we would like to forget when it comes to rural miseries inflicted by coronavirus and the apathy of the system towards a landscape which saved Indian economy from sagging for the last several  years.    Unfortunately, the rural pain is not even being counted well.  The unseasonal rains would require the tillers to plough their fields to preserve the moisture for the ensuing Khariff season. But with the virus raging in the villages, would there be enough manpower , supported by the courageous woman power , to keep us feeding!. Salute to their spirit.


 (Prakash Chawla is a New Delhi-based independent journalist)