Eating disorder

No political party is sure how the blame will fall, between the Centre and the states, in case food price inflation bothers voters. So parties are playing pass the parcel. But first, let us look at the parcel. There is a global structural component to food price rise. True, wheat prices are spiking globally but not in India. But this may not last. Prices of rice, dairy products, edible oil are rising at both home and abroad. Most sensible bets are that India will be a part of global food price inflation for some time. That understood, let us now play the blame game logically.

Vegetable prices in Kerala are typically much higher than those in neighbouring Tamil Nadu. Kerala buys its vegetables mostly from Tamil Nadu. But, given the short distances, transport costs do not explain the price differential. What explains the problem are the traders and the Neanderthal storage and distribution. Traders either build in heavy margins to manage the risk that comes from primitive operations or have small operations that require a large number of intermediaries for the goods to move or they do both. Both imply high mark-ups and explain the big difference between farm gate prices and retail prices nationwide. That is why farmer suicides happen even as farm prices go up. More than a third of India8217;s farm produce is wasted because of systemic inefficiency. And this is despite substantial improvement in road and rail connectivity in recent years.

Both the Centre and the states are to blame. Agricultural marketing is a state issue but the Centre has an influential advisory role. All parties have been happy, at all times, to assume that ludicrously inefficient agricultural marketing boards can do the job. And no party will admit that big retail, which promises efficient farm gate to retail delivery, is the best way to help farmers and consumers. Why should they? Farm commodity intermediaries are important campaign finance sources in semi-rural and rural areas. Marxist Kerala8217;s budget recently imposed a tax on big retail that sources produce from outside the state. Those who think that is pro-people are part of the reason why food prices are rising.