Food
security is very essential for growth of India. Whenever India enters global
markets in case of food shortages, global prices shoot up as requirements of
India are huge. Abnormally high Onion prices in recent days have hit the poor
and middle class households very badly. Food inflation is threatening growth
story of India. It is therefore
need of hour to launch comprehensive action on managing supply chain of food products.
Need for consumers:
·
Except
for food grain (directly managed by FCI), most of other products are sold to
customers at prices multiple times of farm procurement prices;
·
middle men often indulge in hoarding and
cartelisation to increase prices but are very difficult to control due to their
unorganised activities
·
large
quantity of food products perish due to logistic and storage problems;
Need for
farmers:
·
One of the
biggest reasons of farmer suicides in India is marketing problem of farm
produce. In recent case of onions it
may be temporary gain to few farmers to Maharashtra but they could be in distress
in next year when large number of farmers would shift to onion farming and
prices will crash. In the end, it would be middle men and their supporters who
would be making the killing.
·
Due to this reason, farmers of Punjab,
Haryana, UP usually stick to wheat and rice farming as assured marketing
facilities are available.
·
Few years back commodity
exchange was started so that farmers could benefit from forward trading of
commodities and can plan the sowing accordingly. But, this has only increased
the prices of commodities and not benefitted the farmers.
This seems to a case of market failure
and probably a food price regulator like RBI is required.
Possible
actions:
1.
Setting
up a fair price regulator for essential commodities which determines fair
market price for various food products making certain assumptions about projected
supply. To make its job a little manageable in scope, it can restrict itself to
the highly critical ones which influence inflation big-time, like wheat, rice,
potatoes, onions, tomatoes, pulses, to name a few. Basically, just focus on the
20% of the food-products that impact 80% of the cost associated with food.
2.
One or
more PSU like FCI to procuring 10-20% of produce, moving and storing it at
multiple locations closer to consumption points through hiring of storage
spaces. Selling in open market throughout
the year.
3. Decision
of Government to allow FDI in wholesale/retail has not helped much in this
regard. A lean PSU manned by technically trained manpower can be quite
useful(trained manpower from private
sector could be very valuable).
4. Declaring MSP before start of sowing
season for essential food products, not only food grains. This would provide marketing
security to farmer.
5.
Taking
direct market action in case of abnormal rise or fall in prices like RBI does
in case of exchange rate management.
6. Supply chain rationalization reducing as
many middlemen as possible. e-Sourcing might be one way to do so
Ultimately, we need to attach a high
value to the life of every Indian instead of consigning them to being just
numbers. Our system can be developed in a way that respect and justice is given
to every Indian and every Indian life matters.
