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 Development is the Key
 
Food will never become cheaper as expenses rise
The Economic Times, India Monday, November 01, 2010


It is wishful thinking to assume that food will be cheaper than what it is today. The farmer’s single biggest cost now is labour. Farm labour wages have doubled in the last year across states and crops. Food prices have to spiral and stay there if India wishes to feed itself, writes Nidhi Nath Srinivas in The Economic Times.

Never mind wishful thinking by the government and RBI. Food will never be cheaper than what it is today. Not this year. Or in future. The reason is simple. Growing food in India has become extremely expensive. Crops are pricier even before they reach the market and face the pulls and tugs of rising local demand and exports.

The farmer’s single biggest cost now is labour. Farm labour wages have doubled in the last year across states and crops. The worst affected are fruits and vegetables because they need careful tending.

...

Field crops are faring no better.

...

In parts of Punjab and Haryana, you can’t get workers at any price, leaving this summer’s paddy standing forlorn in the fields. What has changed? The farm worker’s negotiating power. For the first time. With free monthly ration and government mazdoori available for Rs 100 a day, landless labourers needn’t beg neighbours for work. Work is chasing them. It’s a heady feeling. And disconcerting for the rest of the countryside.

...

UP cane farmers, Punjab grain farmers, Andhra paddy farmers haven’t used high-tech varieties in years. Only cotton farmers have shown nous in adopting BT technology to double output in six years. Without dramatically boosting volumes, farmers can’t even consider reducing product prices. No FMCG company would either.

With stagnant yields, bumper harvests only occur when more acres are diverted to a crop, and aided by good weather. Since cultivable land has maxed out, this bounty is at the cost of some other crop.

...

As a result, inflation merely hops from pulses to cereals to sugar to oils to vegetables. It never goes away. Yield fatigue implies returns are still too volatile to incentivise technology upgradation. Food prices have to spiral and stay there if India wishes to feed itself.

This article was published in the The Economic Times on Monday, November 01, 2010. Please read the original article here.
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