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Low food inflation is bad news for farmers (downtoearth)

Three years after Narendra Modi-led NDA government came to power, India witnesses unprecedented level of low food inflation. States like Maharashtra and Madhya Pradesh have been witnessing farmers’ unrest for quite some time now. Six farmers were killed in police firing in a protest rally held in Mandsaur district of Madhya Pradesh to demand fair price of their produce and farm loan waiver.

On the one hand, middle-class celebrates one of the lowest food inflation rates, and on the other hand farmers get nothing in return of their toil and get killed for demanding fair price of their produce.

Food inflation rate in April was 0.31 per cent, which was lower than the inflation rate in January (0.53 per cent). Just one year back, the inflation was hovering around 8.35 per cent. (See table 1)

Analysis shows that low food inflation is directly proportional to fair price of produces in the market. As food inflation witnesses a sharp decline, so is the price of produces in agriculture market across the country.

India had witnessed food inflation rate of 8.35 per cent in July 2016. Since then there has been sharp decline in food inflation rate. Meanwhile, there has been sharp decline in commodity prices, too, which has been fueling farmers’ unrest across the country.

Table 1
India’s food inflation
Time period

Food inflation rate

July 2016

8.35

Oct 2016

3.32

Jan 2017

0.53

Apr 2017

0.31

Food inflation fell to 0.53 per cent in January 2017 as compared to 1.37 per cent in December 2016. It was the demonetisation era when 86 per cent of high-denomination currency was rendered invalid in a day. The demand-supply scenario turned against farmers as people didn’t have cash to buy their fast perishing farm produce.

Hence, prices of some vegetables plummeted by 60 per cent between July 2016 and April 2017, further aggravating agrarian crisis.

The average price of onion has dropped by 21 per cent, potato dropped by 60 per cent, tomato dropped by 55 per cent and garlic’s price dipped by 50 per cent since July 2016. (See tables below). Prices of pulses like pigeon peas dipped by more than 40 per cent in different markets across the country.

Onion (Rs/quintal)
Time period

Mini.

Max price

Av. price

Difference%

July, 2016

590

1,035

844



April, 2017

492

794

666

-21%



Potato (Rs/quintal)
Time period

Mini.

Max price

Av. price

Difference %

July, 2016

1,199

1,551

1,381



April, 2017

436

676

556

-60%



Tomato (Rs/quintal)
Time period

Mini.

Max price

Av. Price

Difference

July, 2016

1,279

2,138

1,878



April, 2017

644

1,017

844

-55%



Garlic (Rs/quintal)
Time period

Mini. price

Max price

Av. price

Difference

July, 2016

5,714

10,803

7,484



April, 2017

2,767

4,577

3,694

-50%

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