People who grow fruit, vegetables and cereals are,
ironically, hit harder by inflation than city-dwellers, although the
outcry against price rise is more visible in urban areas. This was
stated by the Associated Chambers of Commerce and Industry of India
(ASSOCHAM) in a study titled “The Producers’ Paradoxes in Food Items”,
which revealed the inflationary gap in vegetable prices in rural and
urban India.
Despite the fact that vegetables are grown in rural areas, people in these areas witnessed an annual increase of approximately 17 per cent in their prices in February 2014, while the city dwellers were somewhat better off, with an annual consumer price index (CPI) inflation of 7.36 per cent in this period.
The story was similar for fruit, but the difference between the rural and urban inflation was not as stark. “The orchards were located in the rural areas, but the people living there had to live with year-on-year inflation of about 17.32 per cent in February 2014 vis-a-vis a lower rate of approximately 13.62 per cent borne by those living in urban areas,” the study stated.
Rana Kapoor, president, ASSOCHAM, said, “The possible reason for the large disparity between the rural and urban prices of farm products is the lack of storage facilities in villages, with the result that the produce first goes to the nearby towns and cities for warehousing, and then, through an inefficient backward supply chain, it goes back to the villagers.
“This is a real producers’ paradox, which needs to be fixed if we have to aim for food security and economic security,” he added. He said another paradox was the fact that poor rural labourers and marginal farmers ended up paying more than their compatriots in the city. He added that the policy-makers needed to mull over this immediately.
“Economic answers must be found and building efficient supply chain with warehouses in both cities and the semi-urban areas seem the possible answers,” Kapoor said.
Though the CPI-measured inflation differential was less in the case of wheat and rice, it is still there. While the cereal products witnessed the rural price rise of 10.42 per cent in villages, the inflation in cities on this score was 9.93 per cent for February 2014.
“Though people in both villages and cities have been squeezed out of their earnings by a double-digit CPI inflation for about two years between April 2012 and January 2014, the villagers suffered more,” the ASSOCHAM study said.
Despite the fact that vegetables are grown in rural areas, people in these areas witnessed an annual increase of approximately 17 per cent in their prices in February 2014, while the city dwellers were somewhat better off, with an annual consumer price index (CPI) inflation of 7.36 per cent in this period.
The story was similar for fruit, but the difference between the rural and urban inflation was not as stark. “The orchards were located in the rural areas, but the people living there had to live with year-on-year inflation of about 17.32 per cent in February 2014 vis-a-vis a lower rate of approximately 13.62 per cent borne by those living in urban areas,” the study stated.
Rana Kapoor, president, ASSOCHAM, said, “The possible reason for the large disparity between the rural and urban prices of farm products is the lack of storage facilities in villages, with the result that the produce first goes to the nearby towns and cities for warehousing, and then, through an inefficient backward supply chain, it goes back to the villagers.
“This is a real producers’ paradox, which needs to be fixed if we have to aim for food security and economic security,” he added. He said another paradox was the fact that poor rural labourers and marginal farmers ended up paying more than their compatriots in the city. He added that the policy-makers needed to mull over this immediately.
“Economic answers must be found and building efficient supply chain with warehouses in both cities and the semi-urban areas seem the possible answers,” Kapoor said.
Though the CPI-measured inflation differential was less in the case of wheat and rice, it is still there. While the cereal products witnessed the rural price rise of 10.42 per cent in villages, the inflation in cities on this score was 9.93 per cent for February 2014.
“Though people in both villages and cities have been squeezed out of their earnings by a double-digit CPI inflation for about two years between April 2012 and January 2014, the villagers suffered more,” the ASSOCHAM study said.
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