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The Great Indian Vegetable Crisis and An Inept Central Government

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usm-red.gif (836 bytes)The Great Indian Vegetable Crisis
It is sheer irony that in a country which is the world’s second largest producer of onions, groundnuts, wheat and rice, third largest in cotton and rapeseed, people are suffering due to shortage of vegetables.
usm-red.gif (844 bytes)Onion Crisis : BJP's Nemesis
The crisis is partly man-made and the ineptitude of the Government to come to the aid of the people for several months has further of buttressed the argument that it is a Government of nonperformance


by M. Ashoke

For the last few months India has been passing through an unprecedented vegetable crisis. Prices of almost all the vegetables have soared. Prices of some vegetables have experienced a shocking tenfold rise. And according to some experts, vegetable prices will continue to rise in the next few months. Yet the Central government has not taken any tangible long term measure to check the food disaster which, analysts say, is the outcome of trader – bureaucracy nexus, inefficient governance and erratic monsoons.

At the end of October last year, onions were selling at Rs. 7-9 per kilogram. Today, they are Rs. 55-60. Potatoes were Rs. 3-5, they are Rs. 10-15 at presents. Coriander leaves are now Rs. 120-150 a kilogram as against 12-15 a kilogram last year.

Indications of crop failure and bad weather were available with the government for a long time. In June this year Department of Consumer Affairs in the Food and Civil Supplies Ministry warned of a food shortage and strongly recommended banning of food exports but the bureaucracy at the Commerce Ministry did not pay heed to the warning. Consequently, nearly 50,000 tonnes of onions were exported between July and September. Many of these onions are now being re-imported at higher prices.

While everyone accepts that the erratic rains have played havoc with the crops, blaming the rains have been found to be an inadequate reason.

The sales network in the agricultural sector is marked by a number of middlemen. They buy to hoard to make the situation far worse than it would have otherwise been. Let us first understand the chain. A farmer who produces the vegetables first sells to the commission agent. The commission agent, in turn, sells it to the primary wholesaler who sends vegetables to bigger markets. In bigger markets there are secondary wholesalers who buy from primary wholesalers and distribute to smaller wholesalers and big retailers at small cities and big city markets. In markets there is tertiary wholesalers who acts as the middlemen between secondary wholesalers and retailers. And the consumers purchase vegetables from retailers. The final price paid by the consumer depends on location and transportation. The long chain of middlemen thus controls the price of the vegetables. Some corrupt traders belonging to this chain in collusion with a section of bureaucracy have created the onion crisis. Their sole object is to make quick money at the cost of people. It is this racket which has jacked up the prices of onions disproportionately. While the farmer who produces vegetables, is getting Rs. 5/- a kilogram consumers are paying Rs. 25/- to 60 for buying a kilogram of onions.

While we agree that this will happen in market economics, where the market player will try to make as much profit as he can, we have no words to explain the incompetence of the Indian government which has failed to react miserably.

According to a political scientist, the big farmer and the big trader from two distinct lobbies. In recent times, these two power groups have come together. Over the years, the Indian big farmer (excepting West Bengal) has become more of a land owner, allowing smaller farmers to till the land while he has concentrated on trades. Similarly, many large traders in agricultural sector have acquired land and have employed small farmers to till it. The distinction between the big farmer and the trader is thus diminishing. And together they could turn out to be a lobby stronger than any one else in the country. The lobby could control the rural economy. And this phenomenon could after the structure of Indian polity. According to some marketing experts, this lobby may even be interested in setting up a chain of agri produce outlets throughout the country. In this process small retailers will be finished. The market will witness some branded agri produces. Finally consumers will be under the full control of the lobby. The central government, which is heavily dependent on the big farmers and large traders, is in no mood to disturb the unholy alliance between the two.

The macro issue related to the food crisis has also not received any attention. India will never be able to overcome food security threats as long as her agriculture remains heavily dependent on monsoons. There are researches on improved farming methods but they never reach the farmers. That’s why India’s yield to area ratio is far lower than the world average in many crops. In paddy, the average world yield is 27% higher than India’s, 41% higher in pulses, and as much as 249% higher for maize.

For the last three decades the government’s capital spending on agriculture infrastructure has been declined and the results is : inadequate roads, transportation and storage facilities, leading to wastage due to decay as vegetables have a short shelf-life. A recent study shows a shocking 45-50% of the produce is wasted due to lack of storage facilities.

Meantime, agricultural exports have been liberalised to some extent, while restriction on imports have been kept unchanged. This has hit the domestic consumers badly. Due to the rise in agricultural exports domestic price has gone up on one hand and the consumers have no access to relatively low-priced farm imports on the other.

The price spiral which started with onions may, according to market watchers, soon reach a crescendo in rice. The rice crop in most of the Indo-Gangetic plains, have been severely affected by erratic rains, the rice yield has plateaued in the northern states for some time. Add to this, an inefficient distribution system. Unless there is sound antidote all these factors may compound the problem and the rice will follow the onion way, warns a market watcher.

It is sheer irony that in a country which is the world’s second largest producer of onions, groundnuts, wheat and rice, third largest in cotton and rapeseed, people are suffering due to shortage of vegetables.

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