Jan 9, 2013

When human food is cheaper than cattle and poultry feed.

The clamour for freezing the wheat procurement price is not dying down. Ironically, it is being spearheaded by the same organisation that is supposed to economically work out the procurement price in the first place -- the Commission for Costs and Prices (CACP). In an editorial, The Economic Times (Wheat Mess, Jan 8, 2013) calls the decision to hike the wheat price by Rs 650 per tonne as 'ridiculous and inane'. It of course draws its opinion from the "wise men of the Commission for Costs and Prices", as it acknowledges.   

Wheat procurement price is Rs 1350 per quintal for the 2013 marketing season. Paddy procurement price is Rs 1250 per quintal for the ordinary varieties. 

While pro-market economists are aggressively pursuing for a policy shift that forces the government to withdraw the support prices, it is interesting to see prices of cattle feed going up through the roof of the cattle sheds in the past one year. Isn't it strange that while the price of foodgrains -- human food -- remains almost static (if you were to adjust for inflation), the price of cattle feed is skyrocketing? 

Cattle feed is in fact more expensive than human food ! 

The Progressive Dairy Farmers Association says: "prices of deoiled rice bran jumped from Rs 700 per quintal in June to Rs 1,050 a quintal; while price of mustard cake shot up from 1,500 per quintal to Rs 2,100 a quintal. Similarly, cost of  deoiled mustard cake and soybean jumped to Rs 1,800 and 4,200 per quintal in just one month, he added. Farmers even accused solvent plant owners and big hoarders of stocking cattle feed ingredients which fuelled the prices." The Tribune (Nov 24, 2012) quotes a dairy farmer Sukhdev Singh of Baroli in Punjab as saying: "The Milk cooperatives purchases milk at Rs 20.50 per litre and sells it for Rs 34 a litre. Feed alone costs Rs 21 per kg as against Rs 14 per kg last year. How will we survive?" 

Let us now look at the poultry industry. In a report in The Tribune (Cold conditions lead to increase in poultry prices, Jan 9, 2013), G S Bedi, President of Amritsar Poultry Industry Association, says because the price of maize (which constitutes 60 per cent of the feed) has gone up from Rs 1100 to Rs 1580 per quintal, and with the price of soya also increasing, the cost of production has gone up by 25 per cent. The news report states that the prices of poultry feed has risen by almost 50 per cent over the last year's price. 

This brings me to the basic question. Why is that the Commission for Costs and Prices has no problems with the rising cost of cattle and poultry feed? I am sure it will project the unexplained hike in cattle and poultry feed prices as a reflection of economic growth. But when it comes to the price for human food -- wheat and rice, farmers don't deserve any profit over the cost of production. A price incentive to farmer (forgetting that he also lives in times when inflation is soaring all around him), is something that is projected as anti-growth !


Anonymous said...

sir..what is the solution you think for this. How can govt make it certain that the farmers will got at least the MSP for their product.

RAJAT said...

can we get freedom from GOVT. from food and agriculture sector

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