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Friday, July 12, 2024

Tomato prices turn faces red & India’s white gold decline is causing a furor

EconomyTomato prices turn faces red & India's white gold decline is causing a furor

With the spiraling costs everywhere, including tomatoes hitting Rs. 200 causing faces to turn red, is the government doing enough to curb inflation?

India’s White Gold

Conventional Indian homes thrive on famous doodh (milk).  Parents give their children that classic glass of milk before they sleep and traditionally crown their morning elaborate breakfast with milk.  An old-time traditional household would consume 2 liters of milk a day, which would now cost over Rs 100/ a day, and Rs 3000 a month, nourishing households from the children to the grandparents.  Indians swear by the goodness of cow’s milk.  However, Rs. 3000 a month may be very tough for the middle or lower middle strata of society.

Amul under Tribhuvandas Kishibhai Patel and Verghese Kurien in 1949 spurred India’s White Revolution, which made the country the world’s largest producer of milk and milk products and has since ventured into overseas markets.

Amul had an exemplary tale of economic empowerment for dairy farmers in post-independence India, which became a source of livelihood for 3.6 million women residing in 18,600 villages in Gujarat. With an impressive annual turnover of Rs 38,000 crore, Amul stands as one of the greatest success stories of its kind with low-cost milk bought by millions of homes.

The turn of the road in recent times with high-rising costs made milk far too expensive for many.  That famous milky Indian chai is now transforming into a dark concoction far too stingingly strong triggering uncomfortable stomach churns.

The costs of high transportation have triggered the rise in milk costs, The rise in fodder costs, strong demand, and the impact of lumpy skin reports have contributed to an increase in prices. This situation arises from a demand-supply imbalance, as farmers faced difficulties during the COVID pandemic with reduced demand. Over the past year, input prices, including feed costs, have surged by 20 to 25 percent.

The surging rise of tomato prices has turned faces red!

Then, the last few months had the soaring surges of tomatoes to Rs 200 in some parts of the country that have turned faces scarlet red! McDonald’s took tomatoes out of its food items in certain locations and many eateries as well as households started using purée instead of tomatoes.  Home cooks have ruled out tomatoes in curries, salads, and sandwiches.

Experts have revealed that the severe inflation in tomato prices since June end of this year has been mainly caused by the recent monsoon floods, heavy rainfall, and diseased crops in parts of the nation that grow and supply the fruit as a major crop

On speaking with the grocery man, he said, “A few people buy a quarter kg of tomatoes, once in a while and they use it very sparingly as if it were gold.”

Stormy conditions with farmers are not managed well. While one cannot control the weather, one can add trees and shrubs to upland areas to stop runoff. Irrigation of the land helps so that the water gets drained off in channels during the rains and does not destroy the crops.  In hilly areas, rainwater could flow down and drown your plants. Planting some trees and shrubbery around these spots will block some of that water and prevent harmful runoff.

While the trees and shrubs don’t completely block the water from flowing, they slow the water down as rushing water damages roots and sweep away crops. Building a strong root system protects crops and curbs soil erosion.

Here it is for the governments to help the farmers so their crops do not get destroyed which has a boomerang effect on high-costing tomatoes!

An article by G. Ram Mohan in The Deccan Chronicle shared that the neglect of farmers led to costly tomatoes.  He quotes a 42-year-old farmer, M. Shekhar, a farmer in Arutla village of Manchala mandal in Ranga Reddy district., “Having burnt my fingers in the last two years and incurring a loss of Rs 1,50,000, which added to my debt burden, which shot up to Rs 4 lakh, I did not dare to cultivate tomatoes again this summer.”

The small farmers express that the government should start helping them with input costs, instead of paying Rythu Bandhu, also known at known as Farmer’s Investment Support Scheme, to those owning over 10 acres. It is said that one out of 100 farmers are benefitting from the current price of tomatoes.

When global crude oil prices are low, Indians pay far higher for crude oil

The bottom line that spurs inflation is usually petrol because everything needs transportation and once fuel is hit, everything rises.  Congress leader Rahul Gandhi had said, ” “UPA cannot be blamed for fuel price rise. At that time fuel price in the international market was high but now it is low. Yet fuel prices are high. You should ask where the money is going? Only two-three businessmen are getting benefits.”

Private companies in India benefit from Russian oil and not Indians. 

The majority of inexpensive Russian oil, approximately three-quarters of it, is purchased by private refiners like Reliance Industries and Russian-controlled Nayara Energy. These companies acquire the lower-priced Russian oil, refine it, and then sell it to European nations at significantly higher prices. Reliance Industries, in particular, has witnessed a substantial increase in its reliance on Russian oil, with nearly one-third of its crude oil purchases now originating from Russia, compared to a mere 5 percent prior to the war.

This situation highlights the fact that public sector refiners such as Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum have only limited access to Russian oil. However, these public refiners are responsible for supplying over 90 percent of the fuel requirements for the average Indian. Consequently, the companies engaged in purification and exportation to other nations have a larger share of the cheaper Russian oil imports, while the companies serving the common people with fuel receive a smaller portion. Consequently, the average Indian has been unable to fully benefit from the advantages of cheaper Russian oil imports, while private refiners are enjoying record profits.

He also said that there has to be a balance between development and environment and it has to be in favor of people, particularly the poor. No government should only favor big businessmen. The role of the government is to protect the environment. It’s your right. It is the job of the people in power to reduce the struggle of the people.

India’s annual consumer inflation rate surged for the first time in five months to 4.81% in June of 2023 from an upwardly revised 4.31% in May, and above market forecasts of 4.58%.

While the central government initially blamed COVID for inflation, despite the 13 percent drop in international crude rates, Indians paid 13 percent higher prices (considering the average price of petrol to be Rs 88 per litre) from January 2020 to January 2021.

In January 2020, before the Covid-19 lockdown, the crude oil price was around Rs 29 per litre, while end-users paid Rs 78 for a litre of petrol. Even after international crude prices nosedived in February, an Indian consumer still paid nearly five times higher (Rs 72.93 per litre) than the crude oil price (Rs 15.60 per litre).

In India, the price of a liter of petrol is approximately four times higher than the cost of crude oil, which is comparable to the price of a liter of packaged drinking water. The disparity is primarily due to taxes, commissions, and additional charges imposed on the end users. These factors prevent fuel rates from experiencing significant decreases in India, even when global crude oil prices are low.

To sum it all up, milk, tomatoes, and fuel have become as precious as gold.  It seems that mismanagement, not taking care of farmers, and seeing through their hazards where their crops get easily ravaged by torrential rains incurring drastic losses are some of the pitfalls triggering the price rise.  High taxes have sparked difficulties everywhere.

On the other hand, while crude oil is bought cheaply by certain big Indian businessmen, fuel costs are drastically rising in the country, in turn affecting the cost of transportation leading to inflated rises in tomatoes, and milk.  We ask, what will it be next?

With the high rises everywhere, the purchasing power is low and traders are facing the hardest time of their lives, and many small traders lament over the glorious past where their businesses were flourishing but now their businesses are at a standstill.

Ronald Reagan former American President said, “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man,” but is the government doing enough to protect the nation from inflation?

Ronald Reagan former American President said, “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man”

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