Inflation- Traders Laughing, Consumers Perplexed

Inflation is really affecting us, particularly the retired persons. I am sure it must be affecting most of the salaried employees too, as it happened with us in late sixties, when the inflation suddenly rose very drastically. I wonder who is making the money: the farmers, who grow, or the wholesalers, or retail traders. Should there be a relation between the prices paid to the farmers, and the prices charged by the wholesalers and the retail traders? Unfortunately, it doesn’t exist.

Since last few weeks, I find most of the daily newspapers of the national capital regions carrying an ad from Agricultural Produce Marketing Committee, Azadpur. As mentioned at the bottom of the ad, it is being ‘done in public interest’. The ad carries the wholesale rates of fruits & vegetables, food grains and pulses in regulated markets- Azadpur, Narela Mandi and in Naya Bazar on the previous day. The wholesale prices (in Rs. per kg.) are surprisingly low. For instance on 22.04.2008, potato was at minimum of 3Rpk and maximum of 4.75 Rpk, onion at minimum of 3 Rpk and maximum 5 Rpk, tomato with minimum at 2.5 Rpk and maximum at 8.75 Rpk, cabbage with minimum at 1Rpk and maximum at 5.75 Rpk, ladyfinger with minimum at 6 Rpk and maximum at 20 Rpk. Price at Narela for the wheat (Mexican) was at minimum of 10 Rpk and maximum of 10.25 Rpk, while price for dals Arhar and Gram at Naya Bazar were at Rs. 34 and Rs 31 per kg. respectively.

The ad aims at telling people the difference between the wholesale rates and the actual price the retailers or the vendors are charging from the customers.

One thing is sure that the farmers or the growers would have been paid much lower prices to have the wholesale price at the level in ad. The farmers are not getting the benefits of the high prices charged from the consumers. The local traders try to buy from the farmers his produces of wheat, rice, or pulses at less than the minimum support price (MSP) fixed by the government. Even the agents of the bigger private companies procure at as little as Rs 10-15 above MSP. Unfortunately, the farmers are neither that rich to resist the tirade of the traders nor as united as the traders are.

Now with the wholesale price known, what should be the prices of the commodities for the consumers that can justify the cost of transportation, other intermediary expenses, some amount of losses, and the margin for the retailers? Presently, the retailers are selling at nothing less than 2-3 times or occasionally even more of the wholesale prices to the consumers. Is it justified? Can something be done about it?

· The vendors in weekly market or permanent vegetable markets decide the retail prices to be charged from the consumers between themselves on day-to-day basis before starting the working day.
· The lone vendors pushing his cart through different localities charges the prices according to the opportunity he gets.
· The prices in organized retail outlets such as Shubhiksha or ‘aap ka bazaar’, or ‘food bazaar’ or even in ‘Safal’ outlets are also almost very much near to these vendors. It doesn’t appear that these organized retailers are buying storing, transporting and delivering using the best practices and selling at the least price to the consumers, as claimed.

As reported in media, even the reputed companies are cutting down the weight of the packages in such a manner that the consumers fail to know, to maintain the price for the consumers without telling the consumers. How can the poor consumers do? Is it any way different than under weighing by the vendors in weekly bazaar?

While the political pressures through protests of all kinds are going on, the situation at least in India demands solutions through a very efficient supply chain management and induction of a lot of investment in technology, warehouses and transportation system to cut down the delivery time and waste. But in this so-called free market economy, who will do that? The only hope can be big business houses that are entering the retail sector such as ITC, Reliance and Bharati and promising to pay the best to the farmers and charge the minimum from the consumers. It can happen if a competition such as one in telecom can evolve. Will it happen?

PS: The Indian retail market will grow to $637 billion by 2015 and modern retail, which presently accounts for 4 per cent of the total market, is likely to increase its share to 22 per cent by 2010.

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