The spiralling food inflation made headlines as it hit 14.1 percent in December 2019. The biggest contributor was vegetable price inflation that rose to 60.5 percent in December from 36 percent in November.
So while you are paying much more for your plate of food, does rising food prices indicate better income for farmers, even though temporary?
Not at all.
For one, the December food inflation was a result of a supply shock in the market. Uneven distribution of rains affected the entire monsoon cropping cycle, with some regions losing crops to drought and others to excessive rainfall. A demand-supply mismatch led to higher prices. So selling smaller quantities even at higher prices, farmers net income is still lower.
The onion was the headline grabber in December with prices zooming the most, 328 percent in December, however, onion farmers are certainly not gaining out of this unprecedented price hike.
Our ground surveys showed only 10-15 percent farmers benefitted from the steep price rise. Most farmers had lost 70-80 percent of their monsoon onion crop to excess rains and whatever was remaining in the field was a poor quality that did not fetch them impressive rates.
"Last year, I had harvested 100 quintals of onion on my two-acre plot. This year it has gone down to 3-4 quintals. Even if I get Rs 100 per kg, I am not even recovering my costs of cultivation," said Rajendra Ahir,
an onion farmer in Nashik. Less quantity and poor quality of onions to trade meant not much benefit.
Farmers like Rajendra suffered when excessive rainfall in November rains spoilt most of the crops on the fields. While the crops were lost, production cost zoomed and even despite rising prices costs are not recoverable. Retail onions prices have already started correcting in January with imports flowing in and new harvests entering the market.
But again onion only contributed one percent to the food index. Other crops and vegetables carry a bigger burden.
Pulses and cereals that make up for a large contribution have again being hit by supply disruption. Mainly owing to the government holding wheat and rice stocks and in turn creating an artificial supply shortage. Here too, the farmer fetched lower rates when he sold at the mandi and prices rose later.
Vegetable inflation rose to 60.5 percent in December and it was largely again led by seasonal shocks and supply disruptions.
Rajendra Jhibal Dunedar, a farmer from Konda Savadi village in Nagpur district says despite rising prices he is unable to even recover his costs. Dunedar's family farms on 25 acres and grows cotton, vegetables and oranges.
"Firstly, rains in November created havoc, and then because of extreme cold, 30-40 percent of the vegetables we are growing are getting damaged. We are not getting any benefit of high prices. Only good quality veggies go-ahead to urban markets and middlemen circles hike up the prices. Only maybe 10 percent of our produce is of good quality. We are in fact selling the rest in local markets at low rates."
Dunedar, who has a large acreage under orange cultivation says the crop has been facing headwinds since last 3-4 years. "Oranges grown in Nagpur region have a typical shine on the skin that signifies superior quality is getting lost. Almost 30 percent of the oranges in my field now have spots on them and the size is also not growing like earlier. This obviously is not getting us good rates."
Neelkanth Gopalji Bhonde, another vegetable farmer from the neighbouring village Nilaj Salwa said in a month, prices shoot up for a few days in the mandi – so only those farmers who are lucky to be at the mandi benefit – even then not entirely as farmers have lost their crops. So on average, the earning is still lower.
"I have sold my green chillies produce at an average rate of Rs 8-10 per kg, while in urban markets it has shot up to Rs 100 per kg. Only the cost of removing chillies from the field comes up to Rs 6-7 per kg. So how am I making money from the price rise?"
Neelkanth’s tomato crops are rotting in the fields, "Tomato prices have crashed so much that we have left the crop in the fields itself, as the cost of removing it and taking it to the market will not even be recovered. And my Baigan crop has been marred by insect infestation."
Tomato farmers in Nashik too echoed the sentiment. Vasant Ahir, who cultivates onions and tomatoes said his earning on both the crops has been devastated, one owing to spoilt crops and the other by the glut in the market. Tomatoes saw over-production in November-December, crashing prices.
One of the biggest issues that farmers are grappling with in this season is that of insect infestation that is shoring up costs and reducing yields.
Mangesh Vasudev Amrute who cultivates green chillies and vegetables on his two-acre plot in Nagpur district says his cost of cultivation has gone up by over 40-50 percent solely on insecticide cost.
"I have spent Rs 2.5 lakh only on insecticides and pesticides. Because of the change in climate, a newer variety of insects are affecting. I need to spray every 8th day and that is an expenditure of Rs 10,000 each time," Mangesh said while in a good production year his farm would have produced 50-100 quintals of chillies, this time it is down to just 20 quintals.
So even when green chillies are selling at Rs 90-100 per kg in urban, retail markets, farmers had only fetched Rs 10-12 per kg.
The trouble is not only with the green chilly crop, but 50 percent of the chana crop cultivated on 1.5 acres was also destroyed in the November rains.
Himanshu, associate professor of economics at Jawaharlal Nehru University said while food prices have gone up none of the other data points signals any increase in rural spending, "So rising food prices are not reflective of the increase in spending power of farmers. Farmers income is dependent on the entire cropping cycle and marginal increases do not compensate for their losses."
In the last 5-6 years, more farmers are moving to vegetables etc, which also makes them more vulnerable to supply disruptions. "While they fetch good rates in a good season, these are cash-intensive, perishables and require good storage and market infrastructure which are not available entirely," Himanshu added.Daily market data for January prices indicates food prices continue to elevate. It is expected to be firm even in January till March when the next crop cycle will hit the markets. But for the farmers, it may still not be a winning bet.