Food Inflation

Only available on StudyMode
  • Download(s) : 3165
  • Published : December 20, 2010
Open Document
Text Preview
Food inflation
Definition: - Food inflation can be defined as a consistent rise in the price level of all agricultural food items. This rise in price level is neither seasonal nor sudden, it keeps on increasing over a period of time. This is one of the biggest problem faced by the economy. Causes of food inflation

* Due to lack of post harvesting infrastructure such as cold chains, transportation, and storage facilities. * High food inflation ensures that consumers have to cut back on their spending power or reduce their purchase capacity. * 60% of the country's total cropped area is not irrigated. * Bad monsoon in India.

* In Recession times, spending power of the consumers decreases. * Shortage of supply in food items and high procurement prices. * Black marketers activities should be stopped.
* The per hectare agricultural yield in India is half that of China. This again points of inefficiency and the failure to help the farmers adopt latest technology in order to increase the crop output.  How to ease food inflation

* Crackdown on hoarders and black marketers could help prevent prices from rising further. This step might not significantly reduce prices but will ensure that prices don't escalate further. * The Government should allow the private sector to import and store the primary agricultural commodities at zero import duty. This will help ease the prices to a large extent.  * The Government also needs to unload the wheat inventory it has in its storage locations. This will have an immediate impact on the prices. * Proper care must be taken of warehouses where all agricultural especially perishable goods are kept to prevent them. * Buffer stock should be released on time.

* Wastage of food items must be avoided.
* Political factors must be properly balanced.
* Consumers should plan their budget according to their need. * Government should take strict action against manipulation of the commodity...
tracking img