Lowering Food Prices for the Common Man

In Kerala, the grand festival of Onam is fast approaching and falls on the 15^th and 16^th of September this year. Yet the spiraling prices of all essential commodities have proved to be quite a dampener. This is the situation as at present and then one can imagine about more hikes in prices in the days to follow when there will be a surge in demand as people would surely go for a spending spree so as to meet the important requirements for their homes. The same is the case elsewhere in India where the prices of food has gone up like anything and leaving the ordinary man at the perils of a weak income.

There is no savings or rather the common man’s savings are cut and pruned and he is then left with nothing much to invest or plan a good purchase of a two wheeler or a car. The food inflation really eats up into the pockets of a common man mostly, but not certainly if one where to change the concept of food inflation itself.

As experts would have us believe that the food inflation arises out of the bottlenecks in infrastructure development and lack of proper planning and disbursement. However, these constraints in infrastructure development are the real advantage that a country like India has in order to bring down food inflation. Let us do some little analysis.

Food inflation occurs when there is scarcity of one or more food items in an area where the demand for the same is more than the supply. That is quite easy thing. The next is that food inflation occurs when there is shortage of supply and this is cleverly exploited by the hoarders. Yet how is the infrastructure bottlenecks an advantage?

Simply because the infrastructure bottlenecks affecting the regulator or the authorities are always similar to the infrastructure bottlenecks faced by the hoarders. This is more so when the items are perishable commodities.

So how do you estimate the potential of a hoarder of perishable commodities? The hoarders can easily be divided into active hoarders, middle level hoarder and passive hoarders. They also operate in that level and therefore it is quite easy to locate them even by considering the size of the country. Most of these hoarders are actually astute businessmen trying to exploit a situation that the country has thrown into their laps.

By understanding these active, middle level and passive hoarders some dozen areas could be located around the country where one can give the label active hoarding areas, middle hoarding areas and passive hoarding areas. The next step is to identify the most sought after commodity which these traders trade in and so does the customers who demand them.

It is to be noted that the active areas and the middle level areas these hoarders create a cartel and have excellent communication system. However, unfortunately for them these are perishable commodities.

The authorities move in and dump those very vegetable, fish, meat or other perishable commodities in large quantities in only these identified areas at say 35 to 40 percent lower price than the existing market rates. What will happen is that the back bone of these hoarding chains will collapse bringing down the prices of perishable commodities elsewhere in the country. This also means that there is no need to distribute commodities throughout the country as then expense will soar, but the authorities can take advantage of the hoarder’s chain itself to bring down the prices of perishable commodities. 
If the infrastructure is the problem then innovate to a modern transportation with the help of helicopter service for dumping vegetables at shortage areas. One may also make use of the coastline ferry service to a great extent for smoother transportation of such commodities in order to control the prices. 

For other commodities that are not easily perishable yet are within the ambit of food stuffs their prices can be regulated if there is decentralized distribution and decentralized imports through various shipping harbors. The same dumping action can be resorted to albeit in some calibrated slow manner to bring about confusion among the hoarders. This would mean that there will be sudden supply of some of these ‘not very perishable commodities’ and then a stop gap and then again a sudden spurt of supply. The prices will automatically fall in place. But all these need some action and not just promises as ground realities would suggest. If however, the demand is greater than supply then we would need to import large scale to bring down the prices in the whole country.