This phenomenon of not having a regulatory or a cap on the
PROFIT LEVELS OF THE RETAILERS OF THE VEGETABLE AND FRUIT RETAILERS has been
escaping the attention of almost all people dealing with the inflation in
India. The reason is that this inflation we take it as granted because there is
no regulator and all people who are involved seem so poor that it certainly
does not come to the notice very easily. It can be pointer to how much money is
moving in the hands of few which are also unaccounted. With this as a little
back ground the focus of this paper is simply to point out the following few
facts. Very little has been written on the subject per se when I went to
research on the Internet too. So it has escaped the eye of many researchers
too.
But what is mind boggling is the numbers which are affected
by this hidden shylock type of fleecing of the poor . This effect all persons across the population
spectrum but certainly very large poor and lower middle class people are affected by these
high profits which affect the consumer
prices of fruit and vegetable prices. In
this game of making more money in a short time the irony is that mostly poor
are fleecing the poor.
The prices of the retail are fixed on whim and fancy of
retailers and are very high for poor consumers as the percentage of profit is always
ranging from 40 to 100 percent. They are kept artificially high even invoking
some reason or the other like either the production has been less, rains have spoilt
the crop, or the transportation has failed, hording by big whole selling traders
there by reducing the quantity in to the market so to meet the demand and supply cycle.
There is no way a consumer can know the actual buyers cost
because he has to pay as asked by
retailer and he has no source to verify
the information supplied verbally.There is a MRP on almost all goods which a poor person uses
for his survival like Atta, rice, sugar, salt, medicines, but for the vegetable
and fruit s there is no such MRP.
OK we can argue that it is
very difficult to fix a MRP for vegetables
and fruits in view of the following
·
Fluctuating Quality
·
Perishing of vegetables and fruits due to weather
·
Perish ability due to moisture content
·
Varied Varieties,
·
Level of Freshness’ after plucking
·
Transportation charge variation,
·
Market expenses/taxes
What
needs to be done?
Agreed you cannot have a MRP but certainly the regulator can
fix as it does the MAXIMUM SELLING PRICE
. Here it will be max profit margin by percentage on the whole sale price while
keeping all the factors in view or in other words what we can still fix is the
percentage of profit which can be in a range from 5- to 25 percentage keeping
in view the effort, man hours spent and capital put in but no way it can be
allowed to be 100% or more as is happening now.
This is actual a grey area for income tax as most of the segment
involved in this trade is non IT payee.
There are large implications for Punjab government and local
population at large especially the lower strata of society in particular. A closer look at this segment reveals that about
90 % of vegetable retail trade is in hand of migrants who are making these
profits . The locals have been ousted because they were not willing to sit the
whole day, consider it too menial to do this business and lacked interpersonal
skills to retail vegetables.
Now what is required is the following
There has to be a mechanism by which all retailers will have
to display the cost of bulk on the display which should be verifiable for a
particular vegetable on the website/records of the market from which the retailer has
bought or picked up the vegetable for retail sale to consumer.There are mainly two sources from which retailer is buying
- Commission Agent
- Farmer
The consumer who is consuming the vegetable and fruit is
from all sections but with rising costs of vegetable prices, the one who feels
the pinch is the lowest strata of society and the middle class. This leads to malnutrition in children, women, pregnant
mothers and old persons as the house holder in order to balance the budget cuts
down on vegetables and fruits which are a very rich source f macro and micro
nutrients.
Warning and benefit for the Government!
So when ever any government which fails to control prices of
essentials it does not get votes from these segments which are affected by high
vegetable prices. The famous onion induced defeat of Delhi BJP is an example.
On the other hand if a
govt can give solace to the poor public is likely to get their nod in the
elections. This is no big asking as the only effort on the government’s part is
control the GREED LEVEL OF RETAILERS OF VEGETABLE AND FRUIT RETAILERS. This step will no doubt alienate a few but
get you the good governance nod from a very large rural and urban poor. This
will also encourage farmers to retail their own and get remunerative prices.
This will also help local poor people to step in the trade with the shrinking profits the migrants may
think of other options. This suggestion is to limit the level of profits which they can make at the cost of a mass of lower and middle class people who are struggling to survive under the load of inflation of other essentials like petrol, diesel, LPG, Atta, Rice, Kerosene, Electricity.
To give you an idea
how the vegetable prices affect the inflation please refer to links below
http://www.telegraphindia.com/1120918/jsp/frontpage/story_15990093.jsp#.UjrcaHa6aM8
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Costlier veggies
take retail inflation to double digits — before diesel price hike kicked in
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New
Delhi, Sept 18 (PTI): Soaring vegetable prices pushed up the retail
inflation to double digits at 10.03 per cent in August, up from 9.86 per cent
in August.
According
to the Consumer Price Index (CPI) data released on Tuesday, the highest rise
in prices was for vegetables, which recorded an increase of 20.79 per cent
during the month.
In
the urban areas, the CPI rose to 10.19 per cent during the month as compared
to 10.10 per cent in July. The retail price rise in rural areas worked out to
be 9.90 per cent during August up from 9.76 per cent in the previous month.
The
CPI for August, however, did not capture the impact of hike in diesel price
announced by the government on September 13 to help the Oil Marketing
Companies (OMCs) to reduce their under recoveries.
The
CPI for food and beverages section during August increased by 12.03 per cent,
clothing, bedding and footwear by 10.71 per cent and fuel and light by 7.55
per cent.
Among
the individual segments, steep rise in retail price was noticed in case of
oil and fats (18.41 per cent), followed by sugar (17.51 per cent) and pulses
and products (16.04 per cent).
The
Reserve Bank of India in its mid-quarter monetary policy on MOnday had raised
concerns about the price situation saying ”as inflationary tendencies have
persisted, the primary focus on monetary policy remains the containment of
inflation and anchoring of inflation expectations.”
The
central bank had refrained from reducing the key pending rates despite
persistent pressure from industry to cut them to promote sagging economic
growth.
And
how much vegetable prices have risen in last decade in comparison to other
eatables you must read the report published in Times of India
By Subodh Verma ,Sep 20 2013
NEW DELHI: If you were to ask any random aam aadmi
anywhere in India what is the single biggest failing of the UPA , the answer would
be - price rise .
This is so because the most important items of family spending - food items -
have relentlessly risen for the past several years despite repeated promises
to bring them down by the economic mandarins and policy wonks that run the
country's economy. Poorer families have had to stop eating various foods in
order to save crumbling family budgets.
Between 2004 and 2013 food prices
in general rose by 157%. But when you get into the nuts and bolts the real
pain becomes starkly clear. India is the second largest producer of
vegetables in the world. Yet chronic supply shortages coupled with serial
hoarding has led vegetable prices to shoot up by a deadly 350% in that
period.
Onion prices
have increased by an incredible 521% since 2004. And
it's not a smooth even rise. There were times when onion prices doubled, even
tripled within weeks and then subsided after a few weeks of rampage. This
happened in the winter of 2010-11. And it is happening again now with onion
prices touching Rs 70-80 levels in most parts of the country.
This has happened with other key staples also like potatoes. In the second
half of 2009 potato prices zoomed up by almost 100% and it was only in
January 2010 that the levels came down. Other vegetables have followed their
own mad ways - brinjal for instance is 311% costlier now than in 2004, and
prices of the lowly cabbage have risen by a jaw dropping 714%. Various
vegetable prices are in fact at all time highs.
The hike in vegetable prices hit poorer families especially hard because
earlier, starting 2006, another staple of families had been knocked out of
thalis. This was pulses, the single biggest source of protein in largely
vegetarian India. Their prices rose steadily 2005 onwards and by 2010 they
had more than doubled. Then again they increased in 2012 and reached an all
time high in September last year. There has been a slight decline since then
but even then prices are 123% higher than 2004.
What about other key food items? Milk prices have increased by 119%. Egg
prices have gone up by 124%. Spices and condiments have increased by 119%.
Sugar has increased by 106%. Even salt, an essential of most cooked food has
increased by 85% in the past decade.
Prices of the two staple cereals of India, rice and wheat, have increased by
137% and 117%, respectively. Remember, India has seen record harvests for a
series of years and except for 2004 and 2009, monsoons have been good
generally. So mass produced crops like wheat and rice which demand high water
inputs have not been subject to the usual weather depression. Even fruit
prices have increased by 95% despite bumper crops of many popular fruits like
bananas, mangoes, oranges and papaya.
These are the wholesale prices. What the aam aadmi gets at the local shop has more jacked up prices.
But if the wholesale prices have risen so dramatically, imagine the real
prices you pay for.
Strangely, principal political parties gearing up for elections next year
seem to be indifferent to this continuing decimation of family budgets. It
will be a very angry voter that they will face at the hustings.
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