Wednesday, May 16, 2012

Summary Exercise May 16 2012

Read the following article and write a summary of around 70 words and tally it with summary provided on the Answers Page.

The government's inability to curb surges in food prices is a significant reason for rising discontent with the Centre, although state governments are to blame too. One of the bizarre contradictions facing the country is that while food prices continue to rise, we also grope desperately for finding adequate storage facilities for mountains of rotting food grain following a record harvest. But it is not just foodgrains like rice or wheat - which account for most of the food stocks of around 53 million tonnes - that are driving up food prices. Those of vegetables, pulses and edible oils are soaring much faster. 

The sharp increase in the price of high-value food products has been rather more regular in recent years with food consumption patterns changing sharply in line with growing incomes. Consumption trends show that while the average quantity of rice, wheat, coarse cereals and pulses consumed per person has declined significantly over the last few decades, that of some other food items like edible oils, fruits, vegetables, milk, eggs, fish and meat has gone up sharply, resulting in a growing mismatch between demand and supply. 

Despite such significant change in demand patterns, government policies continue to focus on foodgrains which corner the most benefits from fertilizer and electricity subsidies to higher procurement prices. These huge costs curtail spending on more immediate priorities like improving agricultural practices, research, irrigation and other rural infrastructure needed to scale up productivity of other high demand products. State governments, which have a major say in agriculture, make matters worse with high taxes on agriculture markets and restraints on transport and stocking of food products, deterring private investment in marketing infrastructure. The end result of these distortions is weak transmission of price signals from markets to producers and, therefore, inability to meet demand. 

Improving supply of food products in demand, so badly required for bringing down food inflation, requires restoring the market mechanism to ensure a faster diffusion of the price signals from the consumer to the producers. For this the government should stop funding programmes that distort prices and divert resources required for raising agricultural productivity. Agriculture markets also have to be strengthened by provi-ding more incentives for building new facilities and increasing competition by adding more players including organised retail. This will ensure that farm gate prices move in tandem with market prices, and improve supply to bring down food price increases to acceptable levels.

No comments:

Post a Comment