irishspirit
13th January 2011, 16:14
The rise in food prices — 18.3% on December 25 — is more teary a problem than the onions suggest. The UPA government, which safely steered the economy through the downturn, is perhaps grappling with its biggest economic crisis: persistently high food prices. Supply shortage
In a normal year, vegetable and fruit prices fall sharply in December. This year, on the contrary, the prices of some vegetables have surged sharply.
There are two primary reasons for the abrupt jump. First, the ground frost and excessive rainfall have damaged crops in some parts of the country, resulting in a supply crunch in staples such as onions. This is a weather-induced situation the government could not have done much about.
The second and more important reason is an inefficient supply chain and distribution system that has worsened the price increase. In other words, speculative activity and hoarding have contributed to the price shock.
This is evident from the trends in the price data. "While wholesale and retail prices of onions as for any other commodity always differ, the gap widened significantly in December. This indicates that, in addition to adverse weather conditions, hoarding and speculation created further upward price pressures," said Samiran Chakraborty of Standard Chartered Bank.
http://www.hindustantimes.com/Understanding-price-shock/Article1-649629.aspx
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May be now, people will stop eating their crop and start growing their own.
In a normal year, vegetable and fruit prices fall sharply in December. This year, on the contrary, the prices of some vegetables have surged sharply.
There are two primary reasons for the abrupt jump. First, the ground frost and excessive rainfall have damaged crops in some parts of the country, resulting in a supply crunch in staples such as onions. This is a weather-induced situation the government could not have done much about.
The second and more important reason is an inefficient supply chain and distribution system that has worsened the price increase. In other words, speculative activity and hoarding have contributed to the price shock.
This is evident from the trends in the price data. "While wholesale and retail prices of onions as for any other commodity always differ, the gap widened significantly in December. This indicates that, in addition to adverse weather conditions, hoarding and speculation created further upward price pressures," said Samiran Chakraborty of Standard Chartered Bank.
http://www.hindustantimes.com/Understanding-price-shock/Article1-649629.aspx
¤=[Post Update]=¤
May be now, people will stop eating their crop and start growing their own.