Watching prices rise, helplessly

By M H Ahssan

The current situation of impotence that the Government finds itself in should prompt some soul searching about the reliance on market mechanisms to take care of India’s food security.

Food prices have become a major talking point for the media. The opposition parties too, it seems, have just woken up to defend the aam aadmi. Under mounting pressure, the Government has unveiled some short term measures to curb prices. The problem, however, is not short term in nature. A timeline of food prices of common food items serves as a reminder that the rapid food price inflation dates back two years, and even more in the case of certain items.

Government-speak
The price rise is variously blamed by the different government representatives on last year’s drought, on “cost push” and on “dysfunction in distribution”. The Government has been fairly candid in admitting its helplessness in combating the price rise. The Planning Commission Deputy Chairman has made public his belief that policy changes to make credit dearer are not a remedy. Imports without a government subsidy are also not possible as prices internationally are higher than in India. Action against hoarding and profiteering must be taken by state governments, says the Agriculture Minister, only to be roundly rebuffed and pointed out his errors of omission and commission.

Several questions arise. Why have prices risen? Are farmers benefiting from the rise? And why is the government so helpless?

In any discussion of food price rise, it is not long before one hears the word ‘drought’ – last year’s drought is assumed naturally to be the main reason behind the price rise. The facts, however, say otherwise. The possibility of a drought became apparent barely five months back (July 2009) and its effects – a below average crop of paddy, pulses, potatoes (Kharif crop) and sugar – would only begin to be felt with lower arrivals in the market from October onwards. Last year’s drought could account for the price rise over the last two months; prices however have been on the rise since the beginning of 2008.Inflation amidst plenty
The case of rice is illuminating. Prices rose sharply in 2008 after record harvests in 2007 and indications of a higher production in 2008. Was the rise a “cost push” effect – due to the higher Minimum Support Price (MSP) for paddy fixed by the Government each year?

Comparing the rise in retail prices with the rise in the price paid to the farmer should provide some answers. The MSP announced as the price per quintal of paddy has been converted into an effective price per kg of rice using the standard assumption that paddy will yield 67 per cent by weight rice on milling for comparison. (For example, the MSP of Rs 950/quintal fixed by the government for paddy for the 2009-2010 translates to an effective remuneration of Rs 14.18/kg rice to the farmer.)

Comparison of retail price of rice (Delhi, end of the month, Government figures) with the MSP offered to the farmer. All prices shown in Rs/kg).

	Retail price	Effective price realised by farmers at MSP	Retail price markup over farmers’ price
Dec 2007	16.0	11.12	4.88
Dec 2008	22	13.43	8.57
Dec 2009	23	14.18	8.82

Of the additional Rs.7 that the customer in Delhi pays now compared to 2 years ago for 1 kg of rice (typically of the lowest quality, available from a government outlet), about Rs.3 goes to the farmer while Rs.4 is the increase in the markup of the retail price over the price paid to the farmer. The increased payments to the farmer in themselves would account for an increase of 9 per cent in rice prices each year over the last two years. The difference between the retail price and the price paid to the farmer – accounting for the cost of milling, storage, transportation, taxes and the commissions of the traders, wholesalers and retailers in the supply chain – has inflated by over 80 per cent in the last 2 years and by over 75 per cent in just 2008. What can account for this inflation?

Fuel prices rose sharply during 2008 but were back to their 2007 year-end levels by the end of 2008. The wholesale price index rose by only 6 per cent during 2008. The Government and its economists never came out with reasons behind this inflation. The likely explanation is that prices went up due to hoarding following the extraordinary increase in the international market price of rice in 2008, with the expectation that a killing would be made in exports. International rice prices more than doubled between Jan and May 2008 before settling down at higher than January levels towards the end of 2008.

About 10 million tones of rice were exported from India in 2007 and 2008 before the government banned exports in April, 2008. After coming down marginally in the middle of 2009, prices have again gone up on the “inflationary expectation” arising from last year’s bad monsoon.

Sugar: some bitter truths
Sugar is another example of a problem that has been some time in the making. The Central Government declares a Statutory Minimum Price (SMP) for sugarcane every year to set expectations for the farmer (This has been renamed “Fair and Remunerative Price” after a recent amendment to the sugarcane law). Some States, including UP – the largest sugar producing state – declare a State Advisory Price (SAP) that sets a higher minimum for the price to be paid by mills for the sugarcane; others, like Karnataka, are content with the center’s minimum price. The effective price realisation of the farmer is calculated with the standard assumption that a quintal of sugarcane will yield 9 kg sugar – thus the Rs.130/quintal price of sugarcane fixed by the UP Government translates to Rs 14.45/kg of sugar.

In 2007 the sugarcane production was in plenty and the millers were paying only the minimum prices set by the Government. Wanting to pay only the lower SMP set by the Central Government, millers even challenged the legality of the UP Government’s higher SAP. The situation has undergone a sea change since then, after 2 years of severe shortfall in production and depleted stocks; millers in UP are paying a premium over the SAP to cane growers to prevent them from diverting their cane to khandsari units or selling to mills in neighboring states.

Here too, the figures show that despite being courted, the farmer gets the short end of the stick. Of the Rs.22 more that a customer now pays for 1 kg of sugar compared to 2 years ago, the farmer gets Rs.10.55 while the sugar mills, wholesalers and retailers together take Rs.11.45.

The current crisis of sugar availability is largely of the government’s own making. It allowed the export of sugar on the back of record production in 2006-07 and 2007-08. Initially prices in the world market were higher than Indian prices and traders and exporters booked their profits. In 2007, the world market prices fell. The central government, however, continued to push exports by waving taxes and providing a subsidy to exporters. In the 3 years 2006 thru 2008, a total of over 9.5 million tones of sugar were exported. The average price realisation of these exports of raw sugar in the period after April 2007 was only Rs 11.76/kg!

This was not all. With a view to curb sugar production, the Government actually held the SMP for 2008-09 at the same level as the previous year even while the support price for food grains was raised. The non-remunerative price announced for 2008-09 pushed farmers to cut back on acreage of cane and sell their cane, when it was ready, to khandsari units who were offering a better price – all resulting in a severe fall in sugar production. Sugarcane production did not recover even in 2009-10 with acreage remaining below 2007 levels and the drought also taking its toll.

The government has been importing sugar for the last two years at roughly double the unit price of the earlier exports. Export when prices are low and import when the prices double – that is India’s sugar story of the last 4 years.

Policy – the real culprit
Clearly, neither “cost push” nor drought really accounts for the food price inflation. The larger causes are the “dysfunction in distribution” and a government policy which is short sighted and makes no contingencies for the vagaries of nature. The “dysfunction in distribution”, in plain speak, stands for speculative hoarding all along the supply chain from farm gate to consumer’s table. And the government policy of exporting surplus agricultural produce without saving for the rainy day profits no one but traders.

It will now be clear why the Government is helpless. While cracking down on hoarding could bring some relief temporarily, it is a difficult option for the governments at the center and in the states, since the trading community is a major source of funds and has close connections with the political parties and politicians. For the Government’s economic advisors, this is also anathema – it militates against the direction of reforms to free markets from all shackles. The preferred policy is to correct the markets through imports, but this will not work when international prices are higher or when the requirements are so large that the initiation of imports would drive up world market prices. Unfortunately, this is just the case now with pulses such as toor dal and with sugar.

The current situation of impotence that the Government finds itself in should prompt some soul searching among those who advocate that market mechanisms and free trade across borders will take care of India’s food security. With bio-fuels competing with food for farming resources, it will become increasingly dangerous to rely on the international market to make up for large shortfalls in local production. It is perhaps time to rekindle the debate on the need for near self sufficiency in essential foods and investment in food storage infrastructure.

U.S. HALF WAY TO KYOTO GOALS – WITH NO GOVERNMENT REGULATION

By DICK MORRIS & EILEEN MCGANN

The worst nightmare of the left is about to come true: The United States is about to achieve the carbon emissions goals set by the 1997 Kyoto Accords. Once seemingly beyond reach, the United States is already half way toward meeting the stringent Kyoto goals for reduction in carbon emissions without a cap and trade law or a carbon tax or carbon dioxide being declared a pollutant.

Environmental nightmare? Yes. The goals of the climate change crowd are not reduction in global warming but the enactment of a world-wide system of regulation which puts business under government control and transfers wealth from rich nations to poor ones under the guise of fighting climate change. Should the emissions come down on their own, as they are doing, the excuse for draconian legislation goes, well, up in smoke.

The facts are startling. In 1990, the year chosen as the global benchmark for carbon emissions, the United States emitted 5,007 millions of metric tons of carbon (mmts). Kyoto specified that emissions must be reduced to a level 6% lower than in 1990. For the U.S., that means 4,700 million metric tons.

American carbon emissions rose year after year until they peaked in 2007 at 5,967 mmts. But, in 2008, they dropped to 5,801 and, in 2009, the best estimate is for a reduction to 5,476. So, in two years, U.S. carbon emissions will have gone down by more than 500 mmts – a cut of over 8%.

President Obama has pledged to bring the U.S. carbon emissions down by 17%. He’s halfway there.

A combination of the recession and an increased emphasis on cutting emissions is working and may make onerous regulation unnecessary and even redundant.

How can we achieve the other half of the hoped for reduction?

If 60% of American cars were electric, the net savings in carbon would be 450 mmts (even counting the coal burned for the higher levels of electricity required). And if one-third of the truck fleet ran on natural gas, the carbon savings would add another 150-200 mmts.

The point is that public education and increased environmental consciousness – the normal way we Americans respond to challenges – may suffice without the need for government regulation. And what persuasion fails to achieve, higher gasoline prices will do for us – move people to buy electric cars.

Good news huh?

Not if you are a socialist banking on climate change as the banner to regulate all utilities and industries in the world. Their game plan is to use the financial crisis to regulate white collar businesses like banking, insurance, and finance while using fears of climate change to extend government regulation to the blue collar trades.

Former U.S. Ambassador to the United Nations, John Bolton calls cap and trade a “massive redistribution of wealth from the north to the south” (i.e. from the developed northern hemisphere to the less developed southern half of the globe). What the globalists and the one-world crowd had hoped to achieve by foreign aid, they now seek to bring about by cap and trade, forcing businesses and utilities to pay rural societies for the right to pollute with carbon.

But market forces are accomplishing what they are hoping only regulation can achieve. And the rationale for the global system of regulation being negotiated at Copenhagen is being made unnecessary even as the agreement is being hammered out.

There is a great deal of justified skepticism about the entire question of whether climate change is going on and, even more, how much human activity is contributing to it. But while the world divides into those who demand global regulation to fight climate change and those who say it isn’t happening, there is now an inconvenient truth — the market is taking care of the problem on its own.

Verbal Abuse: An Insidious Threat

By Sheena Shafia

Labels are all very well and – if you are affluent – welcome when they are Giorgio Armani, Christian Dior, Givenchy, Aigner or Gucci. But what about labels like “stupid”, “idiot” , “dull”, “lazy”, “useless”, “fatso”, “neurotic” “Pakis”, or (in the case of a woman) “fast” and “loose.” It could be even worse, especially with names of animals (“dog”, “donkey”, “owl”) and unmentionable expletives being hurled around. Such labels or what feminists and psychologists call “verbal abuse” does happen behind closed doors so people may not see the problem. In fact some psychologists say that while physical abuse can be seen, its spoken version, can be subtle and it is possible that even the victim may take a long time to recognize it and take it lying down in the belief that it could be worse.

A prime example of verbal use is Sarvmangala who was born with a twisted hand. Subject to humiliation and cruel jibes from her peers and relatives, she was called “Dund” (cripple). Or take the case of an educated women, regularly termed “stupid” or “idiot” by her husband. Or the cruel Sikh jokes that term “ Surds” as “having nothing up there”. Likewise all Muslims can be regarded as “terrorists” or “fanatics” or “Blacks/ Niggers” as “trashy” and “criminals”. In the West all Asians are regarded as “Pakis”

Sensitive children can have it even worse when brought up on a staple of verbal abuse.

Says a young media professional: “We are all born with labels—girl, boy and the names we are given stay with us for the rest of our lives. As we get older, more labels are attached—like a ‘difficult’ child is called a brat without looking into why they are behaving like that. A laughing, non-serious teenager is termed a ‘joker’ or a ‘clown’. These labels, which can be very hurtful to the vulnerable adolescent, continue to change as we get older but they are an element of society that will never completely disappear.”

Pimmi Bais, a school teacher, too has a perspective of the damaging effects of verbal abuse. As she says, “To live in harmony with our peers and society is the ultimate goal of every human being. Therefore, right from childhood we seek appreciation from our near ones whose compliments make us float on cloud nine. Children are always doing things to please their parents and teachers and often push themselves beyond reasonable limits to hear that magical word ‘excellent’. Achievers are pampered and appreciated both at home and school and are called ‘genius’, ‘beautiful’, ‘talented’ and so on. But what happens when unfortunately, due to a slight physical disability, instead of praise and positive encouragement, children are subject to humiliation and cruel jibes by peers and relatives? Cruel nicknames like ‘dund’ (cripple), ‘totla’ (stammerer), ‘pagla’ (insane) and ‘mota’ (obese) are hurled at innocent kids to tease and torment them.”

An expert view on the issue comes from psychologist Shalini Anant: “ While not all labeling is abusive in nature, sometimes such epithets are also terms of endearment. Like any form of abuse, epithets take the form of abuse when they are used by a person (s) with more power (e.g. parent, teacher, employer or a member of a higher class/caste) with whom the labeled person cannot use a label in return. Friends often use labels for each other and in that case they are not abusive, unless one person is being labeled by (almost) everyone, in which case it again becomes a power issue of majority versus minority. This latter case is also by no means infrequent, especially among school children and a little less often in work situations.”

Did you read the well-loved story of ‘The Ugly Duckling’? All about a duckling who was made to believe that he was “ugly”. Ostracized by other ducks, including his mother, he runs away. After a series of misadventures where everyone teases and torments him and drives him to the edge, he finally realizes that in reality he is truly different—not an ugly duckling at all but a beautiful swan. Likewise many fairy tales and myths centre around the theme of the outcast.

What about Tagore’s famous dance drama , ‘Chandalika’? The story revolves around the plight of a young Chandalika ( a girl of the untouchable caste) who is ostracised by society simply because she hails from a ‘lower’ class and is never allowed to forget it ?

Or even how cruel young ones can be to their counterparts who are ‘Hindi speaking types’ (A weird idea for Bangladeshis who take pride in speaking their national language) or ‘behenjis’ (A simple, unsophisticated girl or woman).

One friend of my acquaintance said she would never send her children to a particular school because it was filled with ‘servants’ children. Or the other who had her name distorted in her painful, growing up years and remained for the rest of her life the butt of sarcastic ridicule for being ‘different’ as she did not fit into the narrow and shallow world of social chitter chatter.

There’s a theory that people from ‘lower castes’ or household help are largely the target of verbal abuse. They can thus be called ‘stupid’, ‘idiot’, ‘mad’ or the choicest Hindi abuse such as the names of animals and worse. One friend who runs an export business says that it is largely the nouveau riche and sometimes business suppliers who pay little heed to the dignity of labor as by and large in the West. In her view, the working classes of UK and the US too could be held guilty for the choicest verbal abuse, while educated professionals from Germany, Sweden and Finland take strong objection to verbal abuse.

So what does the law say about verbal abuse? Dependent on the abuse and situation, verbal abuse may constitute a crime in several countries—in varying degrees and forms in Europe, Canada, South Africa, US, while slander, libel, and defamation are considered crimes in many countries.

As far as the law in India goes, says Tenzing Choesang, senior research and advocacy officer of the Lawyers’ Collective, verbal abuse comes under the umbrella of Section 3 of the Domestic Violence Act. The term ‘verbal abuse’, she says, covers on the one hand, insults, humiliation, ridicule and name calling, especially for women who do not have a male child. Secondly, in the case of repeated threats to cause physical pain to a person. If a case of such abuse does arise, the courts can pass a restraining order and direct the abuser not to pursue on this path. If the restraining order is breached, such abuse can be regarded as a cognizable non-bailable offence with the possibility of imprisonment up to one year and a fine of Rs 20,000.

Such cases do occur, most often with a little physical abuse, such as slapping or pushing a woman, according to Supriya Yadav, legal officer with the same Collective. It could also primarily be verbal abuse. As she points out, the Lawyer’s Collective gets about one-two cases of verbal abuse a month.

Patricia Evans, author of ‘The Verbally Abusive Relationship: How to Recognize and How to Respond’ and ‘Verbal Abuse Survivors Speak Out’, has firm theories on the subject. Verbal abusers, she asserts, “almost universally act like nothing happened, like they feel fine and the relationship is fine. This is because they feel they have more control. Maybe they got you to back down, believe them, or doubt yourself. If you doubt yourself then you might go with what they tell you, be more compliant and slave-like. This makes them happy.”

So how should a victim of verbal abuse deal with this situation? The above mentioned Sarvmangala coped with her misery by finding solace in nature—in her case, her father’s rose garden. She also picked up the art of churning out delectable cuisine from her French sister-in-law. Soon she was much in demand from her relatives who came to feast on her exotic dishes. Often numerous guests would drop in at her home and she was an excellent hostess. Sarvamangala attributes her turnaround to her faith in the Divine. She strongly believes in the—what may be termed old-fashioned– dictum, “ Have faith in God, he knows what is best for you. Always accept his will and life will be an adventure,” she says. Whatever the reason, she has beaten all odds and achieved so much with her ‘Dund’ hand that most of us with our two hands are unable to.

“Effective coping skills” is what psychologist Shalini recommends. In her words, “Sometimes it is enough to tell the abuser in a calm and composed manner ‘you cannot call me—‘ and walk away immediately after saying this. Although it is likely to work, there is no guarantee of this, and a lot depends on the body language and the tone in which it is said. If it is some old experience which continues to trouble the person, it often helps to take some friend or family member into confidence and talk about one’s feelings. If the person feels that a lot of damage to their self-esteem has been done because of repeated episodes of verbal abuse, especially by close relatives, or if they feel they do not want to reveal this vulnerable side of theirs to someone they know socially, it helps to see a psychologist and sort the issues out in complete confidence.”

So if you have been a punching bag and pushover for people too long with hate speech coming your way, isn’t it time you ended such toxic relationships?