The Hindu Business Line : Commodity prices

The authors of the article “Global crisis and commodity prices” (Business Line, December 30) have rightly argued that the abnormal rise and sudden fall in commodity prices have not helped the producers.

This conclusion is particularly valid in the case of agricultural produce, where the volatility has unduly benefited traders and speculators at the time of unusual price increase and punished them hard during the subsequent swift fall, as a result of which the entire market is in chaotic conditions.

In agricultural commodities a mild inflation of, 2-3 per cent per annum, like that of a similar increase in manufactured commodities effected by the companies, will ensure that farmers have enough incentives to produce more, either by using improved agricultural techniques or extending the cultivable area to meet the expanding needs of the ever increasing population.

Unfortunately, the market conditions and the pricing do not favour the farmer in such a way that, at the time of lower production and higher prices, he does not have enough produce to sell, and at the time of higher production, the glut conditions and lower prices do not give him remunerative prices either.

The consumer does not mind paying a 5 per cent increase in the cost of manufactured goods such as soap or paste but creates a hue and cry if the prices of agricultural goods increase slightly.

Besides, the international cartel of traders which decides the prices, are always short-sighted in their outlook that they want to make a quick buck by exploiting the scarcity or glut situation.

Unfortunately, farmers do not have a representative body, such as the OPEC for oil producers, to exploit prices.

It is time the government created a board, like the coffee or tea board, to regulate prices and production of commodities and to ensure farmers get enough incentives to expand cultivation for the welfare of the people.

P. Esakki Muthu, Mumbai