What is the solution?

Persistently high food price inflation is a sign that the capital-centric orientation of the economy is incompatible with providing even the most basic necessities for all.  The solution lies in reorienting the economy by bringing social production under social control.  Only by putting an end to the anarchy of capitalism and the domination of profiteers over the market is it possible to ensure adequate availability of nutritious food for all, alongside a stable and secure livelihood to all those who till the land. The solution lies in establishing the control of workers and peasants over the production, procurement, trade and distribution of essential commodities, eliminating the space for private profiteers in this sphere of the economy.

What is the solution?

In recent years, wage and salaried workers in our country have been continuously squeezed by the rapid rise in prices of essential food articles. The prices of rice, wheat, coarse grains, pulses, edible oil, vegetables, fruits, milk, eggs and meat have all been consistently rising at double digit rates. The average annual increase in prices of food items, taken together, has been as high as 10.3% during 2008-13.

Following a global food shortage in 2007, food prices rose sharply in the world market. However, while global food price inflation came down in subsequent years, it has remained at double-digit levels in India. The graph here shows the sharp escalation of prices of food articles in just one year.

The farm-gate prices received by the peasants who cultivate the food crops have not risen as rapidly as the wholesale and retail prices. The main beneficiaries of the high food inflation are not peasants, but those controlling wholesale and retail trade.

The official reports of the Ministry of Agriculture admit that the production of various essential food items, other than wheat and rice, has not kept pace with demand. In the case of arhar dal, moong dal and gram (channa), production has been stagnant over the last three years. Even including imports, the net per-capita availability has declined in recent years. The chronic shortage of these essential food items is a reflection of the fact that social production in our country is not geared to fulfill the rising material needs of the working population.

The fundamental basis for food inflation lies in the anarchy of production that is a characteristic of the capitalist economy. There are sudden acute shortages of some essential commodities, while there are also chronic shortages of other essential commodities. This is due to an absence of an overall comprehensive plan for production and for movement and exchange of goods.

As in the case of pulses, inadequate supply in the face of rising demand for vegetables, milk, egg, meat and fish has kept up the upward pressure on prices and contributed to the persistently high food price inflation. In the case of perishable items, there is the additional problem of lack of cold storage facilities, and the resulting daily wastage of large amounts of these products.

Whenever there is a chronic shortage, the upward pressure on prices is further accentuated by speculative trading activity by capitalist merchants. This leads to a sharper escalation in retail prices than is warranted by the shortfall in production. In the year 2003, Government of India permitted a wide range of agricultural commodities to be traded in the Commodity Futures Market. This led to a higher degree of speculation in agricultural commodities.

Liberalisation of trade policy and regulations has added to the problem. The prices in Indian markets in certain agricultural commodities are now increasingly dependent on the import and export policy on that commodity. Sugar prices have risen 25% in the past month as a result of increased import duties, and encouragements to exporters. The same has happened with onions, coffee, etc. On the other hand, given the vast market of our country, foreign capitalists can dump their goods undercutting Indian farmer producers, as is so in the case of edible oils The trade liberalization policy has put the peasantry at the mercy of the biggest traders in agricultural commodities, Indian and foreign who have reaped maximum profits. It has led to prices of agricultural commodities increasingly reaching the levels in advanced capitalist countries, while real wages of workers, and earnings of peasants are going down.

Rice and wheat are the only two commodities in which the Central Government plays a major role in procurement, transport and retail sales. These two commodities have experienced a lower rate of increase in prices (average of about 6-7% during 2008-13, as compared to 10.3% for all food items). This by itself shows that the solution to the problem lies in extending public intervention. It does not lie in expanding the space for private profiteers.

Figure: Wholesale Price Index (WPI) of food articles (January to December, 2012)

The course being adopted by every government is to further increase the space for capitalism in agriculture. Capitalist monopolies are entering into contract farming and trading. Already, the production of seed and various inputs are in the hands of big corporations. This course will only intensify the existing crisis of agriculture, push more peasants to commit suicides and take essential foods and nutrition out of reach for the working people.

Providing for peasants and working people must become the motive force of agriculture. Only this will ensure that livelihood of peasants is secured and working people are protected from food inflation.

Numerous parties and mass organisations of the working class and peasantry have been demanding that public procurement and public distribution must be expanded to cover all agricultural commodities meant for mass consumption. This is an essential step towards solving the problem. In addition, there is need for planned public intervention to accelerate the production of those goods in short supply.

In the final analysis, the question boils down to the orientation of the economy. Should social production and exchange be geared to fulfill the rising needs of the entire population, or should it be geared to maximize the profits of a minority of capitalists?

Per Capita Net Availability of Foodgrains (Per Annum) in India (Kgs Per Year)

Year	Rice	Wheat	Other Cereals	Cereals	Gram	Pulses	Food grains
1951	58	24	40	122	8.2	22.1	144.1
1961	73.4	28.9	43.6	145.9	11	25.2	171.1
1971	70.3	37.8	44.3	152.4	7.3	18.7	171.1
1981	72.2	47.3	32.8	152.3	4.9	13.7	166
1991	80.9	60	29.2	171	4.9	15.2	186.2
2001	69.5	49.6	20.5	141	2.9	10.9	151
2011	66.3	59.7	23.9	149.9	5.3	15.7	165.6
2012 (P)	69.4	57.7	21.9	149	4.9	15.2	164.2

Persistently high food price inflation is a sign that the capital-centric orientation of the economy is incompatible with providing even the most basic necessities for all. The solution lies in reorienting the economy by bringing social production under social control. Only by putting an end to the anarchy of capitalism and the domination of profiteers over the market is it possible to ensure adequate availability of nutritious food for all, alongside a stable and secure livelihood to all those who till the land. The solution lies in establishing the control of workers and peasants over the production, procurement, trade and distribution of essential commodities, eliminating the space for private profiteers in this sphere of the economy.