For India, Ghost of Planned Economy are causing starvation

Discussion in 'Economy & Infrastructure' started by mylegend, Jun 23, 2012.

  1. mylegend

    mylegend Regular Member

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    Indian Fiber Weaves a Crisis
    Wheat Stocks Are in Danger of Spoiling Amid a Shortage of Jute, the Sole Material the Country Uses to Make Commodity Bags

    By BIMAN MUKHERJI And TOM WRIGHT

    KOLKATA, India—For more than a century, jute made the fortune of this city, the former capital of British India. Today, scarcity of the fiber, which is made into rough-woven bags for commodities, is adding to India's failure to store its food amid widespread hunger.

    Across the country, government officials are rushing to store a record wheat crop before annual monsoon rains, set to begin any day. On Thursday, Food Minister K.V. Thomas admitted that 13% of the nation's 50.2 million tons of wheat stocks were under makeshift shelters and at risk of spoiling from water.
    [​IMG]
    Workers sewed jute into sacks at a mill in Jagatdal, north of Kolkata, in May.

    India's high level of food waste is a national embarrassment for a country whose prime minister, Manmohan Singh, this year acknowledged that malnutrition affects 42% of children.

    A dearth of warehouses, due to federal and state government bureaucratic inertia, is a crucial factor. Now, India's jute industry, which is based in the eastern city of Kolkata—formerly Calcutta—is increasingly viewed as part of the problem.

    India's government in the 1980s passed a law stipulating that 100% of the annual wheat and rice crop must be packed in jute bags. The move was meant to defend the jobs of 250,000 jute factory workers, and the five million Indian farmers who grow jute, from the onslaught of cheaper plastic sacking.

    But as India's wheat harvest has boomed, helped by higher quality seeds and greater availability of fertilizers, the jute industry, with its aging British-era machinery and regular labor strikes, has found it hard to keep up.

    India's annual wheat crop has risen 82% since 1990, while output of jute products, including sacking, is up by a little over a third in the period.

    In Madhya Pradesh, a large wheat-growing state in central India, government officials say they faced a shortage of jute bags this harvest that left them scrambling to buy plastic sacking for the crop—an emergency measure allowed to cover only 20% of a state's harvest if jute bags aren't available.
    [​IMG]

    Officials in Madhya Pradesh say the situation will only get worse in future years as harvest output increases. The government, they say, should revisit the law protecting the jute industry to allow greater use of plastic bags.

    "All this would be wonderful if the jute industry could cope with the demand," said Anthony de Sa, a senior bureaucrat charged with crop procurement in Madhya Pradesh.

    Officials and workers point to another problem: They say some jute sacks are of poor quality. "These bags are no good. Many tear as soon as we put them down," said a laborer who was bagging up wheat recently at a government warehouse about 60 miles outside Bhopal, the state capital of Madhya Pradesh.

    In Kolkata, the capital of West Bengal state, jute producers deny they have capacity constraints or quality issues. Producers blame Madhya Pradesh's government for underestimating the wheat crop, forcing the industry to rush through last-minute bag orders and causing a temporary shortage.

    Jute factory owners say they fear India's plastics industry, which for years has lobbied the government to stop protecting jute, will use the bag shortages to push their case.

    "The plastic lobby is very strong," said Rishav Kajaria, director of one of Kolkata's largest private-sector jute factories. "Madhya Pradesh has given them some more ammunition."

    Others sense an opportunity, too. Industry representatives from Bangladesh, which is the only other country with a major jute industry, met with Indian government officials in New Delhi in May to offer to export bags to fill the shortfall in Madhya Pradesh.

    But Indian officials told them they were unable to accept sacking from Bangladesh, as the jute law is meant to protect only Indian producers and farmers.

    "It's some kind of protectionism," said Mushtaq Hussain, who attended the meetings and is managing director of Golden Fiber Trade Center Ltd., a Bangladesh jute trading company.

    Indian producers retort that Bangladesh's jute factories, just under half of which are owned by the state, benefit from unfair export subsidies.

    For years jute needed no special treatment by government.

    Farmers in Bengal have used fibers from the tall jute plant for centuries to weave into bags and clothing. In the 19th century, the British set up a factory in Dundee, Scotland, to process raw jute into yarn before weaving it into bags for storing coal and other commodities.

    Later, British entrepreneurs set up factories around Kolkata, building fortunes and fueling the city's growth. Many of today's largest Indian corporations, including those run by the Tata and Birla families, got their start trading jute. After the British left India in 1947, many of these traders took over the mills.

    Since then, the industry, and Kolkata, has been in a slow decline. The government nationalized many of the mills in the 1970s and the industry was crippled by strikes that still plague the 60 or so mills that operate today. The government later handed most mills back to the private sector. But New Delhi continues to play a large role in the industry, setting prices and buying almost the entire output of the nation's jute producers.

    Arti Kanwar, deputy jute commissioner, a Kolkata-based Indian bureaucrat whose office buys jute sacking from producers, said the government for years has supported the industry by procuring at above market prices.

    But this year, she said, market prices rose above what the government pays due to large harvests. Some jute producers have reneged on contracts to sell to the government, exacerbating shortages, Ms. Kanwar added.

    In Madhya Pradesh, attention is already turning to the rice harvest, due in October. Paras Jain, the state's food minister, said he was going to ask the government to procure jute bags ahead of time to avoid problems.

    "We want the supply of bags in advance so we don't fall short," he said.

    http://professional.wsj.com/article/SB10001424052702304441404577480341888519600.html?mg=reno64-wsj
     
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  3. Ray

    Ray The Chairman Defence Professionals Moderator

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    It is a sordid saga of political opportunism, industrialists shenanigan and total ineptness and inefficiency.

    There is no food shortage since India has been seeing bumper crops in most crops.

    It is just poor and inadequate shortage caused by political lethargy and chicanery.

    Storage is not in jute bags and instead in plastic bags.
     
    Last edited: Jun 23, 2012
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  4. maomao

    maomao Veteran Hunter of Maleecha Senior Member

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    Food mafia controlled by politicians has created this artificial shortage in the market. In our granaries food is rotting till date, rather than being fed to the poor!

    One of the Maharashtra's strong man controls the food mafia in major parts of India (including many other illegal activities in collusion with pakis/isi/dawood gang/dubai mafias)......and guess what - he our Food Minister! Everybody who tried to expose him has died/killed/exterminated .......... Above all, he is a champion of secularism just like others such as Lalloo, Mulayam, Karunanidhi, Kalmadi, Sheila Dixit and last but not the least the 'Madam of the Indian nation' etc.
     
    Last edited: Jun 23, 2012
  5. parijataka

    parijataka Senior Member Senior Member

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    /\/\/\

    Well said. And yet the populace of Maha keep electing these very same looters. Recently 41 villages of border Maha had threatened to merge with Kar for better handling of drought across the border. Kar has been reducing the number of farmer suicides yet Maha continues on the on an increasing trajectory [Kar and Maha have both large number of dictricts that are prone to droughts]. The strongman of Maha has been involved in so many scams - sugar, stamp paper, dal, onions, a planned city, etc - that several generations of his family can live in luxury.

    Tragedy of India - looters and corrupt netas [latest example being Jagan Reddy] who are selling off the state's resources for peanuts and pocketing the profits along with corrupt babus and crony businessmen are repeatedly elected by voters who view them as their saviours.
     
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  6. pmaitra

    pmaitra Moderator Moderator

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    I see this as a blessing in disguise.

    Let the excess wheat rot and let there be a wheat crisis, further raising the wheat, and jute prices along with it.

    It is high time the nouveau riche of India, may of whom have no qualms spending money on expensive imported liquor, smart phones, automobiles, etc., started paying a higher price for grains and other farm products. This will only lead to more revenue flowing to the crucial, but much underplayed sector, i.e. the agricultural sector.

    Ultimately, water shall find its own level. Let the free market forces take charge!
     
  7. arkem8

    arkem8 Regular Member

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    Sharad Pawar.....
     
  8. Sakal Gharelu Ustad

    Sakal Gharelu Ustad Detests Jholawalas Moderator

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    Hatred for the rich runs so deep in the Indian culture!! Sitting in US makes only makes it easier to endorse such stance.

    Kindly explain how do you think it will increase revenue flow to the farmer?
     
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  9. pmaitra

    pmaitra Moderator Moderator

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    I am not sitting right now, and I don't get to sit much.

    I work harder than most people commenting on my location. Usually, the location of the critics is India, but lately, it seems France has been added to the list as well.

    Anyway, how about you counter my points?

    Recall the discussion we had on economics? Read that thread. Perhaps your question will be answered.
     
  10. Sakal Gharelu Ustad

    Sakal Gharelu Ustad Detests Jholawalas Moderator

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    ^^ Looks like the capitalists do not let you sit!!

    You did not make a point above, you merely bashed the entire nouveau rich class as if rotting of wheat is all of their making and spending their earned money is a bad thing. It reflects the attitude of typical air-conditioned brats connecting two different phenomenons and then trying to become champions of the poor.

    I remember the long discussion we had on eco. but nowhere we talked about how high wheat or food prices in India will help the agricultural sector. It has always had and still continues to help only the middlemen.

    P.S. At the end of day even the donkey works harder than most people, but that does not make it smarter.
     
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  11. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    None of this makes sense. Free market in the US and in India are leagues apart. Nobody gains from high food prices except a few middle men.

    Rich can afford the pricier wheat, but the middle class and poor cannot. We don't have a majority Rich population here. If wheat prices increase people will look towards other food grains. Farmers will be the first to suffer.

    Minimum wage in the US is $7.25/hour or $58 for an 8 hour day or $1276 for a 22 day month. Majority of people get paid between quarter and half this amount with an Engineering degree in India. Poverty line in the US is $23000 for a family of four. Our entire middle class is below the American poverty line. A guy in the US earning minimum wage can compete with our high profile White collar workers in India.
     
  12. sehwag1830

    sehwag1830 Tihar Jail Banned

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    Why is Bengal behind most of the problems in India ?

    1. Mamta Banerjee
    2. Naxal
    3. Jute bag now
    4. Lifafa journalist employed by Western Propaganda machines like NYTIMES , BBC.
     
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  13. pmaitra

    pmaitra Moderator Moderator

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    Read my post again. Now, go back and read it once again. Those that can afford imported liquor, smart phones, automobiles, can very well afford higher grain prices.

    One good quality about donkeys is that they are good at taking instructions, and if donkeys could read, and if told to read a paragraph, they would do it literally, without reading between the lines.

    Of course it does not make any sense (not what I wrote, but what you interpreted). My comment was about India, not US.

    Middlemen will always be there, but read on.

    Farmers have the compulsion to sell grains, because they are perishable. When there is bumper crop production, but not enough storage facilities, this is what happens. If they cannot sell by a certain time, they are forced to sell to the middlemen in low prices, who are part of the supply chain.

    However, if there is grain shortage, farmers will be able to demand higher prices for their grain, when they sell, because there already is a shortage. Even when selling to the middleman, they will be able to make higher profits.
     
  14. ejazr

    ejazr Stars and Ambassadors Stars and Ambassadors

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    Sometimes I wonder if people even read the article and undestand it before commenting on it.


    The entire article is based on the fact that in the 1980s a law was passed to ban import of raw Jute to protect Indian Jute farmers and associated jobs. And now that there is a shortage of jute, the law prevents them from importing jute or jute bags from BD which would have made perfect sense.

    Instead we are debating middle men, food shortages and farmer suicides that have nothing to do with the article!

    Its about shortage of jute bags. Sharad Pawar - no matter how corrupt he is - has nothing to do with this 1980s law and the shortage of jute bags.

    Now we have a jute shortage with artificially high jute prices, And the Jute lobby doesn't want this law changed because they get the govt. to pay for this no matter what the price. The solution would be that the parliament revokes this archaic law and starts importing jute bags so that it can start storing grains and prevent food grain loss.
     
  15. pmaitra

    pmaitra Moderator Moderator

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    Many jute mills are closed, some due to lack of raw materials, and some due to litigation. If all the mills were operating today, including the closed ones, there just won't be enough jute to supply them. Many jute producing regions went to East Pakistan at the time of partition, and many WB farmers have moved on to rice and other crops. Obviously, jute wasn't commanding the same prices as it was before, and other crops are more profitable; hence this phenomenon. We have to find alternative means of storage. Blaming the jute producers is silly, because, if jute indeed commanded high prices, then farmers would definitely go back to producing jute. This is the reality.
     
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  16. pmaitra

    pmaitra Moderator Moderator

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    AFAIK, that law to protect Indian jute farmers hasn't helped, because, India never produced enough jute to supply all the jute factories. If raw jute imports were allowed, many of the jute mills would actually still be running, generating more jobs.
     
  17. Sakal Gharelu Ustad

    Sakal Gharelu Ustad Detests Jholawalas Moderator

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    Dude, you have stayed too far away from the Indian reality.

    Whether perishable or non-perishable crops, the small Indian farmers do not have any storage facilities and hence arise the need to sell the produce as soon as it leaves the field. No amount of high prices is going to help the farmers and I cannot give a simpler explanation than the one above.

    Yes, the nouveau rich will pay high prices and you can still be happy about that!!
     
  18. pmaitra

    pmaitra Moderator Moderator

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    I want you to comment on my claim that those that can afford expensive stuff, can afford expensive food grains. Since you quoted me, either agree with that, or disagree, and say why. You haven't done that so far. First respond to that. We can take it from there.
     
  19. Sakal Gharelu Ustad

    Sakal Gharelu Ustad Detests Jholawalas Moderator

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    ^^I did not say they can't. All I said was expensive food grains is not the way forward to help the flailing agricultural sector.
     
  20. Sakal Gharelu Ustad

    Sakal Gharelu Ustad Detests Jholawalas Moderator

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    I think the title of the thread is too far-fetched. Storage or no storage starvation is going to stay. The twin policies of MSP and free grains cannot be implemented simultaneously without a high level transparency, which I do not see coming in the near future.
     
  21. pmaitra

    pmaitra Moderator Moderator

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    I take it you agree.

    Good.

    Now coming to the next point:

    Many farmers do have their own storage facilities. They can store rice and keep them in the storage, and then sell them one year later. Do you know why? I really want you to answer this question. These farmers also have the option of selling out their stored grains when prices spike.

    It is the landless labourers, who work the farms, but do not own their own land, who end up being at most risk. This is the reality, and not what you stated.

    Coming to perishable items, yes, vegetables, etc., are perishable, but then there are rarely middlemen involved. Farmers actually take their produce directly to the markets and sell them. Again, contrary to what you said, high prices will help the farmers.
     

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