Wednesday, July 2, 2014

The Questions Begin With Onions

This image is in the public domain because it contains materials that originally came from the Agricultural Research Service, the research agency of the United States Department of Agriculture.

It is rather amazing just how many questions can arise out of a simple onion. Following Noam Chomsky's advice that the only honest reporting is done in the business pages, I was browsing the Bloomberg website when I can across an article about how onion traders were viewing current Indian anti-inflation policy. The article opens with a man named Arun Kumar, a produce market middleman, saying he " has seen many Indian governments try and fail to eliminate middlemen at produce markets who are blamed for hoarding and stoking inflation." One of the big drivers for the concern over inflation and food markets is the lack of monsoon season rains this year--India is experiencing a 45 percent drop in rainfall amounts. A full scale drought, according to HSBC Holdings Plc., could reduce Indian economic growth by as much as a half-percent this year.Food prices in India make up about 50 percent of the consumer price index, which rose 8.28 percent in May of this year alone. (By way of comparison, food prices make up about 15 percent of the US CPI).
Notice of this drought in India comes at the same time that some sixty communities in Saskatchewan and Manitoba are dealing with floods from major storms dropping between 75 and 150 mm of rain in 24 hours. Both the drought and the rains (similar to last year's Alberta rains that flooded Calgary and High River), are driven by global warming changing the amount of water held by the air and changes to weather patterns; India sees 45 percent less rain during monsoon season and southern Saskatchewan and Manitoba get a whole summer's worth of rain in 24 hours.
Both these events will negatively impact the production of food in their respective countries. Bloomberg's reports that, in India:
After an emergency meeting two days ago, Jaitley said the government would ask states to crack down on hoarders, aid imports of pulses and cooking oil, and fix a minimum export price for potatoes and onions to discourage overseas sales. Food Minister Ram Vilas Paswan said India will offload about a quarter of its rice stockpiles.

A couple of things of note here; with food prices so important to the CPI in India, and the experience of famine so familiar, the government has made moves to ensure that local food production is sold locally at a reasonable price. Neo-liberal economic theory would suggest that it is better for everybody if the produce distributors could hoard the production and wait for better prices as the population becomes more desperate.
Also, the Indian government holds significant stocks of essential grains (in this case, rice) as a hedge against both famine and price inflation. Here in Canada, grain stocks are an incoherent mess after the federal government arbitrarily disbanded single desk purchasing last year.
Also, in India, the government made an effort in the 1950s to create open and transparent food markets by setting up markets with licensed traders and transparent sales. The goal was to prevent the exploitation of growers by traders. But, quite quickly, the trader's licence's became a monopoly, used to stifle competition by preventing competition. So the current government has changed the law to allow farmers to sell directly to retailers. Arun Kumar commented that the new measures (brought in a few days earlier) had not affected prices of fruits and vegetables.
So that's the macro scale response by India's government, and it gives us some insight into how complex decisions are in a country's food system. But there was another telling comment that brings up the micro scale of food production. Kumar also said "Farmers don’t have the experience or capital required to sell directly to consumers." This brings up an important issue for local food--marketing.
Local food producers cannot simply be brilliant farmers. They also have to be able to market their produce, develop relationships with consumers, and establish long-term growth plans. And a lot of them aren't up to it.
If you are going to be an agricultural entrepreneur, you have to be able to do everything alone. Unless you and others develop a community and focus on cooperation. I was lucky; it turned out that I was actually pretty good at selling vegetables direct to consumers, as were my Significant Other and our kids. But I saw a lot of other producers who would have benefited from direct selling who were not able to stand behind a table and develop relationships with the random people who walked by.
There are a dozen ways to get goods into the hands of those who want them at a decent price, but if you can't do any of them, you're in trouble. Or you need to partner up with those who can. And not just marketing, but in production as well. I would never be able to raise horses, for example. They and I are alien to each other in ways that goats, sheep or pigs and I are not. But there are people who love hayburners, and if I need horses, I need the people who can work with them. So the production cooperative becomes a logical way to move forward. We don't have to be alone. We are humans and humans excel by working together. And we can work together in mutually respectful and non-exploitative ways. We can live well by helping others to live well. We can cooperate and, if history is any indication, we need to cooperate. We just need to rethink the system by which we do it.

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