Analysis

If Indians can’t afford onions, let them eat chicken

By RJ Whitehead

- Last updated on GMT

If Indians can’t afford onions, let them eat chicken

Related tags: Inflation

A press release arrived last week from India with the headline “Chicken becomes cheaper than onions”. Needless to say, it raised a few eyebrows at the FoodNavigator head office in Montpellier, France.

The release had been sent by Godrej Tyson Foods to promote the launch of its Real Good Chicken 400g packs, which are now on sale for just Rs48 (US$0.77). While it didn’t go on to mention onions even once beyond the headline, it had served its purpose by drawing attention to the rising cost of non-meat staples in largely vegetarian India and promoting chicken as a cheap alternative.

Outside India, it is inconceivable that protein could be cheaper than vegetables. But many of those who have been watching the skyrocketing rate of inflation in the country will be able to nod sagely, as if they had predicted it all along.

According to government data released this week, the cost of food items grew at a rate of 18.19% in October.

And while inflation in the vegetable segment stood at 78.38%, onions in particular have seen continued price rises, which amounted to an astounding 278.21% last month. 

Meanwhile, protein-rich items like egg, meat and fish have also been increasing—by 17.47%, against 13.37% in September.

This has of course led to vociferous calls from industry groups for the government to take action. 

The high food prices calls for urgent steps to increase the efficiency of the food supply chain through appropriate policy responses to cut down on intermediaries and reduce waste​,” demanded Chandrajit Banerjee, the director general of the Confederation of Indian Industry.

Assocham, the association of chambers of industry, called this inflationary trend “worrying​” and predicted there would still be much more to come on the back of leaping “built-up inflation​”.

It is not like the government is unaware of the problems India faces to explain away its lack of action; rather it seems to be having difficulty in grasping what to do about it. The whole thing is a conundrum as Assocham’s president, Rana Kapoor, pointed out.

"Inflationary pressure is being exerted from the primary articles and food prices, which are in a way, inexplicable given the fact that we had a good monsoon this year,” ​he said.

Not only is inflation hurting consumers, the fact that the Reserve Bank of India has been forced to increase interest rates twice in its last two monetary policy reviews is piling on the misery.

The RBI has continually maintained that inflation must be in a comfort zone of 4-5% for it to consider any cut in interest rates, though that doesn’t seem a likely prospect given the circumstances. At the same time, they must find ways to promote terminally slowing growth.

To work out to do, the Centre and its financial institutions must work out whether, to paraphrase Milton Friedman, this inflation is a monetary phenomenon, or if it is the flip-side of this, and an instrument of severe social and political disruption. 

The ruling coalition is not only weak, but it is on the cusp of what will be a bitter election next year. It has also become accustomed to half a decade of unchecked economic growth—the pride of the administration, if you will, which it has sought to protect while clearly ignoring the monetary machinery that will always function in tandem with growth in a market.

If you scratch below the surface, you will find that inflation has been a scourge of the Indian economy for nearly four years now, although as a headline-getter, it has had to give way to stories of India’s supreme growth story. 

And now that is shrinking. India has seen, at 4.4% in the last quarter, its lowest growth rate in three years, and consequently its unchecked inflation is coming back to haunt politicians, economists and, worst of all, consumers.

To get food prices on an even keel, India needs to overhaul its crumbling supply chain, something we have reported on often. Even though this year’s monsoon has been good, 40% of fruit and vegetables are lost each year between the farm and the consumer because of a lack of adequate storage, according to a recent report by the UK’s Institution of Mechanical Engineers.

It must ramp up its productivity levels, which have forever been poor in a nation of smallholders, so that farming becomes less expensive.

And more than anything, India must acknowledge that its policies towards farming and agriculture are outdated and need an overhaul. A country that waits generations to reform a punitive sugar levy that was despised on all sides must find ways to speed up its approach to produce.

However, this all takes time, of which consumers have little, so it will be interesting to see where the government goes with this rampant inflation. 

At least Indians can now offset the soaring cost of vegetables with Godrej’s new chicken.

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2 comments

Reply from FNA

Posted by FoodNavigator-Asia,

Ahishek, Thanks for your comment.

The headline paraphrases a well-known quote by Queen Marie Antoinette, who when informed the French people didn't have enough bread to survive, replied that they should eat cake.

There are parallels between that story and the situation in India, whereby people are struggling to afford staples, which have shot up in price, leaving the government with little will or means to remedy the problem.

And please bear in mind that if a food industry news service says something in a tongue-in-cheek headline, it is not forcing people change their religious and cultural beliefs and dietary habits.

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Strange point of view

Posted by Abhishek J Gupta,

Hi Mr. Whitehead,

I appreciate your news article describing a serious inflation issue in the Indian food sector. However, I respectfully disagree with the title of the article.

I find it derogatory and disrespectful because with the current title, it seems like you are forcing Indians to eat Chicken (for cost reasons).

Although I appreciate your viewpoint, we should keep in mind the religious and cultural beliefs of Indians which are key drivers for their vegetarian lifestyle.

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