Food Price Deflation Takes a Toll on Indian Farmers

Grocery prices are a sector where the budding deflationary trend has been evident for months.

EWI's November 2016 Financial Forecast noted:

Since June, 2016, the Elliott Wave Financial Forecast has been tracking an all-important change in consumer behavior. So far, we've detected its presence by deflationary tremors in grocery prices ... . These headlines attest to an intensification in October:

Groceries Get Cheaper
--Minneapolis Star Tribune, October 27

The Restaurant Recession Has Arrived
--MarketWatch, November 1

Now, let's see what's happening in a nation with almost three times the population of the U.S.

Read this June 13 article excerpt from the Hindustan Times:

Agrarian distress casts a troubling shadow over the India growth story, a current facet of which is food deflation or an across-the board crash in food, fruit and vegetable prices. This is sparking unrest even in vanguard agricultural regions such as western Maharashtra and Madhya Pradesh. Earlier this month, farmers went on the rampage in Mandsaur inn MP demanding better prices for their produce and waiver of loans. Agriculturists in Rajasthan, too, have demanded higher prices. In April, farmers in Andhra Pradesh and Telengana protested against the free-falling red chilli prices, which were a quarter of those prevailing last year.

Food deflation is occurring against the backdrop of bumper crop production bumper crop production after two back-to-back drought years. Economists typically attribute the falling food prices to demand-supply mismatches. When farmers reap record harvests, prices are bound to collapse with excess production. The opposite holds if there are severe shortages and prices spiral upwards. But the State heavily intervenes in Indian agriculture by providing minimum support prices for wheat, rice and several other major crops. However, in recent years, these minimum support prices have failed to keep pace with rising input costs of crop cultivation -- making farming an increasingly unviable proposition.

You can read the entire article by following the link below: