FOOD INFLATION AND THE

ROLE OF MIDDLEMEN IN

INDIA..

By LG -13&15

SECTION -B

Shubhadeep Bhaumik

Debolina Mazumder

Swastika Das

Dinesh

Mainak Ghosh

Utsav Basu

Arindam Mukherjee

Arka Das

INFLATION..

Inflation is an increase in the general price level of

goods and services in an economy over a period of

time.

When the price level rises each unit of currency

buys fewer goods and services.

CAUSES OF INFLATION..

There are three causes of inflation-

o Demand-Pull Inflation

o Cost Push Inflation

o Expansion of the money supply

DEMAND PULL INFLATION

Its simply when demand for a goods or services

increases so much that it outstrips supply.

Sellers maintain the prize they will sell out .They

soon realize now they have the luxury of raising

prices, creating inflation

COST PUSH INFLATION

It only occurs when there is a shortage of supply

combined with enough demand to allow the

producer to raise prices.

For e.g.. Natural disasters can temporarily create

cost push inflation by damaging production facilities

such as what happened to oil refineries after

HURRICAN KATRINA.

EXPANSION OF THE MONEY SUPPLY

A third cause of inflation is over expansion of the

money supply. The money supply is not just cash

but also credit , loans and mortgages.

When loans are cheap, then there will be too much

money chasing too few goods , creating inflation.

Prices of everything will increase even though

neither demand and supply has changed.

FOOD INFLATION

Rise in the price of food is known as Food inflation.

CAUSES OF FOOD INFLATION

There is short term supply constraint such as bad

weather.

There is also evidence of increasing long term

supply constraints such as loss of farming land due

to global warming

CAUSES OF FOOD INFLATION(CONTD.)

Lack of storage facilities i.e. Warehouse

Natural disaster (hurricanes,floods,earthquake)

Rise of input cost i.e. cost of agricultural labour

which accounts for 40% of total cultivation cost for

major food products.

ROLE OF MIDDLEMEN..

Farmers sell crops and vegetables to the

middlemen who exploit these poor souls and get it

in a cheaper rate and sell this in turn at a higher

rate to the retailers according to its demand.

Occasionally they hold on to certain products and

thereby increasing demand for it and releasing it

intentionally on a later day when the demand

increases leading to inflation.

HOW TO STOP MIDDLEMEN

Initiatives like PepsiCo ITC should be followed

where they tend to educate the farmers and buy

crops from them by giving them the right market

price at the same time giving rise to farmers

empowerment.

Initiatives like this can stop the middlemen menace

and bring happiness into the farmers life leading to

less amount of inflation

THANK YOU..