Fodder Inflation For October 2022 Peaked At 27.31% Beating 27.29% In June 2013

Rising fodder prices since December 2021 breached the existing inflation peak of 27.29% in June 2013. The Wholesale Price Index (WPI)based fodder inflation stood at 27.31% in October 2022. The rising fodder prices have made the lives of farmers difficult as they are suffering not only from uncertain weather but also from the lumpy skin disease that has killed around 1 lakh cattle in 15 states.

The lumpy skin disease (LSD), as mentioned in the Australian government¡¯s department of agriculture website, ¡®is a highly contagious viral disease of cattle and buffalo that causes relatively low mortality. It does not affect humans. The disease can result in animal welfare issues and significant production losses.¡¯

Fodder inflation has continued to rise despite the WPI inflation going on a downward trend. The inflation went down to 8.39% in October 2022 but it had no effect on the soaring fodder prices.

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How is the Wholesale Price Index(WPI) calculated?

The inflation rate means the rate of price rise in an economy. And it is denoted by a percentage. Consider an example of the price of bread. The brown bread costs Rs 50 this year as compared to its price of Rs 25 last year. This means that it has seen a 100% price rise. It now costs almost double what it used to cost last year i.e more than the base price. Rs 25 is the base price in this example. The base price is the initial price of a commodity or an item.

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But suppose one intends to buy bread at a large scale and chooses to buy it from the wholesale market. This makes matters more complicated because comparing the retail price of Rs 25 for the bread with this year¡¯s Wholesale price might be faulty. To counter this complexity of market economics, the government maps the inflation chart on two indices-wholesale and retail market. These two indices cater to the different inflations in two settings.

The two indices

The two indices used by the government are: The Wholesale Price Index(WPI) and the Consumer Price Index (CPI). Both these indices are used to map the current inflation and compare it with previous year's inflation rates.

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The two indices are compiled by different departments of the government. The WPI-based model is compiled by the Ministry of Statistics and Programme Implementation and the CPI-based index is done by the Department for Promotion of Industry and Internal trade.

The WPI lists manufactured goods while the CPI deals with food items and other miscellaneous products.

What do the rising prices mean?

Prices of essential food items such as milk have been directly impacted by the rising fodder prices. When the dairy cooperative Amul raised its retail milk price in August, the Gujarat Co-operative Milk Marketing Federation (GCMMF) pointed to the increased cost of fodder.

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¡®One of the reasons for the shortage is that paddy and wheat straw is not fully converted into good quality fodder. In many parts of the country, farmers burn stubble, which causes a further shortage of fodder.¡¯ said Amresh Chandra, Director of the Indian Grassland and Fodder Research Institute and as reported by The Indian Express.

Ground reports by The Caravan from western UP have shown that the animal husbandry industry is ailing due to the brunt of the COVID-19-induced lockdowns and rising inflation. Households had to sell cattle and traditional cattle rearing demands costs that are deemed too heavy for the people. ¡®Before the pandemic, a quintal of fodder would cost close to five hundred rupees. It now costs between Rs 2,000 and Rs 2,500.¡¯ The Caravan reported.

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