Fodder Inflation

Subject: Economy

Context:

Fodder inflation at 9-yr high, late rains, crop damage deepen crisis

Details:

The Wholesale Price Index or WPI-based fodder inflation – 25.54 per cent in August 2022, the highest in the last nine years.
Fodder Inflation has been rising since December 2021.
The overall WPI inflation in August 2022 at 12.41 per cent is the lowest since September 2021.

Cause:

Shortage of green fodder and dry fodder -paddy and wheat straw is not fully converted into good quality fodder rather burned.
- Combine harvesters leave the large part of the stalk on the field and need a second round of cutting for fodder.
Crop damage- due to late and heavy monsoon rain.
Changing cropping pattern-farmers are now moving away from cereal crops that yield fodder.
Decline in grazing grounds-due to conversion of land into protected areas and growth of invasive plants.
Breed and crossbreed-Cows crossbred with foreign breeds like Jersey and Friesian Holstein were introduced in India in the 1970s, give more milk but require more to eat.

Concept:

The high fodder inflation has a direct impact on rural livelihoods since as per the National Statistical Office report ‘Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019’,
- 43.8 per cent of the total 9.3 crore agricultural households use green fodder, 52.4 percent dry fodder, 30.4 per cent concentrates, and 12.5 per cent other animal feed during July-December 2018.

Common Inflation types:

Currency inflation: It is caused by the printing of currency notes.
Credit inflation: This happens when credit expansion leads to a rise in the price level.
Deficit-induced inflation: It happens when expenditure exceeds the revenue, and the government can ask RBI to print money to meet the budget deficit.
Demand-Pull inflation: It happens when an increase in aggregate demand over the available output leads to a rise in the price level.
Cost-push inflation: This may arise from the overall increase in the cost of production.