Consider a farmer ‘A’. He gets up early in the morning, goes to his farm and works like hell. He is bent over backwards with all the farm work he does [if he is poor]. And suppose he is rich, all the physical toil is turned into mental struggle – labor charges, cost of fertilizers, cost of seed/seedlings, balancing costs, etc. Whether he is rich or not, one thing is clear – life sure isn’t easy for him without some sort of serious work. Then the time for harvesting comes and sure enough, he is pleased with the results and he tries to sell them. Suppose he sells the harvested stuff to a trader ‘B’ for Rs. 20 per kilo [let’s not bother with what or how much he’s selling]. The trader ‘B’ takes the merchandise to the city and sells it in the market for a higher price – Rs. 35 per kilo. Then the buyer in the market will sell it to the consumer for Rs. 45 per kilo.
Let’s take another example: A product [like Tupperware] is sold by the manufacturers for Rs. X. It goes through a series of distributors and in the end, the price becomes ~Rs. 2000, out of which 20-30% will be the original cost of the product [when it was manufactured]. This means that nearly 80% of the final price [which falls on the head of consumers] is gobbled up by the distributors who stand between the producers and the consumers. This is the case in almost every type of money-swallowing that’s happening in the country… legal businesses as well as illegal ones [I’m referring to corruption, of course].
Everywhere, price rises profit the traders more than it does the producers. The producers do all the work, but traders pop up in between and gather all the profits. It’s no wonder that though food prices have increased manifold, the farmers are still scrap little for a living. They live from hand to mouth when rice is Rs. 5 a kilo and when it’s Rs. 50 a kilo… because no matter what happens, the benefiters are the traders and the only reason why the price increases for producers is the scarcity of the resources. But in the case of merchants, the prices increase even when the resources are plenty… It’s like Jay Leno says:
“Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime. Teach a man to create an artificial shortage of fish and he will eat steak.”
There is a serious flaw in the system which allows for unfair dealings between producers and consumers. The only way out [as I see it] is for the manufacturers to get into the business field too. When they start forming co-operatives or something of that kind, they can start selling their products directly and then there will be no end to their welfare.
As Henry Ford says, “A business that makes nothing but money is a poor business.” Traders make it all about quantity and marketing, but the producers pay attention to the quality... And that is why we need more of producers in India. To have more producers, creating an environment where they are cherished is important. If they perish, no matter what they do to make it better, one can only expect India to become a raw material exporting country and goods importing country - Something it was 63 years ago... Something which past generations have struggled to change.