The Onion Price Rise: What actually made us cry?

The aam aadmi has been hit by the high rate of food price inflation. Though there was a general
increase in the prices of fruits and vegetables in the past year, the fluctuations in the price of onion
were quite notable and were the subject of much debate. This article discusses the probable causes
of the sharp rise in the prices of this essential item in the Indian diet.

Background of the issue

India is the second largest producer of onions in the world. The annual average production is 12 lakh
tonnes per annum. More than half of the total yield comes from Maharashtra. Onion cultivation is
primarily centered in the Nashik, Pune, Ahmednagar, Satara, Sholapur and Dhulia areas of
Maharashtra. These regions are endowed with the well drained, non-crusting soil required for onion
cultivation.

The harvest cycle of onion cultivation in Maharashtra is as below.

Sr. No. Seasons Time of sowing Time of transplanting Time of harvesting

1. Kharif May-June July-August September-December

2. Early Rabi or late Kharif August-September September-October January-March

3. Rabi October-November December-January April-May

Source: Maharashtra State Agriculture Marketing Board, accessible at: http://www.msamb.com/english/export/canalising.htm

The rise in the price of onion began at the end of October. It was the fluctuations in Kharif yield
that led to the price rise. The chart below shows the arrival of onion and the price trends from
September 2010 to January 2011:

As can be seen, the market arrival of onion at the end of October was at an all time low. The price
levels shot up by mid December, after which there was a sudden decline by the first week of January.
However the sudden fall only gave way to greater fluctuations across the month. Thanks to the ban
on exporting and hoarding, the arrivals bounced back after hitting a low in the first week of January.
The monthly figures however reveal high retail margins1 even when arrivals were on the rise.

Spokespersons for the government followed the old practice of blaming supply side factors. But this
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explanation is hard to digest when the facts are examined.

Probable reasons for the price swing

The Kharif yield was definitely well below the normal level. The Indian Council of Agricultural Research
(ICAR) states that the reduction in the yield was caused by the spread of fungal diseases like Purple
Anthracnose and Purple Blotch among the Kharif onion saplings. The erratic monsoons that caused
water logging in the flat crop beds resulted in the spread of the above fungal infections among the
saplings. The humid climate that prevailed from August worsened the situation. Though pesticides
are generally effective against these fungal diseases, the heavy downpour made the spraying
ineffective. The end result was an unprecedented fall in the Kharif yield.

Though the above mentioned supply side developments had an important role in triggering the price
rise, it is impossible to ignore the part played by other elements in aggravating the problem. These
include:

(a) Poor buffer stock maintenance

(b) Failure to discourage exports

(c) Lack of policy preparedness

(a) Poor buffer stock maintenance

The vagary of the monsoon is not new in India. The importance of maintaining buffer stocks
to meet these kinds of exigencies have been stressed over and over again in the country.
Though the states reported adequate buffers, it was insufficient to meet even the normal
demand levels. But, the buffer stock was primarily built on the Kharif yield from Andhra and
Rajasthan. Further, the Kharif yield cannot be stored for more than a month. The poor buffer
management systems is partly reflected in the fact that buffer stocks were not built using the
Rabi yield, which lasts from four to six months.

(b) Government's failure to discourage exports

The immediate response of the government was to discourage the exports. To do the same
the government increased the MEP (Minimum Export Price) of onion. However, as it turned
out, it was an ineffective measure to reduce exports. The export demand did not shrink, as
expected, by the augmented MEP. The strategy eventually had the reverse effect. The
wholesalers became interested in meeting the export demand with their already low yields.
This was the case at least for the existing NOCs (No objection certificates) 3. Two fundamental
faults can be identified in the above stated government response.

i. Weak policy response

It was a weak policy response to a situation marked by rapidly falling arrivals and
unprecedented rise in prices.

ii. Failure to learn from the past

It was not the first time that the strategy was rendered ineffective. A similar situation was
reported in August 2008, when onion exports almost doubled despite an increase in the MEP
for shipments from $25- $180 a tonne.

(3) Lack of policy preparedness

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The failure of the authorities to foresee the impending trouble was definitely an identifiable
cause. If the outbreak of the fatal crop disease was reported in the Kharif season, (July to
November), government should have taken steps to build more buffer stocks and discourage
exports at a much earlier stage. The potential to build sufficient buffer stocks on the bumper
Rabi yield was also not exploited.

To summarize, it is unfair to hold only supply side factors responsible for the upswings in
onion prices. The government cannot deny its failure to adopt prompt and adequate measures
required for moderating the price fluctuations. If that is taken into account, the food price
inflation can be seen to have been caused by the government's action (inaction) and not by
the emerging domestic demand or by the unfortunate supply side conditions alone as
vehemently argued by some.

[1] Refer to Ghosh, Jayati (2011): ‘Food prices and distribution margins in India', accessible at:
http://www.macroscan.org/fet/feb11/fet030211Food_Prices.htm

[2] Anthracnose results in pale yellow spots of leaves which expand length wise covering the entire leaf blade. Leaves
affected by anthracnose shrivel at the earlier stages and later droops. Blotch is marked by water soaked lesions, and purple
centers on leaves, leaf bases and flower stalks. The disease also leads to the shriveling and consequent drooping of leaves.

[3] The issuance of NOCs was completely suspended only by the last week of December

The Onion Prices Rise-What actually made Indian cry?

Hue and Cry over Onion Prices

During the period of December 2010 to January 2011, it seemed as if all of India was shedding tears
over onion prices, which had suddenly registered a sharp rise. The average price, which was running
around Rs 30 in the first week of December 2010, had shot to above Rs 50 by the fourth week of
December. Some centres even recorded a much higher price, with a peak of around Rs 85 in Gurgaon
(Exhibit 1), a city in Haryana state in India. Consumers across all income strata reduced their onion
consumption. For some, in spite of a reduction in their consumption, the expenditure on onions almost
doubled. Even restaurant owners substituted onions with shredded cabbage, carrots and pumpkin in
their dishes. There was a hue and cry over the onion prices across the country, with consumer forums
blaming the government for not taking action to curb onion prices. The opposition parties in the
parliament also blamed the government for pursuing the wrong economic policies. The government
suspected hoarding by the traders to be the main culprit behind the soaring prices and warned them to
release onions from their stocks. It imposed a ceiling on stock holding and issued a search order. The
traders argued, on the contrary, that a natural supply-demand gap was the main reason for the soaring
prices. There was total chaos, with all the stakeholders blaming each other for the situation and with
no clear explanation of what was wrong. Was the shortage due to a natural supply shock? Was it a
result of an artificially created shortage? Was it an outcome of wrong government policies? Or was it
simply the result of changes in demand conditions? The government and business analysts were
wondering not only about the causes of the sharp price rise, but also about the appropriate interventions
and policy changes required to stabilize the prices.

Onion Prices

Supply side of the market

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India is the second largest producer of onions in the world (Table 1). Maharashtra state is the largest
producer of onions in the country, accounting for 41% of the area harvested and 38% of production
(Table 2). Within Maharashtra, Nashik district contributes 35 to 40% of the state’s production.
Lasalgaon in Nashik is the biggest onion market in the country; hence, this market largely determines
the prices in the country. The other major onion-producing states are Karnataka, Gujarat, Bihar,
Madhya Pradesh and Rajasthan.

Table 1: Onion Production, Area and Yield: Top 10 Countries in the World in 2009
Country Production (tonnes) Area Harvested (ha) Yield (hg/ha)
China 21,046,969 947,611 222,106
India 13,900,000 846,909 164,126
USA 3,400,560 60,120 565,629
Turkey 1,849,580 65,000 284,551
Egypt 1,800,000 54,000 333,333
Pakistan 1,704,100 129,600 131,489
Russian Federation 1,601,550 85,700 186,879
Iran 1,512,150 47,450 318,683
Brazil 1,511,850 66,013 229,023
Netherlands 1,269,000 26,000 488,077
Spain 1,263,400 23,600 535,339
Source: FAO. FAOSTAT-Agriculture, as on 23/9/2011 (http://faostat.fao.org/site/567/default.aspx#ancor)

Table 2: State-Wise Area and Production Data for Onions in 2011-12

State Area Production Yield Share in Total Production
(‘000 ha) (‘000 MT) (Ton/ha) %
Andhra Pradesh 54.9 732.3 13.3 4.84
Bihar 54.4 1,138.50 20.9 7.52
Gujarat 57.3 1,394.60 24.3 9.21
Haryana 23.2 476.5 20.5 3.15
Jharkhand 17.2 364.1 21.2 2.41
Karnataka 130 1,756.70 13.6 11.61
Madhya Pradesh 64.1 985.1 15.4 6.51
Maharashtra 387 5,823.50 15.1 38.48
Others 17 340 20 2.25
Rajasthan 48.6 900 18.5 5.95
Tamil Nadu 37 556.5 15 3.68
Uttar Pradesh 23.6 370.8 15.7 2.45
West Bengal 21.2 297 14 1.96
Total 935 15,135.60 100.00
Source: National Horticulture Research and Development Foundation, Database, as on 25/9/2011
(http://www.nhrdf.com/ContentPage.asp?DataCode=202)

There are three main seasons for onion production: kharif (monsoon), late kharif and rabi (winter)
(Table 3). The rabi crop is the major crop, contributing 70% of total onion production. Some of the

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rabi varieties have excellent storage quality of about four to six months.

Table 3: Onion Seasons in India

States/Regions Seasons Time of Time of Time of
Sowing Transplanting Harvesting
Maharashtra and 1.Kharif May-June July-Aug. Sept.-Dec.
some parts of Gujarat 2.Early Rabi Aug.-Sept. Sept.-Oct. Jan.-March
3.Rabi Oct.-Nov. Dec.-Jan April-May
TamiNadu/Karnataka 1.Early Kharif March-April April-May July-Aug.
and AP 2.Kharif May-June July-Aug. Oct.-Nov.
3.Rabi Sept.-Oct. Nov.-Dec. March-April
Rajasthan/Haryana/Pu 1.Kharif May-June July-Aug. Nov.-Dec.
njab/UP and Bihar 2.Rabi Oct.-Nov. Dec.-Jan. May-June
West Bengal & Orissa 1.Kharif June-July Aug.-Sept. Nov.-Dec.
2.Late Kharif Aug.-Sept. Oct.-Dec. Feb.-March
Hills 1.Rabi Sept.-Oct. Oct.-Nov. June-July
2. Summer (long day type) Nov.-Dec. Feb.-March Aug.-Oct.
Source: National Horticulture Research and Development Foundation (2011), Database, as on 25/9/2011
(http://www.nhrdf.com/ContentPage.asp?DataCode=202).
Onions are a commercial crop. The estimated cost of onion cultivation varies from Rs 79,590 per ha to
Rs 87,900 per ha (Table 4) (for the international equivalence of Indian units of measurement, see
Exhibit 2), which is comparatively smaller than the cost of cultivating other crops. Apart from the
suitability of soil for onion production, the lower cost of cultivation also attracts many small and
medium farmers to this crop.

Table 4: Cost of Production of Onions During 2011-12 in Maharashtra (Cost Rs/ha)

Operations Kharif Late Kharif Rabi
1. Land 10000 10000 10000
2. Seed Cost 4800 4800 4800
3. Nursery Raising 3500 3500 3500
4. Land Preparation 7000 7000 7000
5. Transplanting 8000 8000 8000
6. Irrigation 4000 4000 4000
7. Manures and
16000 17500 17500
Fertilisers
8. Weeding and
6000 6000 6000
Hoeing
9. Plant Protection 4000 4000 4000
10. Harvesting, Curing,
Sorting, Grading and 7000 8000 8500
Packing
11. Transportation 3000 3500 4000
12. Supervisory
1500 1500 1500
Charges
13. Overhead Charges 1000 1000 1000
14. Total (Rs) 75800 80800 83800

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 15. Bank interest @ 10%
3790 4040 4190
p.a. for 6 months
16. Total cost (Rs) 79590 84840 87990
17. Average Yield
160 245 250
(Quintal)
18. Cost per Quintal (Rs) 497 346 352

Source: National Horticulture Research and Development Foundation (2012), Market Intelligence System: Baseline
Data for Potato and Onions, April,
(http://www.sfacindia.com/Docs/Onion%20&%20Potato%20Baseline%20Report.pdf)

In spite of India being a major producer of onions, its productivity is one of the lowest amongst the
major growing countries. Apart from lower yield, the crop is also subject to excessive post- harvest
storage losses in the event of adverse weather conditions, lack of dormancy (inactive state) in bulbs,
and pest and disease infestation, which affect the economic viability of the crop.
Storage of onions and supply

Unlike wheat, rice and other food grains, onions are a highly perishable commodity; hence, they
cannot be stored for long periods. Also, the storability of onions depends on their variety and the
harvesting period. Kharif crops cannot be stored for more than a month, whereas rabi crops can be
stored for four to six months. However, conventional methods of onion storage can result in large
losses, even in rabi crops, due to weight loss, sprouting and rotting of bulbs. To overcome these losses,
the country requires scientifically constructed cold storage facilities, which, as per the Maharashtra
State Agricultural Marketing Board (online), can cost around Rs 6,000/- per mt storage capacity
(excluding the cost of land). The country requires an additional storage capacity of around 12 lakh
tonnes and modernization of 8 lakh tonnes capacity of existing units (National Bank for Agriculture
and Rural Development, 2000).

Because of the lack of proper storage facilities, most farmers bring onions directly to the market and
unload their entire stock within a month of harvest. As a consequence of the glut in the market, the
prices are very low in the months of April and May (Figure 1), which adversely affects the earnings
of farmers. Wholesale traders store onions, but in a traditional and unscientific manner; hence, the
supply becomes limited in the subsequent months and prices rise rapidly and steeply, leading to
dissatisfaction among consumers as well as farmers. Consumers feel the pinch of the high prices
because they are accustomed to using the bulbs on a daily basis, whereas the farmers’ agony is due to
poor yield, lack of storage facilities and low prices. Sometimes, they are not able to recover even the
cost of cultivation. In the absence of proper storage facilities, prices fluctuate widely, which creates
uncertainty in the environment and hampers cultivation decisions in the ensuing onion-growing
season.

Figure 1: Month-Wise Market Arrivals and Prices (in Rs) of Onions for All Months in
Lasalgaon (Nashik) in Maharashtra

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 Source: Based on the data available from National Horticulture Research and Development Foundation, Database, as
on 25/09/2011 (http://www.nhrdf.com/ContentPage.asp?ResultCode=301)

Demand side of the market

Except for a few communities, onions are used in the day-to-day cooking of both the poor and the
rich across the country. Apart from households, restaurants are also major users of this bulb. It is
used not only raw, but also in processed form – fried, boiled, baked, dried and powdered as well as
in curries, soups and pickles.

Onions also have numerous health benefits and healing properties and are widely used in the
manufacture of medicines for dropsy, kidney, heart, liver, diabetes, tuberculosis, colic, scurvy,
rheumatic pain and other inflammatory diseases.

However, most Indians use onions not because of their inherent health benefits, but because they
are a condiment that adds taste to the food to which they are accustomed. Also, onions are usually
plentiful and inexpensive, even poor people can normally afford them. Though some consumers
substitute onions with grated cabbage or pumpkin puree during periods of scarcity, there are not
many close substitutes for onions. A small change in the price, therefore, does not have a large
effect on the quantity demand. Considered to be almost an essential item, it takes a very big change
in the price to affect the consumption of onions.

Government policies and regulation of the onion market

In India, in general, the government regulates food grains and vegetable markets by fixing
minimum support prices, minimum export prices, tariffs on imports and quantitative restrictions.
As far as the onion market is concerned, the government pursues the following policies:
 First, the government provides the minimum support price to farmers to augment the
production and supply of various agricultural products, and to support their income.
However, as onions cannot be stored for long periods and their storage requires a special
type of structure and huge area, it is not possible for the government to purchase, store and
market onions. Therefore, the government does not provide support prices for onions. The
lack of storage facilities results in large fluctuations in the market price of onions.
 Second, the government regulates the export of onions by fixing the minimum export price.
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 India is a major producer of onions; hence, supply from India can influence world onion
prices. In a situation of normal supply, onions are available at a cheap price. If exported at
this price in the world market, they are not very remunerative for Indian farmers. Therefore,
the idea behind fixing the minimum export price is to provide lucrative prices to the farmers,
to encourage the export of onions and to maximize foreign exchange earnings for the
country. Keeping these objectives in mind, in a normal supply situation, the minimum
export price is fixed above the market clearing price in the domestic market, but below that
prevailing in the world market. The minimum export price, however, affects the supply in
the domestic market. An increase in export prices (above the world market price) makes the
exports more expensive in the international market, thus reducing demand for exported
onions in the global market. However, this helps increase the supply in the domestic market.
The reverse holds true when the minimum export price is lowered. To ensure a smooth
domestic supply and to moderate fluctuations in domestic onion prices, the minimum export
price is fine-tuned every month, taking into account quality, crop prospects, market trends,
expenses involved, freight charges, etc.
 Third, India is a major producer of onions in the world. To prevent a glut in the market and
to ensure fair prices to onion farmers, the government tries to restrict the import of onions
by imposing an import duty.

 Fourth, in extreme situations, the government can impose quantitative restrictions and even
completely ban the export and import of onions.
 Fifth, in India, the inter-state sale of agricultural products, including onions, is restricted by
various state-level regulations and taxes to ensure food security in the exporting states and
to avoid excessive competition in the importing states. Such restrictions, in spite of the
removal of a ban on the inter-state movement of agricultural commodities, fragment the
markets, result in black marketing and hoarding, boost the commission of middlemen and
make prices highly volatile.

What Caused Soaring Onion Prices?

In general, the overall price level in India hovers around Rs 15 per kg. However, the country also
experiences seasonal fluctuations in prices. Onion prices generally run high in the lean months of
December-January and dip sharply in April and May with the arrival of the rabi crop. But the period
of December 2010 to January 2011 saw an unprecedented rise in the wholesale and retail prices,
which were much higher than those registered in the same period in 2009-10 (Figures 1 and 2).

Was it a supply shock?

Various natural factors affected the kharif crop adversely in Maharashtra, which is the major onion-
growing region in the country. Fungal diseases like purple anthracnose and purple blotch affected
the kharif onion sapling (John, 2011). The situation further deteriorated with an erratic and
extended monsoon, which caused waterlogging in the flat crop beds and spread the fungal
infections among the saplings rapidly. The heavy downpours and prolonged humid climate also
made the spraying of pesticides ineffective. The untimely heavy showers in southern India also
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 affected the onion crop in Karnataka and Tamil Nadu states. As per one estimate, overall, 40% of
the crop was damaged (Madhavan, 2011).

The impact of natural factors on supply could have been mitigated, however, had there been
sufficient onion reserves available in the country. But since it was lacking proper storage facilities,
the country did not have enough of the durable rabi crop in storage. Whatever stocks the states
reported were primarily from the kharif crop, which was not sufficient to meet even normal demand
levels.

Was it a demand shock?

Some analysts argue that India is one of the world’s fastest growing countries, with an average
GDP growth rate of 8 to 9%. Improvements in income levels have been causing changes in dietary
habits in favour of protein-rich foods, fruits, vegetables, pulses, milk, etc. (Chand et al., 2011).
Dietary changes, along with population growth, have led to increased consumption of various
agricultural products, including onions, and have caused continuous price increases.

Apart from the overall increasing trend in the demand for onions, there was also a seasonal increase
in demand, which caused a sharp spike in onion prices. December-January is wedding season in
India. Major festivals, such as Christmas, New Year’s Eve, Makar Sankranti, etc., fall in these
months. Families and friends visit each other during these festivities in India and celebrate the
events with special meals, increasing the demand for onions and other vegetables during this period.

Was it speculation?

Traders did take advantage of the apparent mismatch of demand and supply. The demand-supply
gap, which would have been minor, was widened by speculative activities and hoarding by
intermediaries. The widening of the gap accentuated the deviation between wholesale and retail
prices (Figure 2) and worsened the situation manifold in the market place.
Figure 2: Wholesale and Retail Onion Prices (in Rs) in December 2009 and 2010

Source: Based on the data available from the Ministry of Consumer Affairs, Food and Public Distribution, Price
Monitoring Cell, 2011, http://fcainfoweb.nic.in/Prices_Application/daily_prices/san_interface_daily.asp.
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 Expectations also played an important role on the demand front. In anticipation of a further rise in
the price of onions, consumers also tried to safeguard their interest by demanding more onions than
their normal requirement and storing them. Those families that usually used only 2 kg of onions in
a month bought 5 kg in anticipation of additional increases in onion prices, further accentuating the
shortage of onions in the market.

Was it government policy?

The opposition parties as well as analysts blamed the supply shortage on the government’s economic
policies. They argued that, in its zeal to promote onion exports (India is the largest exporter (Table
5)), the government had ignored the rising domestic demand. India used to export just 106 thousand
tonnes of onions 50 years ago. With the emergence of the WTO in 1995, and after the removal of
quantitative restrictions, the export of onions increased rapidly, reaching 1,670 thousand tonnes in
2008 (Figure 3), which accounted for around 12% of total production.

Table 5: Onion Exports: Quantity and Value: Top 10 Exporters in the World in 2008
Countries Quantity Countries Value ($)
India 1670720 India 422832
Netherlands 1100050 Netherlands 375646
China 545310 Mexico 301007
United States of America 320773 United States of America 182507
Mexico 279989 China 133026
Spain 254773 Spain 96878
Turkey 210936 Argentina 77502
Argentina 202597 Poland 66706
Poland 141672 Egypt 41559
Egypt 103321 Italy 40749
Source: FAO, FAOSTAT-TradeSTAT, as on 24/9/2011 (http://faostat.fao.org/site/535/default.aspx#ancor)
Figure 3: Trend in Export of Onions

Source: Based on the data available from FAO (2011), FAOSTAT-Agriculture, as on 24/9/2011,
http://faostat.fao.org/site/342/default.aspx.

Apart from the removal of quantitative restrictions, the policy on minimum export prices had
promoted export value and volume. The minimum support prices had usually been kept low in
comparison to international prices to make Indian exports competitive and enhance the demand for

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 exported onions. However, since these prices were higher than those in the domestic market, the
effect of this policy had been to reduce the supply of onions in the domestic market.

The government was also criticized for delayed policy responses. The outbreak of the fatal crop
diseases was reported in the kharif season and it was expected that the yield would be low and
prices would soar. Anticipating this, the minimum export prices should have been sharply increased
as soon as it became apparent that there would be a supply shortage. But the government response
on this front was very late in coming. Critics of the government’s policy argued that the government
could have averted the sharp supply shortage by restricting exports and resorting to imports at a
much earlier stage and by building up buffer stocks on the bumper rabi crop (Mehta, 2011 and
John, 2011).

Government Management of the Crisis and Its Impact

To the extent that they are part of even the poorest person’s meal, onions have played an important
role in Indian politics. Hence, a sharp rise in onion prices is considered to be a politically sensitive
issue. The Indian national election of 1980 and state elections in Delhi and Rajasthan in 1998 came
to be known as “onion elections” (Kumar, 2011) because the runaway onion prices in those years
brought down the government in power at the time.

The soaring onion prices, which were reducing home cooks and restaurateurs alike to tears and
threatening to fuel public ire over runaway food prices, compelled the government to respond
forcefully by implementing various measures on December 21, 2010. The immediate response of
the government was to discourage exports by asking the National Agricultural Cooperative
Marketing Federation (NAFED), responsible for marketing (including exports and imports) of
agricultural products for the benefit of farmers in the country, and other agencies to “voluntarily”
suspend onion exports. The government also more than doubled the minimum export prices to
$1,200 a ton from $500 a ton, making onions more expensive in the international market and thus
discouraging exports. The government also attempted to augment supply by eliminating the import
duty on onions, which was 5% at that time, and by importing shipments of onions from
neighbouring Pakistan.

However, the prices ruled steady. Finally, to bring prices down to a desirable level, the government
intervened directly in the market by making the NAFED supply onions at the price of Rs 35, far
below the market prices at the time. However, the huge demand persisted at this price and the
government ended up rationing onions by limiting the supply to 2 kg per person at the time of
distribution by the NAFED.

As the supply of onions at this price was below the cost of procurement, the government agreed to
compensate the NAFED for 30% of the losses it was estimated to have incurred by selling onions
at a cheaper rate (PTI, 2011), implying an increasing burden on taxpayers. The government released
Rs 15 crore to NAFED to subsidize onions and to help tide over the capital city of Delhi during the
crisis (Bhatnagar, 2011).

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 What Is Needed?
Business analysts questioned whether the government should leave the matter of export and
domestic price fluctuations to the natural forces of demand and supply, and intervene in the market
only in the event of large volatility, by subsidizing onions to consumers. Would the traders and
farmers benefit from such a policy? Or, should the government scale up storage facilities by
investing heavily in infrastructure to provide long-run price stability? Such an approach would,
however, drive up the government’s already high deficit, the burden of which would fall on
everyone, including consumers, traders and farmers, in the form of higher inflation.

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