One is the recent outcry on the way farmers refused to take part in cashewnuts auctions owing to the low prices that were being quoted by traders –traditionally having the slanderous label of middlemen. Despite that the situation has been brought under control by a limited subsidy, what do we learn from it?
One element that is not being heralded too loudly but is evident in the manner in which the limited subsidy was calculated, is that it is not possible for the government to stray much from market signals, as government coffers depend on earnings from crops.
Draining state coffers to give better prices to farmers is self-defeating as finally the same farmers need to part with a portion of their earnings as contribution to public coffers generally, which everyone has to contribute, whatever the price level of what he or she is involved. It also means that care will have to be taken in the coming harvest season, so that expectations don’t lead to public disorder.
There is a conceptual link between global commodity prices and agro-sector management in the country, as to what we expect from world markets, and thus how we value or project values and prices at the local level.
It was reported that some political leaders had even intimated that the price of cashewnuts this harvesting or purchasing season would reach 5,000/- a kilo, which begs the question as to what ‘blockchain’ datastream this promise was based.
Blockchain operations differ from ordinary stock auctions in that the market isn’t open but networked, but since the data is open sourced and can be followed, onlookers would know the trending price or value early on.
That is what lacks in our crop price expectations and thus monitoring of agricultural values generally, as we are locked in a traditional system of values and expectations, to which we continually aim higher and expect better results, simply out of goodwill.
Outside the logic of political goodwill and supposedly benevolent markets, what sort of data supply and market projection would suggest that cashewnuts prices could rise to 5,000/- in the current season? Can wishful thinking about friendship with a number of Asian countries as uplifting prices be used to proclaim unachievable price projections for the political feel good factor, only to reap troubles?
What moves this traditional way of looking at prices is the psychological wish to expect good prices for this enhances the dignity of authorities, that they care about the welfare of the people, in this case farmers, by ensuring them good prices.
That is altogether removed from what really takes place in world markets, where harvests differ one year from another, in which case prices at the local level can only rise consistently if other countries have some miserable harvests each passing year, an impossible situation.
In ‘analogue’ situations where data on weather or market projections around the world wasn’t available, wild price guesses were a minor fault but not now - market situations build over time, and projections based on such data are completely reliable.
That is how the global commodity marketplace becomes a kind of blockchain where buyers stake out portions of the total harvest, which is equivalent to mining cryptocurrency, and the number of buyers and their price projections sets the stage for bargaining in a networked manner.
So there must have been some cashewnuts scarcity around the world such that there were around 60 companies that turned up in the local auction, while this year, with a relative glut, just half of those firms came around.
Price quotations moved in the same range, from 4,000/- per kilo to just over 2,500/- per kilo, while ‘analogue’ price projections (that is, same and more than last year) were putting up the figure of 5,000/- per kilo likely price, with no data to back up that projection.
Similarly tucked in an analogue model is the view that economic diplomacy can sort out negative price trends, as it ignores that the world commodity market is closely networked, that no one needs to move from a computer terminal to get the data It also implies that collective setting of what sort of crop to produce is analogue (each to do the same as another in one region, district, to add to the collective effort) –based on a false expectation of good prices.
Modernisation is to grasp the fact that participation in world markets has volatile price movements, and so that we don’t have to quarrel over prices, let people produce as individuals, making their own price projections. If they are wrong, they won’t blame anyone, and nobody will boycott auctions, etc.