i

Agrinews: May 2013

Prepared by

National Council of Applied Economic Research

11, I.P. Estate

New Delhi 110002

ii

A compilation of major news items relating to the overall farm

sector and selected commodities covered under the study

“Agricultural Outlook and Situation Analysis Reports”

iii

CONTENTS

Section Title Page No.

1 Highlights 1

2 Agricultural Policy 5

3 Rice 9

4 Wheat 15

5 Maize /Coarse cereals 31

6 Pulses 33

7 Edible Oils / Oilseeds 37

8 Vegetables – Potato/ Onoins 43

9 Milk 49

10 Sugarcane / Sugar 55

11 Inputs 67

12 Other Agri / Farm News 73

13 Agricultural / Food Prices 103

14 Agricultural Futures Prices 107

Note: Newspapers covered: BL= Business Line, BS = Business Standard, ET= Economic

Times, FE= Financial Express

iv

1

I HIGHLIGHTS

Agricultural Policy

CAG pulls up govt for fixing foodgrain MSP (ET 8/5/2013)

Govt notifies decision on partial sugar decontrol (BS 8.5.13)

Govt moves to examine agri price panel's mandate (BS 10.5.13)

FM suggests tweak in cereal procurement policy (BS 22.5.13)

Rice

India to be world’s top rice exporter for second straight year (BL 8.5.13)

Basmati acreage seen rising on hopes of higher returns (BL 8/5/2013)

China expected to become world's largest importer of rice (ET 15.5.13)

India begins exporting basmati & non-basmati blend to Iran (ET 16/5/2013)

Rice acreage down by 5 per cent so far (ET 17/5/2013)

Wheat

Govt may reduce export price of FCI wheat: Thomas (ET 30.4.2013)

Government lowers wheat procurement target by 25% to 33 million tone (ET

7/5/2013)

Wheat procurement likely to decline 8% in 2013-14 (BS 8.5.13)

India's wheat stocks up 76 per cent, more pressure to boost exports (BL 8/5/2013)

Wheat output may be less this year (BS 13.5.13)

Private buyers crowd out government in wheat procurement process (BS 15.5.13)

Private traders stay away from wheat export bids (ET 24.5.13)

Dubai firm bids highest for PEC wheat at $305.10/tonne (BL 24.5.13)

Pulses

Serious flaws in government’s pulses schemes: Public Accounts Committee (BL

30/5/2013)

Despite lower crop, rise in pulses unlikely (BL 8/5/2013)

Higher arrivals seen pounding pulses (BL 13.5.13)

Edible Oils and Oilseeds

Edible oil imports fall 29% in April (BS 15.5.13)

Global body to promote rice bran oil (BL 24.5.13)

Vegetables/ Onion- Potato

Onion likely to rule at Rs 800 a quintal till month-end (BL 4.5.13)

Potato farmers asked to store harvested produce till July (BL 15/5/2013)

2

Bengal plans to raise onion output (BL 17/5/2013)

Potato trade down over 2% on weak demand (BS 17.5.13)

Milk

'India would meet 172.20 million tonnes milk demand by 2020' (ET 26.4.13)

New Zealand drought fuels boom for Indian dairies (BL 1.05.13)

Amul raises milk prices by Rs 2/litre in Delhi (BS 1.5.13)

Sugarcane/Sugar

Sugar output may exceed demand in next 3 yrs: Thomas (BS 26.4.13)

India's Oct-April sugar output down 3% y/y: Industry body (BL 3/5/2013)

Sugar exports from India poised to rebound (BS 4.5.13)

Sugar millers plan to tap futures platform (BL 15/5/2013)

Sugar co-ops want restrictions on import, with export subsidy (BS 17.5.13)

Sugar imports could jump (BS 23.5.13)

Sugar output may fall 6-8% this year: ICRA (BL 23.5.13)

Inputs

Non-urea fertiliser subsidy cut for current fiscal (BL 01/5/2013)

Madhya Prades farmers to get power at Rs 1,200 for agricultural purpose (ET

11/5/2013)

Seed industry opposes AP Bill; says it conflicts with Central laws (BL 19/5/2013)

Other Agri / Farm News

Campaign against ‘iron-fortified’ genetically modified bananas (BL 2/5/2013)

Andhra Pradesh sees dip in number of farmers (BL 3/5/2013)

Foodgrain output revised upward by 2% to 255.36 mn tonne (ET 4.5.13)

India seeks cut in trade distorting agriculture subsidies by US, European Union

(ET 7.5.13)

Agri exports rise 12% in FY13 (BS 8.5.13)

Monsoon to hit Kerala coast on June 3: Meteorological Department (ET

15/5/2013)

Farm sector may grow by 3.4% this fiscal on normal monsoon (ET 15/5/2013)

Procurement plunge casts shadow over food Bill (FE 17.5.13)

Water scarcity begins to take toll on kharif sowing (BL 17/5/2013)

Govt to cut 147 central schemes to 70 as GoM okays recast (BL 23.5.13)

Strong monsoon phase seen into first week of June (BL 24.5.13)

3

Agricultural Commodity/ Food Prices

Edible oil prices to remain subdued on ample global supply (BL 24.5.13)

Wheat, other grains strengthen on persistent buying (ET 24/5/2013)

Agricultural Commodity Futures Prices

FMC mulls measures to broadbase agri futures (BS 15.5.13)

Soybeans edge higher; rapeseed drops on supply pressure (BL 21/5/2013)

Sugar mills eye forward contracts with bulk buyers (BS 24.5.13)

Sugar extends losses; cheaper imports seen (ET 24/5/2013)

4

5

II AGRICULTURAL POLICY

CAG pulls up govt for fixing foodgrain MSP (ET 8/5/2013)

The Comptroller and Auditor General (CAG) has said the government fixed

the minimum support price of food grain crops in a skewed manner and also faulted it for

following inadequate norms on buffer food grains to meet contingencies during the audit

period of 2006-07 and 2011-12.

In a report titled 'Storage Management and Movement of Food Grains in Food

Corporation of India', tabled in Parliament on Tuesday, the CAG suggested that

government increase procurement to meet the growing demand since it was lower than

the allocation to Public Distribution System and other welfare schemes. However, it

conceded that this might be difficult since only 45% of the total food grain production in

the country made its way to the mandis.

Food Corporation of India is the government's nodal agency for procurement, storage and

distribution of food grains in the country.

Alleging "skewdness" in the fixation of MSP based on the cost of production, the CAG

said the margin of MSP over the cost of production varied widely and no norm had been

prescribed for fixing the margin. The margin of MSP fixed over the cost of production

varied between 29% and 66% in the case of wheat and between 14% and 60% in the case

of paddy during the audit period, it added.

The government announces the MSP for about 20 farm items after taking into account the

recommendations of the advisory body Commission for Agricultural Cost and Prices.

"Thus there is a need for greater transparency in the method of arriving at MSP over cost

of production," it said.

Govt notifies decision on partial sugar decontrol (BS 8.5.13)

Food Ministry has rescinded the control over sugar industry, especially on sugar sale in

the open market and PDS, through Essential Commodities Act and Sugar Control Order

The government has notified the Cabinet Committee on Economic Affairs (CCEA)

decision to remove two key controls on sugar sector.

6

On April 4, the CCEA had decided to decontrol the sugar sector by giving freedom to

mills to sell sugar in the open market and removing their obligation to supply the

sweetener at subsidised rates for ration shops.

According to the gazette notification dated May 2, the Food Ministry has rescinded the

control over sugar industry, especially on sugar sale in the open market and PDS, through

Essential Commodities Act and Sugar Control Order.

As a result, the regulated release mechanism -- under which sugar quantity for open

market sale is fixed by the government -- has been abolished with immediate effect.

Besides, mills are freed from mandatory supply of 10% of their production to the

government at cheaper rate to meet ration shop demand.

The sugar to be supplied through ration shops will be purchased by the state governments

and the Centre will bear the entire subsidy cost, which is estimated to double to Rs 5,300

crore after the decontrol.

Currently, sugar is sold at the retail issue price (RIP) of Rs 13.50 per kg in ration shops.

The difference between RIP and the ex-mill price of Rs 32 per kg, which is capped for

two years, will be given as subsidy to states.

The other controls on the sugar sector such as pricing, cane reservation area and

minimum distance between two mills have been left to the state governments.

Sugar production in India - the world's second biggest producer and largest consumer - is

estimated to be 24.5 million tonnes this year, as against the annual demand of 22 million

tonnes.

Govt moves to examine agri price panel's mandate (BS 10.5.13)

Decision to revise MSP calculation comes up as major states are set to go to polls

With some major states slated to go to the Assembly polls this year, the government has

initiated a move to examine the mandate of the Commission for Agricultural Costs and

Prices (CACP), for the first time since 2005, and revisit its methodology to calculate the

minimum support price (MSP). The move follows complaints that MSPs of farm

produce, especially foodgrain, are inadequate to cover production costs.

Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan are slated to hold Assembly polls

towards the year-end.

Officials said the government had formed a committee under the chairmanship of

Ramesh Chand, director of the National Centre for Agricultural Economics and Policy

Research, to study the cost concepts for fixing MSP. Its first meeting was held on

Thursday. (POLLS AND PRICES)

7

The committee has been asked to suggest whether there is a need to reposition CACP,

owing to the liberalisation of Indian agriculture.

In 2005-06, the government had appointed a committee under economist Y K Alagh to

examine CACP’s terms of reference. The committee had said price recommendations

should be integrated with the tariff policy. While accepting the other suggestions of the

committee in 2009, the government had left out this crucial aspect, owing to opposition

from the Department of Commerce.

Officials said the new committee would consider whether the methods to determine the

value of family labour, the rental value of land, the interest on capital, the depreciation of

fixed assets, etc — factors vital to calculating MSP — were appropriate. The committee

would have representatives from the state governments of Andhra Pradesh, Uttar

Pradesh, farmers’ organisations and the Department of Economic Affairs,

In the last few years, CACP has drawn criticism because of its suggestions to increase the

MSP of wheat and rice by only nominal amounts. Between 2003-04 and 2012-13, the

MSP of common-grade paddy, as recommended, rose 127 per cent; for wheat, it rose 107

per cent. However, since then, the commission suggested recent marginal increases in the

MSP of both wheat and rice, as their output and stocks exceeded the demand.

“If we continue to follow the price policy to incentivise farmers, it would lead to major

imbalances in the demand and supply of farm commodities, primarily wheat and rice, and

mess up the market,” said CACP Chairman Ashok Gulati. He said CACP’s current

mandate was adequate to take care of the concerns of farmers, adding there was no need

to change that. “Our terms of reference clearly say the demand and supply of a particular

commodity, as well as the impact of a decision on the rational use of land, water and

consumers, should be kept in mind before recommending the MSP,” he said.

CACP determines the MSPs of 25 agricultural commodities, including rice, wheat, pulses

and oilseeds. The greatest impact of the entity’s decision is seen in the case of wheat and

rice, as their MSPs are also the de-facto procurement prices. “The current MSP does not

even cover all input costs. If that is the case, what is the need of an MSP?” asked

Yudveer Singh, a representative of the Indian Coordination Committee of Farmers’

Movements and a member of the committee set up to examine CACP’s mandate.

Experts such as former CACP Chairman T Haque said there was a need to examine

CACP’s mandate because the government faced excessive fiscal strain, owing to high

support prices. Also, farmers weren’t pleased with the recommendations, he said.

Adding, “It could also be a ploy to weaken the commission.”

8

FM suggests tweak in cereal procurement policy (BS 22.5.13)

Private sector procurement is being crowded out by the government's minimum support

price policy, Finance Minister P Chidambaram has said.

Due to the manner in which the minimum support price (MSP) and the procurement

policy were set, the government was the largest and, in many ways, the only bulk buyer

of cereals, Chidambaram said during his inaugural speech at the Annual Day function of

the Competition Commission of India (CCI) yesterday. "But, in the process, it is

crowding out private sector procurement. The discovery of market prices for cereals is

affected by government policy. What role should the competition policy play in bringing

private players into procurement and in improving the benefits to both the farmer and the

consumer? The role of the competition policy in improving procurement is a question we

need to debate," he said. Chidambaram said public procurement was an area of

competition policy that was often neglected.

"In the case of agriculture, MSP and open-ended procurement have served our farmers

well. But can we procure in a better way?" he asked.

"Competition regulation must not become another bureaucracy, stifling growth," he said,

adding CCI should continue to be a lean organisation, picking issues it could weigh

carefully, and making a difference when it actually weighed these issues. Its rulings must

be transparent and provide clarity, rather than obscurity, he said.

9

III RICE

India to be world’s top rice exporter for second straight year (BL 8.5.13)

India could export 8.3 million tons of rice this year, making it the world’s leading rice

exporter for two years in a row, the Food and Agriculture Organisation (FAO) said today.

India last year surpassed Thailand as the top exporter for the first time in three decades,

shipping 10.3 million tons of milled rice compared with Thailand’s 7.0 million.

“We estimate that at he end of this year, India will remain the number one rice exporter,

with Vietnam and Thailand slightly behind with 7.8 and 7.7 million tons, respectively,”

said Hiroyuki Konuma, FAO’s regional representative for Asia.

The FAO’s Rice Market Monitor report projected Asia’s rice production in 2013 to rise

2.2 per cent, to 452 million tons of milled rice.

“This will be the third year of bumper harvests for rice in Asia,” Konuma said.

The FAO attributed the increased production to good weather and Government price

supports for farmers in India and Thailand.

It estimated that India’s stockpile would reach 22 million tons by year-end 2013, down

7.6 per cent from 2012, while Thailand’s will reach 16.3 million tons, up 29 per cent

from 2012.

Thailand, which offers farmers a fixed price of about $ 500 per ton of rice, was hoping its

price support scheme would boost international rice prices while bolstering farmers

incomes.

But the FAO said benchmark international rice prices had fallen 4 per cent in the first

four months on 2013.

“The large stocks accumulated by the Thai Government through the paddy-pledging

programme weighed on market sentiment,” the FAO said.

Basmati acreage seen rising on hopes of higher returns (BL 8/5/2013)

Basmati acreage is set to increase by at least a tenth this kharif season as expectation of

higher returns may prompt farmers in northern States to plant more area under the

aromatic rice variety.

“The area under basmati will definitely go up at least by 50-60 per cent over last year…It

could be even 100 per cent,” said Anil Mittal, Chairman of KRBL Ltd, which owns the

India Gate basmati brand and is the country’s largest exporter.

10

Basmati prices had almost doubled last year over the previous year on an estimated 30

per cent shortfall in crop size and rising demand from both domestic and overseas

markets.

The prices of Pusa 1121, a paddy variety that now accounts for almost 80 per cent of the

produce, were quoting around Rs 40,000 a tonne against around Rs 21,000 at the

beginning of the harvest season in October last year.

“There should be at least a 10 per cent increase in area, similar to that of last year,” said

R. Sundaresan, Executive Director, All-India Rice Exporters Association, striking a

conservative note.

Acreage

Basmati acreage in 2012-13 stood at 1.85 million hectares, an increase of 32,000 hectares

over the previous year.

The transplanting of basmati planting normally starts in July every year, but the nurseries

for transplantation are raised during June.

Based on the trend in sales of seeds in Punjab, Haryana and Uttar Pradesh, trade sources

see farmers switching over to basmati from the other rice varieties and cotton to some

extent eyeing better returns.

“Things are very conducive for an increase in basmati area and the way the seeds are

being sold, the acreage is poised to double especially for Pusa 1121 variety,” said Vijay

Setia, Director, Chamal Lal Setia Exports Ltd.

Interestingly, seed retailers in Punjab and Haryana are seeing higher demand for super

fine rice variety PR 14, which is used for blending with basmati mainly for the Iran

market to keep the prices under control, sources said.

Basmati exports jumped around 10 per cent to 3.5 million tonnes valued at over Rs

17,000 crore in fiscal 2012-13 on rise in global demand led by major customers such as

Iran and other West Asian nations.

Exports

Non-basmati rice shipments during the fiscal registered an increase of 58 per cent at

around 6.5 mt against last year’s 4.09 mt.

This quantum jump in non-basmati rice shipments was mainly on account of huge

demand from African countries, such as Nigeria and Ghana and also from Indonesia.

Rice market to stay in a tight range (BL 13/5/2013)

Sharbati rice may lose its current levels while all the other aromatic and non-basmati rice

varieties may continue to rule around current levels this week, said trade experts.

Rice market witnessed a mixed trend on Monday; prices of PR14 and aromatic rice

varieties witnessed an uptrend while Sharbati dropped further on slack demand. PR and

Permal varieties managed to maintain their previous levels.

11

Amit Chandna, proprietor of Hanuman Rice Trading Company, told Business Line that

situation of the market was anticipated and market may continue to rule in a tight range

with marginal fluctuations even in the coming days. Traders expect that availability of

stocks may also improve in coming weeks, he added.

After witnessing a fall last weekend, aromatic rice varieties went up by Rs 50-100 a

quintal.

In the physical market, Pusa-1121 (steam) went up by Rs 100 and sold at Rs 8,100 a

quintal while Pusa-1121 (sela) quoted at Rs 7,100 , Rs 50 up from previous levels.

Pure basmati (raw) moved up by Rs 100 and quoted at Rs 9,000. Duplicate basmati

(steam) traded Rs 50 up and sold at at Rs 7,100.

On the other hand, moderate buying kept brokens unaltered. For the brokens of Pusa-

1121, Dubar quoted at Rs 4,100, Tibar sold at Rs 4,950 while Mongra was at Rs 3,100.

In the non-basmati section, PR14 (steam) improved while, Sharbati went further down on

slack demand. Sharbati (steam) moved down by Rs 150 and quoted at Rs 5,200-5,250,

while Sharbati (sela) was at Rs 4,900, Rs 100 down.

PR14 (steam) went up by Rs 100 and sold at Rs 3,400-3,450.

On the other hand, Permal and other PR varieties continued to rule flat. PR-11 (sela) sold

at Rs 3,400-3,450 while PR-11 (Raw) quoted at Rs 3,100-3,150. Permal (raw) sold at Rs

2,600 while Permal (sela) went for Rs 2,470 a quintal.

China expected to become world's largest importer of rice (ET 15.5.13)

China, the world's largest rice consumer, is expected to become the largest rice importer

this year, according to a new report.

China's rice imports this year will surge to three million metric tonnes from 2.34 million

tonnes a year ago, according United States Department of Agriculture report featured

prominently in the Chinese media today.

Imports of rice has increased since 2012 as "consumption demand for rice in China has

exceeded the supply", it said.

If the forecast holds true, it would represent a sharp increase as the country's rice imports

hovered around 450,000 tonnes per year over the five-year period that ended in 2011,

official data showed.

It would also make China outstrip Nigeria to become the world's largest rice importer,

state-run China Daily reported.

Analysts said that China has no shortage of rice supplies and blamed the expected surge

in imports on the price discrepancy between the domestic and global markets.

The discrepancy is a result of the government's minimum grain purchase price, which

12

aims to shore up domestic grain prices after they declined in the global market due to

weak demand and increased rice yields in recent years, the Daily report said.

The global rice output this year is expected to increase two per cent year-on-year to 479

million tonnes, making 2013 the eighth consecutive year of increased rice yields,

according to the USDA.

Meanwhile, global rice stocks are expected to hit 107.8 million tonnes, the highest level

since 2002, it added.

"The government should allow the purchase price to have some flexibility, so that it

fluctuates according to the international market," said Ma Wenfeng, a senior analyst at

Beijing Orient Agribusiness Consultant Ltd, one of the industry's largest specialist

consultancies.

Meanwhile, rising labour costs and other factors are supporting rice prices in the

domestic market, placing upward pressure on imports.

Lured by the low global prices, "Chinese companies are very willing to import", Ma said.

During the first three months of the year, China's rice imports jumped by a staggering

192 per cent from a year ago to 690,000 tonnes, Chinese official trade data showed.

Because of the price discrepancy, imported rice will always be attractive to domestic

companies, Ma said.

"The government should continue increasing its investment in the agricultural sector to

drive down prices in the long run," he added. Imports of other agricultural commodities

are also expected to increase.

Also China's soybean imports are expected to rise by 10 million tonnes from a year ago

to 69 million tonnes, according to the USDA forecast.

China's grain output reached 589 million tonnes in 2012, the ninth consecutive year of

increased harvests, according to the official data.

India begins exporting basmati & non-basmati blend to Iran (ET 16/5/2013)

India has started exporting a blend of basmati and non-basmati rice to Iran. The Asian

nation, which is still facing Western sanctions, is lifting aromatic non-basmati rice and

pusa-1121 basmati variety from India and blending the two for its domestic market.

Iranian importers have been forced to take this route as their government has said the

price of imported rice should not exceed $1,150 per tonne.

The non-basmati variety, which Iran is buying from India, costs around $750 per tonne,

while the basmati variety costs around $1,600 per tonne. "The blending is being done in

13

India under the supervision of Iranian buyers' representatives. Iran's new strategy has

cheered non-basmati farmers and sales of non-basmati seeds have doubled in Haryana,

Punjab and Uttar Pradesh regions," said Vijay Setia, partner of Chamanlal Setia Exports,

a 300-crore rice exporting firm.

The non-basmati variety being preferred by Iranians have an aroma and the grains are

6.6-6.8-mm long. In the local market, the variety is referred to as PR114 or PR14.

MP Jindal, president of All India Rice Exporters Association, denied such a move

although most of the exporters and traders that ET spoke to confirmed the new trend.

"The PR grain is small and the basmati grain is big. The question of mixing does not arise

at all," he said, adding that some small-time exporters might be doing the blending.

In recent times, India's direct rice exports to Iran have bounced back, thanks to shippers

being paid upfront in rupees from a huge pool of oil money owed to Iran by Indian

refiners. This has helped them to do business in a much easier way than doing business in

any other currency. Iran generally imports 3.2 million tonnes of rice from India.

Traders acknowledged that the blending is happening over the past few months.

"Exporters are blending 10-30% of the PR variety with Pusa 1121 and buyers know it

well. So it is a transparent trade mechanism," said Anil Kumar Mittal, chairman and

managing director, which sells premium basmati under the India Gate brand. "Iranian

buyers are not interested to pay $1,600 a tonne for basmati rice this year. Prices have

almost doubled," said Mittal.

Currently, parboiled 1121 rice is being quoted at $1,400 a tonne, 1121 white rice at

$1,600 a tonne, Pusa brown variety at $1,150-1,175 a tonne. The traditional basmati

brown rice costs $1,300 a tonne and the traditional white basmati rice is fetching $1,500-

1,700 a tonne.

A section of the traders feels that the blending is eroding the image of pure basmati rice

in the world market. "It is a big concern that certain players are blending some inferior

quality rice with 1121 so that they can offer a competitive price to Iranian buyers. This is

not a good practice and is likely to affect basmati's reputation in the world market,"

said Anil Monga, managing director, Emmsons International.

Rice acreage down by 5 per cent so far (ET 17/5/2013)

Area under rice has fallen by 5.14 per cent to 2.4 lakh hectares so far this year against

2.53 lakh hecatre in the year-ago period mainly due to late sowing in Assam and Orissa.

"As per data available from different states, rice has so far been planted in 2.4 lakh

hectare," an official statement said.

"The sown area this week is less as compared to rice planting at this time last year (2.53

lakh hectare), mainly because of late sowing in Assam and Orissa," it added.

14

Sugarcane acreage has also declined to 40.74 lakh hectares so far as compared to 45.74

lakh hectare in the corresponding period last year due to lower area in Karnataka,

Maharashtra and Tamil Nadu.

Cotton area is also lower so far at 7.13 lakh hectares as compared to 7.22 lakh hectare in

the year-ago period.

15

IV WHEAT

India's latest attempt to boost wheat exports to falter on costs (ET 30.4.13)

India's newest attempt to boost wheat exports and cut its bulging stocks by offering

private traders the chance to buy direct from warehouses is likely to be spurned by most

traders as they baulk at the costs of transportation and financing.

The world's No. 2 producer embarked on exports in September 2011 after a four-year ban

as it sought space in stretched warehouses for bumper harvests, but has only managed to

sell about 5 percent of what it produces in a year, partly because of its high prices.

It is now offering 5 million tonnes to private traders such as Cargill, Louis Dreyfus and

Glencore

-- but even though global prices are rising on supply concerns, the high cost of Indian

wheat may still be a deterrent.

State-run Food Corporation of India (FCI), the central grains procurement body, kicked

off the process on Monday, inviting bids for about 1 million tonnes in total.

Pictures of rotting sacks of wheat protected only by tarpaulin and vulnerable to attack by

rodents triggered widespread criticism last year of the government, which has promised

to provide cheap food to its poor.

India has sold about 3.6 million tonnes of the 4.5 million tonnes put up for sale by tender

through state-run traders, with the grain available conveniently at ports. But the

cumbersome process and a high floor price of $300 a tonne has kept sales sluggish.

Its need to cut stocks, which were six times target at 24.2 million tonnes on April 1, is

increasingly desperate as the new wheat harvest of over 90 million tonnes rolls in.

So now the government is going direct to traders, a different tack that it hopes will

smoothen the process.

But it has set the floor price here at 14,840 rupees ($270) a tonne for traders' bids, which

compares unfavourably to global prices that are around $280 free on board (FOB).

The government is under pressure to cut the floor prices. But New Delhi wants to hang

on to these levels as it was offering 14,800 rupees per tonne to domestic bulk buyers. And

even at these prices, it would mean it was selling at a loss -- given purchase, storage and

local levies add up to 17,990 rupees per tonne.

Moreover, FCI wants private traders to lift stocks only from its warehouses in the states

of Punjab and Haryana, the big-hitting wheat producers, and pick up transport costs to

ports.

16

Obtaining the trucks and railway wagons to carry the grains could also prove tricky given

India's creaky infrastructure but the government has taken the view in the past that its

wheat exports should take priority.

"On top of the floor price, which in itself is a big deterrent, we are now expected to bear

the cost of bringing wheat to ports after we buy from warehouses in Punjab and

Haryana," said a New Delhi-based grains trader.

These premium prices are likely to mean the only interest will come from traders needing

urgent cargoes or with customers close by, where freight rates will be low.

UPFRONT PAYMENT "The condition that private traders will have to pay high

transportation cost is like the government throwing a spanner in its own works," said

Tejinder Narang, adviser at New Delhi-based trading company Emmsons International.

The cost of transporting wheat to east coast and west coast ports from Punjab and

Haryana states -- a distance of up to 1,100 miles, or the journey from Washington DC to

Kansas City -- stands at about 1,500 rupees per tonne, traders said.

"Other than paying for transportation, we will have to make an upfront payment the

moment we buy from warehouses," said another trader. "I can tell you that direct exports

will come a cropper."

Interest costs for at least three months will also have to be factored in because of delivery

lags to clients.

The process of exports through state-run trading companies, where private traders do not

have to transport wheat to ports, was "relatively better", the New-Delhi based grains

trader said.

In the latest tender in that process, the highest bid was $304 per tonne for 200,000 tonnes,

lifting on the west coast.

Govt may reduce export price of FCI wheat: Thomas (ET 30.4.2013)

Amid poor response from private traders for wheat export bids, Food Minister K V

Thomas today said the government may consider reducing the benchmark price of the

grain to make exports viable and clear surplus stocks.

Last month, the Centre had allowed an extra 5 million tonnes of wheat exports from its

godowns in Punjab and Haryana through private traders. The Food Corporation of India

(FCI) has invited two bids at a floor price of Rs 1,484 per quintal.

"There was no participation in the first tender because of higher floor price... We will

move a proposal in a week's time before the Group of Ministers (GoM) to consider

reduction in the price," Thomas told reporters.

The GoM, headed by Agriculture Minister Sharad Pawar, may also extend the deadline

for export of wheat beyond June 30, he said.

17

Asked if the government would allow more wheat exports from its godowns, Thomas

said, "We have more wheat stocks than required and an additional exports may be

allowed after the shipment of the existing 5 million tonnes is completed."

As on April 1, the government had wheat stocks of 24.20 million tonnes, as against the

requirement of 7 million tonnes.

On the ongoing wheat procurement, the Minister said the government is expected to

purchase 40 million tonnes in the 2013-14 marketing year starting April, slightly lower

than the targeted 44 million tonnes for the same period.

So far, wheat procurement has touched 19.41 million tonnes in the current year.

"Wheat procurement will be below our target. It will reach around 40 million tonnes this

year as private traders are buying in Madhya Pradesh and Uttar Pradesh," he said.

Wheat stocks have raised in the FCI godowns due to record procurement following

bumper crops in the last two consecutive years. Wheat output is expected to be 92.30

million tonnes in the 2012-13 crop years (July-June).

High prices keep bidders off FCI wheat tender (BL 30.4.13)

The Food Corporation of India has found no takers for its initial tender to sell about one

million tonnes of wheat to private players for exports as the price is high.

The Government had fixed a floor price of Rs 1,484 a quintal for offloading about five

million tonnes of wheat from the 2011-12 crop from FCI warehouses in Punjab and

Haryana, for which the first set of tenders were floated.

“There was no response to our tenders today. We plan to re-tender the same later this

week,” FCI Chairman, Amar Singh, told Business Line.

The FCI had tendered 4.09 lakh tonnes (lt) of wheat from its godowns in Haryana and 5.4

lt from Punjab. Recently, the Government had approved exports of five million tonnes

from the Central pool stocks by private exporters to make storage space for the new crop

that’s being currently harvested.

Higher prices

However, exporters feel that shipments from the Government stocks were unviable at the

price offered by FCI as the global prices have started softening. At current FCI’s price of

Rs 14,840 a tonne, wheat for exports including the transportation and handling costs,

would cost about $315 a tonne free-on-board, while the grain from Black Sea origin

commands a lower price of around $280 .

18

Moreover, the availability of wheat at a lower price than the minimum support price

(MSP) of Rs 1,350 in the mandis of the Uttar Pradesh has prompted the exporters to buy

from the country’s largest wheat producing State.

In some of the mandis of Uttar Pradesh such as Baharaich and Haathras, wheat traded at

around Rs 1,330- 1,340 a quintal, marginally lower than the minimum support price on

Monday. Exporters, stockists and domestic millers have been actively buying from the

UP mandis since the harvest has begun in the current season.

Exporters such as ITC, Emmsons International and Cargill among others have been

actively buying from the UP market, where the Government’s procurement mechanism is

relatively weak when compared to States such as Punjab and Haryana.

inventories

Though the private exporters have been demanding the Government to revise the floor

price downwards in tune with the global market, the Centre is undecided on the issue.

The re-tendering on Wednesday is expected to be on the same price of Rs 1,484 a quintal.

So far, the State trading agencies – STC, MMTC and PEC have totally exported about

3million tonnes of 4.5 million tonnes allowed from the Government stocks.

Wheat stocks with the Government stood at 24.2 mt as on April 1, and by June 1, the

stocks are expected to rise to 62 mt as procurement is in full swing in Punjab and

Haryana.

Govt may trim 2013-14 wheat procurement target (BL 01.05.13)

However, this will not have any impact on the PDS as wheat stocks in state-run

warehouses are more than three times the required quantity

The government may have to trim its 2013-14 wheat procurement target by four million

tonnes (mt) to around 40 mt because of heightened purchases by private traders from

Madhya Pradesh and Uttar Pradesh. However, this will not have any impact on the public

distribution system (PDS) as wheat stocks in state-run warehouses are more than three

times the required quantity.

In the 2013-14 crop marketing season that started from April 1, the government had

targeted to purchase around 44 mt of wheat from farmers, almost six mt more than the

actual procurement of last year. The target was raised because of bumper harvest in

Madhya Pradesh, Uttar Pradesh, Punjab and Haryana.

“In Madhya Pradesh and Uttar Pradesh, private traders have been active this year in

purchasing wheat directly from farmers and are not waiting for the government to make

the first move which could lead to lower-than-expected procurement for the central

pool,” food minister K V Thomas told Business Standard.

19

He added the government might also think of exporting more wheat from the central pool

over the already sanctioned around 10 mt as and when the need arises. “First, we will

have to exhaust the total allocated quantity for exports and then think of increasing it,”

Thomas said.

The government first allowed export of 4.5 mt of wheat from the central pool and then

okayed another five mt to clear its inventories ahead of the new procurement season. “We

might think of giving private traders more time to export wheat from the second lot,” the

minister said.

Meanwhile, latest government data showed that in Uttar Pradesh, state-run agencies have

procured around 210,195 tonnes of wheat till last week against 502,337 tonnes procured

during the corresponding period last year. In Madhya Pradesh, state agencies procured

around 4.65 mt of wheat till last week, against 3.85 mt during the year-ago period.

Thomas said private traders were not very active in the northern states of Punjab and

Haryana because of high taxes imposed by the state governments. Punjab imposes a tax

of around 14.5 per cent on wheat, while Haryana has a tax of around 11.5 per cent. In

contrast, the total tax on purchase of wheat from Uttar Pradesh is nine per cent, while in

Madhya Pradesh it is 4.7 per cent.

Officials said in the 2013-14 marketing year, across the country, the government has till

date purchased around 19.44 mt of wheat from farmers against 18.99 mt purchased

during the corresponding period last year. Of this, highest procurement has been in

Punjab, where till Sunday, around 8.89 mt of wheat has been procured by central

agencies, up from 7.56 mt procured during the same period last year, while Haryana

purchased 5.13 mt of wheat till Sunday against 6.47 mt during the year-ago period.

WHEAT PROCURED TILL APRIL 28 (IN MILLION TONNE)

STATES 2012-13 2013-14

PUNJAB 7.56 8.89

HARYANA 6.47 5.13

MADHYA PRADESH 3.85 4.65

UTTAR PRADESH 0.50 0.21

RAJASTHAN 0.52 0.51

TOTAL 18.99 19.41

NOTE: The Total Might Not Match As All States Have Not Been Included. Also, the

procured quantity might be of some dates which are day or two before April 28, 2013, but

has been collated as per last information available with the central government.

Source: Department of Food and Public Distribution

20

Government lowers wheat procurement target by 25% to 33 million tone (ET

7/5/2013)

With private players aggressively buying wheat directly from farmers, the government

today revised itsprocurement target downward by 25 per cent to 33 million tonne (MT)

for the 2013-14 marketing year, which will help the centre save about Rs 3,000 crore.

In view of higher output, government had pegged wheat procurement to be a record 44.12

MT in the current marketing year that started in April, as against 38.1 MT last year.

"The procurement target has been revised downward to 33 MT for this year due to active

buying by private players in states like Madhya Pradesh and Uttar Pradesh," a

senior Food Ministry official told PTI.

As per the revised estimate, the government is expected buy 11 MT in Punjab, 7 MT in

Haryana, 9 MT in Madhya Pradesh, 3 MT in Uttar Pradesh and 2.5 MT in Bihar this

year.

The expected drop in wheat procurement will reduce the burden on storage and help the

government save about Rs 3,000 crore thereby bringing down the overall food subsidy

bill, the official said.

The reasons for lower procurement, the official said unlike previous years, private players

such as roller millers have stepped up their wheat buying directly from farmers because

they have realised from last few years' experience that they would not get the cheaper

grain under government's open market sale scheme (OMSS) later.

Last year, the Food Ministry did not relent to millers' demand to reduce wheat price

underOMSS for bulk users. "This resorted them to aggressively buying directly from

farmers this time," the official said.

Lower procurement is expected also because traders are buying more wheat to meet the

export demand, while some big farmers are seen holding stock anticipating higher price

after the harvesting season, he said.

That apart, FCI has emphasised the state agencies to enforce quality standards keeping in

view the requirement of stocks for export purpose.

According to FCI data, the government has so far procured over 20 million tonnes of

wheat at the minimum support price of Rs 1,350 per quintal.

Although the procurement is expected to be lower than the last year, but the quantity is

sufficient to maintain the government's buffer stock and fulfil the demand of PDS and

other welfare schemes, the official said.

As on April 1, state-run Food Corporation of India (FCI) had 24.2 MT of wheat. This

year's estimated procurement would take total wheat in FCI godowns to 57.2 MT.

21

Wheat procurement likely to decline 8% in 2013-14 (BS 8.5.13)

FCI expected to purchase 35 mt, against last year's 38 mt as yield in Punjab, Haryana to

dip 10-15%

India will purchase fewer quantities of wheat in the 2013-14 crop marketing year for its

central stocks, due to brisk buying by private traders in Madhya Pradesh and Uttar

Pradesh and a drop in yields in Punjab and Haryana, said a senior official.

“By our estimate, wheat procurement this year could be somewhere around 35 million

tonnes because yields in Haryana and Punjab, the two biggest wheat producing states, are

almost 10-15 per cent less than 2012,” a senior official of the Food Corporation of India

(FCI) told Business Standard. Punjab, Haryana, Uttar Pradesh and Madhya Pradesh

account for 90 per cent of the total wheat produced in India every year.

Last month, Food Minister K V Thomas had told Business Standard that wheat

procurement in 2013-14 could be around 40 million tonnes, less than the original target

of 44.12 million tonnes, because of strong demand from private traders.

According to a PTI report today, procurement could be around 33 million tonnes, of

which Punjab will contribute 11 million tonnes and Madhya Pradesh nine million tonnes.

“Between last month and now, the situation has further changed and indications of strong

revival in arrival has gradually diminished,” said the FCI official.

In the 2012-13 crop marketing year, which ended on March 31, the government had

purchased a record 38.1 million tonnes from farmers. “A clear picture will emerge only

around May 15 but the trend indicates that procurement from Punjab and Haryana won’t

be huge,” the official added.

Massive procurement in the previous years has stretched the already precarious foodgrain

storage scenario. According to FCI data, foodgrain stock in the central pool as on April 1

was around 60 million tonnes, three times the required quantity.

Of this, wheat stocks are estimated to be around 24.2 million tonnes, compared to a

requirement of seven million tonnes, while rice stocks are estimated to be around 35.4

million tonnes, against a requirement of 14.2 million tonnes.

The FCI data shows the government has so far procured 20 million tonnes of wheat at the

minimum support price of Rs 1,350 a quintal. Officials said although the procurement is

expected to be lower than last year, the quantity is sufficient to maintain the

government’s buffer stock and fulfil the demand of the Public Distribution System and

other welfare schemes.

22

India's wheat stocks up 76 per cent, more pressure to boost exports (BL 8/5/2013)

Wheat stocks for May at government warehouses surged more than 76 percent to 42.7

million tonnes from April, government sources said on Wednesday, increasing pressure

on the world's No. 2 producer to boost exports and cut down huge stockpiles.

But India's latest attempt to boost wheat exports and cut its bulging stocks by

offering private traders the chance to buy up to 5 million tonnes direct from warehouses

is likely to be spurned by most traders as they baulk at the costs

of transportation and financing.

New Delhi has also offered 4.5 million tonnes of wheat via tenders by state traders, of

which about 3.6 million tonnes have been contracted for exports.

New Delhi uses the stocks to distribute cheap grain to its half a billion poor people and

also holds some in inventory as a buffer for emergencies. The government is trying to

expand the subsidised food progamme but its bill has yet to be approved.

India's rice inventory on May 1 was 34.7 million tonnes against 35.5 million tonnes in the

previous month, the sources added.

India harvests only one wheat crop a year, with harvests from March bumping up stocks.

The new season rice harvest begins in October, which are then drawn on for distribution

in government welfare schemes.

Wheat output may be less this year (BS 13.5.13)

Less wheat output is likely to mean less procurement by the government in this year

All this while, the government has attributed a lower estimate for procurement of wheat

in the 2013-14 crop marketing year (April to March) to a rise in buying by private

traders. However, experts have started doubting the official explanation. The reason for

low procurement, they say, is an expected fall in production in the 2012-13 crop year

(July-June), by three-four per cent less than the last official estimate of the government.

India’s annual wheat procurement target for 2013-14 (April-March) has been twice

revised, initially from 44 million tonnes to 40 mt and thereafter to 33-35 mt.

Official reasoning was that brisk buying by private traders to build inventories had

resulted in a cut in procurement. This might be true to some extent. However, experts

said private purchases cannot go up as much to force the government to lower its annual

procurement target by as much as 25 per cent.

“Usually, of the 70 per cent annual marketable surplus of wheat, the organised private

sector purchases 12-14 mt. This year, they are expected to increase it to 15-18 mt.

Making heavy purchases is unprofitable due to softening of the international price of

Black Sea wheat, direct competitor of the Indian variety, from over $300 a tonne to just

23

$275 a tonne in the past few weeks,” said an official from a leading multinational grain

trading firm.

He agrees flour millers and wheat-based factories had stepped up purchases but said these

were too small to make a big difference. So, where has the wheat gone? In the third

advanced estimate of foodgrain production, issued by the department of agriculture on

May 5, India is expected to produce 93.6 mt of wheat in the 2012-13 crop year. Even at

that time, it was 1.3 per cent less than the 94.9 mt in the previous year.

According to leading traders, experts and economists, wheat production in the 2012-13

crop year is not expected to be near this latest estimate of 93.6 mt. It is likely to be

around 90 mt or maybe even lower, as March’s sudden rise in temperature in Punjab and

Haryana and February’s unseasonal rain in Madhya Pradesh pulled down the output.

“I would expect that at the current MSP (minimum support price) and underlying yield

growth of 1-1.5 per cent, the weather effect would pull down India's wheat production by

two to three per cent as compared to last year,” Planning Commission member Abhijit

Sen told Business Standard.

Sharekhan Commodities, in a recent research note, said the United States’ department of

agriculture (USDA) had lowered India’s wheat production figure to 92 mt, while

Agriwatch, a domestic agriculture information company, has reportedly pegged it around

88 mt.

However, Sen said though the output might not be as high as 93.6 mt, it wouldn’t drop to

86-87 mt.

Multinational wheat trading companies operating in India have already revised their

production numbers for the 2012-13 crop year to 86-87 mt, seven to eight mt less than the

previous official estimate.

24

“In the Indore and Hoshangabad divisions of MP alone, the wheat harvest is expected to

be 30 per cent less than last year,” said a senior official who toured those areas recently.

He pegged total production in the 2012-13 crop year at 89-90 mt. MP was primarily

responsible for pushing up India’s annual wheat procurement in the 2012-13 crop

marketing year to a record 38 mt.

The other reason, the official said, was drought in Maharashtra. Crop from neighbouring

states such as MP is getting diverted, leading to lower procurementthere by state agencies

and Food Corporation of India (FCI). Till May 10, around 7.2 mt of wheat had arrived in

MP’s mandis, of which state agencies had procured around 5.6 mt.

Overall, over the same period, around 26.5 mt of wheat had arrived in markets across the

country, of which 23.5 mt had been purchased. Last year, during the same period, 28-30

mt had arrived in the market.

Private buyers crowd out government in wheat procurement process (BS 15.5.13)

Last year, flip-flops in the government policy on OMSS wheat price had driven mills in

the South to buy more from the open market

The projected fall in the yield of wheat in Punjab and Haryana has led to private traders

purchasing substantial quantities of the commodity from producers across India. In

Madhya Pradesh and Rajasthan, too, private traders are buying huge quantities of wheat,

despite a bonus on the prices. Owing to this, the government procurement target for this

year has been scaled down from 44 million tonnes (mt) to 34 mt.

Sources in the Food Corporation of India (FCI) said procurement might decline to 30 mt.

Last year, state agencies procured 38.1 mt of wheat. Private traders didn't procure any

wheat last year.

As wheat prices might rise due to low arrivals and demand from exporters, it is prudent to

purchase now, at a price slightly higher than the minimum support price, says Naresh

Ghai, president of Punjab Roller Flour Millers' Association. Adi Narayan Gupta,

president of Roller Flour Millers' Association of Uttar Pradesh, said this year, private

traders were aggressive, as low procurement might affect the release of wheat through the

open market sales scheme (OMSS).

Though government warehouses are overflowing, due to the impending food security

Bill, the buffer requirements might increase.

Last year, flip-flops in the government policy on OMSS wheat price had driven mills in

the South to buy more from the open market. K S Kamla Kannam, president of the Roller

Flour Millers Association of Tamil Nadu, said the wheat price, through OMSS, was

reduced from Rs 1,525 a quintal to Rs 1,170 a quintal, before being revised to Rs 1,750 a

quintal. Mills in the South had preferred to buy from private traders, rather than from

25

FCI.

An Ahmedabad-based wheat broker confirmed exporters were lifting wheat, as they had

to complete the shipments between May 15 and May 30. At this point, exporters don't

stand to gain, as wheat from Ukraine is available at prices lower than that of Indian wheat

in the international markets. As Indian exporters cannot default on their commitments,

they are selling at a loss.

Though the dwindling yield might result in losses for farmers, government storage

agencies, under pressure to arrange additional storage space, could get a breather. A 10-

mt fall in procurement may do away with the requirement of additional covered storage

space, said an official.

According to sources in the food ministry, Punjab and Haryana could record a 15-20 per

cent fall in the yield of wheat. Since the two states contribute about 50 per cent to the

central wheat pool, total wheat procurement may be hit. The sources said there might be a

marginal decline in total production, as procurement might be affected. "In 2011-12,

India registered an eight per cent increase in wheat production over 2010-11. This year, it

may remain stagnant or drop marginally," he added.

Indu Verma, director at the Directorate of Wheat Research, Karnal, said, "Rain in March

and the consequent-water logging in the fields have hit wheat productivity in the two

states (Punjab and Haryana), but because of better seed quality and growing awareness

among farmers in eastern states, total wheat production may be about 92 mt."

Earlier, Planning Commission member Abhijit Sen had said this year, the wheat crop

might be about 90 mt.

Government can get Rs 25,000 cr by export of 17 MT wheat lying in open (ET

19/5/2013)

The government could garner over Rs 25,000 crore by just exporting 17 million tonnes

of wheat that are lying in open storage facilities of FCI, an Assocham study said.

The industry chamber also suggested the government to keep an ambitious agri-

exporttarget of USD 50 billion for this fiscal as this will help control current account

deficit.

"The Food Corporation of India (FCI) can earn over Rs 25,000 crore through exports of

26

about 17 million tonnes (mt) wheat lying in its open warehouses across various states,"

Assocham said in a statement.

The study "Agri-exports: High potential and action agenda" has strongly advocated a

long-term agricultural exports promotion policy as farm exports have the potential to be

the second most significant foreign exchange earner after software and services exports.

Targeted export levels are imperative for raising the economic growth and narrow down

the rising current account deficit, it added.

"The government should set a USD 50 billion target for agricultural exports for the 2013-

14 fiscal which should subsequently be raised to about USD 70 billion in 2017 which will

help in reducing the rising CAD," Assocham President Rajkumar Dhoot said.

Higher farm exports would promote crop diversity, drive productivity of crops and

encourage farmers grow specific crops to meet global demand, he said.

As per official data, the country had exported USD 33.54 billion worth agriculture and

allied products in 2012-13.

As there is huge scope for raise farm output in eastern states, there is need for greater

investment for implementing modern and new farm practices.

Inclement weather likely to hit wheat output in Punjab, Haryana (BL 21/5/2013)

Wheat production in Punjab and Haryana will be lower as the crop was hit at the fag end

of maturity stage due to inclement weather conditions, a top official of the Karnal based

Directorate of Wheat Research said today.

“As per reports from fields, wheat production in Punjab and Haryana has been adversely

affected due to unfavourable weather conditions prevailed at the fag end of maturity stage

which will have bearing on crop production,” said Indu Sharma, Project Director,

Directorate of Wheat Research.

However, she expressed optimism that country’s wheat output target of 93 million tonne

would be achieved.

Inclement weather conditions including untimely rain accompanied by hailstorm

prevailed during the month of March this year which raised fear of crop damage in

Punjab and Haryana.

Sharma also said the production level in Punjab and Haryana will drop because of

exceptionally high output achieved last year.

27

“Last year, wheat production in Punjab and Haryana was exceptionally high. The drop

this year was bound to happen,” she said.

During last season, Punjab had recorded an all—time high wheat yield of 179.82 lakh

tonnes on the back of favourable weather conditions, while Haryana had an output of

130.69 lakh tonnes.

For current season, Punjab and Haryana has projected wheat output of 162 lakh tonne and

124 lakh tonne respectively in this season on the back of prolonged winter and absence of

major attack of fungal disease on wheat crop.

However, she was optimistic about achievement of 93 million tonne of wheat production

across the country. “Wheat output in other states like Madhya Pradesh is expected to be

higher, therefore, the output target can be achieved,” she said.

Meanwhile, farmers outfit Indian Farmers Association today sought Rs 500 per quintal as

bonus from the Centre for wheat growers in the wake of drop in output of the grain.

Private traders stay away from wheat export bids (ET 24.5.13)

Private traders have not shown any interest in the bids invited by food grain procurement

agency Food Corporation of India (FCI) for the export of wheat stored in Punjab and

Haryana, citing the base rate fixed by the Centre as high.

"We have not received any bid from private traders for the export of wheat so far," a

senior official of FCI (Punjab) said here.

Similarly, FCI Haryana official also informed that no interest had been shown by private

traders in the bids invited for the wheat export.

FCI had invited bids for the fourth time since export was allowed but had failed to get

any positive response from traders.

The Centre had allowed wheat export of 5 million tonne for 2011-12 crop from its

godowns through private traders in a bid to ease the storage burden.

The base price of the wheat to be exported Under Open General Licence (OGL) from the

Punjab and Haryana has been fixed at Rs 1,484 per quintal.

Describing the base rate fixed for wheat as high, private traders said unless the Centre

brought down the rate there is no viability for them to export.

"The government has set a very high rate for wheat export via private traders. It should be

reduced at least to Rs 1,200 per quintal so as to encourage private traders to export

wheat," said a Khanna-based wheat trader Raj Sood.

28

Sood said after adding transportation, loading and other expenses into the base rate, it

would be unviable for them to export.

"We will have to bear over Rs 200 additional expenses over and above the base rate of Rs

1,484 per quintal on loading, transportation and others which will raise our cost to Rs

1,700 a quintal which is not a viable rate for export," he added.

Traders said the wheat rate in global market has also nosedived from USD 290 per tonne

two months back to USD 265 per tonne now.

"In the international market, already wheat rates are dipping then why anybody will take

risk for export at higher rate to suffer any loss," another trader said.

Dubai firm bids highest for PEC wheat at $305.10/tonne (BL 24.5.13)

State trading firm PEC Ltd has received the highest bid of $305.10 a tonne from the

Dubai-based Al Ghurair for export of 40,000 tonnes wheat from Government stocks

through the Kandla Port.

For PEC’s other two tenders for shipments from Gangavaram and Krishnapattanam, it

has received offer from Singapore-based Concordia at $303.10 and $301 for 30,000

tonnes and 40,000 tonnes, respectively.

Among the bids opened by the three State trading entities – MMTC, STC and PEC — in

the past three days, PEC got a better response compared with the other two.

On Wednesday, STC received the highest bid of $304.5 from Sudan’s Promising

International Trading Co, while on Tuesday MMTC was forced to cancel its tender for

one lakh tonnes as the offer price it received from Gencore was much lesser than the floor

price of $300 fixed by the Government.

Interestingly, Glencore quoted a higher price of $303.37 for PEC’s Kandla tender on

Thursday, while for STC’s tender on Wednesday, the Anglo-Swiss firm was the second

highest bidder at $301.87 for 50,000 tonnes. Other bidders for PEC’s Kandla contract

include Emmsons International at $303.89 and Condordia at $294.25.

The State trading entities have been floating export tenders to ship out wheat from

Government stocks since July 2012.

In the last financial year, these entities were expected to have shipped out around three

million tonnes from Government stocks, while the shipments by private traders stood

around 2.6 mt for the period.

29

In the current financial year starting April 1, exports from Government stocks stood at

around five lakh tonnes, while shipments by private traders are estimated at 3-4 lakh

tonnes, sources said.

Punjab wants Rs 1,855 per quintal MSP for wheat in 2013-14 (ET 25/5/2013)

Punjab government ON Saturday sought a minimum support price of Rs 1,855 per quintal

for wheat in Rabi season 2013-14 from Centre, saying the MSP should be fixed

considering the actual input cost.

Besides, the state government has also asked Centre to fix the Minimum Support Price

(MSP) of other crops like Barley, Gram and Mustard at Rs 1,498, Rs 3,618 and Rs 3,400

per quintal, respectively.

Punjab Chief Minister Parkash Singh Badal today approved the recommendations of the

State Agricultural Department asking the Centre to fix the Minimum Support Price

(MSP) for the crops of Rabi season 2013-14 in accordance with the prevalent cost of the

inputs in market.

Disclosing this here, a spokesperson said Badal has asked the Director Agriculture to

write a letter to the Member Secretary of Commission for Agriculture Costs and Prices

(CACP) to streamline the policy regarding the marketing of Rabi crops in 2013-14.

The state government has recommended an increase in prices of such crops in proportion

to the increase in their input costs, the spokesperson added.

Keeping in view the steep hike in the input costs of agricultural commodities, the need of

hour is to fix the prices of the Rabi crops accordingly, he said.

The spokesperson said in order to fix the estimated cost of the wheat crop for the year

2013-14, the market price of various inputs like seeds, fertilisers, insecticides, pesticides,

irrigation and labour have been kept in mind along with various other factors including

the marketing expenditure and weather risks.

58.80 lakh tones of wheat procured in Haryana (BL 25.5/2013)

As much as 58.80 lakh tonnes of wheat has arrived so far in Haryana during the current

procurement season.

Out of it, over 58.71 lakh tonnes of wheat has been procured by Government agencies at

the minimum support price and 9,232 tonnes has been purchased by private millers and

traders, a spokesman of the Food and Supplies Department said here today.

He said HAFED has procured over 22.77 lakh tonnes of wheat while Food and Supplies

Department had procured over 14.61 metric tonnes.

30

Other agencies that procured wheat were Food Corporation of India (over 7.25 lakh

tonnes), Haryana Agro Industries Corporation (over 5.70 lakh tonnes), Haryana

Warehousing Corporation (over 5.29 lakh tonnes) and CONFED (3.06 lakh tonnes of

wheat).

31

V MAIZE/COARSE GRAINS

New hybrid maize seed developed for Gujarat: AAU Official (ET 13/5/2013)

A new hybrid seed variety of maize has been developed, which has a potential to more

than double the crop production in tribal belts of the state has been developed, according

to an official atAnand Agriculture University (AAU).

The new variety -- Gujarat Anand Yellow Hybrid Maize-I (GAYHM)-- is suitable for

sowings during kharif season under rain fed conditions in North and central Gujarat - a

maize growing beltin the state covering tribal areas.

The variety is rich in Lysine (an essential amino acid) and is touted to be a source of rich

protein diet for the tribals, who are its major consumers.

"In a first, a hybrid of yellow colour variety maize has been released, which gives 13 per

cent higher yield as compared to High Quality Protein Maize-I (HQPM), a hybrid

developed at Hissar in Haryana and recommended for Gujarat," AAU Director Research

K B Katheria said.

"The average production of maize with pre-dominantly used varieties is around 1,439 kg

per hectare, whereas the new hybrid variety GAYHM-I has the potential of up to 4,000

kg per hectare yield," he said.

The new hybrid seed variety of maize has been approved by the state level research

council, official sources said.

Gujarat Maize(GM)-II is a predominantly used seed variety in the state, besides HQPM-I.

"As compared to GM-II, the new hybrid has potential to give 24 per cent higher yield.

GAYHM-I is an early maturing variety, say between 80-85 days, compared to any other

usual variety which takes 100-120 days," Katheria said.

"Lysine, an essential amino acid required for human body, is available up to 2.85 per cent

in protein of this maize, which is higher compared to other variety," he said, adding that it

is a good source of protein for the tribals.

A cash crop in Gujarat, maize is largely grown by farmers in tribal dominant districts like

Sabarkantha, Banaskantha, Panchmahal, Dahod, amongst others.

It is also cultivated in districts like Mehsana, Kheda, Anand, Vadodara and Patan.

The average acreage under maize in Gujarat is pegged at around 4.23 lakh hectares, while

annual production of the crop is estimated to be around 6 lakh tonnes, sources said.

"The yellow grain variety of maize is widely used as poultry feed too as its colour is

linked to beta-carotene, which potentially can improve directly the yoke quality of the

32

egg," Katheria said.

The new variety was developed by AAU's research station at Godhra. Last year, the agri

varsity had released Gujarat Anand White Hybrid Maize-II, to enhance productivity.

"But, compared to white, yellow colour maize is more popular in Gujarat as it has wider

application," he said.

"It will first have to pass a few more requisite clearances... It can be made available to the

farmers only by next year," Katheria added.

Lower offtake by end-users seen keeping maize prices on leash (BL 17/5/2013)

Maize prices in Karnataka are flat and are likely to remain subdued till June due to low

consumption.

Currently, maize is trading at Rs 1,300-1400 a quintal (100 kg) at Davangere, Hubli and

Gadag markets.

“Prices are subdued due to low consumption from end users — poultry industry and poor

demand for exports,” B.V. Gopal Reddy, Vice-President, Karnataka Maize Merchants’

Association, told Business Line.

Due to demand for maize from Bangalore-based poultry companies, prices are ruling at

Rs 1,430-1,450 for delivery at Bangalore, he added.

As sowing has begun in parts of North Karnataka, UAS-Dharwad’s Domestic and Export

Market Intelligence Cell (DEMIC) has advised the farmers that maize prices are to rule

around Rs 1,400-1,500 in Ranebennur.

Balachandra K. Naik, Head DEMIC, said “We have come out with price forecast to help

farmers. Currently, they are in a dilemma to go for maize or take up alternate crop during

the ensuing kharif season.

“In order to guide the farmers to take right decision, we at DEMIC studied and analysed

the market behaviour of prices in selected regulated and commercial markets of North

Karnataka,” he added.

SUNFLOWER

Framers in Bagalkot region are busy in preparing their lands for sunflower sowing, one of

the major oilseed crops in north Karnataka.

“In order to prepare them, DEMIC has come out with a forecast that kharif grown

sunflower may trade at Rs 3,800-4,250 in August-September,” said Naik.

33

VI PULSES

Serious flaws in government’s pulses schemes: Public Accounts Committee (BL

30/5/2013)

The Public Accounts Committee (PAC) has found serious flaws in the Centre's scheme to

sell imported pulses in domestic market and rapped the government for avoidable

expenditure of Rs 42.71 crore during 2006-11 because of delay on ports.

Based on CAG's report on pulses in December 2011, the PAC, headed by Murali

Manohar Joshi, has made recommendations in its 82nd report tabled in Parliament today.

The government auditor CAG had estimated a loss of Rs 1,201 crore on import and sale

of pulses by state-owned agencies -- MMTC, STC, NAFED and PEC between 2006 and

2011.

Examining in detail the CAG's findings, the PAC said: "The Committee find that serious

flaws and weaknesses in design, implementation, distribution and monitoring reduced a

well intended scheme into a loss bearing scheme".

The Centre introduced two schemes to bridge the demand- supply gap. It had asked the

four agencies to import on behalf of the government and sell in the open market with

subject to reimbursement of 15 per cent losses. The other scheme was to distribute

imported pulses through ration shops to poor people at a fixed subsidy of Rs 10 per kg.

Noting that there was "serious deficiencies in the design of the schemes and its

implemenation", PAC said the government failed to control retail prices of pulses despite

imports.

It also criticised the Ministry of Consumer Affairs, Food and Public Distribution for not

having any structured mechanism to assess the domestic demand.

"The Committee note that apart from shortfall in import and disposal, there were delay in

clearance of imported pulses from the port by the importing agencies, which affected the

availability of pulses in the market apart from adversely impacting their prices.

"It also resulted in avoidable expenditure of Rs 42.71 crore as detention and demurrage

charges during the period 2006-2011," the report said.

The panel hoped that the Commerce and Consumer Affairs Ministries "become wiser

after causing so much avoidable public misery and outcry due to their apparent

complicity and prophylactic and preventive action on their part."

The PAC listed out several key issues that requires urgent attention such as fixing of

support price on higher side to encourage farmers to boost domestic production,

formulation of long-term policy to meet demand, exploring possiblity of creating buffer

34

stock of pulses and streamlining the monitoring mechanism to control prices.

It suggested inclusion of punitative clause in tenders to avoid delay in lifting of pulses by

bidders and reimbursement of total losses suffered by PSUs in pulses import.

India, the world's biggest producer and consumer, imports about 3 million tonnes of

pulses annually to meet the local demand. Domestic production is stagnant around 16-17

million tonnes.

Despite lower crop, rise in pulses unlikely (BL 8/5/2013)

Pulses and pulse seeds continued to trade lower on slack demand and buying support

from millers.

Tur

Amid limited demand , tur (Maharashtra) on Wednesday ruled flat at Rs 4,550 a quintal.

Similarly, tur (Madhya Pradesh) also ruled stable at Rs 4,000-4,100 .

Notwithstanding lower domestic crop output, tur prices are seen ruling stable for the past

sometime, primarily due to weak demand from the millers.

Arrival of imported tur in mandis has also added to stability in tur prices, said Prakash

Vora, a local pulse trader adding that any major rise in tur prices appears unlikely unless

and until it gets renewed buying support from the millers.

Tur dal (full) in local mandis was at Rs 6,400-6,500 , tur dal (sawa no.) at Rs 5,800-5,900

while tur marka ruled at Rs 7,000.

Moong

Sluggish trend also prevailed in moong on weak demand and steady rise in arrival. On

Wednesday, moong (bold) prices were quoted at Rs 5,200-5,400 while moong (medium)

ruled at Rs 4,900.

Future of moong appears to be bearish as arrival of new summer crop has picked up in

local mandis , said a trader.

Moong dal (medium) was being quoted at Rs 6,600-6,700, moong (bold) at Rs 7,300-

7,400, while moong mongar ruled at Rs 7,400-7,500 .

Urad

Urad also ruled steady on slack demand with urad (bold) being quoted at Rs 3,450-3,500,

while urad (medium) ruled at Rs 3,000-3,200.

Urad dal (medium) was Rs 4,000-4,100, urad dal (bold) at Rs 4,500-4,600, while urad

mongar ruled at Rs 5,600-5,900 a quintal respectively.

35

Higher arrivals seen pounding pulses (BL 13.5.13)

Moong is expected to turn bearish due to rise in arrivals and weak demand for pulses.

Rise in arrival of the summer crop and weak demand have dragged moong prices in the

past one week by almost Rs 300 a quintal.

On Friday, moong (best) ruled at Rs 5,200-5,300, while moong (medium) at Rs 4,700-

4,800 a quintal.

With steady rise in arrivals, bearish sentiment will likely to continue in moong in the

coming days.

Moong dal remained unchanged with moong dal (medium) being quoted at Rs 6,600-

6,700 , moong dal (bold) at Rs 7,300-7,400 while moong mongar ruled at Rs 7,400-7,500

a quintal.

Sluggish trend continued in pulses and pulse seeds on weak offtake.

Poor buying support and demand dragged masoor (bold) prices on Friday to Rs 4,100-50

(down Rs 50), while masoor (medium) ruled at Rs 3,700-3,800 a quintal.

Despite poor domestic crop, masoor is ruling sluggish on poor demand and arrival of

imported masoor in large quantity.

Masoor dal (average) was at Rs 4,600-25 (Rs 4,650-75), masoor dal (medium) declined

to Rs 4,700-25 ((Rs 4,750-75), while masoor dal (bold) ruled at Rs 4,825-50 (Rs 4.850-

75).

Urad and its dal also ruled steady on subdued buying support with urad (bold) at Rs

3,400-50 while urad (medium) ruled at Rs 3,000-3,200. Urad dal remained unchanged

with urad dal (medium) being quoted at Rs 4,000-4,100, urad dal (bold) at Rs 4,500-

4,600, while urad mongar ruled at Rs 5,600-5,900 a quintal respectively.

36

37

VII EDIBLE OILS / OILSEEDS

Edible oils slide on sluggish demand, global cues (ET 6/5/2013)

Edible oil prices slide up to Rs 200 per quintal on the wholesale oils and oilseeds market

today on sluggish demand amid a weak global trend.

Neem oil in the non-edible section, also eased on reduced industrial offtake.

Traders said sluggish demand amid a weak global trend mainly kept pressure on edible

oil prices.

Meanwhile, palm oil for the contract for July delivery fell one per cent to USD 752 a

tonne, the lowest since December 13 on the Malaysia Derivatives.

In the national capital, palmolein (rbd) and palmolein (Kandla) oils fell by Rs 200 each to

Rs 5,800 and Rs 5,300, while crude palm oil (ex-kandla) traded lower by the same

margin to Rs 5,400 per quintal, respectively.

Soyabean refined mill delivery (Indore) and soyabean degum (Kandla) oils also lost Rs

100 each to Rs 7,200 and Rs 6,750 per quintal, respectively.

Groundnut mill delivery (Gujarat) and mustard expeller (Dadri) oils moved down by Rs

200 and Rs 100 to Rs 10,600 and Rs 6,450, while cottonseed mill delivery (Haryana)

traded lower by Rs 100 to Rs 6,100 per quintal, respectively.

In the non-edible section, neem oil declined by Rs 50 to Rs 4,900-5,000 per quintal.

Edible oils trade awaits palm oil output data (BL 8/5/2013)

Ahead of Malaysian palm oil production and inventories data, edible oils market may

bottom out and the next few days will be crucial in determining the course of the trade.

Shailesh Kataria of Riddhi Broker said, “expectation of lower Malaysia's palm stocks in

April pushed up sentiment later on the day. Investors avoided taking risky bets ahead of

official data for stocks and output due on Friday. Market may see bottoming out. The

next few days will be crucial in determining market direction.”

Groundnut oil continued to decline on Tuesday tracking bearish reports from the

producing centres. With a drop of Rs 10 more, groundnut oil in the first seven days of

this month registered total loss of Rs 60 for 10 kg in Mumbai. Slack demand pulled down

rapeseed oil by R e1 and cotton oil by Rs 2. In the absence of active buyers, palmolein,

sunflower and soya oil ruled unchanged. The volume was thin and sentiments remain

cautious tracking bearish domestic futures market, said sources.

38

An observer said, “leading local refineries lowered the prices in absence of demand. As

some importers were offering lower rates volume remain subdued in spot. Importers sold

about 350-400 tonnes of palmolein at Rs 493 for delivery from June 1-10. Resellers sold

150-200 tonnes of palmolein at Rs 496 for ready - near term delivery. There was no

volume in other oils.”

Arrivals of soyabean in Madhya Pradesh were 30,000 bags and the mandi prices were Rs

3,950-75 and plant delivery Rs 4,010-25. Mustard seed arrivals were 3.90 lakh bags and

its prices were Rs 3,250-3,490.

Towards the day’s close, Liberty was quoting palmolein at Rs 500-505, super palmolein

Rs 543 and sunflower refined oil Rs 780. Ruchi was quoting palmolein at Rs 506 ex-

Patalganga, soyabean refined oil Rs 660 and Rs 780 for sunflower refined oil. Allana was

quoting super palmolein Rs 545. In Saurashtra – Rajkot groundnut oil rose by Rs 5 to Rs

1,725 for telia tin and Rs 1,120 (Rs1,120) for loose (10 kg).

Malaysian BMD crude palm oil’s June futures closed higher at MYR 2,258 (MYR

2,249), July at MYR 2,260 (MYR 2,250) and August at MYR 2,256 (MYR 2,248) a

tonne.

The Bombay Commodity Exchange spot rates (Rs/10 kg): groundnut oil 1,130 (1,140),

soya refined oil 665 (665), sunflower exp. ref. 685 (685), sunflower ref. 765 (765),

rapeseed ref. oil 677 (678), rapeseed expeller ref. 647 (648) cottonseed ref. oil 638 (640)

and palmolein 500 (500).

Mustard may rule stable on bumper crop (BL 9/5/2013)

Any major rise and fall in mustard prices from its current level appears unlikely given the

bumper crop this year.

Production of the oilseed is expected to cross 71 lakh tonnes against 58 lakh tonnes last

year.

On Thursday, mustard oil and seeds ruled flat on slack demand.

In Indore, mustard oil ruled at Rs 632 for 10 kg, while it was Rs 625 in Neemuch and Rs

630 in Moorena.

In Rajasthan and Gujarat mandis also mustard oil rued stable with its price in Kota and

Ganga Nagar remaining steady at Rs 625 each, while it was Rs 640 in Jaipur and Rs 620

in Gujarat respectively.

On Thursday, mustard seeds in Indore ruled stable at Rs 4,050 a quintal, while raida ruled

at Rs 3,000.

On the other hand, mustard seeds traded higher on improved buying support at lower rate

with its May and June contracts on the NCDEX closing at Rs 3,415 (up Rs 11) and Rs

3,451 a quintal (up Rs 12).

Similarly, plant deliveries in mustard ruled at Rs 3,400-25 on weak demand from

crushers.

39

inflow

Arrival of mustard seeds in the country on Thursday declined to 2.80 lakh bags.

Rajasthan led the arrival with 1.70 lakh bags, followed by Uttar Pradesh, Punjab/Haryana

with 25,000 lakh each, Gujarat - 20,000 bags, Madhya Pradesh - 15,000 bags, while

remaining 20,000 bags were offloaded in other mandis of the country.

Edible oil imports fall 29% in April (BS 15.5.13)

Analysts said the fall was primarily on account of increased stocks due to excessive

imports since December 2012

India's edible oil imports fell in April, snapping a three-month rising trend. Analysts said

the fall was primarily on account of increased stocks due to excessive imports since

December 2012.

Edible oil imports fell from about 9,00,000 tonnes in April 2012 to about 6,41,000 tonnes

in April this year, a fall of 29 per cent. During the same period, non-edible oil imports fell

from 28,000 tonnes to about 13,500 tonnes. According to data compiled by the Solvent

Extractors' Association of India (SEA), vegetable oil imports fell to 6,54,827 tonnes in

April, against 9,25,334 tonnes in the corresponding month last year, a fall of 29.2 percent.

Vegetable oil imports had risen between December 2012 and March 2013. These grew 35

per cent, 75 per cent, 10 per cent and 23 per cent in December, January, February and

March, respectively. "India had imported excessive quantities during the last three

months. Also, there was disparity in imports last month. Therefore, imports fell in April,"

said Govindbhai Patel, an expert on edible oils.

"The overall import of vegetable oils during November 2012 to April 2013 is reported at

52,79,505 tonnes, compared with 47,14,963 tonnes (in the year-ago period), up 11.97 per

cent," SEA said in its report.

Industry players said from this month, imports might increase, as stocks had fallen due to

40

lower imports in April. "We will see imports pick up from this month, as previous stocks

have already fallen," Patel said.

According to SEA data, as of May 1, edible oil stocks at various ports and pipelines stood

at 18,20,000 tonnes, against 21,00,000 tonnes a month ago.

Owing to the fall in imports, prices have fallen. Crude sunflower and crude soybean oil

prices have fallen since January; prices have recorded five to 10 per cent correction.

Imported edible oils fall further (BL 16/5/2013)

Edible oil prices, especially imported plmolein and soyabean refined oil, extended loss

further by Rs 2 each and cotton refined oil dropped by Rs 3 for 10 kg on Wednesday

tracking weak local demand and bearish Malaysian palm oil futures. Groundnut, rapeseed

and sunflower oil ruled unchanged in line with steady to weak trend in producing centres.

Sources said that slack middle month demand kept volumes thin and isolated in Mumbai

market. Stockists preferred to fulfil old commitments. About 200-250 tonnes of

palmolein were traded in resale at Rs 504-505 for ready delivery. Lower arrivals of

soyabean and rapeseed in producing centres kept sentiment positive. In Indore soyabean

prices were Rs 4,050-60 ex-mandi and Rs 4,100-20 plant delivery. Mustard seed arrivals

were 2.70 lakh bags national level and the prices were Rs 3,100-3,610.

Towatds the day’s close, Liberty was quoting palmolein at Rs 510-514, super palmolein

Rs 545 and sunflower refined oil Rs 780. Ruchi was quoting palmolein at Rs 514 for

Patalganga and Rs 508 for JNPT, soyabean refined oil Rs 660 and sunflower refined oil

at Rs 755. Allana’s rates for palmolein were Rs 545. In Saurashtra – Rajkot, groundnut

oil dropped by Rs 10 to Rs 1,770 for telia tin and Rs 1,150 (Rs 1,160) for loose (10 kg).

Malaysian BMD crude palm oil’s June contracts settled at MYR 2,295 (MYR 2,292),

July at MYR 2,297 (MYR 2,302) and August at MYR 2,297 (MYR 2,301) a tonne.

The Bombay Commodity Exchange spot rates (Rs/10 kg): groundnut oil 1,140 (1,140),

soya refined oil 660 (662), sunflower exp. ref. 675 (675), sunflower ref. 755 (760),

rapeseed ref. oil 690 (690), rapeseed expeller ref. 660 (660) cottonseed ref. oil 645 (648)

and palmolein 505 (507). (This article was published in the Business Line print edition

dated May 16, 2013)

Global body to promote rice bran oil (BL 24.5.13)

Rice bran oil producers have decided to form an international organisation to create an

awareness among consumers about the health advantages of using the oil.

This decision was taken at the first Thailand conference on “Fats and oils: Roles of rice

bran oil and its products in changing Asia” on May 16-17.

41

According to the National Institute of Nutrition Hyderabad, the rice bran oil has its anti-

oxidant properties that help to lower cholesterol and the risk of intestinal cancer.

Efforts have to be taken to promote its sales through small retail chains and also educate

consumers about the advantages of the oil, a statement from the Solvent Extractors

Association said.

42

43

VIII VEGETABLES / POTATO - ONION

Onion likely to rule at Rs 800 a quintal till month-end (BL 4.5.13)

Onion prices are likely rule stable around current level of Rs 800 a quintal at least until

the end of this month with supply likely to match demand.

“Currently, quality onion commands Rs 850-900 a quintal, while the fair average quality

is quoting around Rs 800,” said a trader over phone from Nashik.

At the Lasalgaon Agricultural Produce Marketing Committee (APMC) yard, the modal

price or the rate at which most trades took place was Rs 811 a quintal with nearly 1,600

tonnes arriving.

“Some farmers are bringing their produce to the market as the current price is good, while

some are holding back expecting a rise,” said R.P. Gupta, Director of National

Horticulture Research and Development Foundation.

During the same time last year, prices were lower than Rs 400.

“Farmers are happy with Rs 800 a quintal now. Very rarely do prices rule at this level

during peak arrival of the rabi crop,” Gupta said.

While a section of the trade said that arrivals were of average quality, another section said

that good quality onions were arriving in markets.

Gupta said though the area under rabi onion was 20 per cent lower this year, higher

productivity has made up for the loss.

“Productivity is some 15-20 per cent higher this year,” he said.

A long winter, good sunshine and no rains around the time when the crop was maturing

have all led to higher yield this year.

44

Exports, on the other hand, are also good with demand continuing for West Asian

countries.

subramani.mancombu@thehindu.co.in

Potato prices decline Rs 50/quintal in Bengal (BL 13.5.2013)

Potato prices in West Bengal dipped by nearly Rs 50 a quintal last week on the back of

improved supplies from cold storages coming into the market.

Wholesale price of the tuber (Jyoti variety) was ruling around Rs 850, down from Rs 900

in the first week of May.

Prices are likely to hover around current levels backed by a steady demand for Bengal

potatoes in other states, said Sukumar Samanta, General Secretary, Singur Ratanpur Aloo

Byabasi Samiti.

Improved Supplies

According to Patit Paban De, member of West Bengal Cold Storage Association, more

than half of the 400-odd cold storages in the State have started unloading their potatoes.

With the State government approving a rental hike of Rs 19 a quintal, cold storages

started opening their outfits for unloading potatoes in the first week of May.

The present hike, which comes after almost three years, is still inadequate to make good

for the 50 per cent rise in input costs, De said.

The 400-odd storage units in the State can hold up to 60 lakh tonnes of potatoes.

“Prices had shot up in the last week of April and early May on the back of a steady

demand leading to depletion of stocks held with farmers,” De told Business Line.

Usually around this time of the year, farmers have a reasonable quantity of potatoes with

them. However, this year, there was hardly any stock left.

This is despite a 12 per cent rise in potato production to 98 lakh tonnes this year.

West Bengal consumes around 50-55 lakh tonnes of potatoes produced; while nearly 40

per cent of the potatoes produced in Bengal find its way into other States.

Had the cold storages not started unloading, then prices could have risen further as the

demand continues to be good, De pointed out.

“Starting next week, the other cold storages will also commence their unloading

operations. This might exert some pressure on prices, however, we expect price to remain

firm at these levels due to steady demand,” he said.

However, if for any reason, potato supply from Bengal to other States comes down, then

prices might crash due to an excess production this year, he added.

shobha.roy@thehindu.co.in

45

Potato farmers asked to store harvested produce till July (BL 15/5/2013)

Potato farmers have been advised to store the harvested produce and offload the stuff in

July, when the prices are expected to move up.

Experts at the Domestic and Export Market Intelligence Cell functioning at the Tamil

Nadu Agricultural University here foresee an increase of Rs 3-4 per kg of potato in July

from the present rate of Rs 24/kg.

Their advice is based on an analysis of price movement in the Mettupalayam market.

According to the National Horticultural Research and Development Foundation, the area

and production of potato in Tamil Nadu during 2011-12 was 4,910 hectares and 1.05 lakh

tonnes, respectively.

Exports in 2012-13 were down by 26 per cent at 74,635 tonnes.

In Neerbogam season, potato is sown in February and harvested during May-June. At the

auction centre at Mettupalayam, potato is currently auctioned at Rs 2,000-2,100 a quintal.

Reduction in planting area coupled with drought conditions might results in lesser

arrivals and higher prices of potato in the Mettupalayam market, the farm varsity sources

said.

Bengal plans to raise onion output (BL 17/5/2013)

Availability of locally produced onions in West Bengal is set to improve starting this

year.

The State Government is planning to supply seeds at subsidised rates to farmers to grow

onions in the kharif season (June-end October).

The State currently produces onions only during the rabi season (mid November to

April).

According to Pijush Kanti Pramanick, Director of State Horticulture Department, the

improvement in availability of locally produced onions will also bring down prices.

West Bengal produces nearly 3.04 lakh tonnes onions during the rabi season. The

estimated demand is pegged at around 3.33 lakh tonnes. The shortfall of close to 29,000

tonnes is currently met through imports from Maharashtra and Karnataka.

“Once we start producing the kharif onions, our overall production will improve and in

the next three-to-four years, we will turn self-sufficient to meet our demand,” Pramanick

told Business Line. The State Government has already identified some farmers in the

46

districts of Bankura, Purulia, West Midnapore, Birbhum, Murshidabad, Nadia, North 24

Parganas and Hughli for growing onions. “We plan to bring close to 600 hectares of land

under onion cultivation during this kharif season. Nearly 15-17 tonnes of onion can be

produced on a hectare,” he said. The rabi onions start coming into the market around

February-March and is available till end of August.

Once the stock of locally produced rabi onions gets deplete, post-August, onions from

other States start flooding the local markets, thereby, pushing up prices, he pointed out.

PILOT PROJECT

The State Horticulture Department in association with the National Horticultural

Research and Development Foundation (NHRDF) had launched a pilot project about two

years back to look into the possibility of cultivation of kharif onions.

“We looked at the adaptability of onions grown in Nashik and other parts of Maharashtra,

in West Bengal. The pilot project was successful, so we decided to go on a massive drive

to grow onions during kharif season,” he said. The State Government would be procuring

the seeds developed by NHRDF Nashik, which are most suitable for Bengal, and supply

it to the farmers at subsidised rates, he said.

Potato prices to increase in July (BL 22/5/2013)

With potato prices expected to be around Rs 27 to Rs 28 per kg in the month of July, Rs 3

more than the prevailing prices, farmers are recommended to store and sell their produce

after June.

Domestic Export and Marketing Intelligence Cell (DEMIC) functioning in Tamil

NaduAgricultural University here, analyzed the 10 years' prices of potato, which

prevailed n the Nilgiris Cooperative Marketing Society, one of the big trading centres in

India and showed the increase in the price in July.

The prevailing price of potato is Rs. 24 to Rs 25 per kg, which would remain stable till

June.

Tamil Nadu produced 1,04,90 tonnes of potato from 4,190 hectares during 2011-12 out of

the India's production of 414 lakh tonnes from 19.06 lakh hectares.

Potato is curretnly auctioned at Rs 2,000 to Rs 2,100 per quintal in Mettupalayam and

reduction in planting area coupled with drought conditions, may result in a lesser arrivals

and high prices, DEMIC said.

Potato trade down over 2% on weak demand (BS 17.5.13)

Prices traded low as speculators offloaded their positions

47

Potato prices fell by 2.15% to Rs 840 per quintal in futures trade today as speculators

offloaded their positions triggered by subdued demand in the spot market.

At the Multi Commodity Exchange (MCX), the July contract fell by Rs 18.50, or 2.15%,

to Rs 840 per quintal in 26 lots.

The June contract declined by Rs 16.90, or 1.83%, to Rs 905.50 per quintal in 34 lots.

Marketmen said fall in potato prices was mostly due to offloading of positions by

speculators amid subdued demand in the spot market.

48

49

IX MILK

'India would meet 172.20 million tonnes milk demand by 2020' (ET 26.4.13)

India's domestic demand of milk and milk products would be around 172.20 million

tonnes by 2020-21 and the country would have sufficient production to meet such

demand, the government said today.

"As per an assessment made by the Planning Commission, the domestic demand for the

milk by 2020-21 is expected to be 172.20 million tons.

"The milk production at national level is by large sufficient to meet the demand of milk

and milk products," Minister of State for Agriculture & Food Processing Industry Charan

Das Mahant said in a written reply to the Lok Sabha.

Meanwhile, Mahant said that state wise data of demand and supply of milk and its based

products was not available with the government.

He also informed that at present, the government was not providing any subsidy on

export of milk products.

However, an incentive of 5 per cent duty credit on the basis of Free on Board (FoB) on

export of skimmed milk powder (SMP) is being provided under Videsh Krishi and Gram

Udyog Yojna, Mahant said .

He further informed that the government is implementing various schemes for dairy

development in the country for promoting village-based milk procurement systems

through dairy cooperatives.

These dairy cooperatives procure milk from the farmers on the price determined by the

dairy cooperative unions or the concerned state milk federation.

Mahant said that the government is providing financial assistance to these dairy

cooperatives under its schemes Rashtriya Krishi Vikas Yojna and National Mission for

Protein Supplements.

Moreover, the government has also taken various measures under some centrally

sponsored programmes to strengthen these dairy cooperatives under Intensive Dairy

Development Programme (IDDP), Strengthing Infrastructure for Quality and Clean Milk

Production, Assistance to the Cooperatives, Dairy Entrepreneurship Development

Scheme and National Dairy Plan.

Till March this year, 3,134 such dairy cooperatives have been established in Maharashtra

under the IDDP.

50

New Zealand drought fuels boom for Indian dairies (BL 1.05.13)

A severe drought in New Zealand that has sent global milk prices soaring is proving to be

a boon for Indian dairies, especially the co-operatives, which have seen a surge in

demand for skimmed milk powder in recent months.

The Gujarat Milk Marketing Co-operative Federation, which owns the Amul brand, saw

its exports rise to 4,000 tonnes since the Government lifted the ban on shipments in June

last year.

“Exports of SMP are good. Currently, we have an order book of about 3,000 tonnes,”

said R.S. Sodhi, Managing Director, GCMMF.

Co-operatives such as Amul and the Karnataka Milk Federation seem to have more milk

powder stocks than their private counterparts. Sources at the Karnataka federation said

that they had exported about 5,000 tonnes and were now expecting global prices to go up

further. Global skimmed milk powder prices are hovering around $3,800-4,000 a tonne.

Smp exports

“India, which has ample milk powder stocks, can continue exporting about 10,000 tonnes

a month for the next few months,” said Sodhi.

Since June last year, the total exports from the country are estimated at over 60,000

tonnes in the just-ended fiscal. These exports are largely destined to the milk-deficient

South Asian countries such as Bangladesh, Sri Lanka and Pakistan.

Indian exporters are realising between Rs 170 and Rs 180 a kg for the milk powder

against the Rs 140 a kg realised four months ago.

The increase in SMP exports is notwithstanding the onset of summer in North India,

when milk production declines.

“Our daily milk procurement is still high by about 15 per cent over last year and such a

trend is expected to continue for some more months,” said Sodhi.

Flush season

Private players such as Hatsun Agro Product Ltd and Sterling Agro Industries, who were

actively exporting milk powder till a couple of months ago, have now slowed down for

various reasons.

Hatsun Agro, the country’s largest exporter, has shipped over 12,000 tonnes in the last

financial year. “We have to wait for at least three months for the next flush season,” said

R.G. Chandramogan, Chairman and Managing Director, Hatsun, which largely operates

in the South, where the flush or peak milk producing season ended some three months

ago.

However, in North India, where the ongoing flush season in last phase, private dairies are

focussing more on the domestic market.

51

“Milk powder exports are no longer viable as domestic demand is picking up,” said

Kuldeep Saluja, Managing Director, Sterling Agro, makers of the Nova brand dairy

products. Sterling has exported about 7,000 tonnes in 2012-13.

Sterling, which recently launched pouched liquid milk under the Nova brand in the Delhi-

National Capital Region, has seen its sales touch one lakh litres a day in 1.5 months,

Saluja said.

“We are aiming to sell 5 lakh litres by December 2014,” he said.

Amul raises milk prices by Rs 2/litre in Delhi (BS 1.5.13)

An increase of 5-8% expected in other regions, too; other dairies to follow suit

With a rise in overall inflation and higher procurement cost, India’s largest milk

marketing player, Amul, has decided to increase prices in the Delhi-NCR region by Rs 2

a litre from May 1. Dairies operating in

different regions are set to follow suit,

citing higher procurement and logistics

costs.

The price rise has come after a gap of 13

months since the last increase by the

Gujarat Cooperative Milk Marketing

Federation (GCMMF), which sells the

Amul brand of milk.

“We are raising prices in the Delhi-NCR region by Rs 2 a litre across all varieties. Last

increase was made in April 2012,” said R S Sodhi, managing director, GCMMF. The

recent increase is due to inflation and increase in milk procurement prices, paid to

farmers, he added.

Amul sells around 2.4 million litres of packaged milk a day in the Delhi-NCR market.

Among private dairies, Hatsun Agro Products, a leading milk player from the south, said

a five per cent hike is on the cards. This would be implemented within the next month. R

G Chandramogan, chairman and managing director of Hatsun said, “In the past year,

there has hardly been any inflation for milk. Normally, there is a five per cent inflation

annually.

Logistic costs are increasing, and a five per cent rise is imminent.” He added that while

Hatsun is planning to raise prices within the next month, other regional dairies will also

follow suit in the next two-three months.

Another north-based dairy, SMC Foods Ltd, which sells milk and milk products under

the Madhusudan brand, is also mulling raising prices by around Rs 2 a litre during the

52

coming fortnight. Punjab State Cooperative Milk Producers’ Federation Ltd, popularly

known as MILKFED (Verka), which had raised prices by Rs 1 a litre in August 2012, is

also planning to raise prices within the next month. Sources in the dairy indicated that the

rise could be in the range of Rs 1-2 a litre.

One of the major players in the western region, Parag Milk Foods, which sells milk and

milk products under the Gowardhan and Go brands, too, has hinted at the possibility of a

price rise.

According to Devendra Shah, chairman, Parag Milk Foods, milk and milk products could

become costlier by five-eight per cent in the next three months, driven primarily by

drought in parts of Maharashtra and Karnataka.

However, Mother Dairy, which supplies over three million litres of milk a day in Delhi-

NCR, including packaged and loose milk through vending machines, has not yet decided

on price rise.

Commenting on the milk price hike issue, a Mother Dairy spokesperson said, “The

procurement cost and other overhead costs have gone up in the past few months. Mother

Dairy at this point is still reviewing the situation and a decision on an increase is yet to be

taken.”

Milk production rises 14% in Dakshina Kannada (BL 18/5/2013)

Milk production and marketing in Dakshina Kannada and Udupi districts saw a growth of

around 14 per cent and 4 per cent, respectively, during 2012-13.

Addressing presspersons here on Saturday, Raviraj Hegde, president of the Dakshina

Kannada Cooperative Milk Union Ltd, said that the average milk procurement of the

union stood at 2.23 lakh litres a day during 2012-13 against 1.96 lakh litres a day in

2011-12, recording a growth of 13.77 per cent.

He said last week’s decision of the State Government to increase the subsidy to milk

producers from Rs 2 a litre to Rs 4 a litre would help milk farmers in the district. To a

query on the status of procurement after this announcement, he said the union has been

getting additional 4000-5000 litres of milk a day after the announcement.

DEMAND

(As many as 647 primary milk producers’ cooperative societies in Dakshina Kannada and

Udupi districts come under the jurisdiction of the union).

53

However, the demand for milk also increased in the market during 2012-13. On an

average, the union marketed 3 lakh litres of milk a day during 2012-13 as against 2.88

lakh litres a day in 2011-12, recording a growth of 4.1 per cent.

To meet the demand in the region, the union is bringing around 1-1.5 lakh litres a day

from the districts such as Hassan, Mysore, Shimoga and Mandya.

It marketed around 34,600 kg of curd a day during 2012-13, recording a growth of 10 per

cent over the previous year, he said.

The total turnover of the union stood at Rs 451 crore (Rs 367 crore) during the year. It is

expecting a turnover of Rs 555 crore during 2013-14, Hegde said.

The cooperative union recorded a provisional profit of Rs 3.60 crore in 2012-13 as

against a profit of Rs 3.47 crore in 2011-12, he added.

Milk price hiked in Maharashtra (BL 24.5.13)

Milk prices across Maharashtra will be hiked from Saturday. The State Government has

allowed an increase of Rs 2 per litre for cow’s milk and Rs 3 for buffalo milk.

The decision was taken at the State Cabinet meet on Wednesday. Due to the hike,

consumers will have to shell out Rs 31 a litre (plus delivery charges) for cows’ milk and

Rs 40 for buffalos’ milk. The decision would be applicable for all State Government and

Cooperative Society owned diaries. For the last one month, cooperative societies across

Maharashtra have been lobbying with the State Government for an increase in the rates

due to higher operational costs.

The State Government has also increased the procurement rates, as a result of which

farmers will get Rs 18.5 per litre for cows’ milk and Rs 27.50 for buffalos’ milk.

54

55

X SUGARCANE / SUGAR

Sugar output may exceed demand in next 3 yrs: Thomas (BS 26.4.13)

India's sugar demand is about 22 mn tonne, while the output in the next 3 yrs is likely to

be more than the demand

The country's sugar production is expected to be "comfortable" and above the annual

demand of 22 million tonnes during the next three years, Food Minister K V Thomas said

today.

Sugar production has touched 24 million tonnes in the ongoing 2012-13 marketing year

(September-October) against the forecast of 24.6 million tonnes. The output is, however,

lower than 26 million tonnes achieved in the previous year.

"Out assessment is (that) 2013-14, 2014-15 and 2015-16 will be a comfortable year for

India in the sugar sector," Thomas told reporters on the sidelines of an event here.

India's sugar demand is about 22 million tonnes, while the output in the next three years

is likely to be more than the demand, he said.

The assessment on sugar output came out during a recent discussion with the Agriculture

Minister on ways to revive the entire sugar sector in the coming years, he added.

Stressing the need to strengthen the sugar industry, Thomas said his ministry has

prepared a paper in this regard in consultation with the Agriculture Ministry and will be

discussed with stakeholders next month in Kanpur.

"I think by third week of May, there will be a meeting at a Sugar institute in Kanpur. All

experts and stakeholders of the industry will discuss and chalk out various programmes

for improvement of the sugar sector," he said.

Early this month, the government partially decontrolled the sugar sector by giving sugar

mills the freedom to sell in the open market and unshackled them from the obligation of

supplying the sweetener at subsidised rates for ration shop.

India is the world's second biggest sugar producer after Brazil.

Sugar ends mixed on lower demand, good supply (ET 29/4/2013)

Small sugar prices moved down at the Vashi wholesale sugar market here today due to

poor demand from stockists and traderon the back of sufficient supplies.

While, medium sugar displayed a mixed pattern of trading owing to alternate bouts of

56

buying and selling.

Small sugar (S-30) eased by Rs 5 to Rs 3,071/3,171 per quintal from last Saturday's

closing level of Rs 3,076/3,171.

Medium sugar (M-30) was quoted at Rs 3,200/3,361 per quintal, compared to Rs

3,162/3,381 previously.

Following are today's closing rates for sugar (per quintal) with the previous rates given in

brackets:

Small sugar (S-30) quality: Rs 3,071/3,171 (Rs 3,076/3,171.

Medium sugar (M-30) quality: Rs 3,200/3,361 (Rs 3,162/3,381).

India's Oct-April sugar output down 3% y/y: Industry body (BL 3/5/2013)

Indian sugar mills produced 24.52 million tonnes of the sweetener between Oct. 1, 2012

and April 30, about 3 per cent less than a year earlier, a leading industry body said on

Friday.

Top producing Maharashtra state churned out 8 million tonnes during the period, about

10 per cent lower than a year earlier, the Indian Sugar Mills Association (ISMA) said in a

statement.

Output from Uttar Pradesh, the second-biggest producer, reached 7.43 million tonnes, 7

per cent higher from a year earlier.

India, the world's top consumer and the biggest producer behind Brazil, is likely to

produce 24.6 million tonnes of sugar in 2012/13, ISMA said, against an annual demand

of about 23 million tonnes.

Sugar exports from India poised to rebound (BS 4.5.13)

End of state curbs on local sales will pull down domestic prices and encourage mills to

boost overseas shipments

Sugar exports from India, the world's second-biggest producer, are set to climb next

season as an end of state curbs on local sales sends domestic prices lower and encourages

mills to boost overseas shipments.

Supply will be available for exports in the 2013-14 season that starts in October,

according to Abinash Verma, director general of the New Delhi-based Indian Sugar Mills

Association (Isma). Domestic prices in India for white sugar are about 10 per cent higher

than futures in London, discouraging exports for now.

57

Global refined sugar prices have dropped 11 per cent in the past year as oversupply of

sweetener overwhelmed processors. India's government said April 5 it will allow mills to

freely sell sugar in the local market for the first time in four decades. The crop starts

being harvested in India in October.

"With deregulation in India, there may be changes in the marketing patterns of the mills

resulting in more material hitting the market immediately when crushing starts," Vijay

Iyengar, managing director of Agrocorp International Pte, a Singapore-based commodity

trader, said by phone on April 30. "In the months between October to let's say when the

crush is going on, to March or April, sugar prices should be under pressure and at that

point, there could be some exports."

White sugar futures on the National Commodity & Derivatives Exchange Ltd in Mumbai

are Rs 2,928 a quintal ($542.90 a tonne) today, compared with $500 a tonne on NYSE

Liffe in London. The London price is down 4.5 per cent this year after falling 33 per cent

the past two years.

India shipments Shipments from India have been about 35,000 tonnes since the current season started on

October 1 compared with 3.4 million tonnes for the entire 2011-12 season as high

domestic prices discouraged exports, Isma estimates. Exports in 2013-14 could be

500,000 tonnes if domestic prices fall below global levels, according to Charlotte

Kingsman, an analyst in New Delhi at Kingsman SA, a Lausanne, Switzerland-based

research company.

The nation's stockpiles will climb 37 per cent to 9.2 million tonnes by October from a

year earlier, the most since 2008-09, said Vinay Kumar, managing director of the

National Federation of Cooperative Sugar Factories Ltd.

Indian sugar makers were curbed by a policy that set limits on sales by each mill to cap

prices, while states fixed cane rates to help 50 million farmers. The government also said

it will stop buying sugar from producers at below market prices, with the changes to take

effect this season. A notification of the exact date has yet to be published.

"Freedom unfortunately means that people tend to sell quicker than they buy," Robin

Shaw, an analyst at Marex Spectron Group in London, said on May 1. "Producers need

cash and they can only get cash from sugar, so they have to sell their sugar while the

buyers don't need to buy in advance, so you could see that the first effect of de-control

will be a tendency to sell."

Sugar surplus Sugar output in India will be 24.6 million tonnes in 2012-13, beating consumption of

22.5 million tonnes, leaving a surplus of 2.1 million tonnes, according to Isma.

Production may be as high as 25 million tonnes, Green Pool Commodity Specialists Pty,

a Brisbane, Australia-based researcher, estimates.

58

"Uttar Pradesh had a very good crop and Maharashtra wasn't as bad as what people

thought," Tom McNeill, a director at Green Pool, said in a telephone interview on April

30. "There were numbers as low as 20 million tonnes for this year and it's going to end up

near 25 million, an incredible outcome really, but that's because cane prices have been

very good."

Sugar may improve soon with rising mercury (BL 7/5/2013)

Pressurised by ample supply, sugar prices are unlikely to go down further.

An analyst said. “Sugar prices are under pressure since Diwali but are not expected to go

down further as it is already ruling near Rs 3,000 – far below the cost of production.

Also, prices are likely to show some improvement with the rise in temperature.”

Sugar prices ruled almost unchanged at upper level on Tuesday tracking range-bound

volatility in futures market and slack physical demand at national level. Mumbai’s sugar

traders are on indefinite strike against Local Body Tax since May 1 so there were no

activities in spot market here.

A wholesaler said: “Vashi APMC Market – 1 including sugar, gur, spices, coconut and

other are on indefinite strike in protest of LBT. Vashi Market -2 including Grain and

pulses may also join hands soon. As sugar production this year is higher than local

demand, prices in other main producing centres are also ruling downward. Upcountry

buying is lacking since long in Maharashtra, forcing the State’s mills to concentrate on

local markets.ashi sugar market currently carries sufficient 110 – 120 truck loads

inventory. There were no fresh arrivals or local dispatches of sugar since May 1. On

Monday evening, 13-14 mills offered tenders and sold 28,000-30,000 bags at Rs 2,920-

3,000 (Rs 2,910-2,990) for S-grade and Rs 3,000-3,060 (Rs 3,000-3,060) for M-grade.

Centre asks states to start buying sugar from open mkt for PDS (ET 9/5/2013)

The Centre has asked state governments to immediately start buying sugar from the open

market to ensure supply to ration card holders as it is left with the stock to

meet PDS requirement for current month only.

The Centre has partially decontrolled the sugar sector and mills are no longer obligated to

supply sweetener to the Centre for the Public Distribution System (PDS).

In a letter to state chief ministers, Food Minister K V Thomas said that the centre has

allocated sugar quota up to May 2013 and "it is imperative that the states take immediate

action for procurement for future requirements."

He also asked states to "initiate steps immediately to ensure that the supply of sugar

through PDS is not affected during the period of transition and thereafter."

On April 4, the Centre decided to scrap the levy sugar mechanism, under which mills

59

were obligated to supply 10 per cent of their production at a cheaper rate to the Centre to

run ration shops.

Now, the state governments are required to procure sugar from the open market through a

transparent system. The Government of India will bear the difference between the ex-mill

price of Rs 32 per kg and retail sugar price of PDS at Rs 13.50 per kg.

"The Centre has decided to provide a subsidy at the rate of Rs 18.50 per kg to states for

existing level of allocations so that sugar continues to be available to consumer under

PDS at Rs 13.50 per kg," Thomas said in the letter.

The government supplies about 17-20 lakh tonnes annually through PDS at subsidised

price bearing a subsidy of about Rs 2,600 crore annually, which may rise to Rs 5,300

crore in the decontrol period.

Besides, Thomas has also asked state governments to consider the Rangarajan

Committee's other recommendations relating to cane area reservation, minimum distance

criteria and adoption of cane price formula -- for implementation in a manner which is

most appropriate.

Sugar production in the country is estimated at 24.5 million tonnes in the 2012-13

marketing year (October- September), as against the annual demand of 22 million tonnes.

Cane arrears in U.P. touch record Rs 6,308 crore (BL 10/5/2013)

Sugarcane arrears have hit a record high, exceeding Rs 6,308 crore, in Uttar Pradesh on

delayed payment by millers even as crushing in the current season ending September has

come to an end.

However, the rising arrears do not seem to deter UP farmers from planting cane for the

next season as no other alternative is seen matching sugarcane in terms of returns since

the price is fixed by the State Government.

UP is followed at a distance by Karnataka, the third largest sugar-producing State, where

dues to cane growers are estimated at over Rs 1,600 crore.

The all-India cane arrears are said to have crossed Rs 12,300 crore, according to the Food

Ministry.

For this build-up in cane arrears, millers blame the high cost of production – driven by a

high cane price and lower-than-expected realisations.

Since the beginning of the current season in October, sugar millers in UP have been

losing about Rs 4-5 a kg as the ex-factory prices have been hovering around Rs 31-32 a

kg while the cost of production is estimated at Rs 36 a kg.

Further, the recent decontrol of sugar sales announced by the Centre has not helped

millers to clear cane dues as ample supplies in the market have kept its prices quiet for

some time now.

60

V.M. Singh, Convenor of the Rashtriya Kisan Mazdoor Sangathan, blamed the UP

Government’s inaction against sugar millers for the build-up in arrears. Singh has filed a

public interest litigation in this context and the next hearing is due on May 16 in

Lucknow.

“The UP Government is playing into the hands of sugar mills. By not issuing recovery

certificates against the mills, even the State is losing out,” Singh said.

He said the removal of curbs recently on sugar sales had not helped the farmers in any

way.

In early April, the UP Government had initiated action against some mills for payment

default, but subsequently the Cane Commissioner, Kamaran Rizvi, was transferred.

Principal Secretary (Sugar) Rahul Bhatnagar, currently holds additional charge of Cane

Commissioner in UP.

“We have held a meeting with the millers and told them to clear the dues by June 30,”

Bhatnagar said.

S.L. Gupta, Secretary, UP Sugar Mills Association, said that mills in the State were under

pressure to clear the dues and had been selling more sugar since sales were de-controlled.

In fact, sugar prices had seen a marginal decline after the decontrol was announced, as it

has led to more supplies in the market, Gupta said.

IMPORTS

The increased availability and cheaper imports have led to bearish trend in prices and that

millers may need more time to clear the dues.

Meanwhile, farmers continue to plant cane in Uttar Pradesh, where according to early

estimates the area covered under is marginally lower than corresponding last year.

As on May 8, sugarcane has been planted on 19.20 lakh hectares in UP, lower by about

two per cent over corresponding last year.

ACREAGE

However, the cane acreage across the country is lower by 11.5 per cent at 40.30 lakh ha

against 45.54 lakh ha in the corresponding last year. This decline in cane acreage is due

to 45 per cent drop in area in Maharashtra, the largest sugar producing state, on account

of prevailing drought and also in Karnataka.

In Maharashtra, farmers have so far planted cane in 5.11 lakh hectares against 9.37 lakh

hectares in corresponding last year.

Cane planting has been affected in parts of Marathawada, Pune and Vidarbha regions

where second consecutive drought has affected the acreages.

In Karnataka, the decline in acreage is estimated at 10 per cent at 3.27 lakh hectares

against 3.65 lakh hectares in corresponding last years.

Sugar industry wants import duty to be increased to 30 pc (ET 13/5/2013)

Assuming a domestic consumption of 22.5 million tonne this season, industry experts cite

a surplus of 2 million tonne in the current season.

61

After achieving success in getting the sugar market decontrolled, sugar industry will now

pursue the government to increase the import duty on sugar to 30 per cent from current

10 per cent.

Sugar production in the country has reached 24.5 million tonne and the industry feels that

the domestic market will be in a comfortable condition this sugar season (October 2012-

September 2013) and the next as well.

Assuming a domestic consumption of 22.5 million tonne this season, industry experts cite

a surplus of 2 million tonne in the current season. The carry over stock of sugar from last

season would be 34 lakh tonne as on 1st October 2013, if it's not exported by the mills.

"There is more than enough sugar in the country so there is no need for imports. Even if

Maharashtra gives lower production in the next season (due to drought condition), the

opening balance will be so good that there will be enough sugar in the next season also,"

Abinash Verma, director general, Indian Sugar Manufacturers Association, (ISMA).

Sugar import in the country for the past two seasons has been nil. In the current season

though, the country imported 4 lakh tonne of raw sugar (including the expectations in

May). This season also witnessed 14,000 ton of white sugar coming from Pakistan.

As the sugar prices are crashing in global market, Indian sugar mills are unable to export

the surplus domestic stock. Meanwhile sugar traders are importing sugar, which turns out

cheaper than domestic produce. The final cost of converting imported raw sugar into

refined sugar including the 10 per cent import duty is Rs 29 per kg. The ex-mill price of

sugar in Maharashtra in Rs 31 per kg and in North India is Rs 34 per kg.

"Sugar mills are already in a crisis situation. Sugar rates have gone down from Rs 35 per

kg to Rs 28 in just 6 months because of stock surplus in the market. Now, after the

crushing season when the mills are hoping the prices to improve, imports could again

bring down the prices," said Vinay Kumar, managing director, National Federation of

Co-operative Sugar Factories.

High cost of sugarcane along with declining sugar prices has put pressure on the sugar

mills, which are unable to pay the cane farmers.

Sugar millers plan to tap futures platform (BL 15/5/2013)

After getting the freedom to sell sugar, millers are now keen to learn the futures game.

Further, they also plan to strengthen their marketing teams and chase long-term deals

with bulk consumers, such as beverage and confectionery makers.

Till recently, sugar sale was controlled by the Government through the release order

mechanism, under which it decided the quantity of sugar to be sold by mills during

specific periods.

62

Now, sugar industry bodies, the Indian Sugar Mills Association and the National

Federation of Sugar Co-operative Factories, are exploring options to organise training for

their members on the futures platform.

“There is a need for the co-operatives to participate in the futures market for better price

discovery. We are planning to encourage mills to participate in the futures trade by

organising some training in the days to come,” said Vinay Kumar, Managing Director,

NFCSF.

The apex State co-operative body plans to hold consultation with the various State

federations in this regard.

M. Srinivaasan, Chairman, ISMA, said: “At present, not many of our member companies

have the skills to trade in futures. We are in discussions to organise programmes to get

our members trained in the futures trade.”

Currently, sugar is traded on the NCDEX and MCX, but the volumes are yet to pick up

on these exchanges.

Kumar said that operating in a controlled environment needed no marketing, “but now,

sugar mills need marketing skills.”

He said his federation would develop a marketing strategy over the next two months to

help the co-operatives adapt to the changed environment.

Even companies in the private sector are seen responding to the change in environment.

“Having a marketing team is the need of the day,” said Mukesh Kumar, Executive

Director of Belgaum-based Vishwaraj Sugar Industries Ltd, stating that his company

proposed to put together a small team of less than 10 people.

Besides, Vishwaraj is eyeing long-term deals with bulk consumers, such as the beverage

and confectionery makers among others.

Currently, only a few large sugar companies are in long-term contracts with the bulk

buyers such as Pepsi, Coca-Cola, Britannia and Cadbury among others.

“We are planning give a thrust to our institutional sales by strengthening our tie-ups with

bulk buyers such as Coke and Pepsi,” said B.B. Mehta, Director and Chief Executive

Officer of Dalmia Bharat Sugar. The company is also in talks with other major

consumers such as Dabur.

Dalmia, which currently sells about 30 per cent produce to large consumers, aims to

increase its bulk sales to about 40 per cent of its sales over next year. Mehta said Dalmia

was also looking to leverage the NCDEX futures trading platform and was strengthening

its commodity team for effective hedging and delivery.

The over 300-odd co-operatives, which account for close to half of the sugar produced in

the country, mainly sell their produce through the tendering process.

“We plan to actively participate in the tenders that the States are expected to float for

their public distribution system (PDS) procurement,” Kumar added.

The Centre, which scrapped the levy mechanism, has told the States to procure directly

from the mills for supplies through the PDS.

63

Sugar co-ops want restrictions on import, with export subsidy (BS 17.5.13)

At present, sugar imports via open general licence route are permitted at 10% duty

Burdened by rising sugar imports, impacting their price realisation and payment of dues

to cane growers, the National Federation of Cooperative Sugar Factories (NFCSF) has

sought a rise in the tariff on both raw and refined sugar to 30 per cent.

At present, sugar imports via the open general licence (OGL) route are permitted at 10

per cent duty. Sugar imports should also be taken off OGL, says the letter to the Union

food and agriculture ministries from NFCSF President Kallapa B Awade.

Traders have imported 468,000 tonnes in the ongoing 2012-13 sugar season (October-

September), he said, adding some imports were also coming from Pakistan. This is

despite their estimation of sugar production exceeding demand, of 25 million tonnes

versus 22.5 mt, respectively.

Taking imports into account, opening stock in the next year would be 9.7 mt.

“Considering the initial three months requirement for 2013-14 of about 5.8 mt, India will

have a net surplus of 3.86 mt,” it said. The surplus cannot be exported as international

prices are ruling lower. If imports are continued at lower duties, domestic prices will

further fall, hitting realisation and timely payment to cane growers, says the letter.

“It is becoming very difficult for factories...cane price arrears are mounting and reached

Rs 12,600 crore up to March 15,” the NFCSF said. The body also wants the government

to give export subsidy to ship surplus sugar, saying it would help them clear their cane

arrears.

Ex-factory realisation has been falling since October 2012. The all-India average ex-

factory price in October was Rs 3,328.7 a quintal. It was down to Rs 2,925 a quintal last

month.

Hilly states face logictics issues for buying PDS sugar (BL 20/5/2013)

North Eastern and hilly states, including Jammu & Kashmir, have expressed concerns

over logistics for undertaking sugar procurement from the open market for PDS purpose,

while big states like Andhra Pradesh have already issued tenders for the same.

The Centre has partially decontrolled the sugar sector and mills are no longer obligated to

supply sweetener to the Centre for the Public Distribution System (PDS). States are asked

to start procurement of sugar from the open market to meet the PDS demand from next

month onwards.

“Some states such as Delhi and Andhra Pradesh have issued tenders for procurement of

sugar. However north eastern, hilly states and island territories have said they do not have

a system in place to understake the procurement,” a senior Food Ministry official told

PTI.

64

According to sources, states such as Assam, Mizoram, Arunachal Pradesh, Nagaland,

Manipur, Meghalaya, Tripura, Jammu & Kashmir, Lakshadweep and Andaman &

Nicobar - have suggested that Food Corporation of India (FCI) should buy for them from

the open market for PDS sale at Rs 13.50 per kg.

Also, these state governments have argued that subsidy of Rs 18.50 per kg (including all

administrative, transportation, distribution and other expenses) would not be sufficient as

sugar prices are more than Rs 45 per kg in the retail market of hilly and north eastern

states.

Since much of the expense in hilly areas is on transportation, the states feel that it would

be better if the FCI provides sugar for PDS sale for an year and within that time, the

states will put in place a system for sugar procurement, they added.

Meanwhile, the Delhi government has invited tenders for procurement of 700-2,000

tonnes of sugar per month for PDS supply during June, July and August. Andhra Pradesh

has issued tenders for procurement of 11,000 tonnes for supply in June.

To ensure that sugar is sold at subsidised price of Rs 13.50 per kg in PDS shops, the

centre has decided to give a subsidy of Rs 18.50 per kg to the states effective from June

1, this year, for next two years.

The annual demand of PDS sugar is around 2 million tonnes, while the country’s total

production is estimated at 24.5 million tonnes in the 2012-13 marketing year (October-

September).

Sugar imports could jump (BS 23.5.13)

Sugar imports by India, the world's biggest consumer, are set to surge as a slump in

global prices to the lowest level in almost three years spurs purchases by refiners,

according to a millers' group.

Processors have imported 1.1 million tonnes of raw sugar since October 1, including as

much as 468,000 tonnes for sale in the local market, Vinay Kumar, managing director of

the National Federation of Cooperative Sugar Factories, said in an interview. An

additional 416,000 tonnes has been contracted for delivery in the coming months, he said.

Sugar tumbled to the lowest in 34 months in New York yesterday on signs the harvest is

accelerating in Brazil, the world's largest grower. Production globally will be 10 million

tonnes more than consumption in 2012-2013, boosting a glut for a second season, the

London-based International Sugar Organization said yesterday.

"Imports will increase which will further damp domestic sugar prices," Kumar said by

phone. "We don't need sugar imports as there is a surplus locally."

65

Inventories might jump 45 per cent to 9.7 million tonnes on October 1 from 6.7 million

tonnes a year earlier as output exceeds consumption for a third year, Kumar said. That

will leave an exportable surplus of 3.87 million tonnes even after keeping about 5.8

million tonnes to meet demand for three months, he said. Futures are heading for a third

year of declines, the longest slump since 1992.

Sugar output may fall 6-8% this year: ICRA (BL 23.5.13)

Domestic sugar production in the current sugar year (October-September) will decline by

6-8 per cent to 24-24.5 million tonnes from 26 mt in 2011-12, mainly due to weak and

delayed monsoon in key growing regions, according to rating agency ICRA.

Maharashtra has witnessed the largest decline followed by northern Karnataka. But Uttar

Pradesh is likely to see higher production because of more sowing in the previous seasons

and better weather conditions, it said.

ICRA estimates domestic consumption at around 23-23.5 mt. Thus, sugar stocks will

remain stable at around 5.5-6.0 mt, enough to meet three months’ domestic consumption,

it said.

66

67

XI INPUTS

Bengal hikes potato cold storage rentals by Rs 19/quintal (BL 2/5/2013)

Cold storages in West Bengal will start unloading potatoes starting Friday with the State

Government approving the industry’s long standing demand for a hike in rentals.

According to Patit Paban De, member of West Bengal Cold Storage Association, the

State Government has approved a rental hike of Rs 19 a quintal on storage of potatoes.

The opening up of cold storages will help check rise in prices of the tuber in the State.

Backed by a steady demand from other States, potato prices inched up by almost Rs 150

a quintal in the last fortnight.

Wholesale price of the tuber (Jyoti variety) was ruling around Rs 900 this week, against

Rs 750 during the second week of April.

“Usually around this time of the year, farmers have a reasonable quantity of potatoes left

with them.

“However, this year there is hardly any stock left even while the production has been

very good. If cold storages do not start unloading, then prices could rise further as the

demand continues to be good,” De told Business Line.

Lower than expected

West Bengal Cold Storage Association had urged the State Government for a hike of Rs

36 on rentals in order to be able to make good for the rise in operation costs.

West Bengal and Tripura are the only two States in the country where potato cold storage

rents are controlled by the State Governments.

Cold storages in West Bengal have been reeling under losses due to a 50 per cent rise in

input costs in the last three years.

Electricity tariffs have increased by 50 per cent from Rs 30 about three years ago to Rs

45 now, while diesel prices have increased by 48 per cent from Rs 35 to Rs 52. Labour

costs have also gone up during this period, thereby, exerting pressure on profitability, De

said.

“There has been no hike for the last three years and now though the hike has come but it

is way too less than what the industry had expected. It is difficult for the industry to

sustain on this kind of rentals,” he said.

The last hike happened in January 2010 when rentals increased by Rs 14.

The hike took into account the rise in operational costs in 2009 over that in 2008.

Cold storages spend nearly Rs 150 for storing one quintal of potatoes during the storage

season extending between mid-February to end of November.

However, till last season, the rental for storing potatoes was Rs 101.

68

Mamata Banerjee-led State Government had set up an expert committee to look into the

issue.

Non-urea fertiliser subsidy cut for current fiscal (BL 01/5/2013)

After a month’s delay, the Government on Wednesday announced a cut in subsidy on

complex non-urea fertilisers for the current fiscal following the decline in global prices of

potassic and phosphatic nutrients.

Under the nutrient-based subsidy (NBS) scheme, the Union Cabinet approved the new

rates for nitrogen (N) at Rs 20.875 a kg against last year’s Rs 24.

Similarly, for potash (K) the subsidy rate has been fixed lower at Rs 18.33 (Rs 24),

phosphate (P) at Rs 18.679 (21.80) and sulphur unchanged at Rs 1.677. The subsidy rates

are applicable from April 1, an official statement said.

Based on these rates, the subsidy for di-ammonium phosphate (DAP) is fixed at Rs

12,350 a tonne, a 14 per cent decline over last year’s Rs 14,350 .

Similarly, the subsidy for muriate of potash (MoP) is pegged at Rs 11,300 , a 22 per cent

decline over last year’s Rs 14,440 . The subsidy for other P&K fertilisers covered under

the NBS policy shall also be according to the nutrient content in that grade.

Announcing the Cabinet’s decision, Finance Minister P. Chidambaram said that the total

subsidy outgo for P&K fertilisers for 2013-14 would be lower by 15 per cent because of

the decline in global prices. The actual subsidy outgo would depend on the consumption

of these complexes.

MRP cut

Despite the subsidy cut, the Government expects the maximum retail prices of DAP and

MoP to come down by Rs 1,500 and Rs 1,000 a tonne, respectively. DAP was sold at Rs

24,000 a tonne last Rabi, while MoP was priced at Rs 17,000 a tonne. Fertiliser makers

are expected to cut the maximum retail price (MRP) global prices have dropped more

than the cuts in subsidy announced by the Government.

69

As a result, they are expected to pass on some of the benefits to farmers. Besides, the

pressure to offload the existing stocks may prompt the fertilisers companies to lower

prices.

According to industry estimates, the build-up in non-urea fertiliser stocks is estimated at

eight million tonnes due to poor offtake in the past two seasons. Chidambaram said the

Fertiliser Ministry would put in place a mechanism to ensure that lower MRP is fixed by

the manufacturers and the benefits of decline in global prices were passed on to farmers.

“If there is any violation or contravention, there will be a monitoring mechanism that will

take corrective step to ensure that the benefit is passed on to farmers,” he noted.

Without waiting for the Government’s announcement, fertiliser makers have been

tagging bags with the MRP of last rabi season printed on them. With the Government

announcing the subsidy cut, the companies are expected to revise the prices accordingly.

The reduced prices of complexes such as DAP and MoP may help boost their usage, as

farmers had shifted to cheaper urea during rabi and kharif seasons in last two years

following the rise in prices.

The Government had decontrolled the prices of non-urea fertilisers in April 2010, after

which the prices of the complexes had almost doubled on account of rise in global raw

material costs and a weakening rupee

Madhya Prades farmers to get power at Rs 1,200 for agricultural purpose (ET

11/5/2013)

Farmers in Madhya Pradesh will get power for agricultural purposes by paying a flat rate

of Rs 1,200 a year, Chief Minister Shivraj Singh Chouhan announced today.

"There will be no meter reading on connections installed inside agricultural wells and

farmers would get power supply for 10-hour a day instead of 8 hours," Chouhan said

while addressing farmers and party workers at "Vikas Sammelan" held at Sanver, 30 kms

from here.

He reiterated that all districts in the state would start getting 24x7 power supply under

"Atal Jyoti Programme" by June 15.

"Farmers would have to buy a power motor of 1 Horse Power (HP) capacity to avail

electricity at the single fixed rate of Rs 1,200 per year, and can pay the amount either in

one go or in two instalments to (the) Power Board", the Chief Minister said.

Chouhan told the gathering that the Narmada-Shipra river linking project would be

completed by this year-end and would irrigate 16 lakh hectares of land in Malwa region

70

alone.

Earlier, he inaugurated and laid the foundation stone for various development works in

the region, worth Rs 32.53 crore and of Rs 20 crore in Kharjana area.

The Chief Minister said that of the Rs 12 crore grant sanctioned for Sanver town, Rs 8

crore will be utilised for a drinking water project and rest on building roads.

Seed industry opposes AP Bill; says it conflicts with Central laws (BL 19/5/2013)

The seed industry has opposed the proposed Seed Bill in Andhra Pradesh and the State

Government has got no powers to regulate royalty.

Cottonseed firms pay royalty (or trait value) to Mahyco-Monsanto for the biotechnology

that gives the plant internal strength to kill bollworms.

The Andhra Pradesh Government seeks to regulate this component to keep the seed price

affordable to farmers.

Levy of royalty falls under the provisions of Patent Act.

“Any provision to regulate royalty in the Bill will be without jurisdiction and in direct

conflict with the Act,” the Seedsmen Association, which represents 500 seed firms, said.

“Most of the features in the State Seed Bill already figure in the existing Parliamentary

enactments such as the Seeds Act 1966, the Seeds Rules, 1968, the Essential

Commodities Act, 1955 and the Seeds (Control) Order, 1983,” Seedsmen Association

Honorary Secretary and Treasurer Venkata Reddy toldBusiness Line.

Issues such as regulation of sale of seed, registration of kinds and varieties of seeds,

export and import of seeds, were already covered in the existing Central enactment, he

said. Andhra Pradesh, which is a player in seed production, has come out with a draft a

few weeks ago that seeks to assert the State’s right on regulating the seed price.

It also seeks to levy punishments for the seed companies if they fail to deliver what they

promise with regard to the seeds.

The State held a stakeholders meeting last month with a view to getting feedback from

various quarters on the proposed Bill.

Though several farmers’ associations, non-governmental organisations and political

parties have responded by pronouncing their objections, the seed industry wanted more to

react.

71

SUGGESTIONS

“The Parliamentary enactments in similar matters take precedence over the State laws as

per the Article 254 (1) of the Constitution. Unless State enactments get the assent of the

President of India, the enactment made by the Centre prevails,” he said. The industry,

however, comes out with some suggestions on some provisions. “We feel that the word

‘offences’ need to be classified as major, minor and petty offences. Sale of misbranded

seeds and spurious seeds can be classified as major offences. The sale of sub-standard

seed (which fail to meet specified standards of germination and) purity could be defined

as minor offences,” he said.

He argued that since the seed is a biological product it might lose germination abilities

due to environmental factors.

Fertiliser companies cheer good rain forecast (ET 24.5.13)

The forecast of a normal monsoon has spread cheer among fertiliser companies which

are expecting to make good the loss they suffered from poor sales last year due to

deficient rains and rise in input prices.

The forecast of a normal monsoon has spread cheer among fertiliser companies which are

expecting to make good the loss they suffered from poor sales last year due to deficient

rains and rise in input prices.

Prices have fallen this year making it easier for companies to increase sales. "Prices of

most fertilisers are under control. On an average, prices have corrected by 1,000-1,500

per tonne," said an official in the Department of Fertilizers.

"Despite a fall in prices, there are few takers as the water level in the Cauvery and the

Krishna is low. We should have got sporadic showers by now. With the intensity of the

monsoon picking up, we expect better sales," said SV Sreenivasa Rao, chief manager of

marketing, Zuari Agro Chemicals.

Iffco, the largest fertiliser cooperative, said the rise in sales could depend on the quality

of the monsoon. Sales went down to 100 lakh tonne in 2012-13 from 121.84 lakh tonne in

the previous year, said a spokesperson of the company. Besides a good monsoon, an

increase in sales will depend on global prices, he said. The current decline in the rupee's

value could impact the raw material contracts when they will be done in the next two

months.

State-owned Fertilisers and Chemicals Travancore could produce only 5.4 lakh tonne of

its flagship complex fertiliser Factamfos against an installed capacity of over 7 lakh tonne

due to shortage and high prices of raw materials last year. Prices of main feedstock

naphtha went up 50% to 60,000 tonne.

This year, the company is planning to increase the production of Factamfos which has a

72

good demand in southern states. The company's chairman and managing director Jaiveer

Srivastava said the company hopes to shift to LNG from naphtha by the end of July,

which will help it bring down the cost.

73

XII OTHER AGRI / FARM NEWS

India to achieve 254 MT foodgrain production target: Pawar (BS 26.4.13)

India could not achieve the food production target in 2009-10 due to severe drought in

many states. However, it had met the target since 2010-11

The government today said the country would meet the target of producing 254.23

million tonne foodgrain in 2012-13 despite drought in some parts of the country.

India could not achieve the food production target in 2009-10 due to severe drought in

many states. However, it had met the target since 2010-11.

"Despite drought in some parts of the country in 2012-13, foodgrain production is on

course to realise target of 254.23 million tonne," Agriculture Minister Sharad Pawar said

in a written reply to the Lok Sabha.

India's target for rice production in 2012-13 was 104 million tonne and as per the Second

Advance Estimates, it would be 101.80 million tonne. In 2011-12 it was 105.31 million

tonne and 95.98 million tonne in 2010-11, he said.

While pulses production target was 18.24 million tonne in 2012-13 and as per the

estimates, it would be around 17.58 million tonne. Target for Jowar was 7 million tonne

for 2012-13, and 5.26 tonne has been produced.

States such as Uttar Pradesh had target of 48.46 million tonne of food production last

fiscal and as per the estimates, has produced 49.70 million tonne in 2012-13.

Similarly, Bihar has a target of 13.98 million tonne and produced 14.02 million tonne;

Madhya Pradesh produced 21.82 million tonne against its target of 15.87 million tonne.

Punjab has target of 27.98 million tonne and has met it in 2012-13.

However, some states such as Andhra Pradesh, Gujarat, Karnataka, Maharashtra,

Rajasthan fell short of their targets.

Answering to a separate query, Minister of State for Agriculture and Food Processing

Industries Tariq Anwar informed the Lok Sabha that the seed industry in the country is

growing at rate of 8-10 per cent in the last three years and has now turnover of about Rs

11,000 crore.

"The seed industry in the country has been growing approximately 8-10 per cent per

annum over last three years. Present turn over of the industry is about Rs 11,000 crore,"

said Tariq.

He said the reason for fast growth in the seed industry is increased demand for quality

seeds by the farmers to achieve higher production.

74

Moreover, price of these quality seeds has also increased by 5-13 per cent during that

period and the government is providing assistance for seed production and distribution

under various crop development schemes to provide seeds at reasonable rates to the

farmers, said Tariq.

He further added that the central and state governments are organising various training

programmes on safe and judicious use of pesticides to educate the farmers.

Indian economy to grow at 6.1% this fiscal: World Bank (FE 30.4.13)

World Bank today scaled down India's growth forecast to 6.1 per cent for the current

fiscal from 7 per cent projected six months ago.

The decline in the growth forecast is largely due to the decline in agriculture sector which

is expected to grow at 2 per cent during 2013-14 against the previous estimate of 2.7 per

cent despite normal monsoon projection.

However, the multi-lateral funding agency said that India is regaining economic

momentum and growth is expected to recover gradually to its high long-term potential.

As per the latest India Development Update of the World Bank, Indian economy would

grow by 6.1 per cent in 2013-14 on account of robust domestic demand, strong savings

and investment rate.

Growth projections for 2013-14 has been arrived at by taking into account present

internal and external factors.

"Economic growth is likely to accelerate to over 6 per cent during the current financial

year (April 2013-March 2014). Growth is expected to increase further to 6.7 per cent in

2014-2015," said Denis Medvedev, Senior Country Economist, World Bank, India.

"Recent data point to some improvements in economic activity: inflation and trade deficit

came down in recent months, while private consumption and investment growth had

accelerated in the third quarter of 2012-2013," he said.

According to the Update, a twice yearly report on the Indian economy and its prospects,

GDP growth during 2012-13 would be around 5 per cent, lowest in the decade.

As per the International Monetary Fund (IMF) report released yesterday India's GDP is

likely to improve to 5.7 per cent during year ending December 2013 and further to 6.2 per

cent a year after.

Cabinet cuts bring fuel & fertiliser dole to 6-yr low (FE 2.5.13)

75

The fall in global commodity prices has begun to directly help India’s fiscal

consolidation efforts. Taking advantage of declining global fertiliser prices, the

government on Wednesday reduced the subsidy on phosphatic and potassic fertilisers by

15%, potentially saving the exchequer about Rs 4,600 crore this financial year. As a

result, state subsidy on these two commodities could fall this year to their lowest in six

years of around Rs 25,000 crore, off from the historic Rs 48,555 crore it scaled in 2008-

09, which saw the global financial meltdown and spiralling commodity prices.

On the oil subsidy front also, there’s good news for the government as the under-

recoveries of oil marketing companies have come down steeply in the second half of

April. The under-recovery on high speed diesel (HSD) declined to Rs 3.80/litre in the

second half of last month from Rs 6.42/litre in the first half. Apart from the softening of

crude, the ongoing deregulation of diesel prices and the phasing-in of the direct benefit

transfer for LPG subsidy disbursal will bring down oil subsidy for this fiscal. OMCs

reported Rs 1,61,029 core as gross under-recoveries in 2012-13.

Soon after Wednesday’s Cabinet decision to cut fertiliser subsidy, IFFCO slashed the

price of di-ammonium phosphate (DAP) by Rs 75 per bag (of 50 kg) to Rs 1,125,

indicating that the fall in global prices still affords room for importers to reduce the

farmer price of DAP and muriate of potash (MOP).

“We are reducing the price of DAP to Rs 22,500 from Rs 24,000 per tonne effective from

April 1,” IFFCO managing director US Awasthi said. He said global prices have come

down by Rs 3,500 per tonne, while the government has reduced subsidy by about Rs

2,000 per tonne.

Finance minister P Chidambaram told reporters after a meeting of the Cabinet here that

the actual subsidy outgo on phosphorous and potash fertilisers in 2013-14 will depend on

farmers’ consumption of the commodity. The finance ministry, which spent Rs 30,576.12

crore to meet the subsidy bill on these two fertilisers last fiscal, had in February allocated

Rs 29,427 crore for the current year.

Phosphorous and potash together account for slightly less than half of the Rs 65,972 crore

fertiliser subsidy originally allocated for the current year.

As per a policy in force from April, 2010, subsidy for various deregulated fertilizers such

as phosphorous, potash and sulphur are decided at the beginning of the year, based on

which state assistance per kilo of a particular brand is calculated.

“This (subsidy for 2013-14) will be lower than the rates approved for 2012-13. As a

result, subsidy on DAP will be Rs 12,350 per tonne and on MoP, it would be Rs 11,300

per tonne,” Chidambaram said.

The fertiliser ministry would put in place a mechanism to ensure that lowered MRP is

fixed by suppliers and benefit of reduction in global price is passed on to farmers, he

76

added. Bulk of the nearly 30 million tonnes of DAP, MoP and complex fertilisers India

needs is imported.

While phosphorous and potash prices are deregulated with partial government subsidy,

price of another major plant nutrient, urea, is still under state control. Since producers and

importers sell this commodity at state-fixed price, subsidy burden on the government is

high on this. The heterogeneity of raw materials used by various producers makes it

difficult for the government to give pricing freedom to them for fear that the less efficient

naphtha-based producers may go out of market and indirectly increase the country’s

import dependence. Besides, dependence on naphtha is likely to increase as natural gas

production in the country is dwindling unexpectedly.

Campaign against ‘iron-fortified’ genetically modified bananas (BL 2/5/2013)

Anti-genetically modified (GM) food groups on Wednesday announced a campaign

against the Government’s move to promote “iron fortified” GM bananas to save Indian

women from anaemia.

As part of the campaign, an online petition opposing the move has been initiated by

Navdanya, Mahila Anna Swaraj, Diverse Women for Diversity, Initiative for Health &

Equity in Society, Guild of Services, Save Honey Bees Campaign, etc.

At a press conference here on Wednesday, Navdanya founder, Vandana Shiva, even

questioned the credibility of James Dale of Queensland University, who was being

funded by Gates Foundation for “innovation” in GM bananas.

India’s Department of Biotechnology has signed an agreement with Queensland

University for research and field trials over the next four-five years and launch the GM

bananas within six-10 years.

“Dr Dale does not have a single paper related to iron fortification of bananas. This work

has been done by the Bhabha Atomic Research Team. (Gujulla B. Sunil Kumar &

Lingam Srinivas & Thumballi Ramabhatta Ganapathi),” she said in a release.

Pitching for Indian solutions to anaemia that leads to child-birth deaths in India, Shiva

said “Bananas are rich in nutrition but have only 0.44mg of iron/100 gram of edible

portion,” she said.

But, according to the BARC scientists, they can achieve a six-fold increase in iron

content in GMO bananas.

This makes it 2.6mg, which is 3,000 per cent less than iron in turmeric, or niger, or lotus

stem, 2,000 per cent less than amchur (mango powder), she said and added that safe,

biodiverse alternatives were multi-fold in India.

77

Shiva said Indian taxpayer money was also funding this project, which was “a waste of

money and time”.

The National Banana Research Centre, while conserving 200 varieties, has already put

the development of GMO bananas in its Vision Document 2030, she said.

“The solution to malnutrition lies in growing nutrition,” such as iron-rich plants, she

added.

Andhra Pradesh sees dip in number of farmers (BL 3/5/2013)

Andhra Pradesh has lost significant number of farmers in the last one decade.

The percentage of cultivators had declined from 22.52 per cent in 2001 to 16.47 per cent

in 2011, according to the primary census abstract of the State released here on Friday.

At the district level, Adilabad has highest number of cultivators at 27.48 per cent and

lowest in Hyderabad, Y. V. Anuradha, Director of Census Operations, Andhra Pradesh,

told newspersons.

AGRI LABOURERS

The number of agricultural labourers had increased by 40 per cent.

Their number was highest in A. Kondur in Krishna district, while Nampally mandal in

the State Capital had the lowest. The number of main workers (who worked for six

months or more during the reference year) was over 3.30 crore and about 2.41 crore of

them were in rural areas.

The sex ratio (number of females for every 1,000 males) had increased from 978 in 2001

to 993 in 2011. In rural areas and urban areas it was 996 and 987, respectively.

At the national level, the sex ratio was 943.

Among the districts, the highest sex ratio was recorded in Nizamabad at 1,040 and lowest

in Hyderabad district at 954.

The proportion of child population to the total population of the State had declined from

13.35 per cent in 2001 to 10.81 per cent in 2011.

The decline was noticed in all the 23 districts.

The child sex ratio was at 939 against 919 at the national level.

78

This was highest in East Godavari district and lowest in Hyderabad, according to the

data.

Foodgrain output revised upward by 2% to 255.36 mn tonne (ET 4.5.13)

Country's foodgrain production has been revised upwards by over 5 million tonne to

255.36 million tonne in 2012-13 crop year from earlier estimates on account of higher

output of rice, wheat and coarse cereals, according to the data released by the Agriculture

Ministry.

The foodgrain output for 2012-13 crop year (July-June) was projected at 250.14 million

tonne in the second advance estimates released in February.

Despite upward revision in the third estimate released today, foodgrain production will be

lower than the previous year's record 259.32 million tonne.

This is because of drought in Maharashtra, Karnataka, Gujarat and Rajasthan on account

of poor monsoon last year.

According to 3rd Advance Estimate, rice production has been revised upwards to 104.22

million tonne for 2012-13, from 101.80 million tonne in 2nd advance estimate. It is still

lower than previous year's record 105.31 million tonne.

Similarly, wheat production has been pegged higher at 93.62 million tonne in 2012-13

from earlier estimate of 92.3 million tonne, but is lower than the record 94.88 million

tonnes in the previous year.

Pulses production, too, has been revised slightly upwards to 18 million tonnes from 17.58

million tonne in February estimates. In the 2011-12 crop year, pulses output stood at

17.09 million tonnes.

The production of coarse cereals has been pegged higher at 39.52 million tonne in 2012-

13, from the earlier estimates of 38.47 million tonne. In 2011-12 crop year, the coarse

cereals output stood at 42.04 million tonne.

In the 3rd advance estimate, the Agriculture Ministry has revised upwards the oilseeds

production to 30.72 million tonne in 2012-13, compared to 29.46 million tonne in the

earlier projection. In the 2011-12 crop year, oilseeds production stood at 29.79 million

tonne.

Cotton production has been retained at 33.8 million bales (of 170 kg each) while

sugarcane has been revised upwards to 336.14 million tonne in 2012-13, from 334.54

million tonne in the estimates released in February this year.

Sugarcane output stood at 361 million tonne in 2011-12.

79

India seeks cut in trade distorting agriculture subsidies by US, European Union (ET

7.5.13)

Seeking to promote export of farm produce, developing nations including India are

pressing for reduction of trade distorting agriculture subsidies by the US and the EU,

Parliament was informed today.

"India and other WTO Members have been seeking reduction in trade distorting domestic

support of both these Members in the agriculture negotiations under the Doha Round of

trade negotiations in the WTO," Minister of State for Commerce and Industry D

Purandeswari said in a written reply to the Lok Sabha.

As per their latest notifications to the WTO in 2010, she said, the US provided about $4

billion of support to their agricultural producers "under the category of Current Total

Aggregate Measurement of Support (i.e. support considered under WTO classification as

trade-distorting) and $ 120 billion as Green Box support (non-trade-distorting)".

Similarly, the European Union provided 9 billion euro as Current Total Aggregate

Measurement of Support and about 64 billion euro as Green Box support.

"In addition they provided approximately Euro 5 billion as direct payments under

production-limiting programmes," Purandeswari said.

On the forthcoming WTO Ministerial Meeting, which is scheduled in December in Bali,

she said that efforts are being made to build consensus around a package for an early

outcome of the stalled Doha Round of talks.

"The package being negotiated includes trade facilitation (TF), some agricultural issues

including food security, some issues relating to LDCs etc," she added.

The minister said that some developed Members, including the US have objected a

proposal tabled by developing countries related to food security, while pressing for an

early agreement on TF.

"India, alongwith the other developing countries and the LDCs, are working for

finalisation of a package that is balanced and development-oriented in keeping with the

mandate of the Doha Development Agenda," she said.

Doha round of talks under the aegis of the WTO started in the Qatari capital in 2001 for

achieving a global trade deal, but a breakthrough has not emerged as yet.

Further, Purandeswari said that in the WTO negotiations on industrial goods, developed

countries want some prominent developing nations like India, China and Brazil to take

commitments of complete duty elimination in specific sectors like electronic products,

chemicals and industrial machinery.

80

However, she said: "India has reservations on account of the effect of such a commitment

on sectors and products which are critical for employment generation and economic

growth."

There is also a proposal to eliminate tariffs on a list of environmental goods, which has

not been supported by India and some other developing countries, Purandeswari said.

Besides, the minister said that India has raised concerns relating to the unfair trade

practices and policies being followed by the US which have an effect on New Delhi's

exports.

These include the exorbitantly high countervailing duty imposed on Indian steel products,

and the US policy of giving preference to their domestic solar energy equipment

manufacturers for availing subsidy, thereby discriminating against imported products.

"India has also raised objections on the domestic content requirements of certain

renewable energy programs and water utility projects of the US," the minister said.

Total Rice Production Estimated at 104.22 MT, Foodgrain Production Likely to be

255.36 MT (BS 7.5.13)

The third advance estimates of production of major crops grown in the country have been

released today. As per the estimates, the total foodgrain production is likely to be 255.36

million tonnes. The foodgrain production was earlier estimated at 250.14 MT (as per II

advance estimates released in February.)

Production of rice is likely to be 104.22 million tonnes. Wheat production is likely to be

93.62 million tonnes.

The foodgrain production this year is the second highest production ever achieved despite

low and erratic rains in many parts of the country during the monsoon season. In 2011-

12, India had produced 259.32 MT foodgrains.

Details of the estimates of crop production in 2012-13 as estimated earlier and now are as

follows:

(million tonnes)

Crop 2nd Advance Estimates 3rd Advance Estimates Rice 101.8 104.22 Wheat 92.3

93.62 Jowar 5.26 5.30 Bajra 8.15 8.71 Maize 21.06 21.82 Coarse Cereals 38.47 39.52

Tur 2.75 3.04 Gram 8.57 8.49 Urad 1.74 1.87 Moong 1.27 1.18 Total Pulses 17.58 18.00

Total Foodgrains 250.14 255.36 Groundnut 5.78 5.4 Rapeseed & Mustard 7.36 7.4

Soyabean 12.96 14.1 Total Nine Oilseeds 29.47 30.7 Cotton # 33.8 33.8 Jute Mesta # #

11.13 10.6 Sugarcane 334.54 336.1

#million bales of 170 kg each # # million bales of 180 kg bales

81

Farming as a value chain (BS 7.5.13)

Integrated farming can offer sustainable livelihoods to small farmers

The tradition of mixing crop farming with supplementary farm activities, such as animal

husbandry, poultry, fishery, silkworm rearing and beekeeping, has been the mainstay of

most Indian farmers who hold no more than one to two hectares of land. However, they

do so largely to hedge the crop-failure risk rather than to maximise economic gains by

harnessing their synergies. Now, farm experts are exploring ways of integrating these

enterprises so as to fully capitalise on their supplementary and complementary roles. In

integrated farming, the output and by-product of one enterprise is used as the input for the

other, and the waste is recycled to produce nutrient-rich manure.

Many research institutes of the Indian Council of Agricultural Research (ICAR) and state

agricultural universities are currently engaged in this effort. They are conceiving and

testing integrated farming to suit their respective regions. At the behest of the Bihar

government, Patna-based ICAR Research Complex for Eastern Region has come out with

some reliable and field-tested comprehensive farming systems, suitable for small and

marginal farmers in the state and other nearby areas. Over 75 per cent of the farmers in

Bihar have land holdings of less than half a hectare. Worse, most of these tiny holdings

are highly fragmented and not suitable for single-enterprise-based agriculture.

The blend of enterprises that the Patna centre has found most apt and lucrative for farms

of less than one hectare comprises growing crops (grains, vegetables, fruits and fodder)

along with poultry and goat keeping. Mushroom production, which does not require

much land, can also be a part of this combination. All these activities go well together,

and can help farmers meet their household needs, as well as procure enough produce for

sale. Going by the research centre's estimate, this combination of enterprises enables a

one-hectare land holder earn a net annual income of over Rs 1.42 lakh with an

expenditure of Rs 24,250 on inputs. For a two hectare field, experts suggest a blend of

cereals, vegetables and fruit crops along with fish-cum-duck farming. The net income

from such an integrated farm is estimated at Rs 2 lakh.

About half of the field in both cases is recommended to be devoted to crops, including

cereals (rice and wheat) and vegetables (cabbage, peas and cauliflower). The bund of

fields and ponds can be utilised for planting fruit trees like banana, lemon and guava.

Vegetables borne on climbers, such as Cucurbits, too, can be grown on boundaries and

built on fences. Separate thatched sheds can be erected for keeping livestock (goats or

cows). Ponds - dug on about one-fifth of the farmland - can be used to raise ducks along

with mutually compatible fish species that source their feed from different water depths,

such as Catla (surface feeder), Rohu (middle-column feeder) and Mrigal (bottom feeder).

Duck droppings serve as good manure for fish ponds. Vermiculture, which is

82

recommended as part of all integrated farming ventures, help convert organic wastes into

vermicompost with the help of earthworms. Besides being rich in major as well micro

plant nutrients, the presence of live earthworms in this compost helps improve the

physical structure of the soil and its fertility.

Though these models of integrated farming have been devised especially for Bihar's agro-

ecological conditions, scientists maintain that these can be used in almost all states with

some situation-specific modifications. Apart from being environment-friendly and

sustainable, such farming systems ensure optimal and cost-effective use of land and other

resources. Up to 20 per cent reduction in production costs has been observed in impact

studies. Convinced of the gains from this approach, especially for small and marginal

farmers, the Bihar government has begun offering a subsidy of Rs 10,000 to every farmer

who adopts this technology. Other states, too, need to consider promoting integrated

farming to strengthen the livelihood security of their resource-poor farmers.

Agri exports rise 12% in FY13 (BS 8.5.13)

The country's agricultural and allied product exports have increased by 12 per cent to

$33.54 billion in the 2012-13 fiscal, Parliament was informed today.

"India's export of agricultural and allied products have increased from $29.8 billion in

2011-12 to $33.54 billion in 2012-13," Minister of State for Agriculture Tariq Anwar said

in a written reply to the Lok Sabha.

Currently, global prices of wheat, rice and maize are higher as compared to last year,

while prices of commodities such as cotton, edible oils and sugar are lower, he said.

Commodity prices depend on production and demand situation and do not follow a linear

path, he added.

The country exports guar gum, rice, wheat, fruits and other processed items.

Oilmeal exports slump by 51% in April: SEA (BS 8.4.13)

Much of the fall in export was seen in soyabean meal, whose shipment declined

drastically by 68%

Oilmeal exports from the country dropped significantly by 51 per cent to 1,99,168 tonnes

in April as supply was less due to lower crushing, industry body SEA said today.

The shipment of oilmeals, used as animal feed, stood at 4,03,090 tonnes in the same

period last year.

"The export of oilmeals is heavily reduced in April mainly due to disparity in crushing

83

and high prices of soybean resulted into less availablity for the export," Mumbai-based

Solvent Extractors Association (SEA) said in a statement.

Much of the fall in export was seen in soyabean meal, the shipment of which declined

drastically by 68.31 per cent to 99,451 tonnes in April from 3,13,832 tonnes in the year-

ago period, it said.

The availability of soyabean meal for export was affected as prices of soyabean remained

higher at $616 per tonne in April, as compared with $509 per tonne, it added.

Similarly, the shipment of rice bran extraction fell 13,000 tonnes from 23,400 tonnes in

the review period.

However, export of rapeseed meal and castor seed meal remained higher than the year-

ago period.

Export to Iran, South Korea, Thailand, Japan and Indonesia fell sharply in April from

over the last year.

For instance, shipment to Iran fell by 30 per cent to 67,576 tonnes in April from 97,904

tonnes in the same month last year.

Similarly, export to South Korea dropped by 17 per cent to 58,454 tonnes from 70, 496

tonnes in the review period.

Centre taking initiative to raise foodgrains storage capacity (ET 13/5/2013)

As part of the Centre's initiatives to improve storage capacity of foodgrains in the

country, Kerala's capacity would be increased from 5.13 lakh tonnes to six lakh tonnes in

the near future, Union Minister for Food K V Thomas said on Monday.

Speaking after laying the foundation stone for the 5,000 tonne capacity godown of FCI

here, Thomas said the Food Security Bill would ensure that every citizen gets five kgs of

foodgrains per month.

It was under these circumstances, more storage facilities were needed in the country. Two

storage facilities with a capacity of 25,000 tonne each would be set up under PPP mode

in Kochi and Kozhikode, he said.

Referring to the initiatives to reform PDS in the country, he said an ambitious programme

with a total outlay of Rs 844 crore had already commenced.

Thomas said Centre had allotted 13.7 lakh tonnes of foodgrains to Kerala since 2009.

When the price of rice increased, it allocated an additional 1.5 lakh tonnes to Kerala, he

added.

84

CAG, food security and good sense (BL 13/5/2013)

The National Food Security Bill (NFSB) couldn’t be passed in the Parliament session that

ended last week, despite a spirited promotional pitch by its proponents — including

Nobel Laureate Amartya Sen. Last week also saw the Comptroller and Auditor General

of India (CAG) table its report on “Performance Audit of Storage Management and

Movement of Food Grains in Food Corporation of India (FCI)”.

Allocations vs off-take

This report, covering the period from 2006-07 to 2011-12, has highlighted some of the

major systemic deficiencies in the operations of the public distribution system (PDS).The

convergence in the timing of the NFSB being introduced in Parliament and tabling of the

CAG report provides an opportunity to understand the problems potentially arising from

implementing the proposed legislation. Before formalising it into an Act, the Government

may well look into the current creaky system of procurement and distribution of grains,

whose flaws cannot be eliminated, even if attempted to be remedied through the new

legislation.

A significant observation made in the CAG report pertains to the allocations made from

the Central foodgrain pool for the targeted PDS and various welfare schemes during

2006-12. These, as the accompanying chart shows, stood way above what actually got

lifted by the States. It points to a lack of real demand and also overestimation by the

Centre while making allocations.

Equally interesting is the fact that in most years, even procurement of grain by FCI and

State agencies has been lower than the allocated quantities, while more than the actual

off-take. Clearly, it means a limited capacity of the system to distribute whatever grain is

procured.

85

In the event of the NFSB becoming an Act, one can expect a further step-up in grain

allocations by the Centre. That would, then, require procurement to go up even more to

match the proposed allocations. Where is this extra grain going to come from — when

the Commission for Agricultural Costs and Prices (CACP) has noted that up to 98 per

cent of the market arrivals in major States are already being mopped up by FCI/agencies?

And even if more grain gets procured, what is the guarantee of it getting lifted? Also,

what would be the impact of such large-scale procurement by government agencies on

open market prices? It all raises questions on the very feasibility and sustainability of the

proposed NFSB.

Storage, accountability

The CAG report has also made pertinent points about the status of storage capacity

available with FCI. The latter’s ‘storage gap’, corresponding with the peak space

requirement on June 1 after the wheat crop’s procurement, was estimated at 332 lakh

tonnes (lt) in 2012. That amounted to 40 per cent of the total Central pool stock of 824 lt

for that date (June 1, 2012).

From this observation, it is natural to ask: If FCI does not have storage capacity for 332 lt

of grain (worth Rs 66,000 crore or $12 billion), how is it going to handle the additional

quantities that will have to be procured for the NFSB? It is quite possible that in this case,

the Centre would pass on the onus for creating the matching storage infrastructure to the

States!

Related to this is the involvement of multiple agencies — including State corporations

and even private millers — in storing foodgrains constituting the so-called Central pool.

The CAG is right in observing that having so many agencies, without any “single point

accountability” that should mandatorily lie with FCI, is conducive to a situation where

the indicated stock in the Central pool may not actually be available for distribution at a

given point of time.

That, in turn, raises strong possibilities of mismanagement, theft and pilferage of the

stocks supposedly held in the Central pool. Needless to add, the chances of these would

go up even more with grains selling at Re 1 (coarse cereals), Rs 2 (wheat) and Rs 3 (rice)

under the NFSB. At these rates, large-scale diversion and ‘round-tripping’ of the same

grain back to the Government procurement agencies are inevitable. In the process, a new

‘grain mafia’ class could well emerge.

MSP vagueness

Another observation by the CAG is about minimum support prices (MSP) of paddy and

wheat being fixed in an ad-hoc manner. The MSP of wheat alone during 2006-12 was

fixed anywhere between 30 and 66 per cent over the ‘C2’ cost. The latter, determined by

the CACP, takes into account all input costs — including the imputed value of family

labour and rental income foregone. While there are set procedures for computing C2

costs, there are no such established norms, though, for arriving at the margins (over the

C2 costs) while fixing the MSP.

By hiking MSPs without following any norms, the impact on the quantum of the

Government’s food subsidy bill has been predictable. The fiscal costs will go up further

86

when this arbitrariness in fixing MSPs gets combined with the fixed Rs 1-3/kg retail

pricing formula under the NFSB.

In 2011-12, the Government incurred over Rs 88,000 crore ($16 billion) as the economic

cost of the grains handled by it, while realising slightly over Rs 26,000 crore ($4.7

billion) through their disposal. The FCI’s economic cost for wheat alone is now about Rs

20/kg, against a realisation of Rs 6 or so. Under NFSB, the latter will be Rs 2. And who

knows, with progressive reductions in the coming years, it could be virtually free!

The conclusion from all this is as follows: Off-take under the PDS is currently less than

allocations as well as procurement. The FCI’s storage gap, at around 40 per cent, will

only increase with higher procurement sought under the NFSB — unless the States oblige

by augmenting warehousing capacities (which is unlikely). On top of it, there is no

single-point accountability on quality or quantity of grains stored, just as the system of

MSP fixation follows no norms whatsoever. The nation needs to seriously consider

whether the above monolithic mechanism needs to be promoted further under the

proposed NFSB law.

Monsoon to hit Kerala coast on June 3: Meteorological Department (ET 15/5/2013)

Monsoon rains may arrive on the southern coast around June 3, the weather office said on

Wednesday, a late debut that will raise fears any revival for drought-hit tracts of southern

and western farmland could be delayed.

The rains, which run from June to September, are vital for the 55 percent of farmland that

is without irrigation in India, one of the world's largest producers and consumers of food.

"The date of onset of southwest monsoon over Kerala is likely to be on 3rd June,"

the India Meteorological Department said in a statement adding the forecast has an error

margin of four days, a time frame treated as normal.

Last year, the monsoon hit Kerala four days after the June 1 date forecast by the weather

office, and the season brought below average rainfall across the country, leaving several

key sugar- and cotton-growing states parched by drought.

'Adequate funds to be provided for crop improvement works' (BS 14.5.13)

Adequate funds would be provided for crop improvement works on Pigeonpea, Mung

bean and Urad bean, a senior official in Indian Council for Agriculture Research said

today.

These three crops are climate resilient and very important for achieving nutrition security

and cropping system sustainability in India, B B Singh, Assistant Director General,

ICAR, Delhi, said while inaugurating the three-day Annual Group Meeting on Pigeonpea,

Mungbean and Uradbean at Tamil Nadu Agricultural University, here.

The country needed to increase the area and production under pulses and ICAR would

87

provide necessary fund allocation for crop improvement works.

However, Singh cautioned that those centres which failed to perform in field trials would

be withdrawn from the ICAR projects.

Indian Institute of Pulses Research (Kanpur) Director N Nadarajan said 80 per cent of the

pulse crop in India was grown under rainfed conditions.

India has achieved 18.10 million tonnes of pulses production in 2012-13, he said.

Farm sector may grow by 3.4% this fiscal on normal monsoon (ET 15/5/2013)

Agriculture and allied sectors could achieve a higher growth rate of 3.4 per cent this

fiscal if the country receives normal monsoon, PM's economic advisory panel chairman C

Rangarajan said on Wednesday.

The agriculture and allied sectors are estimated to have grown by just 1.8 per cent in

2012-13. Drought in Maharashtra, Karnataka, Rajasthan and Gujarat because of

poormonsoon had affected crop production.

"We had projected average growth rate of 3.4 per cent for agriculture sector in the 11th

Plan. All indication are that monsoon will be normal, we expect agriculture sector to do

well this year," Rangarajan said at the Assocham conference on gold.

"If monsoon is normal, 3.4 per cent growth rate is achievable in the agriculture sector this

fiscal," he added.

South west monsoon -- the lifeline of Indian agriculture -- is all set to bring showers over

the Andaman Sea in the next two to three days.

Last month, the weather office had forecast normal monsoon this year with overall

rainfall expected to be 98 per cent of the long period average.

Monsoon is crucial for the kharif crops such as rice, soyabean, cotton and maize because

almost 60 per cent of the farm land in the country is rainfed.

The country's foodgrain production is estimated to have declined at 255.36 million tonne

in 2012-13 crop years from record 259.32 million tonnes in the previous year.

Procurement plunge casts shadow over food Bill (FE 17.5.13)

88

Despite the government hiking its estimate of wheat production by around a million

tonnes to a likely 93.62 million tonnes (mt) for 2013, the sharp fall in procurement

suggests the government may have to revise the output. Based on figures till May 16,

procurement levels are already lower than last year’s by 5.5 mt. Compared with 29.7 mt

till May 16, 2012, just 24.2 mt of wheat were procured in the same period this year.

With just a few weeks left for procurement, FCI sources say they will be lucky to reach

even 30 mt. At that figure, this means a 21% fall in a year where output is just 8 lakh

tonnes less than last year (see graphic). This target compares poorly with the food

ministry’s original target, in April, of 44 mt, which was later revised early this month to

33 mt.

While the US department of agriculture has revised its outlook for India’s wheat crop for

the year to 92 mt, FCI sources say USDA may further reduce its outlook.

Though lower procurement will help contain the food subsidy bill, it creates problems as

far as the food security bill is concerned since larger quantities of both wheat and rice

will be required. For sustaining food grain requirement under the proposed food security

legislation and maintaining buffer stocks, the government agencies need to procure at

least 35 million of wheat annually.

“With farmers bringing wheat to mandis slowing down considerably during the last few

days, we could even fall well below 30 mt,” an FCI official said on condition of

anonymity. Amar Singh, chairman and managing director of FCI did not respond to FE’s

call.

During the last few days, daily wheat arrivals at around 3000 mandis across key wheat-

producing states including Punjab, Haryana, Madhya Pradesh and Rajasthan have

dropped to only about 1.3 lakh tonnes against close to 4 lakh tonnes reported during same

period last year.

“It is shocking to see procurement estimates tumbling from 44 mt in early April to 40 mt

by April-end to 33 mt by May 15, and now, it would be around 26-28 mt. How can we

plan our national food security legislation on such shaky procurement estimates?”

wondered Ashok Gulati, chairman,Commission for Agricultural Costs and Prices.

MS Sandhu, director of agriculture, Punjab government said the wheat output in the state,

the biggest contributor to the central pool, is expected to fall around 8% to 10% because

of unseasonal rains before harvest. Last year, Punjab had a record wheat harvest of 15 mt,

out of which the government had purchased close to 13 mt and rest was used for

consumption in the state.

He said due to expected better price realisation in coming winter months and purchase

from flour millers, wheat arrivals have declined in the state, which remains the biggest

contributor to the central pool.

89

Till now, Punjab and Haryana have contributed 10.7 mt and 5.8 mt respectively to the

central pool. At present, other key contributors to the central pool has been states such as

Madhya Pradesh (5.8 mt), Rajasthan (1 mt) and Uttar Pradesh (5 lakh tonne).

Water scarcity begins to take toll on kharif sowing (BL 17/5/2013)

Planting of key kharif crops such as rice, sugarcane and cotton has begun on a sluggish

note this year, with total acreage standing at 58 lakh hectares, lower than the

corresponding last year’s 62.9 lakh ha.

Farmers have planted rice in 2.40 lakh ha, marginally lower than 2.53 lakh ha last year.

DROUGHT CONDITIONS

The lower rice area is reported mainly in Assam and Orissa, according to an official

statement.

Sugarcane has been planted in 40.7 lakh ha against 45.7 lakh ha last year.

Lower acreage has been reported in Karnataka, Maharashtra and Tamil Nadu where poor

water availability has hit the planting this year.

In Maharashtra, sugarcane has been planted in 5.11 lakh ha, a 45 per cent decline over the

corresponding last year’s 9.37 lakh ha.

The decline has been attributed to the prevailing drought conditions in the State.

In Karnataka, the decline is marginal as the acreage stands at 3.27 lakh ha against last

year’s 3.65 lakh ha.

FIBRE CROPS

In Uttar Pradesh, too, the cane area has seen a marginal decline at 19.35 lakh ha against

last year’s 19.54 lakh ha.

However, the fibre crops - jute and mesta - have seen an increase in acreage at 7.75 lakh

ha against 7.42 lakh ha, mainly due to higher planting in West Bengal, Bihar and Assam.

But cotton acreage has seen a marginal decline at 7.13 lakh ha against 7.22 lakh ha.

PUNJAB HIGHER ACREAGE

Cotton planting has mainly commenced in northern states and farmers in Punjab have

planted an area of 4.8 lakh ha, higher than last year’s 3.91 lakh ha.

90

In Haryana, the acreage is lower at 1.50 lakh ha against last year’s 2.44 lakh ha.

South-west monsoon makes debut over Andaman Sea (ET 17/5/2013)

South-west monsoon today made a debut in the Andaman Sea and parts of Bay of

Bengal, setting the stage for the four-month rainfall season crucial for India's agriculture-

based economy.

"Southwest monsoon has set in over some parts of south Bay of Bengal and Andaman

Sea," India Meteorological Department (IMD) said here.

It said conditions were favourable for further advance of monsoon over some more parts

of Bay of Bengal during next 2-3 days.

Monsoon is expected to bring its first showers to Kerala on June 3 - a slight delay

attributed to the cyclone activity over the Bay of Bengal.

After arriving over Kerala, monsoon moves gradually to cover the entire country by mid-

July.

India is expecting normal monsoon rains this year with overall rainfall expected to be 98

per cent of the long period average.

Monsoon is crucial for the kharif crops such as rice, soyabean, and cotton and maize

because almost 60 per cent of the farm land in the country is rainfed.

Pre-monsoon heating of north-west, central India begins (BL 19/5/2013)

Pre-monsoon heating has started in right earnest over north-west and adjoining Central

India, though slightly behind schedule this year.

Heating of the landmass is required to set up the temperature and therefore pressure

gradient linking Kerala with Rajasthan for monsoon winds to fan upcountry and bring

rains along.

Rajasthan and adjoining region should get heated up to the maximum, and this process

may have just about started, India Met Department observations revealed.

It was held back by low-pressure western disturbances criss-crossing the region, bringing

rain, thunderstorms or dust storms in their wake.

91

On Saturday, heat wave conditions prevailed over parts of Jammu and Kashmir,

Himachal Pradesh, Punjab, Haryana, Delhi, Rajasthan, East Uttar Pradesh, Vidarbha and

north Madhya Pradesh.

The maximum temperatures recorded were in the order of 48.5 deg Celsius at Churu;

48.3 deg Celsius at Allahabad; 47.2 deg Celsius at Bikaner; and 47.0 deg Celsius at

Nagpur.

HEAT WAVE

A weather alert said that heat wave to severe heat wave conditions may occur over most

of these parts for next two days as well.

An anticipated cyclonic circulation has materialised over the Arabian Sea away to the

south-west, which holds the warmest pool (30-32 deg Celsius) of waters.

Strengthening prospects are limited given proximity to land (East Africa and Yemen),

which does not allow it needed elbowroom.

This might just help ward off an irritant to monsoon flows that should start heading

towards the Maldives, Sri Lanka and the Kerala coast in that order from next week.

But a stray US tracker agency held on to its view of activity building in Central Arabian

Sea and predictably culminating near the shores of Yemen/Oman.

Meanwhile, London-based Tropical Storm Risk Group said it saw near-normal typhoon

(cyclone) activity in north-west Pacific, which has some relevance for Indian monsoon.

Away-going typhoons (headed to West and Central Pacific) can affect monsoon strength

since both would need to share the same moisture resource. But west-ward-bound

(towards Vietnam or Thailand) ones could set up ‘pulses’ that enter Bay of Bengal next

door to form low-pressure areas.

Karnataka government has open mind on GM crops (ET 21.5.13)

Karnataka government has an open mind on the issue of GM crops, and favours giving

options for farmers to make informed choices, says Agriculture Minister.

Karnataka government has an open mind on the issue of genetically modified crops, and

favours giving options for farmers to make informed choices, Agriculture Minister

Krishna Byre Gowda said today.

He said Bt cotton, first introduced in the State some one-and-half decades ago, has

definitely benefitted farmers to improve yields in an eco-friendly manner. "That's why

farmers have adopted it". As much as 90 per cent of farmers in Karnataka are using Bt

92

cotton seeds.

Agricultural universities based in Dharwad and Raichur are currently working on

improving the Bt cotton seeds.

"We must keep our minds open", Byre Gowda said when asked to spell out the new

Congress government's stand on GM crops. "We must give him (farmer) the options; let

him choose".

On organic farming, which was aggressively promoted by the previous BJP government,

the Minister, in reply to a query, said funds for such initiatives were perhaps misused but

added that subject comes under the Horticulture Department, which needs to inquire into

it.

The Minister said the government has geared up to supply seeds and fertilisers to farmers.

Agriculture department has estimated that for the 2013 Kharif season, 10.68 lakh quintals

of seeds would be needed, which had been stocked.

As against the requirement of 24 lakh tonnes of fertilisers, the government has a stock of

nine lakh tonnes, which would continuously get replenished, he said.

The Minister advised farmers not to over-use urea just because it was cheap, saying such

an approach would bring down soil fertility.

A special squad has been formed to crack down on elements who seek to create "artificial

shortage" by hoarding, he said.

Byre Gowda also said though there are many schemes for farmers, the government would

focus on those identified among them, rather than trying to implement all of them.

Weather office forecasts normal monsoon this year (ET 22/5/2013)

So, it's going to be another year of normal monsoon, so says the weather office. For a

country where rains decide its status as an exporter of farm goods or importer, where

fortunes of both farmers as well as political parties swing with the tide, the IMD forecast

has come as showers of blessing.

But has the much-derided weather bureau been spot on when it comes to forecasts?

Prabodha SV finds out:

93

Monsoon-related rain seen over Kerala coast (BL 22.5.13)

Rainfall related to the onset of monsoon has been forecast for the Kerala coast from

Friday/Saturday, according to a US-based forecasting agency.

Climate Forecasting System of the US National Centres for Environmental Prediction

made this forecast in its latest assessment of conditions evolving in the Arabian Sea.

94

JUNE RAINS

“India Met Department is forecasting onset of Southwest monsoon onset over Kerala

coast around June 3rd, even though our model is predicting onset-related rainfall

conditions around June 24-25,” the agency said.

It went on to add that the month of June is likely to witness a strong monsoon, with early

indications that the rains might start to relent with beginning of July.

Back home, India Met Department said in its update on Tuesday that it too was expecting

an increase in rainfall activity over Kerala, Karnataka and Lakshadweep from Friday.

Monsoon is likely to break over the Kerala coast by Monday/Tuesday (May 27/28),

according to a former honcho of the Met Department, who did not wish to be identified.

India Met Department has already said that the onset of seasonal rains is likely to happen

on June 3 with an error margin of four days to either side.

But the current build-up over Southeast Arabian Sea might just spring a surprise on the

upside, as per the US agency forecast. Heat wave conditions are peaking over Northwest

and adjoining Central India with a ‘tongue of flame’ extending right into East India.

Lull in western disturbance (low-pressure systems in North India) activity would allow

the heating to become entrenched.

CORE HEATING

Air masses would rise and reduce pressure relative to the Southwest coast, inviting

monsoon winds fan blow into land and bring rains along. The core of heating (‘heat low’)

centred over Rajasthan with the ‘tongue to the East’ will eventually set up the all-

important trough which the Bay of Bengal arm of monsoon would enter plains and

farmlands.

Southwesterly winds would transport rain-bearing clouds along the Kerala coast to form

the Arabian Sea arm of the monsoon.

It would meet with the Bay of Bengal arm over Central India later into the season.

vinson.kurian@thehindu.co.in

Country can achieve 4% growth in farm sector: Prime Minister (ET 23.5.13)

Manmohan Singh today said the government was bringing a food security legislation on

back of higher foodgrain output and crop diversification.

Expressing confidence of 4 per cent growth in the agriculture sector during 12th Plan,

Prime Minister Manmohan Singh today said the government was bringing a food security

legislation on back of higher foodgrain output and crop diversification.

95

"We achieved 3.7 per cent growth per year in agriculture during the Eleventh Plan

compared with only 2.4 per cent in the Tenth Plan. We are targeting 4 per cent in the

Twelfth Plan, and I am confident we can do it," Singh said addressing the fourth

Anniversary of UPA-II government.

He also said that agriculture wages grew sharply in the UPA regime.

"Faster agricultural growth, combined with government programmes such as

MGNREGA, and the expanded pace of investment in rural infrastructure have improved

real wages of agricultural labour.

"Agricultural wages grew at 6.8 percent per year in real terms after 2004, which is six

times faster than the rate of growth between 1994 and 2004," Singh said.

The report card said UPA government is committed to enact the National Food Security

Bill and highlighted that agri-credit to farmers has been increased five-fold and food

subsidy bill more than three-times during its tenure.

"Our efforts at increasing food grain production are working as also our efforts to

diversify agriculture. This is the foundation which allows us to introduce Food Security

legislation in parliament," Singh said.

The UPA government is committed to the enactment of the National Food Security Bill,

which legally entitles families under Antodaya Anna Yojana (AAY) for 35 kg of

foodgrains per month and other families for 5 kg per person at subsidised rates under

PDS, the UPA report card said.

The government had tried to get the Food bill -- promised by the Congress in its election

manifesto in 2009 -- passed in the Lok Sabha in the recently-concluded Budget session.

The debate on the proposed law could not be concluded amid din.

The Food Bill aims to provide legal right over fixed quantity of foodgrains at a uniform

price of Rs 1-3 per kg per month to 67 per cent of the country's population.

"Agriculture credit has increased five-folds to help small farmers improve productivity,"

the report said.

Farm credit in the 2012-13 fiscal has crossed Rs 6 lakh crore, as against Rs 1.25 lakh

crore in 2004-05 fiscal. This fiscal, the Centre has set credit target of Rs 7 lakh crore.

The report card also mentioned that "there has been more than three-fold increase in food

subsidy during UPA tenure. It reflects government's commitment to ensure adequate food

at affordable prices for all, especailly the poor."

Foodgrains stocks in the country were at record levels during the year as efforts in

96

strengthening agriculture sector have led to record production in recent years, it added.

Foodgrains production was at record 259.32 million tonnes in 2011-12 crop year (July-

June), while the output is expected to around 255.36 tonnes in the current year.

Govt to cut 147 central schemes to 70 as GoM okays recast (BL 23.5.13)

A Group of Ministers, headed by Agriculture Minister Sharad Pawar, today approved

merging of 147 Centrally Sponsored Schemes (CSS) into 70 across various sectors for

efficient implementation and monitoring in the 12th Five Year Plan.

“The GoM on Restructuring of CSS has decided to converge 147 central schemes into 70

for better monitoring and implementation in the 12th Five Year Plan (2012-17),” a highly

placed source said.

It has approved setting up of a flexi-funds system in each scheme, under which state

governments can use 10 per cent of the Budget allocated for CSS within the broader

framework of the flagship programme.

For better utilisation of funds under CSS, the panel of ministers approved transferring of

funds from the central government to the state consolidated funds and not directly to the

implementing agencies.

That apart, the panel has approved setting up of state specific guidelines in each central

sponsored schemes.

The GoM decisions are in line with the recommendations of the Chaturvedi committee,

which had suggested bringing down CSS to 59 from 147 to avoid overlap.

The decisions taken in the GoM meeting would be placed before the Cabinet soon for

approval, the source said.

Finance Minister P. Chidambaram, Commerce Minister Anand Sharma, Planning

Commission Deputy Chairman Montek Singh Ahluwalia were among others present in

the meeting.

The GoM on restructuring of CSS was constituted to iron out differences between

ministries such as the Agriculture and Tribal Affairs, which wanted to maintain some of

the schemes for development of the sector.

Sources said that the differences have been sorted out in the GoM meeting. “That’s why

the number of schemes to be merged has been kept to 70 schemes, as against the

Chaturvedi Committee’s suggestion of 59 schemes.”

Concerned over proliferation of CSS, Finance Minister P. Chidambaram in his Budget

speech had announced that “the schemes will be restructured into 70 schemes. Each

scheme will be reviewed once in two years”.

97

Australia-India ink MoU for skills training in agriculture sector (ET 24.5.13)

India and Australia today signed an agreement for skill development in the agriculture

sector

India and Australia today signed an agreement for skill development in the agriculture

sector.

The Memorandum of Understanding (MoU) was signed between the Agriculture Skills

Council of India and AgriFood Skills Australia, according to a statement from the

Australian High Commission.

The MoU results from the joint commitment of Australian and Indian Prime Ministers in

October 2012 to build bilateral partnerships between skills councils in key sectors such as

telecom, retail, mining, media/entertainment and agriculture, it added.

On this initiative, the Australian High Commissioner to India Patrick Suckling said: "This

partnership aims to achieve quality industry-led skills training standards in the agriculture

sector."

"With India projected to add 12 to 15 million workers to its labour force every year over

the coming decades, employability and productivity gains will be inextricably linked to

quality standards," he added.

The MoU would promote cooperation in creating quality occupational training,

assessment, certification, information and stakeholder engagement standards, the

statement said.

National Seminar focuses on doubling food production in five years through an Indo

- Dutch approach (ET 24.5.13)

"It is imperative that any initiative taken in agriculture sector helps us in increasing the

farmers' income rather than only focusing on boosting production for sustaining

agriculture growth,"said Sanjeev Chopra, joint secretary and mission director, National

Horticulture Mission & National Mission on Micro Irrigation, Ministry of Agriculture.

He further appreciated the setting of Centres of Excellence (COEs) in several states of

India under the Indo - Dutch collaboration and said that such COEs are a welcome step

and it compels us to think big and scale certain milestones".

Chopra was addressing, industry representatives, academia and government & embassy

officials at the seminar on "How to Double Food Production-In Five years- An Indo -

Dutch Approach" which was organized jointly by CII Northern Region and The

98

Netherlands Embassy.

Presenting the theme Address, the Netherlands Ambassador Alphonsus Stoelinga, said

that there was scope to work on agriculture, infrastructure, energy, quality system and

technology apart from water and water management sectors and cold chain infrastructure.

Anuradha Prasad, joint secretary, Ministry of Food Processing Industries and Rajni Sekri

Sibal, joint secretary Animal Husbandry, Ministry of Agriculture also addressed the

delegates at the Seminar.

Mr Jan Hak, Chairman, Netherlands Agro Food & Technology Center in his address

mentioned that NAFTC is a public private partnership representing Dutch Agriculture,

Food & Agro/Food Technology enterprises in selected countries and is the

implementation body from the Dutch side. He also shared that NAFTC will be working

with the respective states to make these CoEs approach sustainable.

In his concluding remarks, Arie Veldhuizen, Counselor for Agriculture, Nature & Food

Quality, Embassy of the Netherlands stressed that these CoEs are important for achieving

the goal of doubling the food production in next five years and Indian and Dutch

government are jointly preparing proper roadmap for successful implementation &

evaluation.

Earlier in the day, while welcoming the delegates, Salil Singhal, chairman, CII National

Council of Agriculture said that CII has always whole heartedly supported the initiatives

towards the development of sectors that are crucial to the growth of the country. He also

highlighted that the CII National Council on Agriculture has taken up rejuvenating Indian

agriculture as its key priority agenda.

99

Strong monsoon phase seen into first week of June (BL 24.5.13)

All available indications point to a strong phase of South-West monsoon in the first week

of June, after seasonal rains break over Kerala coast. This would be underwritten by a

wet phase of Madden-Julian Oscillation (MJO) wave that passes above the Indian Ocean

during this period.

MJO INFLUENCE

Though travelling high up, the wave is able to influence ground weather by facilitating

formation of clouds, precipitating rains, even triggering storms and monsoon onset. The

Climate Prediction Centre of the US National Weather Services has said that the Indian

Ocean, South India and Sri Lanka are expected to get impacted.

AUTO-PILOT MODE

The strong phase would kick off from May 28 and last for 11 days until June 7. Gusty

winds might bear down over Kerala and Konkan-Mumbai coasts and trigger copious rain.

Rains may relent later, depending on how monsoon dynamics become established by that

time.

100

Normally, a strong phase helps monsoon shift to auto-pilot, which means that the strength

of the flows would be enough to carry it along with or without an MJO wave.

Available indications suggest that this could indeed be the situation, and the monsoon is

shown as running up whole peninsula and East India thanks to concurrent activity in the

Bay of Bengal. US forecast models have also indicated thatJune could likely witness

normal to above normal rainfall.

Meanwhile, India Met Department said on Thursday that rainfall could scale up along the

West Coast and Lakshadweep from Sunday.

This would set the stage for copybook-style conditions culminating likely in onset of the

monsoon early next week, according to international weather models

THUNDERSHOWERS

A prominent pre-monsoon atmospheric formation is already setting up a chain of

thunderstorms over peninsular and South India.

The weather-setting trough of lower pressure runs from South Jharkhand to South Tamil

Nadu across South Chhattisgarh and interior Andhra Pradesh.

The trough receives moisture from the seas on either side, which combines with the hot

air to set up clouds and thundershowers along the line. Thundershowers are forecast to

break out over Kerala, Karnataka, Lakshadweep, South Konkan, Goa, South Madhya

Maharashtra, Andhra Pradesh and Tamil Nadu until Sunday.

3 lakh cultivators leave field in Karnataka (BL 24.5.13)

Karnataka has seen a 4.40 per cent decline in the number of cultivators. The total number

of cultivators is 65.80 lakh in 2011 compared with 68.83 lakh cultivators in 2001.

Of the decrease of 3.03 lakh, the fall in the number of female cultivators (2.24 lakh) is

more than the decrease in the number of male cultivators (79,132).

Releasing the Primary Census Abstract, T. K. Anil Kumar, director of Census

Operations-Karnataka, said: “The proportion of cultivators to total workers has decreased

by 4.40 per cent and the decrease in the proportion in male cultivators is nominal at 1.64

per cent, whereas the decrease in the proportion of female cultivators is high at 10.93 per

cent.”

Among the districts, the decrease in the proportion of cultivators is more than 5

percentage points in 11 districts, with Bangalore Rural district registering the highest

decrease of 9.55 per cent, followed closely by Mysore district (9.26 per cent). In the

remaining 19 districts, the decrease is less than 5 per cent. The least decrease of -0.31 per

cent was recorded in Kodagu district preceded by Raichur district (-1.05 per cent).

Even though all the districts have registered a decline, the proportion of cultivators is

more than 45 per cent in Hassan district (48.37 per cent), followed by Mandya District

101

(44.64). The least proportion of cultivators is recorded in Bangalore district (2.25 per

cent), preceded by Dakshina Kannada District (3.39 per cent).

Agri Labourers

Anil Kumar said though the number of agricultural labourers has increased in the State by

14.92 per cent during 2001-11, their proportion to total workers has marginally declined

from 26.46 in 2001 to 25.67 per cent in 2011.

The proportion of male agricultural labourers has increased by a nominal 0.77 percentage

points while their female counterparts have registered decline of -3.12 per cent.

Among the districts, the proportion of agricultural labourers varies from 2.31 per cent in

Bangalore to 44.49 per cent in Chamarajanagar. In 19 out of 30 districts, the proportion

of agricultural labourers is higher than the State average of 25.67 per cent, with 16

districts reporting more than 30 per cent. In three out of the remaining 11 districts, where

the proportion is below the State average, the proportion of agricultural labourers is less

than 6 per cent.

Household Industry

The proportion of workers in the household industry, which was 4.08 per cent in 2001,

has declined to 3.28 per cent in 2011.

Anil Kumar said among the districts, Dakshina Kannada, with a proportion of 18.86 per

cent of household industry workers tops the list, followed by Bagalkot district with 5.48

per cent. In the remaining districts the proportion of workers engaged in household

industry is less than 5 per cent and the least proportion of 0.56 per cent is recorded in

Kodagu district.

Among the total 9.13 lakh persons enumerated as workers in household industry in the

State, nearly three lakh workers are accounted in only Dakshina Kannada and Bangalore

districts. Both these districts together account for more than 30 per cent of the total

workers engaged in household industry.

In comparison to 2001 Census, the proportion of other workers has increased by 7.23

percentage points by 2011. anil.u@thehindu.co.in

National Seminar focuses on doubling food production in five years through an Indo

- Dutch approach (ET 24/5/2013)

"It is imperative that any initiative taken in agriculture sector helps us in increasing the

farmers' income rather than only focusing on boosting production for sustaining

agriculture growth, “said Sanjeev Chopra, joint secretary and mission director, National

Horticulture Mission & National Mission on Micro Irrigation, Ministry of Agriculture.

He further appreciated the setting of Centers of Excellence (COEs) in several states of

102

India under the Indo - Dutch collaboration and said that such COEs are a welcome step

and it compels us to think big and scale certain milestones".

Chopra was addressing, industry representatives, academia and government & embassy

officials at the seminar on "How to Double Food Production-In Five years- An Indo -

Dutch Approach" which was organized jointly by CII Northern Region and The

Netherlands Embassy.

Presenting the theme Address, the Netherlands Ambassador Alphonsus Stoelinga, said

that there was scope to work on agriculture, infrastructure, energy, quality system and

technology apart from water and water management sectors and cold chain infrastructure.

Anuradha Prasad, joint secretary, Ministry of Food Processing Industries and Rajni Sekri

Sibal, joint secretary Animal Husbandry, Ministry of Agriculture also addressed the

delegates at the Seminar.

Mr Jan Hak, Chairman, Netherlands Agro Food & Technology Center in his address

mentioned that NAFTC is a public private partnership representing Dutch Agriculture,

Food & Agro/Food Technology enterprises in selected countries and is the

implementation body from the Dutch side. He also shared that NAFTC will be working

with the respective states to make these CoEs approach sustainable.

In his concluding remarks, Arie Veldhuizen, Counselor for Agriculture, Nature & Food

Quality, Embassy of the Netherlands stressed that these CoEs are important for achieving

the goal of doubling the food production in next five years and Indian and Dutch

government are jointly preparing proper roadmap for successful implementation &

evaluation.

Earlier in the day, while welcoming the delegates, Salil Singhal, chairman,

CII Agriculture said that CII has always whole heartedly supported the initiatives towards

the development of sectors that are crucial to the growth of the country. He also

highlighted that the CII National Council on Agriculture has taken up rejuvenating Indian

agriculture as its key priority agenda.

103

XIII AGRICULTURAL / FOOD PRICES

Inflation falls to lowest level since November 2009, revives rate cut hopes (ET

15.5.13)

Headline inflation fell to its lowest level in more than three years in April, raising hopes

that despite the massive rise in trade deficit last month, the Reserve Bank of India will cut

rates again in mid-June to revive the economy that is growing at its slowest in a decade.

Annual inflation based on the wholesale price index (WPI) came in at 4.89% in April,

well below the consensus forecast of 5.5% and 5.96% in March, data released on

Tuesday showed. This is the first time since November 2009 that wholesale inflation has

dropped below the crucial 5% mark, the level RBI says it is comfortable with. The

decline triggered a rally in bond and stocks and the rupee strengthened.

Inflation for February was revised upwards to 7.3% from 6.8% estimated initially. Data

released on Monday had shown a similarly sharp decline in consumer inflation to 9.39%.

Core inflation (non-food inflation), a measure of demand pressure that RBI monitors,

dropped to 2.8% in April, the lowest since January 2010, from 3.5% in March.

The finance ministry felt the case for a rate cut was now stronger. "I think we need to

look at the statement made by the RBI governor during the last policy review, where he

had stated that RBI is closely monitoring inflation figures and if there is a dramatic

change, then RBI will take that into consideration during its next review," Department of

Economic Affairs Secretary Arvind Mayaram said. "So, we do believe that RBI would

look at this figure," he said.

In its May 3 policy review, RBI said there was little room to cut rates further, even as it

lowered repo rate by 25 basis points to 7.25%.

Abheek Barua, chief economist of HDFC Bank, feels RBI can be a little more aggressive

in cutting rates given that core inflation is down sharply.

104

This implies there is not much pricing power left. "In a sense, RBI is now on a much

safer ground," he says, suggesting two rounds of 25-bps cuts followed by a review.

However, Sonal Varma of Nomura feels the spike in trade deficit to $17.8 billion in April

has clouded the outlook for rate cuts. "From a policy perspective, we expect the Reserve

Bank of India to keep the repo rate unchanged in June as trade deficit worsened in April

and CPI inflation still remains above 9%," she wrote in a note. Current account deficit

widened to 6.7% of GDP in October-December quarter and is likely to end the year at

around 5% of GDP.

The decline in inflation was triggered by a fall in all the three components of WPI - food,

manufactured products and fuel - apart from a high base effect and softer commodities

prices. Economists say WPI could decline further in the coming months.

A fall in the price of vegetables, which were primarily responsible for high food inflation,

drove overall food inflation down to 6.08% from 8.73% in March. Manufactured

products inflation came in at 3.41% in April against 4.07% in March. Fuel inflation fell to

8.84% from 10.18% because of the decline in the price of petrol.

Edible oil prices to remain subdued on ample global supply (BL 24.5.13)

Edible oil prices are likely to remain subdued on lower domestic demand and

comfortable global supply.

Since April, prices of major edible oils have been declining due to rising rabi crop

arrivals and abundant supply of palm oil from Malaysia and Indonesia.

Apart from palm oil, India is importing soya oil from South America, which is also

pressurising prices to a certain extent.

“Prices may recover marginally but there will not be any surge as there is abundant

supply from worldwide origins. India’s import of edible oils is rising as supply from

other major countries is rising, given the higher acreage and production. A comfortable

international supply position coupled with a depressed demand due to seasonal factors is

likely to suppress prices,” said Raju Choksi, Vice-President, agro-commodities, Anil

Nutrients. The company is a subsidiary of the Rs 650-crore agro and food processing

major Anil Ltd.

Choksi added that domestic supply would also improve as hoarded seeds with farmers

and stockists would start getting liquidated once the monsoon sets in. “Palm oil stocks

will start building up in Indonesia and Malaysia from July to August onwards,” he said.

The Central Organisation for Oil Industry and Trade estimated the total vegetable oil

availability from the kharif and rabi oilseeds crops for the year 2012-13 (November-

October) upward at 81.97 lakh tonnes compared to 81.52 lakh tonnes last year.

105

Imports during 2012-13 is estimated to increase by 5-7 lakh tonnes compared to last year.

Edible oil imports during November 2012-April 2013 rose by 11.6 per cent to 51.38 lakh

tonnes against 46.03 lakh tonnes in the corresponding period last year, data from Solvent

Extractors Association showed.

Palm oil imports surged 34.5 per cent to 33.54 lakh tonnes during the same period.

Wheat, other grains strengthen on persistent buying (ET 24/5/2013)

Prices of wheat and other grains strengthened up to Rs 75 per quintal on the wholesale

grains market today due to persistent buying activity.

Traders said persistent buying by flour mills helped wheat prices to strengthen.

In the national capital, wheat dara (for mills) rose further by Rs 25 to Rs 1,550-1,555 per

quintal. Atta chakki delivery edged up to Rs 1,555-1,560 per 90 kg. Atta flour mills and

maida moved up to Rs 815-825 and Rs 840-850 per 50 kg. Other bold grains

like bajra strengthened by Rs 15 to Rs 1,465-1,470 per quintal. Jowar yellow and white

also moved up by Rs 75 each to Rs 1,600-1,650 and Rs 2,300-2,500 per quintal,

respectively.

The following were today's quotations per quintal: Wheat MP (deshi) 2,000-2,200, Wheat

dara (for mills) 1,550-1,555, Chakki atta (delivery) 1,555-1,560 Atta Rajdhani (10 kg)

210, Shakti bhog (10 kg) 210, Roller flour mill 815-825 (50 kg), Maida 840-880 (50 kg)

and Sooji 900-950 (50kg).

Basmati rice (Lal Quila) 10,000, Shri Lal Mahal 10,000, Super Basmati Rice, 9,500,

Basmati common new 8,000-8,100, Rice Pusa-(1121) new 7,900-8,500, Permal raw

2,300-2,550, Permal wand 2,500-2,600, Sela 3,500-3,600 and Rice IR-8- 1,900-1,950,

Bajra 1,465-1,470, Jowar yellow 1,600-1,650, white 2,300-2,500, Maize 1,425-1,430,

Barley 1,250-1,255, Rajasthan 1,080-1,090.

106

107

XIV AGRICULTURAL FUTURES PRICES

Soybeans hit contract high on low supply; sugar drops (ET 26/4/2013)

Soybean futures hit a contract high on Friday due to a rise in overseas prices and on thin

supplies as farmers delayed sales expecting further rise in prices.

Soyoil rose on good demand and a rise in overseas palm oil prices, while rapeseed edged

up tracking gains in other oilseeds.

The key May soybean contract ended up 1.19 percent at 4,121 rupees per 100 kg on the

National Commodity and Derivatives Exchange, after rising to 4,182 rupees earlier.

The key May soyoil contract rose 0.58 percent to 721.05 rupees per 10 kg, while the

rapeseed contract for May edged up 1.35 percent to 3,521 rupees per 100 kg. * At the

Indore spot market in Madhya Pradesh, soyoil edged up 5.4 rupees to 737.6 rupees per 10

kg, while soybeans rose 93 rupees to 4,174 rupees per 100 kg. At Jaipur in Rajasthan,

rapeseed edged up 19.5 rupees to 3,500 rupees.

SUGAR

Indian sugar futures hit a contract low due to ample supplies and weak demand in the

spot market.

The key June contract on the NCDEX ended 0.44 percent down at 2,956 rupees per 100

kg, after hitting a contract low of 2,953 rupees earlier.

Spot sugar fell 5.5 rupees to 3,018 rupees per 100 kg in the Kolhapur market in the top-

producing Maharashtra state.

CHANA

Indian chana futures snapped a five-day losing streak on bargain-buying, though subdued

trade in spot markets, rise in supplies from the new season crop and expectations of

higher output limited the upside.

The May contract rose 0.49 percent to 3,518 rupees per 100 kg on the NCDEX.

In Delhi, spot chana edged up 6 rupees to 3,477 rupees per 100 kg.

SPICES

Indian cumin seed futures hit a contract low, weighed by rising supplies from the new

season crop and expectations of higher output.

The actively traded jeera, or cumin seed, contract for May delivery was down 0.09

108

percent at 12,952.5 rupees per 100 kg on the NCDEX, after hitting a contract low of

12,850 rupees earlier in the day.

Spot jeera fell 86 rupees to 13,395 rupees per 100 kg at Unjha in Gujarat.

PEPPER

Indian pepper futures edged up as depleting stocks supported buying offsetting estimates

of higher output and a rise in supplies from Karnataka.

The most-active pepper contract for May delivery edged up 0.16 percent to 35,305 rupees

per 100 kg on the NCDEX.

Spot pepper fell 128 rupees to 35,864 rupees at Kochi, a key market in the southern state

of Kerala.

TURMERIC

Indian turmeric futures rose on some value buying, supported by estimates of lower

output.

The most-active turmeric contract for May delivery ended up 0.44 percent at 6,416

rupees per 100 kg on the NCDEX. It had fallen 1.72 percent in the previous session.

FMC mulls measures to broadbase agri futures (BS 15.5.13)

The FMC is considering steps to deepen the market, make the environment more flexible

for hedgers and create room for smaller farmers to trade in the futures market

The commodity futures market regulator is considering several measures to broadbase

participation agricultural commodity futures trading. On the anvil are measures to deepen

the market, make the environment more flexible for hedgers and create room for smaller

farmers to trade in the futures market.

The Forward Markets Commission (FMC) would be issuing a circular to exchanges to

reduce the lot size of four agri commodities - soya oil, soya bean, turmeric and coriander

- to one tonne. Ramesh Abhishek, chairman, said: "This was also recommended by the

Standing Committee of Parliament and is being done with a view to improve volumes in

agriculture commodities."

Once this experiment is successful, lot sizes will be reduced in other agri commodities.

Traders say part of the motivation is the coming imposition of commodity transaction tax

on non-agri commodities; this is expected to affect volumes in that segment.

FMC is also consulting exchanges to link member-level trading and open interest limits

109

to the net worth of the member concerned. This will allow large net worth members to

raise Open Interest (the number of derivative contracts not delivered on a particular day)

and allow more clients to trade through them.

The environment for hedgers is also being liberalised. Hedgers are those with exposure in

the physical market and they hedge risk in that market on the futures platform. FMC's

proposal is to exempt hedgers from additional and special margin payment.

In the recently approved Finance Bill, the Income-Tax law has been amended to allow

set-off of losses and gains in the commodity futures market with other business losses

and gains. This is expected to boost hedging in commodity futures.

FMC might also provide two working days for members to collect margins from clients.

At present, there is no such norm. However, members have to pay mark-to-market

(revaluing assets at present values) margins to exchanges. FMC's move is seen as

disciplining members to ensure proper margin collection.

FMC proposes evening trading in agri commodities (BS 21.5.13)

FMC has proposed discontinuing futures trading on Saturdays. In most exchanges,

trading volumes on Saturdays are 50-70 per cent of other days

The commodity futures market regulator is considering allowing evening trading in agri

commodities. At present, non-agri commodities like metals, bullion and energy products

are traded in the evening session. Since prices of all these commodities are linked to

global markets, which are active all the time, these are allowed in globally-linked

commodities' trading in the evening session on Indian bourses.

Evening trading in globally-linked agri commodities was allowed earlier, but was

discontinued six-seven years ago. This, since it served little purpose for price hedging as

hedgers were hardly active and evening trading promoted dubba trading or illegal trading

in northern and western parts of India.

Ramesh Abhishek, chairman of the Forward Markets Commission (FMC), said the

regulator had sought views of exchanges on allowing evening trading in globally-linked

agri commodities. Soya bean and oil, crude palm oil, cotton and rubber are among

globally-linked agri commodities traded on Indian bourses.

FMC has asked exchanges to point out globally-linked commodities in which evening

trading could be permitted. A senior exchange official said perhaps only soybean and oil

would qualify because rubber was mostly traded in Japan and palm oil in Malaysia and

Indonesia, which are typically morning markets from the Indian perspective.

The idea behind evening trading has been that globally, most commodities are traded in

the futures market round the clock and traders and hedgers should get a chance to

respond to market volatilities after normal market hours in the Indian market. Hence, in

110

commodities, such as gold-silver, metals and energy commodities, where India is not a

price setter but a price taker, evening session trading was permitted in the early days of

commodities futures.

FMC has also proposed discontinuing futures trading on Saturdays. In most exchanges,

trading volumes on Saturdays are 50-70 per cent of other days.

Two executives on condition of anonymity said they did not support the idea of no

trading in commodities futures on Saturdays.

Soybeans edge higher; rapeseed drops on supply pressure (BL 21/5/2013)

Soybean futures edged higher on Monday on thin supplies and a weak rupee, while

rapeseed eased on supply pressure from the new season crop.

Soyoil was treading water as sluggish demand outweighed gains in overseas markets.

At 0835 GMT, the benchmark Malaysian palm oil contract was up 0.09 per cent at 2,338

ringgit per tonne, while US soybeans were 0.28 per cent higher at $14.52-1/2 per bushel.

"Soybean supplies are limited. Farmers are not selling the harvest. Oil mills are running

operations at half of their capacity," said Subhranil Dey, an analyst with SMC Comtrade.

"Soybean futures will trade in a narrow range. Weak soymeal exports are weighing on

sentiments."

The key June soyoil contract on the National Commodity and Derivatives Exchange was

up 0.02 per cent at Rs 699.05 per 10 kg.

The key June soybean contract rose 0.31 per cent to Rs 3,908.5 per 100 kg, while the

rapeseed contract for June edged down 0.26 per cent to Rs 3,510 per 100 kg.

A weak rupee makes edible oil imports expensive but also raises returns for oilmeal

exporters. The local currency eased on Monday.

Soymeal exports in April sank 67 per cent from a month earlier to 99,451 tonnes,

dropping for a third straight month as farmers held back stocks in a move that tightened

supply and boosted prices of the animal feed.

At the Indore spot market in Madhya Pradesh, soyoil edged down Rs 0.85 to Rs 725.55

per 10 kg, while soybeans rose Rs 13 to Rs 4,055 per 100 kg. At Jaipur in Rajasthan,

rapeseed fell Rs 30 to Rs 3,511.

111

Sugar mills eye forward contracts with bulk buyers (BS 24.5.13)

Sugar companies are looking forward to the added flexibility from the partial decontrol

announced recently by the central government to enter into forward contracts with bulk

buyers.

Sanjay Tapriya, director, finance, at Simbhaoli Sugar Mills, said, "With the levy

arrangement and quota system being discontinued, it will be easier for mills to enter into

forward contracts with buyers like ice-cream and beverage companies. Generally, these

start buying when winter begins, for their products in the summer."

Such an arrangement would give mills more stability, avoiding open market volatility.

Asitava Sen, head of food and agri business research at Rabo Bank, said, "Institutional

food and beverage demand for sugar accounts for 30 per cent of the sugar available in

India and is rapidly growing."

Until now, bulk buyers were restrained from entering into forward contracts as the sale

release mechanism was complex, where even mills were unsure on how much sugar

would be available for the open market. Since this has gone, forward contracts will now

be possible.

Meanwhile, the price of sugar in the open market after decontrol has come down because

exports have been halted due to unviable prices. State governments were asked to procure

their requirement for the Public Distribution System from the open market after

decontrol. As a result, prices in many regions have fallen below the cost of production. In

Uttar Pradesh, the second largest producer, prices are Rs 3 a kg lower than the cost of

production, said a senior official of a UP mill.

Mills are now relying more on byproducts. Last month, tenders were floated for

supplying ethanol for mixing with petrol. A price of Rs 35 a litre has been fixed, 30 per

cent higher than earlier. Rating agency Icra has said, "Prices of byproducts such as

bagasse and molasses continue to remain remunerative, driven by healthy demand from

consuming sectors such as power, paper and alcohol. Higher realisations for fuel ethanol

in the current financial year will further result in improved returns from byproducts."

Further, forward integration into distilleries and power generation continue to yield

healthy returns, driven mainly by a supportive regulatory framework and healthy offtake,

and pricing for alcohol and power, said Icra.

Edible oils show mixed trend (ET 24/5/2013)

The wholesale oils and oilseeds market ended on a mixed note today as select edible oil

prices rose on increased buying by vanaspati millers.

112

The wholesale oils and oilseeds market ended on a mixed note today as select edible oil

prices rose on increased buying by vanaspati millers while a few others declined on

sufficient supplies.

However, non-edible oils after moving in a narrow range in limited deals settled around

previous levels.

Traders said increased buying by vanaspati millers influenced by a firm global trend

mainly led to rise in select edible oil prices.

Meanwhile, palm oil for August delivery rose 0.6 per cent to USD 781 a tonne, the

highest since April 11 on the Bursa Malaysia Derivatives.

Adequate supplies against lack of buying support kept pressure on other edible oil prices,

they said.

In the national capital, tracking a firm global trend, soyabean refined mill delivery

(Indore) and soyabean degum (Kandla) oils added Rs 50 each to Rs 7,450 and Rs 7,050

per quintal, respectively.

Palmolein (rbd) and palmolein (Kandla) oils followed suit and gained Rs 50 each Rs

5,600 and Rs 5,100 per quintal, respectively.

On the other hand, groundnut mill delivery (Gujarat) and sesame mill delivery oils fell by

Rs 250 and Rs 300 to Rs 10,000 and Rs 12,000 per quintal on adequate supplies from

producing belts. Groundnut solvent refined traded lower by Rs 100 to Rs 2,000-2,050 per

tin.

Mustard gains on lower inflow (ET 24/5/2013)

Decline in arrivals soyabean and mustard seeds besides rise in buying support due to the

ongoing marriage season, continued to push up mustard prices in mandis across Madhya

Pradesh, Rajasthan and Gujarat for the second consecutive week.

Mustard oil in Indore mandis ruled at Rs 650 for 10 kg (up Rs 9 from last week) on

Thursday.

In Rajasthan also, mustard oil witnessed an uptrend on decline in arrival and rise in

buying support. It ruled at Rs 645 each in Ganga Nagar and Kota, while it was Rs 660 for

10 kg in Jaipur.

Mustard seeds, on the other hand, ruled firm at Rs 4,200-4,300 a quintal, while raida

ruled at Rs 3,200 amid decline in arrivals.

Weak arrival of soyabean and mustard seeds lifted price of mustard in Indore mandis to

Rs 4,300-50 (Rs 4,150-4,200). Similarly, raida rose to Rs 3,200-50 (Rs 3,100-50).

113

On the NCDEX, mustard seeds traded lower with June and July contracts closing at Rs

3,509 a quintal (down Rs 4) and Rs 3,556 (down Rs 3).

Plant deliveries of mustard seeds for Jaipur line were quoted at Rs 3,530-35 (up Rs 10

from last week) on slack buying support from the crushers.

Arrival of mustard seeds across the country was recorded at 2.65 lakh bags on Thursday.

(This article was published in the Business Line print edition dated May 24, 2013)

Sugar extends losses; cheaper imports seen (ET 24/5/2013) Sugar futures extended losses on Thursday on profit-taking driven by ample supplies and

expectations that a sharp drop in overseas prices may lead to higher imports.

An improvement in demand from bulk buyers due to the summer season and concerns

over output in 2013/14 limited the downside.

The key June contract on the National Commodity and Derivatives Exchange was down

0.55 percent at 3,060 rupees ($55.07) per 100 kg at 0815 GMT, after rising to 3,104

rupees earlier this week, the highest level since March 13.

"Sugar prices in the world market are continuously falling. Sugar refiners may import

more quantity in the coming months. There is good refining margin at today's price," said

a Mumbai-based dealer.

"I don't think local prices will fall below 3,000 rupees. Bulk consumers are quite active in

spot market," the dealer said.

New York raw sugar futures sank to an almost three-year low on Wednesday under

pressure from the stronger U.S. dollar, expectations of ample supplies as the cane crush

in top producer Brazil sped up, dealers said.

Demand for sugar from ice cream and beverage makers typically rises during the

summer.

Concerns that sugar output in the top-producing Maharashtra state may fall sharply due to

drought also limited the downside, dealers said.

Sugar cane is a perennial, water-intensive crop and is usually harvested 10 to 16 months

after planting. Cane for the crushing season starting Oct. 1 has been planted, but half the

total acreage is short of water.

Spot sugar dropped 14 rupees to 3,068 rupees per 100 kg at the Kolhapur market in the

top-producing Maharashtra state.

Farmers have planted cane on 4.07 million hectares as of May 17, compared with 4.57

million hectares during the same period a year ago, agriculture ministry data showed.

114

India is likely to produce 24.6 million tonnes of sugar in 2012-13, an industry body has

said, against an annual demand of about 23 million tones.