only for reference by project staff -...
TRANSCRIPT
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ONLY FOR REFERENCE BY PROJECT STAFF
AgriNews: January 2014
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”
Prepared by
National Council of Applied Economic Research
11, I.P. Estate
New Delhi 110002
(Coverage from December 26, 2013 to January 25, 2014)
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CONTENTS
Section Title Page No.
1 Highlights 1
2 Broad Sectoral Trends 5
3 Agricultural Policy 7
4 Rice 11
5 Wheat 17
6 Pulses 29
7 Edible Oils / Oilseeds 35
8 Milk 41
9 Vegetables – Potato/ Onoins 45
10 Sugarcane / Sugar 53
11 Inputs 65
12 Other Agri / Farm News 73
13 Agricultural / Food Prices 95
Note: Newspapers covered: BL= Business Line, BS = Business Standard, ET= Economic
Times, FE= Financial Express
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1
HIGHLIGHTS
Broad Sectoral Trends
World Bank projects India’s growth at over 6% in 2014-15: The World Bank has
projected India’s economy will grow over 6 per cent in 2014-15 and 7.1 per cent by
2016-17 as global demand recovers and domestic investment increases. (BL 15.1.14)
India Ratings pegs GDP at 4.9%; projects improvement in FY'15: India's growth
rate is expected to slip to 4.9% in the current fiscal but will improve significantly to
5.6% in 2014-15 on the back on turnaround in investments, India Ratings has said.
(ET 15.1.14)
Agricultural Policy
'Agri research policy must respond to changing environment': Agriculture
research policy must respond to a changing agricultural, scientific and economic
environment and the new paradigm underscored pluralistic institutional structure with
dominant role for private sector, a senior union agriculture ministry official said
today. (BS 27.12.13)
Rice
Govt declares bonus to farmers at Rs 100 per quintal of paddy: Bowing to the
demands of various farmer associations and political parties, Chief Minister Naveen
Patnaik today announced a bonus of Rs 100 per quintal of paddy for farmers affected
by Cyclone Phailin and the subsequent floods that struck the state in October this
year. (BS 28.12.13)
Twofold rise in processed food, Basmati rice exports to Iran: In value terms,
India's Basmati rice exports to Iran increased by 137%, or nearly three folds. (BS
6.1.13)
Geographical Indications asks agri-export body to include MP as Basmati
growing area: Geographical Indications (GI) Registry has directed agri-export body
APEDA to file an amended GI application for including Madhya Pradesh as a
Basmati growing region. (ET 8.1.14)
India's 2013/14 basmati rice exports to hit record 4 million tonnes : Sources:
Indian traders are set to export a record 4 million tonnes of basmati rice in the year to
March on higher demand for the premium grade from the Middle East, bringing total
sales to about 10 million for a third straight year, sources said. (ET 8.1.14)
Nitish Kumar hikes paddy bonus, make MSP on paddy highest in country: The
Bihar government today announced an increase of Rs 250 per quintal bonus on
procurement of paddy pushing the MSP to Rs 1560 a quintal, highest in the country.
(ET 22.1.14)
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Wheat
India's wheat sowing surges; may set new record: USDA: Total area sown under
wheat crop this year in India is expected to surpass the previous record of 29.9 million
hectares in 2012-13, a USDA report has said. (ET 3.1.14)
Govt warns wheat farmers against yellow rust attack: The government has issued
a warning to farmers about dreaded yellow rust attack after the disease was detected
in a wheat field in Haryana. The Karnal-based Directorate of Wheat Research (DWR)
had alerted the government about the finding. (BS 6.1.14)
At $282/t, Swiss firm’s bid is highest for Indian wheat: Switzerland-based
commodity trading Vitol Group placed the highest bid of $282.62 a tonne for wheat
offered for exports by State Trading Corporation (STC) from Mundra Port in the
latest tender. (BL 8.1.14)
Wheat sowing up by 6% to 31.4 million hectares so far: Area under wheat
cultivation has risen by 6 per cent to an all-time high of 31.4 million hectares so far in
the ongoing rabi season, boosting prospects of a record output this year, Agriculture
Ministry said today. (ET 24.1.14)
Pulses
Time to open up pulses export as production rebounds: Pulses imports have
slowed down considerably following a significant rebound in domestic production
this year and softer, consumer-friendly prices. (BL 2.1.14)
Agriculture Ministry to move Cabinet note to lift pulses export ban. The
Agriculture Ministry will soon move a Cabinet note for lifting the 8-year long ban on
export of pulses to arrest fall in domestic prices that are ruling below the MSP level
on expectations of higher output. (ET 15.1.14)
Edible Oils / Oilseeds
CACP asks Nafed to increase groundnut procurement to prevent further fall in
prices: Groundnut market prices are still ruling below the minimum support price
(MSP) despite Nafed procuring more than 1.1 lakh tonne of the nut from farmers,
mostly in Gujarat and Rajasthan, under the price support scheme in the last one
month. (FE 13.1.14)
Import of vegetable oils in November, December 2013 increases by 25%: The
import of vegetable oils in India increased by 25% in November and December 2013,
driven by availability of cheaper Sunflower oil as compared to the Soyabean oil. (ET
13.1.14)
Palm oil prices may slip after March on rising oilseeds supply: Crude palm oil
prices might have held up well in recent times supported by a host of factors including
seasonality and anticipated Indonesian internal demand, but a moderately bearish
phase is rapidly emerging. (BL 20.1.14)
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Milk
Oil India to enter dairy sector; inks pact with Irma for study: As part of a
corporate social responsibility (CSR) initiative, energy major Oil India Ltd (OIL) has
decided to step into dairy sector and has signed an agreement with Institute of Rural
Management, Anand (Irma) to carry out a feasibility study. (BS 31.12.13)
Amul plans to sell liquid milk in US in a year : Company will start making yogurt,
lassi and curd in New Jersey in a few months. (BS 3.1.14)
Vegetables – Potato/ Onoins
Export floor price for onion cut to $150/tonne: The Centre has further slashed the
minimum export price for onions to $150 a tonne from the prevailing $350 a tonne to
facilitate more shipments abroad. (BL 27.12.13)
Onion exports double in Dec at 1.33 lakh tonnes on MEP cut: Onion exports have
more than doubled during December at over 1.33 lakh tonnes compared with the
previous month after government lowered the minimum export price (MEP). (BL
7.1.14)
Onion exports in Apr-Dec period rose by 59% to Rs 2,532 cr: Onion exports in
value terms during April-December period of 2013-14 have risen by 59% to Rs 2,532
crore on account of higher export price fixed by the government. (BS 23.1.14)
Sugarcane / Sugar
Govt notifies norms for sugar mills to get interest-free loans: The government has
notified the modalities for the beleaguered sugar industry to avail of interest-free
loans to the tune of Rs 6,600 crore from banks for payments to cane growers. (BS
6.1.14)
GoM headed by Sharad Pawar okays incentives for raw sugar export: An
informal group of ministers (GoM), headed by Agriculture Minister Sharad Pawar,
today approved incentives to the beleaguered sugar industry for exports of up to 40
lakh tonnes of raw sugar for two years. (ET 16.1.14)
Inputs
ICAR ends '13 on a high: Releases 104 improved varieties in 2013 (BS 1.1.14)
Other Agri / Farm News
Veerappa Moily to seed a change, likely to approve GM food crops in India:
Environment Minister Veerappa Moily is expected to cast his vote in favour of
allowing genetically modified (GM) food crops in the country, overturning the
position of his immediate predecessors. (ET 28.12.13)
BARC using nuclear technology for agriculture: The nuclear technology is
making valuable contribution to the agriculture in India, a scientist from Bhabha
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Atomic Research Centre said here. (ET 30.12.13)
Banana production increases in TN: The production of banana in Tamil Nadu has
increased over the past four years to more than eight million tonnes in 2012-13. “In
2009-10, the production of banana in Tamil Nadu was over 4.9 million tonnes”, it
said. (BL 30.12.13)
Need to further liberalise agricultural trade: RBI: The Reserve Bank of India
(RBI) believes there is a need to further liberalise agricultural trade to ensure the food
economy doesn’t pose a major risk to non-inflationary growth. (BS 14.1.14)
Urad, moong, groundnut coverage slips in rabi sowing: Area under wheat,
rapeseed/ mustard, chana at record. (BL 17.1.14)
Foodgrain output to exceed 260 mt this year: Pranab: Need to dispel fears over
GM crops, says President (BL 19.1.14)
Exporters exemption from stock holding welcomed: Welcoming exemption of
exporters of edible oil and rice from the purview of stock holding limits, the
Commerce Ministry today said the decision will help reduce their transaction cost.
(ET 20.1.13)
Agricultural /Food Prices
Food prices fall globally, but keep rising in India: Latest data released by the
United Nation's Food and Agriculture Organization shows that the Food Price Index
fell 3.5% in December 2013, compared to a year ago. For the full year, the index
averaged 209.9, which was 1.6% lower than 2012 (ET 12.1.14)
Retail inflation falls to three-month low of 9.87% in December: A month after
touching a record high, consumer price index-based inflation came down to a three-
month low of 9.87 per cent in December, thanks to vegetable prices. (BS 14.1.14)
Dec WPI eases to 5-month low of 6.16%: WPI inflation eased to 5-month low of
6.16% in December compared to 7.52% in November. (BS 15.1.14)
Vegetable prices ease across the board: Most vegetables – onion, cauliflower,
cabbage, carrot, bottle gourd, brinjal, peas, radish and beans – are currently retailing
not just below their November peaks, but even their January 2013 levels. (BL
19.1.14)
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SECTORAL ISSUES
World Bank projects India’s growth at over 6% in 2014-15 (BL 15.1.14)
The World Bank has projected India’s economy will grow over 6 per cent in 2014-15 and 7.1
per cent by 2016-17 as global demand recovers and domestic investment increases.
In China, growth is estimated to stay flat in 2014 at 7.7 per cent, slowing to 7.5 per cent for
the next two years, reflecting deleveraging and less reliance on policy-induced investment.
Global GDP growth may firm up to 3.2 per cent this year from 2.4 per cent in 2013,
stabilising at 3.4 per cent and 3.5 per cent in 2015 and 2016, respectively, the World Bank
said in its Global Economic Prospects (GEP) report released today.
According to the report, the global economy is projected to strengthen this year, with growth
picking up in developing countries and high-income economies appearing to be finally
turning the corner five years after the global financial crisis.
“Growth appears to be strengthening in both high-income and developing countries, but
downside risks continue to threaten the global economic recovery,” said World Bank Group
President Jim Yong Kim.
According to the report, in South Asia, weaker growth in India, following several years of
rising inflation and current account deficits, has opened up a large negative output gap, which
is projected to gradually close as the economy slowly recovers. Better Indian performance
will be heavily reflected in the region’s growth, which is expected to strengthen to 5.7 per
cent in 2014 and about 6.7 per cent in 2016, it said.
Growth in South Asia is estimated to have been a very weak 4.6 per cent in 2013, mainly
reflecting weakness in India.
Growth appeared to be recovering toward the end of 2013, and regional GDP on a calendar-
year basis is projected to slowly accelerate to about 6.7 per cent in 2016, mainly reflecting
stronger growth in India and a cyclical recovery in investment and external demand, it said.
India Ratings pegs GDP at 4.9%; projects improvement in FY'15 (ET 15.1.14)
India's growth rate is expected to slip to 4.9% in the current fiscal but will improve
significantly to 5.6% in 2014-15 on the back on turnaround in investments, India Ratings has
said.
"Our expectation for improved growth in FY'15 is based on a partial recovery in the industrial
and services sector growth, and an uptick in investment due to project clearances by the
Cabinet Committee on Investment (CCI)," said India Ratings.
India's growth rate plummeted to decade's low of 5% in 2012-13. The economic outlook
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report, released on Tuesday, projected growth of 5.6 % on the back of with farm sector
expansion at 3%, industry by 4.1 % and services 6.9 in 2014-15. Outlook for the Indian
economy is looking significantly better now than it did in mid-2013 when the country was
struggling with current account and fiscal deficit, falling rupee and high and stubborn
inflation, it said.
"Better-than-expected monsoons, rising exports, swift policy as well as project clearance
actions by the government and deft currency management by the RBI have improved
business sentiments," the report said.
It projected average wholesale price index -based inflation to decline to 5.5% in FY'15, from
5.9% in 2013-14, which will lead to monetary easing. "We expect the pressure on food prices
to ease in FY15 on the back of normal monsoons. With the expected
moderation in inflation in FY'15, the agency expects RBI's policy stance to gradually shift
towards monetary easing. We expect a 0.50 % reduction in repo rate in its base case," India
Ratings said.
It further projected that the fiscal deficit will narrow to 4.5% in FY'15 as the new
government, post the general elections, will make efforts to adhere to fiscal onsolidation.
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POLICY ISSUES
'Agri research policy must respond to changing environment' (BS 27.12.13)
Agriculture research policy must respond to a changing agricultural, scientific and economic
environment and the new paradigm underscored pluralistic institutional structure with
dominant role for private sector, a senior union agriculture ministry official said today.
The reforms were generally proceeding at slow pace in developing countries, where there was
a large proportion of small scale farmers and the public sector still dominated the research
system, Agriculture Commissioner J S Sandhu said.
Thus, the focus of research policy should remain on improving efficiency of the public
research system and encouraging the participation of private sector wherever possible,
Sandhu said delivering his address to 34th Convocation of Tamil Nadu Agricultural
University here.
A systematic approach was needed for identifying land use and production system that were
sustainable in each land and climate zone, he said.
In order to reinvigorate agriculture and ensure a resourceful living standard for the rural poor,
Indian agriculture must undergo an important transformation on both the demand and supply
side, along three primary direction --emphasising higher value output, increasing productivity
and redefining the roles of public and private sector, he added.
"As the structural transformation of Indian economy proceeds, the share of agriculture will
likely continue to decline, which almost declined significantly from about 40 per cent in
1960, to around 12 per cent in 2011," Sandhu said.
Decision soon on ‘agri price commission’ in Karnataka (BL 6.1.14)
The Karnataka Government will soon take a decision on establishing an ‘agricultural price
commission’. A Cabinet sub-committee has already been constituted to discuss its
establishment, according to an official.
In an informal chat with presspersons on the sidelines of a review meeting of district-level
officials here on Monday, Bharatlal Meena, Principal Secretary of the Agriculture
Department, Karnataka, said the Cabinet sub-committee has already held one meeting to
discuss the establishment of ‘agricultural price commission.’
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Stating that the draft is being readied in this regard, Meena said another meeting would be
held after that. He hoped that the proposal would be taken to Cabinet soon after that for the
establishment of an ‘agricultural price commission’.
The State Budget for 2013-14 had proposed the establishment of an ‘agricultural price
commission’ to fix suitable prices for the agri produce.
It had stated that the Commission would include farmers, agriculture experts and agro-
economists. The government had stated it would fix suitable prices based on the scientifically
worked out recommendations of the commission.
While presenting the Budget, Chief Minister Siddaramaiah had stated that farmers are always
facing problems due to indeterminate prices for their produce. Most of the times they do not
even get the costs incurred. Considering this and to fix suitable prices, he had initiated the
process of establishing an ‘agricultural price commission’.
Earlier, Meena, who is also the Secretary in-charge of Dakshina Kannada district, reviewed
the performance of various departments in the district.
The official of the Horticulture Department informed the meeting that arecanut growers in the
district have estimated crop loss to the tune of Rs 310 crore due to the fruit rot disease in their
plantations.
The government has extended a compensation of Rs 20 crore to the growers in the district.
Additional compensation of Rs 10 crore has been sought from the government, the official
informed the meeting.
Draft policy on organic farming to be released soon (BL 7.1.14)
A draft policy on organic farming is expected to be announced soon by the State
Government. Tamil Nadu had initiated this proposal a year ago, and the government had
constituted an 18-member committee to draft the policy. This is expected to be announced by
Chief Minister J. Jayalalithaa soon, said an official in the know of developments.
The objective has been to analyse the world organic farming scenario and determine the
State’s role in the global organic farming arena and pool the views of experts.
Organic farming strategies can be devised based on a strong State policy. The method of
implementation and agencies involved can be defined in the policy, according to a note on
organic farming on the Horticulture Department website.
“With food security concerns looming large, we have to definitely take a stand on sustainable
agriculture by adopting organic farming methods, especially in food crops. Over-exploitation
of natural resources and indiscriminate use of chemicals have resulted in environmental
degradation. We have to revive farm holdings,” said TNAU Vice-Chancellor K Ramasamy.
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Briefing media persons about the forthcoming State Level Farmers’ Day event, slated for
January 11, he said ‘a permanent central exhibition on the theme ‘Doubling agricultural
Production and Tripling Farmers’ Income’ would be inaugurated at the university
highlighting significant and critical technologies on different aspects of farming and crops.
Agricultural land area in the State had fallen from 52 lakh hectares to 43 lakh hectares due to
four-laning of roads and environmental degradation, he said. “The consolation is that people
are coming back to agriculture,” he said.
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RICE
Govt declares bonus to farmer at Rs 100 per quintal of paddy (BS 28.12.13)
The bonus will be paid over and above the minimum support price of paddy
Bowing to the demands of various farmer associations and political parties, Chief Minister
Naveen Patnaik today announced a bonus of Rs 100 per quintal of paddy for farmers affected
by Cyclone Phailin and the subsequent floods that struck the state in October this year.
"Being a farmers' government, we have all sympathy for the farming community. After
considering the plight of the farmers into consideration, the state government has decided to
give a special assistance of Rs 100 per quintal on paddy to all farmers during the kharif
season", Patnaik announced at a public meeting in Baragarh.
The bonus will be paid over and above the minimum support price of paddy. The expenditure
for this will be totally borne by the state government, he added.
The Centre has fixed minimum support price (MSP) of paddy at Rs 1,250 per quintal for the
2012-13 kharif as against Rs 1,080 in the previous year's kharif marketing season. For A-
grade variety of paddy, the support price has been raised to Rs 1,280 per quintal from Rs
1,110.The decision comes three days after some aggrieved farmers, under the banner of
Navanirman Krushak Sanagathan (NKS), tried to block Patnaik's motorcade near State
Secretariat to register their protest against the government apathy towards the plight of the
farmers.
The government has also decided to wave two per cent market fee and two per cent CST on
movement of paddy so that the farmers can get a higher rate for their produce, Patnaik said.
The state government has targeted to procure about 30 lakh quintals of paddy during the
ongoing kharif season.
The decision was reportedly taken at the state cabinet meeting last night, but was not made
public in view of model code of conduct being in force for the ensuing Bhubaneswar
Municipal Corporation elections.
The announcement exposes the government's political motive. It would have been better if
the government declared Rs 300 bonus per quintal of paddy," said senior Congress leader
Narasingh Mishra.
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Assam lines up 32 mini mills to process bumper rice yield (ET 6.1.14)
With Assam expecting a bumper production of rice this year, the state government will soon
set up around 32 mini rice mills for processing the harvest. Assam's rice production
is expected to touch 60 lakh tonnes, almost 8 lakh tonnes more than the last year's.
The rice mills will come up in different areas with the state government subverting the cost
up to 50 per cent. Assam Agriculture Minister Nilamoni Sen Deka said in fiscal year 2012-13
, the state produced over 52 lakh tonnes of rice and around 7 lakh tonnes were surplus.
"This year, we are expecting 60 lakh tonnes of rice." Despite a drought-like situation earlier
in the season, the situation improved later on. "The Food Corporation of India (FCI) and the
Assam Agricultural Marketing Board have readied 60 centres for procurement of rice," Deka
said.
The minister said that in the absence of milling facility, rice from Assam is processed in
Siliguri and Coach Bihar in West Bengal, and in Bangladesh and is sold back in Assam.
The cost of setting up a mini mill will be around Rs 16 lakh and the government will provide
half of it as subsidy. Assam is focusing on the export variety of rice like Kumol (soft) and red
rice.
Twofold rise in processed food, Basmati rice exports to Iran (BS 6.1.13)
In value terms, India's Basmati rice exports to Iran increased by 137%, or nearly three folds
India’s agriculture and processed food
exports to Iran have more than
doubled in quantum and value terms in
the last one year, mainly on account of
an exceptional surge in Basmati rice
exports. If the trend continues, this
year’s export of Basmati to Iran could be
the highest.
In value terms, Basmati rice exports to
Iran increased by 137 per cent (nearly
threefold rise), while in terms of quantity it increased by 77 per cent, between April and
September 2013 and 2014, data from Agricultural and Processed Food Products Export
Development Authority (Apeda) show.
Between April and September 2013, total food exports to Iran was valued at Rs 7,104 crore,
against Rs 3,043 crore in the same period last year, a rise of nearly 133 per cent, according to
Apeda. In terms of quantity, the amount of exports increased by almost 104 per cent between
April and September this year over the corresponding period last year.
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“This year there has been a great surge in Basmati exports to Iran. While the quality of rice
exported from India has improved, there could be other reasons for the rise in exports. It
might be the reason that the Iranian government wants to stock up their inventory,” said R
Sundaresan, executive director, All-India Rice Exporters Association.
After US sanctions against Iran, India’ export to that country had suffered a setback.
However, with Iran being a key oil supplier to India, both countries reached a new payment
mechanism in 2012. Under this, 45 per cent of India’ crude payments were made in rupees
through UCO Bank. The rupee resources were being used for making payments for Indian
exports. Thus, with Iran unable to procure foodgrains from other countries, India’s rice
export has witnessed a surge in volume.
About 85 per cent of India’s agriculture and processed food exports to Iran are on account of
Basmati.
However, India’s exports might be affected by the recent deal of six major countries (the US,
France, Germany, Britain, China and Russia) with Iran to ease Iran’s nuclear plans in lieu of
temporary relief over sanctions.
Govt's rice procurement down 8% at 16.39 million tonne (ET 7.1.14)
Government's rice procurement is lagging behind by 8 per cent over last year at 16.36 million
tonne so far in the 2013-14 marketing year due to lower production estimate and relatively
strong open market prices.
Food Corporation of India, government's nodal procurement agency, had procured 17.78
million tonne rice in the same period of 2012-13 marketing year (October-September).
"Procurement is happening very slowly in most states as open market prices are relatively
ruling strong due to lower kharif crop estimate," a senior Food Ministry official said.
Procurement in eastern and southern states was also delayed by late rains and is expected to
pick up this month, the official added.
The rice production is estimated to be lower at 92.32 million tonne during the kharif
(summer) season of 2013-14, as against 92.76 million tonne in the year-ago season.
Currently, spot prices of common grade rice are ruling in the range of Rs 1,835- 3,750/quintal
in major producing states, according to traders.
Of the total rice procured so far, FCI has purchased 8.1 million tonne in Punjab, 2.46 million
tonne in Chattisgarh, 2.39 million tonne in Haryana and 1.54 million tonne in Andhra
Pradesh, as per FCI data.
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The government has set 34.5 million tonne as target for rice procurement for 2013-14, as
against 34.1 million tonne last year. In 2011-12, it was a record 35.06 million tonne.
Looking at the procurement trends, market experts are of the view that total rice procurement
could reach 32 million tonne.
Geographical Indications asks agri-export body to include MP as Basmati growing area
(ET 8.1.14)
Geographical Indications (GI) Registry has directed agri-export body APEDA to file an
amended GI application for including Madhya Pradesh as a Basmati growing region.
The GI label certifies not only the geographical origin of a product but also confirms
adherence to some production standards. Further, it prevents producers who aren't covered by
the tag from using the same.
Madhya Kshetra Basmati Growers Association Samiti, Dawat Foods Ltd and the state
Department of Farmer Welfare and Agriculture Development had in 2011 filed an
"Opposition" (application) against APEDA for excluding the state land area under the GI-145
application, and causing extensive damage to the business interests of farmers and millers.
Following that, the Chennai-based GI Registry's assistant registrar Chinnaraja G Naidu on
December 31, 2013 directed APEDA to file an amended GI application including the
uncovered area, with map of the region clearly demarcating the area of production, within 60
days from the date of the order.
"In Madhya Pradesh, four lakh farmers produce nearly 8 lakh tonnes of Basmati rice; out of
which 40 per cent is being exported to countries like the US and others," Madhya Pradesh
Agriculture Department's Principal Secretary Rajesh Rajora told PTI today.
The state government will also file a caveat before the Intellectual Property Appellate Board,
Chennai, regarding the matter, he said. A large number of farmers in Madhya Pradesh have
been growing Basmati rice for last many years by using traditional and new
techniques, Rajora said.
"Non-inclusion of the state among the Basmati growing areas will have an adverse effect on
the lives of farmers, who are mainly dependent on Basmati rice cultivation," he said, adding
that it will also reduce the country's turnover from the export of Basmati.
The opponents blamed APEDA -- Agriculture and Processed Food Products Export
Development Authority -- for failing to include in its application areas that cultivate Basmati
rice in Madhya Pradesh, including Morena, Bhind, Gwalior, Sheopur, Datia, Shivpuri, Guna,
Vidisha, Raisen, Sehore, Hoshangabad, Jabalpur and Narsinghpur.
They submitted that since the state is located in the Indo-Gangetic plain, the climatic
condition of these areas is favourable for the cultivation of Basmati.
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The opponents have also submitted proof of cultivation of Basmati within Madhya Pradesh
state since as early as 1990 and also provided copies of the Gazetteers, historical documents
to substantiate their claim on the issue.
India's 2013/14 basmati rice exports to hit record 4 million tonnes: Sources (ET 8.1.14)
Indian traders are set to export a record 4 million tonnes of basmati rice in the year to March
on higher demand for the premium grade from the Middle East, bringing total sales to about
10 million for a third straight year, sources said.
More supplies from India, which toppled Thailand in 2011/12 to become the world's top rice
exporter, could further hit Thai benchmark prices that shed 3.4 percent over the past week
amid bulging supplies at other key suppliers Thailand and Vietnam.
While New Delhi does not allow exports of the grain from government warehouses, private
traders have annually sold about 10 million tonnes a year over the past two years.
India's basmati rice exports rose 15 percent to 2.88 million tonnes between April and
December, Vijay Setia, former president of All India Rice Exporters Association, told
Reuters.
"A lot of deals are taking place due to a spurt in demand. Other than some parts of Iran and
Afghanistan, where you can find some basmati from Pakistan, India's basmati is in huge
demand," said Setia, also a leading exporter.
India and Pakistan exclusively grow long-grain, aromatic basmati in the foothills of the
Himalayas. The superior variety carries a premium over non-basmati, or common grades of
rice.
Setia expects basmati rice sales to Iran, the top buyer of Indian rice, to remain steady at about
1.1 to 1.2 million tonnes in 2013/14 due to relatively higher government stockpiles there.
But a rise in demand from buyers such as Kuwait and Saudi Arabia would help India push
2013/14 exports of the premium grade to a record high, said Rajen Sundareshan, executive
director of the All India Rice Exporters Association.
Basmati rice exports have risen 15 percent so far this year, shrugging off a more than nearly
18 percent rise in India's export price. Last year's average rate was $100 a tonne, said officials
at two New Delhi-based rice mills.
"The trend clearly suggests that buyers are willing to pay more for premium rice varieties.
Basmati is the most premium rice variety, giving India an avenue to raise exports further,"
Setia said.
Rising income levels in the Middle East have also helped boost demand for basmati rice,
traders said.
With basmati rice exports likely to touch 4 million tonnes in 2013/14, India's total rice
shipments are expected at about 10 million tonnes this year, Sundareshan said.
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In 2012/13, India's overall exports totalled 10.1 million tonnes, including 3.5 million tonnes
of basmati.
Rice output in India, the world's No.2 producer, stood at 104.40 million tonnes in the crop
year to June 2013, more than sufficient to cover demand for its 1.2 billion people.
Summer rice crop had been estimated at about 92 million tonnes this year, on par with the
previous crop year.
Nitish Kumar hikes paddy bonus, make MSP on paddy highest in country (ET 22.1.14)
The Bihar government today announced an increase of Rs 250 per quintal bonus on
procurement of paddy pushing the MSP to Rs 1560 a quintal, highest in the country.
The decision to increase bonus on paddy for farmers was taken at a meeting of the state
cabinet presided over by Chief Minister Nitish Kumar.
The price for purchase of paddy this year was initially fixed at Rs 1310 per quintal.
Chief Secretary Ashok Kumar Sinha told reporters the hike was aimed at encouraging
farmers who cultivated paddy in the state despite an adverse weather.
He said farmers who sold their paddy produce prior to this hike, would also be benefited as
additional sums would be paid to them.
Asked about the paddy production volume in the state this year, he said a final figure was not
yet arrived at, but it might fall short of last year's production figures.
In another significant decision, the cabinet approved a proposal to recruit the father of a girl,
who was gang-raped twice and later allegedly burnt alive in West Bengal, as a driver in the
police force after conducting a driving test.
Kumar had last week offered the job to the victim's father, who hails from Samastipur, when
he had come here to meet him with his wife.
17
WHEAT
Madhya Pradesh expects wheat production to cross 190 lakh tones (ET 31.12.13)
Madhya Pradesh is expecting wheat production to cross 190 lakh tonnes during the current
Rabi season.
"The state is expecting an estimated wheat production of over 190 lakh tonnes. With this, the
state would be able to surpass Punjab in the production of wheat," state's farmer welfare and
agriculture development department director, Dr D N Sharma told PTI.
The farmers had sown wheat a bit in advance due to more than adequate rains, he said,
adding that the production will also be helped by the intense cold prevailing now.
Last year, wheat was sown on 54 lakh hectares which led to production of 161.25 lakh tonnes
of wheat. This year there is a target to sow wheat on 57 lakh hectares of land, Sharma said.
India's wheat sowing surges; may set new record: USDA (ET 3.1.14)
Total area sown under wheat crop this year in India is expected to surpass the previous record
of 29.9 million hectares in 2012-13, a USDA report has said.
Meanwhile, as per the Agriculture Ministry's data, wheat - a key winter (rabi) crop - has been
already sown in 28.69 million hectares. Wheat sowing begins from October, and harvesting
from April, in the world's second largest grower.
"Higher planting has been reported in most states on optimal soil moisture conditions and
timely harvest of the preceding kharif (summer) crops," the US Department of Agriculture
(USDA) said in its latest report.
Wheat planting conditions have been generally favourable throughout the major growing
states with adequate soil moisture conditions and adequate irrigation water availability in the
major reservoirs and irrigation systems, it said.
Most wheat growing regions have seen a decline in temperatures in the recent weeks,
providing favourable early growing conditions for the crop, it added.
Wheat sowing in the major growing states is almost over, except for some late planting in
Uttar Pradesh and Bihar following the sugarcane harvest, it added.
As for wheat production, the report said it will "largely depend on winter rains
(December-January) and warmer temperatures during the critical grain filling and
ripening stages in February and March".
18
Indian agriculture experts have maintained that if weather conditions remain good, the
country's wheat production is expected to exceed last year's 92.46 million tonnes and touch a
new record.
The previous record of wheat output was 94.88 million tonnes in the 2011-12 crop
year (July-June).
Wheat area reaches all-time high at 30.2 million hectares: Govt (BS 4.1.14)
Country had produced a record 259 million tonnes of wheat in 2011-12
The area under wheat cultivation has climbed to an all-time high of 30.2 million hectares so
far in the ongoing rabi season, boosting prospects of a record production this year, the
Agriculture Ministry said today.
Although the condition of the crop is good as of now, the ministry is keeping a watch for
yellow rust, a fungal disease, which has been detected in Jamuna Nagar in Haryana, it added.
Wheat was grown on 28.63 million hectares in the same period last year. Sowing of wheat, a
major rabi crop, starts in October and harvesting takes place from April.
"This is a record wheat acreage. The previous record was 29.9 million hectares in 2012-13
rabi season. Hopefully, if weather conditions remain conducive, we can have record wheat
production," Agriculture Commissioner J S Sandhu told PTI.
The country had produced a record 259.29 million tonnes of wheat in 2011-12. In the
following year, output fell marginally to 255.36 million tonnes.
Sandhu said another 5-6 lakh hectares are expected to be covered under wheat in the coming
days, especially in Bihar, Madhya Pradesh and Uttar Pradesh.
So far, Uttar Pradesh has sown wheat on 9.68 million hectares against a target of 9.73 million
hectares, while Madhya Pradesh has planted the crop on 5.39 million hectares against a target
of 5.9 million hectares. Bihar has sown wheat on 2 million hectares against a planned 2.32
million hectares, he added.
"But the bad news is that yellow rust disease has been detected in Jamuna Nagar in Haryana
and we are keeping a watch on it," said Sandhu.
A meeting has been scheduled next week to discuss the preparedness of wheat-growing states
to tackle the disease, he added.
Besides wheat, rice, pulses, coarse cereals and oilseeds are also grown during the rabi season.
The total area under rabi crops has touched 59.19 million hectares so far, much higher than
the 56.98 million hectares in the year-ago period.
19
Govt warns wheat farmers against yellow rust attack (BS 6.1.14)
Yellow rust attacks wheat crop in Haryana
The government has issued a warning to farmers about dreaded yellow rust attack after the
disease was detected in a wheat field in Haryana. The Karnal-based Directorate of Wheat
Research (DWR) had alerted the government about the finding.
Wheat crop is expected to be bumper this year on the back of record sowing. However,
yellow rust, one of the most common diseases in wheat plant, is known to lower yields.
Yellow rust is a fungal disease principally found in wheat grown in cooler environments and
is characterised by yellow-colored stripes produced parallel along the venations of each leaf
blade.
“We have issued advisories and warning to farmers in main wheat growing states of north
India to take adequate protection against yellow rust, as the disease has attacked quite early –
there is almost three months to go before wheat will be harvested – and the intensity is also
severe,” Indu Sharma, project director of Directorate of Wheat Research, told Business
Standard.
HIGH ALERT
Yellow rust attacks wheat crop in Haryana
Directorate of Wheat Research issues
warning to farmers
Warning issued in view of timing, severity of
attack
Centre may hold meeting next week to
discuss attack
She said farmers have been advised to visit their fields regularly and spray relevant chemicals
immediately. “The warning and advisory have been issued in view of the severity of the
attack, but the situation is still not alarming,” Sharma said.
Haryana along with Uttar Pradesh, Punjab and Madhya Pradesh are the main wheat
producing states of India. The crop is annually sown in around 2.5-3 million hectares in
Haryana.
PTI had reported on Friday that Union Agriculture Commissioner J S Sandhu said the
ministry was keeping a close watch on the attack and a meeting of all wheat-growing states
had been called next week to discuss the problem.
Meanwhile, sowing of wheat, which is the main foodgrain grown during the rabi season, has
reached a record high because of favourable weather and adequate soil moisture.
20
According to department of agriculture data, the crop has been sown in around 30.2 million
hectares in 2013-14, as against 28.63 million hectares last year. The previous record was 29.9
million hectares in 2012-13 rabi season.
The country had produced a record 259.29 million tonnes of wheat in 2011-12. In the
following year, output fell marginally to 255.36 million tonnes.
So far, Uttar Pradesh has sown wheat on 9.68 million hectares against a target of 9.73 million
hectares, while Madhya Pradesh has planted the crop on 5.39 million hectares against a target
of 5.9 million hectares.
Bihar has sown wheat on two million hectares against a planned 2.32 million hectares.
Besides wheat, rice, pulses, coarse cereals and oil seeds are also grown during the rabi
season.
The total area under rabi crops has touched 59.19 million hectares so far, much higher than
the 56.98 million hectares in a year-ago period.
Wheat exports may fetch more on firm global prices (BL 7.1.14)
India, currently a big wheat seller in the global market, could gain from the firm trend in
prices of the cereal, triggered by the concerns over severe cold snap affecting the US crop
and large purchases made by African countries
State trading entities – MMTC, STC and PEC Ltd – have offered to sell a total of nearly 8.3
lakh tonnes of wheat. Tenders for the sales expected to be decided over the next 17 days.
“India should exploit the current situation to get the maximum price for its wheat. There is a
case for upward revision of the floor price for exports,” said trade sources.
India had set minimum export price of $260 a tonne but has received higher quotes from
global buyers for tenders floated recently. So far, about 9 lakh tonnes of wheat have been
tendered for sale, but sales of about six lakh tones only have been finalised.
The Government has planned to export about 20 lakh tonnes to create storage space for the
new crop expected to arrive in April. The country’s wheat stocks as on December 1 stood at
31 million tonnes, almost thrice the buffer and strategic reserves to be maintained statutorily.
The firm trend in global prices is also aided by the aggressive buying from African nations
such as Egypt and Algeria last week. Egypt has bought 5.35 lakh tonnes from Ukraine,
Russia and France at an average price of $317 a tonne.
Algeria has bought about 5 lakh tonnes, while Syria has bought about two lakh tonnes.
21
“Going by the recent market trends India should get better price for its wheat. The intrinsic
value of the Indian wheat is $290-300 a tonne – a price at which India should be selling,” an
analyst said.
Wheat futures, which rallied to a two week high on the Chicago Board of Trade on concerns
of crops damage in the US winter crop, eased a bit on Tuesday on signs of slack demand.
Wheat acreage in the current rabi season has touched a record 302 lakh hectares, raising
expectation of a bumper harvest of over 95 million tonnes. Prevailing cold conditions across
the wheat growing regions of North India are seen aiding the crop.
Government's new series of tenders for wheat exports may evoke poor response
(ET 8.1.14)
The government's new series of tenders for wheat exports opening from Wednesday may
evoke a tepid response from private traders amid weak global demand. Akin to major wheat
suppliers, India is sitting on huge stockpiles of wheat and trading companies expect prices to
soften to $270-280 a tonne free on board (FOB).
But extreme cold conditions in the United States are said to be damaging the wheat crop. On
Tuesday morning, Chicago Board of Trade ( CBOT) March wheat climbed 0.3% to $6.07 a
bushel. This could reflect in an uptick in global prices in the coming weeks. "In the next level
of tenders, we see prices at $270 FOB India on west coast and on East coast at $269 a tonne,"
said BK Anand, head, grain supply chain, Cargill India. He added that the shipment was for
February and he has not been seeing much demand.
In a tender that closed on November 15, the highest bid for wheat export was at $289.90 a
tonne.
"Bids were higher in the previous tenders as most of the traders needed to cover their
positions for making the delivery," said Shivaz Monga, director, Emmsons International. He
said quotes were dropping to the $275-285 range with a new crop from Gujarat expected by
March.
Of the 20 lakh tonne allocated in August for exports, state trading agencies have already
tendered 15 lakh tonne. Against the contracted quantity of 6.92 lakh tonne wheat, over 2.21
lakh tonne has been exported, said a government official. The government targets to export
further 9 lakh tonne wheat with tenders floated from various ports before the closure of this
financial year.
If there is a good response, the Centre might look at allocating more grains for exports, said
government and industry sources. The country exported 42 lakh tonne wheat in the previous
year, which fetched $1.4 billion in the international market.
Indian wheat was in demand in Bangladesh, Ethiopia, Sri Lanka and West Asia. "We are
expecting a good response for the tenders to opened on January 8, 10, 14 and 23," said a Food
Corporation of India (FCI) official. Multinational players such as Glencore, Cargill,
22
Singaporebased trading companies Concordia and Midstar to Indian player Emmsons have
been actively participating in the tenders floated by the government agencies.
As on December 16, total stock of wheat in the central pool was 299.39 lakh tonne with FCI
holding 120.34 lakh tonne. As on January 1, the country should have 82 lakh tonne wheat in
buffer and additional 30 lakh tonne in strategic reserves.
Sale in open market is gradually picking up. Of the 100 lakh tonne wheat and rice allocated
for sale, private traders have purchased 30 lakh tonne.
"Since July, sales have picked up. Out of the 98.87 lakh tonne wheat allocated, we have sold
28.78 lakh tonne," said a government official.
At $282/t, Swiss firm’s bid is highest for Indian wheat (BL 8.1.14)
Switzerland-based commodity trading Vitol Group placed the highest bid of $282.62 a tonne
for wheat offered for exports by State Trading Corporation (STC) from Mundra Port in the
latest tender.
Louis Dreyfus Commodities was the second highest bidder at $280.62. STC, which offered to
sell 1.6 lakh tonnes, received seven bids.
These bids were higher than the floor price for exports of $260.
The Government had reduced the floor price for exports from $300 to $260 on October 30 to
boost shipments.
The highest price fetched by the Indian wheat so far is $289.9, sometime in mid-November
for shipments from Krishnapatnam port.
However, with international prices firming up as the winter crop in the US is threatened by
cold snap, analysts said India should reject these bids and float fresh tender at a short notice.
“India would be underselling wheat at these prices as the market has firmed up in the recent
past,” said Tejinder Narang, grains trade analyst.
The Black Sea wheat is traded at $305 on free-on-board (f.o.b.) basis, while the French and
the US wheat are quoted around $300 f.o.b. for the same quality.
At around $283, Indian wheat would be at a discount of over $20. “Indian wheat deserves a
better price. The Government can reject the tender for letting the market know that it can’t be
taken for a ride” Narang said.
He further said that the Government should increase the floor price for exports to $285 as at
least seven tenders are set to come up in the next 16 days.
The Government should calibrate the floor price for exports in line with the market price to
realise the maximum.
23
Wheat has rallied on concerns that cold snap in the US could affect the crop.
Also, the aggressive buying by countries such as Egypt and Algeria has lent support to the
prices.
Over the past week, Egypt has bought 5.35 lakh tonnes from Ukraine, Russia and France at
an average price of $317 a tonne.
Algeria and Syria have bought five and two lakh tonnes respectively.
India wheat crop reaching 100 mt widens global glut (BS 10.1.14)
Wheat production in India, the world's second-largest grower, will probably climb to a
record, as all-time high domestic prices boost planting, adding to global grain surpluses.
The harvest could total 100 million tonnes (mt) in the marketing year starting April 1,
Agriculture Commissioner J S Sandhu said on Thursday. Output had fallen 2.5 per cent to
92.5 mt a year earlier from a record 95 mt in 2011-2012, according to the agriculture
ministry.
Crop prices from wheat and corn to canola are slumping as record harvests from the US to
Brazil expand global grain inventories. The Standard & Poor's GSCI Index of eight crops fell
to the lowest since July 2010 on Wednesday, extending its biggest annual drop since 1981.
Record output might force India to accelerate exports from state reserves to make room for
the new crop, extending a decline in global food costs tracked by the United Nations.
"Exports will pressure global prices," said Vedika Narvekar, chief manager at Mumbai-based
Angel Commodities Broking. "Exports will largely depend on the crop in the US and Russia.
Domestic prices will be stable."
Wheat futures tumbled 22 per cent in 2013, as world production climbed 8.4 per cent to a
record 711.4 mt versus consumption of 699 mt, according to the US Department of
Agriculture (USDA). Futures fell to $5.8675 a bushel on Wednesday, the cheapest since
December 2011, and were at $5.8825 in Chicago on Thursday.
24
'Exports difficult'
Prices in India rallied to an all-time high on December 27, after the government increased the
minimum price for farmers to a record. The February delivery contract fell one per cent to Rs
1,640 ($26.4) a quintal on the National Commodity & Derivatives Exchange in Mumbai on
Thursday.
"The international market is not very promising for at least six months," said Abdolreza
Abbassian, a senior economist at the UN's Food & Agriculture Organization. "If India's
output increases, as it looks, global prices will fall below local prices, making exports
difficult."
Area for wheat in India may reach a record of 31 million hectares this year, said Sandhu.
Sowing increased 5.6 per cent to 30 million hectares as of Janu-ary 3, compared with 28.6
million a year ago, according to the ministry. The average yield of wheat in India is three
tonnes a hectare and the crop is planted from October and harvested in April and May.
Monsoon, winter
"The crop will get the benefit from a normal winter predicted," said K K Singh, head of
Agromet division at India Meteorological Department. "More than average monsoon rains
and its late withdrawal provided adequate moisture."
State stockpiles totalled 31 mt on December 1, compared with 37.7 mt a year ago, according
to the Food Corp of India. The government raised the minimum price paid to growers to an
all-time high of Rs 1,400 a quintal for the 2013-2014 crop. The government purchases rice,
wheat and oilseeds from farmers at guaranteed prices and sell these to the poor at subsidised
rates through state-run shops, to prevent distress sales in the open market.
Wheat shipments from India could drop five per cent to 6.5 mt in 2013-2014, according to the
USDA. Exports totalled 2.8 mt between April 1 and December 13, according to ministry
estimates.
Wheat sowing up by 7 pc to 31.18 million hectares (ET 10.1.14)
Area under wheat cultivation has rose by 7 per cent to an all-time high of 31.18 million
hectares so far in the ongoing rabi season, boosting prospects of a record production this year,
Agriculture Ministry said today.
In the case of wheat, more area has been reported from Madhya Pradesh (14.22 lakh
hectares), Rajasthan (4.88 lakh hectares) and Uttar Pradesh (4.73 lakh hectares), the ministry
added.
25
Wheat was grown on 29.12 million hectares in the same period last year. Sowing of wheat,
and other rabi crops, starts in October and harvesting takes place from April.
The country had produced a record 259.29 million tonnes (MT) of wheat in 2011-12. In the
following year, output fell marginally to 255.36 MT.
The total area under rabi crops has touched 61.90 million hectares so far, against the 58.70
million hectares in the year-ago period.
Among other rabi crops, pulses acreage has increased to 15.51 million hectares this season
from 14.73 million hectares last year, taking advantage of rains.
Area under oilseeds has increased to 8.62 million hectares during the period from 8.27
million hectares last year.
Total area under rice sown in the rabi season has also risen to 0.72 million hectares during the
week ending today from 0.55 million hectares in the year-ago period.
However, the area under coarse cereals has decreased to 5.85 million hectares from 6 million
hectares a year ago.
The government has set a rabi production target of 92.50 million tonnes (mt) for wheat, 12 mt
for pulses, 14 mt for rice, 4.4 mt for maize and 1.5 mt for barley.
State Companies export 3 lakh tonnes of wheat from FCI godowns (BL 12.1.14)
State-owned trading firms have so far exported about 3 lakh tonnes of wheat from FCI
godowns out of 20 lakh tonnes allowed by the government. “About 3 lakh tonnes of wheat
has been shipped so far,” a senior government official said.
In August last year, the Cabinet Committee on Economic Affairs (CCEA) had allowed 20
lakh tonnes of wheat exports till June 2014. The government decided to export wheat as the
Food Corporation of India (FCI) had surplus stocks.
According to the official, State Trading Corporation of India, PEC and MMTC have so far
floated tenders to export about 17 lakh tonnes of wheat, of which 7 lakh tonnes have been
awarded.
The government had lowered the floor price for wheat exports to $260 per tonne from $300
per tonne. The US, Canada and Australia were selling the same quality of wheat in the range
of $270-275 a tonne, he said. The FCI expects to earn more than Rs 3,400 crore from wheat
exports in the current financial year.
“With heavy snowfall in USA and Canada, there has been a logistic jam in these countries, so
in coming days, prices quoted for India wheat are likely to go up,” a trader said.
26
So far, the average price at which Indian wheat has been exported is about $281 per tonne,
with the highest at $289.9 per tonne in November last year for shipment from Krishnapatnam
port.
The government had allowed export of 4.5 million tonnes of wheat from FCI godowns during
the previous financial year, of which PSUs sold about 4.2 million tonnes at an average price
of $311.38 per tonne for over Rs 7,000 crore.
Recently, a Parliamentary committee had suggested there is an urgent need to reduce the food
subsidy burden and recommended that the government should fix an upper limit for
foodgrain storage.
FCI is the government’s nodal agency for procurement and distribution of foodgrains.
Government likely to allow more wheat exports soon as record crop eyed (ET 17.1.14)
The country is likely to soon permit more wheat exports as the world's second-biggest
producer of the grain looks set to harvest a record crop this year, government sources said,
swelling stockpiles in an oversupplied world market.
The country is extremely cautious about allowing exports of wheat, a staple for its 1.2 billion
population, and lifted a four-year-old ban on shipments in 2011 by allowing only private
traders to sell on the world market.
But a succession of bumper crops and poor storage conditions that have led to substantial
wastage have prompted a rethink on exports. Since last fiscal year India has exported nearly
4.5 million tonnes of wheat from state warehouses, and state-backed traders are now selling
another 2 million tonnes via tenders.
Any extra supplies from India, though, could dampen Chicago prices which have fallen
around 9 per cent in the past month due to rising global supplies. Leading producer Ukraine
has already raised its 2013 grains output forecast to a record.
"In all likelihood, the crop is going to be an all-time high so more exports are almost certain
now," said an Indian government source directly involved in the decision-making process.
"But we are yet to take a call on the quantity to be shipped out."
Of the 2 million tonnes of wheat currently allowed for exports from government warehouses,
state-run traders have already sold almost a million tonnes.
Three government-backed traders - State Trading Corp. , MMTC Ltd and PEC - are getting
good response in their tenders after the government in October cut the floor price for exports
to $260 a tonne to boost shipments.
Any decision on additional exports could come in March.
"Most likely a formal decision for more exports will come when another one million tonnes
27
will be sold out. By then, we will also get a clear idea about the crop size," said another
government source who is also a decision-making authority.
Farmers grow only one wheat crop in a year, with planting in October-September and
harvests from March.
This spring farmers would harvest more than 100 million tonnes, Farm Minister Sharad
Pawar said on Wednesday, the seventh the seventh consecutive wheat crop to exceed
demand. In 2013, India produced 94.88 million tonnes.
A jump in the area planted with wheat and favourable weather conditions are the main
reasons behind expectations of a record crop in the country which needs 76-77 million tonnes
of wheat a year to feed its population.
Farmers have planted wheat on a record 31.14 million hectares, up from 29.65 million
hectares in the previous year, said Indu Sharma, chief of the state-run Directorate of Wheat
Research in Haryana, a major wheat growing state.
"Crop condition is excellent. Colour is good. There are signs that the crop will be more than
100 million tonnes," Sharma said.
The government buys grains from local farmers at fixed prices to protect them from any
distress sale and build stockpiles to sell subsidised food to the poor. Bumper harvests
mean more stocks at government warehouses.
On Jan. 1, wheat stocks at state-run warehouses were 28.0 million tonnes, substantially
higher than a target of 8.2 million tonnes.
Wheat sowing up by 6% to 31.4 million hectares so far (ET 24.1.14)
Area under wheat cultivation has risen by 6 per cent to an all-time high of 31.4 million
hectares so far in the ongoing rabi season, boosting prospects of a record output this year,
Agriculture Ministry said today.
Wheat acreage stood at 29.6 million hectares in the same period last season. Wheat, a major
rabi crop, is sown from October, while harvesting begins from April.
According to the latest data released by the Agriculture Ministry, area under cultivation of
rabi rice, pulses and oilseeds as on today is higher than that in the year-ago period.
Pulses area has increased to 15.6 million hectares as on today from 14.9 million hectare in the
year-ago period, while area under oilseeds has risen to 8.8 million hectare from 8.5 million
hectares.
Similarly, area sown to rice has increased to 1.5 million hectare from 1.07 million ectares in
the review period.
However, area under the cultivation of coarse cereals has marginally declined at 6 million
28
hectare as on today, from 6.19 million hectare in the year-ago.
Total area under all rabi crops has increased to 63.51 million hectare so far this rabi season,
as against 60.33 million hectares in the year-ago.
Looking at the encouraging sowing figures, Agriculture Minister Sharad Pawar had
recently said the country's total wheat output is expected to cross 100 million tonnes, setting a
fresh record for this year.
Pawar had also said that overall foodgrains production in 2013-14 crop year (July-June) is
likely to break the previous record of 259.29 million tonnes achieved in 2011-12.
29
PULSES
Redgram farmers seek 50% rise in MSP for FY14 (BS 27.12.13)
Cost of production has gone up well above MSP of Rs 4,300 per quintal due to rise in input
costs
Redgram (or Tur) farmers in Karnataka, which have seen a steep rise in the cost of
cultivation, have demanded a 50% rise in minimum support price (MSP) for the year 2013-
14. The farmers have also seen crop damage due to Helen cyclone in major parts of growing
regions in the state.
The prices of Redgram in Gulbarga, the Tur Bowl of India, have crashed to Rs 3,600 per
quintal, a decline of 16% over the MSP declared for the year due to the arrival of fresh crop.
The Central government has announced a MSP of Rs 4,300 per quintal for 2013-14.
“The cost of cultivation has seen a steep rise due to rise in input costs this year. The prices of
fertiliser (DAP) have gone up by 2.5 times to Rs 1,350 per bag as against Rs 530 per bag last
year. Besides, the labour shortage has resulted in the rise of daily wages paid to farm
labourers,” Basavaraj Ingin, president, Karnataka Pradesh Redgram Growers' Association
said.
Gulbarga district in northern Karnataka contributes 15% of national Tur output. This year,
more than 800,000 hectares of area was cultivated for Tur and the estimated production was
around 560,000 tonnes from Gulbarga district alone.
He said the total cost of cultivation per acre amounts to Rs 12,000-14,000, which means the
cost of cultivation per quintal of Tur has touched Rs 4,500 per quintal as against the MSP of
Rs 4,300 per quintal, making it uneconomical for the farmer to grow. As a result of the price
crash, which is below the MSP as well as cost of cultivation, it would be highly
unremunerative to farmers, he said.
“We have requested the Central government through a memorandum to Union Railway
minister Mallikarjun Kharge, who hails from the Tur growing region of Gulbarga, to enhance
the MSP to Rs 6,450 per quintal based on the recommendations of M S Swaminathan in his
report of Second Indian Farmers' Commission,” Ingin said.
The government of India, instead of supporting farmers in the country, has resorted to import
of pulses, which are meant "for consumption of pigs".
There has been a widespread damage to the Tur crop in Karnataka due to Helen cyclone
effect and the rains thereafter and also the heavy fog for three days subsequently. According
to the estimates by the state agriculture department, the crop damage is about 80% in
Chincholi taluk and 70% in Chittapur taluk.
30
“There is a need to conduct a joint survey by the departments of agriculture and revenue and
award a compensation of Rs 25,000 per acre wherever the crop is insured,” Ingin said.
The drop in production could be as high as 50% across the state. At the national level the
pulses scenario was precarious. As against the country’s requirement of 18 million tonnes the
production has been only 14 million tonnes.
“The country can import a maximum of 3 million tonnes of pulses. And this year in particular
there is an additional shortage of 2 million tonnes. There will be an overall shortage of 3 m
tons” Ingin, who heads the Pulses Division of Confederation of Indian Farmers Associations
(CIFA), added.
He also urged the Karnataka government to intervene immediately and start procurement of
Tur through the Tur Development Board.
"The Tur Development Board is totally defunct and it is necessary for the government to
announce a Rs 100 crore financial assistance for the Board to procure Tur from farmers. We
have asked the state government to announce an additional support price of Rs 1,200 over
and above the MSP of Rs 4,300 per quintal," Ingin added.
Time to open up pulses export as production rebounds (BL 2.1.14)
Pulses imports have slowed down considerably following a significant rebound in domestic
production this year and softer, consumer-friendly prices.
Compared with 33.6 lakh tonnes of aggregate arrivals during 2012-13 fiscal, imports during
the first six months (April-September) of the current fiscal were 14.2 lakh tonnes.
At the current pace of arrivals, total imports during the current fiscal are likely to be lower
than 30 lakh tonnes. Currency movements have also played a part in slowing imports.
Rapid weakening of the rupee and its recovery subsequently, albeit partial, in 2013 caught
many traders by surprise. The effect of slowing imports is clearly felt in the world market.
Canadian exporters are a little worried over slower pace of shipments.
Canada is India’s largest supplier of pulses, mainly yellow pea. Expressing concern, Martin
Chidwick of Agrimonde Pulse Inc, Canada, recently enquired: “What is happening in India
that has seen our yellow pea shipping slip?” The answer is that chana (gram) harvest in 2013
was a record at 89 lakh tonnes against 77 lakh tonnes a year ago.
No wonder, chana prices have been ruling steady to soft in the last several months.
31
It is widely believed that flour made out of imported yellow pea is blended with chana flour.
Anecdotal reports from traders suggest that offtake in the local market is somewhat sluggish.
Extended South-West Monsoon, excellent subsoil moisture and higher minimum support
price have combined to boost rabi plantings.
According to the Weather Watch Group of the Agriculture Ministry, as of December 20, area
under various rabi pulses was 126.8 lakh hectares, higher than 121.2 lakh hectares during the
corresponding period a year ago.
In particular, acreage under gram or chana (desi chick pea) has increased to 87 lakh hectares
against 83 lakh hectares last year. Moong plantings have also reverted to trend at about 2.3
lakh hectares.
Crop prospects appear bright on current reckoning. Rabi harvest has the potential to reach
120-125 lakh tonnes.
With kharif harvest estimated at 60 lakh tonnes, the annual production of pulses may total
180-185 lakh tonnes.
It may, however, fall slightly short of the annual target of 190 lakh tonnes.
With rebound in production and softer prices, the time is most opportune for the
policymakers to open up pulses export, even if in a limited way.
Such as open door foreign trade policy (free import and export) will bring multiple spinoff
benefits including providing price support to growers, utilisation of idle milling capacity and
foreign exchange earning.
The Planning Commission’s working group has projected pulses demand for 2013-14 at
217.7 lakh tonnes.
However, the actual demand may turn out to be higher because of rising rural incomes,
consumer-friendly prices and current low per capita consumption.
Pulses body asks Govt to open up exports (BL 9.1.14)
The pulses trade has reiterated its demand to lift the ban on exports, as some pulses are ruling
below the minimum support price levels on higher output.
“The moment exports are allowed, the trade will get dynamic and the milling industry will
stand to benefit and the market will find its balance,” said Pravin Dongre, Chairman of the
Indian Pulses and Grains Association.
Further, allowing exports will give a floor to the market as prices of pulses such as chana and
tur are ruling below the support levels, he said. If this trend of prices ruling below the support
32
levels continues for another year, it may force farmers to shift to other crops such as rice,
wheat or cotton, Dongre said.
The Government had allowed exports of pulses in 2001 but banned shipments, except for
kabuli chana (chickpea) in 2007 after a sharp increase in prices.
However, domestic production has increased in recent years as also consumption.
“The Government should open up exports, but impose quantitative restrictions to ensure
adequate domestic availability,” said Bimal Kothari, Vice-Chairman of the association.
Kothari said export demand exists for pulses, such as chana, processed lentils, moong and tur
from countries in West Asia and South Asia.
India is the largest producer of pulses – estimated at 19 million tonnes in 2013-14 and is also
the largest consumer.
The country is expected import around 3.2 million tonnes, about 10 per cent lower than last
year’s 3.5 million tonnes.
Dongre also announced that The Pulses Conclave 2014, the second edition of the global
pulses and trade event, will be held in Goa from February 19 to 21. The conclave, a platform
for the Indian and global stakeholders to converge and connect, will seek to refocus the
attention of Indian policy makers on the sector in terms of processing, distribution, value-
addition and nutritional aspects. The conclave is expected to attract over 1,000 delegates,
including overseas participants.
He said the United Nations has declared 2016 as the International Year of Pulses, a move that
would raise the level of awareness globally on the role pulses can play in advancing health,
nutrition, food security and environmental sustainability.
Agriculture Ministry to move Cabinet note to lift pulses export ban (ET 15.1.14)
The Agriculture Ministry will soon move a Cabinet note for lifting the 8-year long ban on
export of pulses to arrest fall in domestic prices that are ruling below the MSP level on
expectations of higher output.
Export of pulses, except for kabuli chana, was initially prohibited for six months in 2006. It
was then extended from time-to-time up to March 31, 2014.
"To protect farmers from sharp fall in domestic prices, we are soon moving a Cabinet note on
lifting the export ban on pulses," a senior Agriculture Ministry official told PTI.
The ministry is mulling over allowing export of pulses without "quantitative restrictions" and
placing the commodity under the open general licence category on the lines of sugar, wheat
33
and rice, the official said.
Such a move is necessary to contain further fall in domestic pulses prices, which are ruling
below the minimum support price (MSP) levels in most parts of the country on expectations
of a bumper crop, the official added.
An industry body has also sought the removal of ban on pulses export to balance the
domestic market prices so that with better prices farmers are encouraged to grow pulses in the
coming years.
The ministry is expecting a record pulses production at 19 million tonnes in 2013-14, as
against 18.45 million tonnes last year, as good monsoon in rainfed areas has boosted crop
prospects.
The demand is estimated to be around 21.77 million tonnes for the same period. The gap
would be met through imports. The country's annual pulses imports have normally been in
the range of 3-3.5 million tonnes. Higher production is expected to bring down imports in
2013-14.
34
35
EDIBLE OILS/ OILSEEDS
Consumption growth gives relief to groundnut oil mills (BS 3.1.14)
Growth in consumption has given some relief to the groundnut mills of Gujarat which are
back to functioning normally after almost two years. The reduction in prices of groundnut oil
by around 36 per cent has led to the growth in demand.
According to industry sources, the price difference between groundnut oil and other edible
oils has reduced and as a result consumption has increased almost 40-50 percent in past two
months.
"Due to higher groundnut production in Gujarat, availability of raw material for crushing has
improved for groundnut oil mills which, in turn, decreased the price of the oil almost 36 per
cent as compared to last year", said Samir Shah, president of Saurashtra Oil Mills Association
(SOMA).
Last year, at this time, refined groundnut oil was traded at Rs 2,250 for a 15 kg tin, an all time
high price.
At present, however, groundnut oil price is ruling at around Rs 1,440-1,450 for a 15 kg tin,
which is a drop of around 36 per cent or Rs 800 per tin in a year's time. Similarly, loose
groundnut oil prices have decreased from Rs 1,310 per 10 kg to Rs 775 per 10 kg.Samir Shah
said, "With the drop in prices, people who had diverted to other edible oils, mainly cotton
seed oil, are now back to groundnut oil. This has increased the consumption of the oil in past
two months."
Before Diwali, hardly 50-70 tonnes were traded per day and now demand has crossed over
250 tonnes per day.
There are about 200 groundnut oil mills in Gujarat. However, since the last two years hardly
40-50 mills were in working position due to lower production of groundnut and higher prices
reducing the demand of the commodity. Moreover, good export of peanuts had created
scarcity of groundnut for crushing.
With increase in demand now more than 150-175 mills are in working.
Ravjibhai Mandanaka, president of Gondal Oil Mills Association said, "Main reason for
higher consumption is price difference between groundnut oil and other edible
oils."Difference between groundnut oil and cotton seed oil is about Rs 350 per 15 kg tin now
which was about Rs 1160 per 15 kg earlier. The industry insiders said that average groundnut
oil production is about 200,000 tonnes per annum which may increase to over 300,000 tonnes
36
per year because of good groundnut production. SOMA has predicted 2.40 million tonnes
kharif groundnut production in Gujarat for this year which is almost three times higher as
compared to last year's 800,000 tonnes.
Higher rapemeal export lifts oilmeal shipments in December (BL 7.1.14)
Oilmeal exports increased three per cent in December to 5,86,437 tonnes from 5,67,199
tonnes in the same period a year ago as demand for rapeseed meal rose significantly.
Export of oilmeals in the first three quarters of this fiscal was up seven per cent at 31,67,155
tonnes against 29,58,218 tonnes in the same period a year ago.
It has been a roller-coaster ride for oilmeal exports in the last three quarters.
Second quarter
Oilmeal shipments in the first quarter were down 20 per cent due to drastic drop in export of
soyameal. In the second quarter, it jumped 43 per cent due to large-scale purchase of
soyameal by Iran and Europe, while it moved up 14 per cent due to overall increase in export
of soya, rape and castor meals.
The depreciation in the rupee also boosted exports in the last two quarters.
While soyameal prices increased marginally in December to $559 (Rs 34,552) a tonne against
$557 (Rs 34,428) a tonne in November, rapeseed meal remained unchanged at $242 and
castorseed was up at $108 a tonne ($97 a tonne).
Between April and December, oilmeal import by South Korea has been reported at 8,21,811
tonnes against 6,47,331 tonnes last year consisting of 3,88,148 tonnes of rapemeal, 3,81,416
tonnes of castormeal and 52,247 tonnes of soyameal.
India is fast losing its share in the Vietnam market due to stiff competition from other origins
and increased availability from domestic crushing.
Shipments to Vietnam more than halved to 1,41,479 tonnes (3,86,836 tonnes) while to
Indonesia, too, they dropped 48 per cent at 76,604 tonnes (1,46,323 tonnes). Japan imported
2,37,386 tonnes (3,74,226 tonnes) consisting of 3,840 tonnes rapemeal, 833 tonnes
castormeal and 2,32,713 tonnes soyameal.
Iran doubled its import to 9,23,779 tonnes (4,93,669 tonnes), including 9,21,117 tonnes of
soyameal, and 2,662 tonnes of rapemeal. Thailand imported 2,35,372 tonnes (2,31,199
tonnes) oilmeals, consisting 1,03,028 tonnes of soyameal and 1,32,344 tonnes of rapemeal.
Europe turned out to be a bigger market for Indian non-GMO soyameal.
Europe imported 2,40,045 tonnes compared with 1,20,731 tonnes of last year.
37
Oilmeal exports rise to 31.7 lakh t in April-Dec (BL 7.1.14)
India’s oilmeal exports rose 7 per cent to 31.67 lakh tonnes during April-December this fiscal
due to significant increase in shipments to Iran, South Korea and Europe.
The country had exported 29.58 lakh tonnes during the same period last fiscal, according to
data compiled by the Solvent Extractors’ Association of India.
In December, shipment of oilmeals — used as animal feed — marginally increased by 3 per
cent to 5.86 LT from 5.67 LT in the same month in 2012.
“Export of oilmeals during April-December 2013 is reported at 31.67 LT compared with
29.58 LT during the same period of last fiscal, up by 7 per cent,” the association said in a
statement.
Maximum increase in exports was to Europe, Iran and South Korea. Shipments to Europe
doubled to 2.4 LT in April-December period of the current fiscal against 1.20 LT in the year-
ago period.
Similarly, exports to Iran surged to 9.23 LT from 4.93 LT, while shipments to South Korea
increased 27 per cent to 8.21 LT from 6.47 LT.
CACP asks Nafed to increase groundnut procurement to prevent further fall in prices
(FE 13.1.14)
Groundnut market prices are still ruling below the minimum support price (MSP) despite
Nafed procuring more than 1.1 lakh tonne of the nut from farmers, mostly in Gujarat and
Rajasthan, under the price support scheme in the last one month.
The Commission for Agricultural Costs and Prices (CACP) has asked the National
Agricultural Cooperative Marketing Federation of India (Nafed) to increase the volume of
groundnut procurement by buying more quantity of the commodity from farmers so that
market prices do not decline further.
According to Agmark data, groundnut prices in various markets of Gujarat are presently
around R3,200 per quintal while in Rajasthan they are around R3,000 per quintal against the
MSP of R4,000 per quintal.
In anticipation of bumper groundnut crop in the key growing state, the market prices have
fallen below MSP, forcing the key oilseeds procuring agency, Nafed, to intervene in the
market.
“Nafed must widen its base of procurement as prices are still below MSP and the government
should liberalise edible oil export norms,” CACP chairman Ashok Gulati told FE. He also
requested the commerce ministry to reconsider its decision of allowing groundnut exports
only in packs of 5 kg.
38
A Nafed official said the federation has purchased 67,000 tonne in Gujarat and 40,000 tonne
in Rajasthan from farmers at the government approved MSP. The federation has also initiated
procurement operations in Maharashtra, Karnataka and Uttar Pradesh.
Nafed, in collaboration with state government-owned marketing agencies, has set up 29
centres in Gujarat and six centres in Rajasthan for purchasing groundnut.
In a bid to boost oilseed production to reduce the country's dependence on imports of edible
oil, MSP for groundnut has been hiked from R2,700 per quintal in 2011-12 to R4,000 per
quintal in 2013-14.
“We have been providing incentives to farmers to boost oilseed production. The government
must provide support in purchasing their produce for boosting production and reducing our
dependence on import of edible oil,” Gulati said.
Groundnut contributes to nearly 25% of total oilseed production in the country. Nearly 75%
production is during June-September and the rest during November-March, known as kharif
and rabi seasons respectively. India is one of the major groundnut exporting countries after
China.
The country exported 5.35 lakh tonne of groundnuts worth R4,065 crore during the year
2012-13. The major export destinations were Indonesia, Vietnam, Malaysia, Philippines and
Thailand.
Import of vegetable oils in November, December 2013 increases by 25% (ET 13.1.14)
The import of vegetable oils in India increased by 25% in November and December
2013, driven by availability of cheaper Sunflower oil as compared to the Soyabean oil.
The Solvent Extractors' Association of India (SEA) has compiled the import data of
Vegetable oils (edible and non-edible) for the month of December, 2013. Import of vegetable
oils during December 2013 is reported at 1,067,709 tonnes compared to 908,587 tonnes in
December 2012, consisting of 1,052,550 tons of edible oils and 15,159 tons on non-edible
oils, up by 18%. The overall import of vegetable oils during ovember and December 2013 is
reported at 2,012,018 tonnes compared to 1,608,958 tonnes, up by 25%.
An SEA release stated: "In last two months import has surged as Sunflower oil was cheaper
to Soybean oil encouraged larger shipment of Sunflower oil. Spread between RBD Palmolein
and Crude Palm Oil reduced to less than US$ 10 per ton made RBD Palmolein more
attractive over CPO and also in anticipation of likely increase in import duty, palm oil
shipments were higher during the month."
December, 2013 has shown second highest record import of vegetable oils at 10.67 lakh tons,
since 1994. In January 2013, import was 11.57 lakh tons.
39
Palm oil prices may slip after March on rising oilseeds supply (BL 20.1.14)
Crude palm oil prices might have held up well in recent times supported by a host of factors
including seasonality and anticipated Indonesian internal demand, but a moderately bearish
phase is rapidly emerging.
Several looming bearish factors including strong South American soyabean crop, expected
beginning of the palm production up-cycle from April onwards and narrowing spread of palm
oil prices with other oils are likely to play out soon.
Supply glut
From a supply perspective, production reports from various origins suggest that soyabean,
rapeseed and sunseed markets are well-supplied.
Expectation of large harvest in South America (Brazil, Argentina) on the back of favourable
weather conditions pulled soya futures down 3.5 per cent in December.
Falling soya oil prices have narrowed the differential with CPO prices, making the latter less-
attractive. The current price differential of $70 a tonne is less than half of the historical
average differential of $150 between soya and palm oils.
The notable point is that the price fall was despite higher usage of oil by the biodiesel
industry.
Starting February, Brazil’s large harvest estimated at a record 89 million tonnes (mt) (82 mt)
will come into the market and augment supplies. To be sure, Brazil’s crop is nearly equal to
the 89.5 mt that US harvested in October last.
Possibly next year, Brazil can relegate the US to the second position in soyabean production.
Argentina is set to produce an estimated 54.5 mt, a 10 per cent rise from lat year.
Palm oil prices are already under pressure after Indonesia forecast higher production. USDA
has forecast world palm oil production at 58.4 mt for 2013-14, up from 55.8 mt in the
previous year.
In addition, lower crude oil (mineral oil) prices caused by reduced geopolitical tensions can
pressure the vegoil complex down.
Importantly, there is perceived risk that soya oil prices may lose support provided by
biodiesel industry if tax credit is not extended.
There are other incidental factors such as Malaysian palm oil stocks estimated at very close to
the psychological bearish mark of two million tonnes.
Recently, India announced a hike in customs duty on refined oils from 7.5 per cent to 10 per
cent ad valorem in order to discourage rising refined oil import.
40
Higher inventories
Additionally, a large rapeseed/mustard crop estimated close to 8 mt in getting ready for
harvest. Inventories at the origins and the destinations are also quite high. For instance,
India’s port-based and pipeline stocks are estimated at a staggering 1.6 mt.
A higher figure is being talked about for China. Palm oil exports are likely to slow in the
coming months as the world vegoil market is well supplied and there will competition to
capture market share.
Yet the market may not witness a major sell-off as production in January and February will
continue to slow because of seasonal effect. The cash-rich Malaysian industry will manage to
defend CPO prices in the MYR 2,400-2,600 a tonne range.
41
MILK
Oil India to enter dairy sector; inks pact with Irma for study (BS 31.12.13)
Detailed project report will be prepared after the study in two districts of Assam where the
company has significant presence
As part of a corporate social responsibility (CSR) initiative, energy major Oil India Ltd (OIL)
has decided to step into dairy sector and has signed an agreement with Institute of Rural
Management, Anand (Irma) to carry out a feasibility study.
According to company sources, a detailed project report (DPR) would be prepared after the
study in two districts of Assam where Oil India has significant presence.
"It is going to be a significant CSR initiative of the company. This project is aimed at filling
the gap in milk production in the North-East and giving employment opportunity to the
youths of Assam," a source said. The state-run OIL has signed an memorandum of
understanding (MoU) with Irma in Gujarat around 10 days ago for the study that will cover
select villages in Dibrugarh and Tinsukia districts of the state.
The project is planned to be developed on the lines of the 'Amul' model.
"Through this MoU, OIL aims to formulate a DPR on the basis of baseline survey for
implementing the company's 'Dairy Project'.
The DPR will enable us to devise a roadmap and a long-term broad vision plan for the same,"
an official said. The study funded by OIL will focus on the prospects of developing a
cooperative dairy project in Assam.
When contacted, OIL General Manager N R Deka said: "The baseline survey for the project
shall be done with the objective of increasing milk production and dairy products by
providing opportunity to unemployed youths."
The feasibility study will focus on quantitative, qualitative and participatory methods of
enquiry where secondary data will be collected from various sources, helping the company to
identify dairying as an alternative source of livelihood, he added.
42
Amul plans to sell liquid milk in US in a year (BS 3.1.14)
Company will start making yogurt, lassi and curd in New Jersey in a few months
Americans will soon be able to have Amul milk for breakfast. Gujarat Co-operative Milk
Marketing Federation (GCMMF), which markets milk and dairy products under the Amul
brand, plans to launch liquid milk in the US within a year.
Besides, GCMMF has ambitious plans to export milk
products from the US to neighbouring Canada as well as
countries in Europe in the long-run. “There is definitely a plan
to launch it (liquid milk) in the US market. However, it
would take some time,” said R S Sodhi, managing director of
GCMMF. Exports to Canada can start soon, while exports to
the European countries can take a while, he added.
GCMMF is all set to start manufacturing ghee (clarified
butter) and paneer (cottage cheese) at a plant in New
Jersey from February this year. Kaira (Anand) District Cooperative Milk Producers Union
Ltd (Amul Dairy) has entered into an agreement with a local manufacturing plant owned by a
non-resident Indian to start manufacturing.
Already, Amul has tied up with a local cooperative dairy to procure milk for processing. In
the long run, it can also opt for buying directly from local dairy farmers. Sodhi said: “We
would pay at par with the prevalent rates in the US. Procurement prices in the US are more or
less at a similar level as that in India.”
Initially, it would require around 50,000 litres of milk a day. It plans to make around five
tonnes of ghee a day and two tonnes of paneer a day in the first phase, and eventually add
products such as lassi, yogurt, shreekhand, besides scaling up production for ghee and paneer
based on demand.
“We usually export ghee from here to the US, but it takes around one-and-a-half month to
reach. Also, while there is a promising market for paneer in the US, both for households and
restaurants, we cannot export from here as it is a perishable commodity,” said R K
Srivastava, managing director, Amul Dairy. Amul plans to start selling fresh dairy products in
US market in a few months and liquid milk in a year’s time ,he added.
According to Srivastava, no additional investment would be required for launching liquid
milk. The local manufacturing unit already has the capacity to make paneer and has invested
close to $2 million for manufacturing ghee.
Amul plans to sell its products in markets such as New Jersey, New York, Boston, which
have a significant Indian population. “There are around four million Indians in the area,
together with around five million south Asians like Pakistanis and Bangladeshis. It is like
catering to cities like Mumbai, Delhi which have a huge population,” Srivastava said.
43
With four million Indians (around one million families approximately) consuming even one
kg of dairy product, the demand can reach 1,000 tonnes in a month from households alone.
The locally made products would also be 10-15 per cent cheaper than Amul products
imported from India as there is a 20 per cent duty.
'Mini dairies' to spread white revolution in UP (BS 13.1.14)
There is proposal to set up 150 mini dairies spread over all 75 districts in state
To boost dairy sector, the Uttar Pradesh government has drafted a blueprint for setting up
‘mini dairies’ across the state with interest subsidy.
There is a proposal to set up 150 mini dairies spread over all the 75 districts in the state. Each
dairy unit to be set up by individual entrepreneurs would comprise 50 cattle heads.
The government would provide interest subsidy to these units on 75% of the bank credit
secured through public sector commercial banks. State animal husbandry minister Raj
Kishore Singh has directed officials to encourage entrepreneurs set up such mini dairies in
UP.
A typical unit would require investment of about Rs 52 lakh, of which 25% of margin money
would be incurred by the entrepreneur. The rest could be secured through loans repayable in
the next 5 years.
The dairy owner would be mandated to get animal insurance and only rear cattle of single
breed.
The state accounts for the largest share of about 18% of the total milk production in India and
also has the largest cattle population.
The major towns in UP alone consume almost 7.5 million litres of milk/day, of which
Lucknow consumes nearly a million litres of liquid milk/day.
Currently, India is amongst the largest milk producers in the world. The country’s annual
milk production is pegged at 128 million tonnes, of which 66% is consumed in liquid milk
form and the rest in value added forms such as curd.
The nodal agency of dairy development in UP is Pradeshik Cooperative Dairy Federation
(PCDF), which was established for multiple objectives of increasing milk production,
processing/marketing of milk/dairy products and development of infrastructure to promote
dairy industry.
Dairy is one of the priority sectors for the state government to increase rural income.
44
Amul Dairy invests Rs 150 crore in cattle-feed plant (BL 14.1.14)
In order to secure animal feed supplies for the milk producers, Anand-based Kaira District
Cooperative Milk Producers’ Union Ltd or Amul Dairy is setting up a cattle feed factory with
capacity to manufacture 1,000 tonnes a day.
Amul Dairy has invested Rs 100-150 crore towards setting up the new plant near Kapadvanj
in Kaira district in Gujarat.
The plant is likely to be commissioned in a year’s time.
With the new plant, Amul is set to become Asia’s largest cattle feed manufacturer with a total
capacity of over 2,000 tpd.
The dairy has an existing cattle feed making plant with capacity of 1,100 tpd near Anand at
Kanajri.
“The work has already begun to set up the new plant. The machinery is of a German make
and has been brought from Denmark.
It has ultra modern technology including robotic processing techniques,” said Ramsinh
Parmar, Chairman, Amul Dairy.
“Initially we will manufacture around 700 tonnesof cattlefeed. Going forward, the production
would be increased,” said Parmar. Amul Dairy makes range of dairy products, including
cheese, paneer and chocolates, besides others at its plants at different locations in and outside
Gujarat.
The dairy, which procures 19 lakh litres of milk daily, is set to achieve a record Rs 3,100
crore-3,200 crore turnover during the current fiscal.
Currently, the dairy manufactures Amuldan (Bypass Protein Feed), Calf Starter, Milk
Replaced, Mineral Mixer, Medicated Feed, Urea Mineral Molasses Block.
According to dairy officials, cattle feed constitutes around 70-75 per cent of the total milk
cost. Hence, a larger capacity would mean lower cost and secured supply with consistent
quality for the milk producers.
45
VEGETABLES- POTATO/ONIONS
Export floor price for onion cut to $150/tonne (BL 27.12.13)
The Centre has further slashed the minimum export price for onions to $150 a tonne from the
prevailing $350 a tonne to facilitate more shipments abroad.
third instance
The latest reduction in the floor price is the third in as many weeks. The floor price for export
has been reduced from $800 since December 10.
The move follows a sharp decline in prices of the vegetable in the key growing regions of
Maharashtra, where realisations by growers have slumped by about 50 per cent over the past
four weeks.
Govt initiative
The reduction in the floor price came after Wednesday’s meeting between Agriculture
Minister Sharad Pawar and Commerce Minister Anand Sharma to discuss issues related to
decline in onion prices in Maharashtra. An inter-Ministerial committee consisting of officials
from Agriculture, Commerce and Consumers Affairs Ministry regularly monitor arrivals and
wholesale modal and retail prices of onion.
The Government will make appropriate interventions in future as and when required to
balance the interests of farmers and consumers, an official statement said.
modal prices
The modal price or the rate at which most trades took place in onion in Maharashtra’s
Lasalgaon Agricultural Produce Marketing Committee yard, Asia’s biggest for the bulb,
hovered around Rs 1,800 a quintal in early December. Currently, prices are ruling around Rs
900.
46
In early November, the modal price was ruling at a high of Rs 4,900.
Similarly in Pimpalgaon, another significant market, the modal price for onions is hovering
around Rs 950 against Rs 4,500 in early November and Rs 1,750 in early December.
This sharp decline in prices forced farmers to stage protests in Maharashtra and Karnataka.
On December 10, the Government reduced the floor price on onions to $800 in line with the
softening trend in prices after arrivals picked up with the progress of harvesting in the key
producing regions of Maharashtra and Karnataka.
The Government believes a further reduction in the floor price will not only help in arresting
the sharp decline in prices realised by farmers, but also make onion exports more
competitive.
Onion prices have been on a roller coaster since July this year, with the depletion in stocks of
stored produce in Maharashtra and excess rains affecting harvest in Karnataka disrupting
supplies.
Prices reached a high of Rs 100 a kg in various retail markets in Delhi and other major cities,
forcing the Government to resort to imports from countries such as Egypt, China and
Pakistan.
Prices continued to rule high through August-November on account of untimely rains, supply
constraints, less than expected production and speculative hoarding activities by
unscrupulous traders leading to a spike in food inflation.
The Government had imposed a floor price of $650 on August 14 and had hiked it to $900 on
September 19 and further to $1,150 on November 1 to augment domestic supplies and curb
any further rise in prices.
Gujarat sees higher sowing of onion, garlic, cumin (BS 28.12.13)
Higher price, export potential tempt state farmers to opt for these commodities this rabi
season
Tempted by their higher price in the retail market and better export potential, Gujarat’s
farmers have increased sowing of onion, garlic and cumin. The sowing area of these crops
has exceeding average total sowing in the past three years.
As on December 16, onion sowing was done in 65,500 hectares against a total sowing
(average of three years) of 53,600 hectares. In the same period last year, the sowing was in
just 10,400 hectares.
Ditto with mustard, cumin and garlic whose sowing exceeded the average sowing in the
previous three seasons. Sowing for mustard was done in 277,400 hectares, which is 19 per
cent higher than the average of the total sowing in the past three years, while for cumin it was
397,300 hectares (14 per cent) and for garlic it was 38,400 hectares (11 per cent). The
47
average of the total sowing for mustard, cumin and garlic in the past three years was 232,200
hectares, 349,000 hectares, and 34,500 hectares, respectively.
During the same period last year, sowing area for mustard was 194,600 hectares, while for
cumin it was 263,500 hectares and for garlic it was 7,400 hectares. Experts believe higher
sowing in onion this year was mainly due to higher price the commodity fetched in the retail
market, while for cumin, garlic and mustard, there was strong export demand. The retail price
of onion had touched Rs 90-100 per kg mark earlier this year in many parts of the country.
“Because of higher prices onion in retail market and also in export market, farmers have been
tempted to go in for onion cultivation. They anticipate better prices this year. Also, because
of the Centre’s export policy with regard to onion, garlic and cumin farmers are expecting
better returns,” said A M Sheikh, vice-chancellor of Anand Agriculture University.
Similar was the opinion of A R Pathak, vice-chancellor, Navasari Agriculture University.
“Higher prices of onion and garlic has definitely impacted this year’s rabi sowing pattern.
Because of the price factor, more farmers in the state are going in for crops like onion, garlic
and cumin,” Pathak said. He, however, expressed caution over excess output against demand
which could bring down the prices.
Talking about the outlook on the
present rabi season in the state, Pathak
said: “Because of the late monsoon,
there is good amount of moisture in the
soil. Plus the winter has been good.
This is a very conducive environment
for the rabi crops. Also, the winter chill
will help in flowering of mango fruit.”
Sheikh said, “The late withdrawal of
monsoon and timely onset of winter is good for wheat, castor, chick pea and other rabi crops.
Also, due to late rains, there is ample of water in the reservoirs for irrigation purpose. Thus
overall the outlook for this years rabi season is very good.”
According to the state agriculture department, sowing for rabi season 2013-14 as on
December 16 was complete in 3.25 million hectares against 2.17 million hectares in the
corresponding period last year. This means, against the total sowing area of 3.57 million
hectares (average of the last three years), sowing has been done in 91 per cent area.
New year gift: Uttarakhand govt removes mandi cess on vegetables (BS 2.1.14)
The state govt removes 2% mandi cess on vegetables and fruit
48
Call it an Aam Aaadmi Party effect or a new year gift, the Uttarakhand government has
decided to waive taxes on vegetables to bring down prices.
After the recent spurt in vegetable prices, the government has removed the two per cent
mandi cess on vegetables and fruit in the hill state under the Uttarakhand Agriculture
Production Marketing (Development and Regulation) Act. This will put an additional burden
of Rs 7.25 crore on the state exchequer, said Agriculture Minister Harak Singh Rawat.
"With the waiving of the mandi cess, we expect the prices of vegetables and fruit to fall by 10
per cent," said Rawat. The government is yet to implement the Act in its spirit, which seeks
to promote contract farming, bring reforms in agriculture, provides for better regulation of
marketing agricultural produce and establish a more efficient marketing system.
The government has also decided to give Rs 5000 each to all the disaster-affected families for
buying clothes for winter. This money will be given from the Chief Minister's relief fund.
Onion exports double in Dec at 1.33 lakh tonnes on MEP cut (BL 7.1.14)
Onion exports have more than doubled during December at over 1.33 lakh tonnes compared
with the previous month after government lowered the minimum export price (MEP).
Exports of onions stood at 66,236 tonnes during November, 2013, according to data compiled
by the National Horticultural Research and Development Foundation (NHRDF).
During last month, the government had slashed onion MEP three times in order to boost
exports and check the sliding domestic prices of edible bulb that led to farmers protest in
producing states.
On December 26, onion MEP, which is the benchmark price below which the commodity
cannot be exported, was reduced to $150 a tonne from $350 a tonne.
Before that, MEP was reduced to $350 per tonne from $800 a tonne on December 19, while it
was cut to $800 a tonne from $1,150 on December 16.
As per NHRDF data, onion exports jumped more than two-fold to 1,33,290 tonnes in
December as against 66,236 tonnes in the previous month. However, exports were lower than
December 2012 that saw shipments of 1,37,956 tonnes.
During April-December period of 2013-14, onion exports have declined by 30 per cent to
9.87 lakh tonnes as compared with 14.04 lakh tonnes in the corresponding period of previous
financial year.
India exported 18.22 lakh tonnes of onions in the entire 2012-13 fiscal.
49
The government had imposed MEP on onion in September and then it was raised several
times to curb exports and boost domestic supplies as retail prices had shot up as high as Rs
100 per kg in major parts of the country. The country had to even import onion to control
price rise.
With improved domestic supplies and crash in wholesale rates, the Centre has now reduced
the MEP sharply to boost exports and stabilise the domestic prices. Wholesale rates in
Lasalgaon mandi in Nashik have risen to Rs 11.25 per kg from around Rs 10 per kg last
month.
UP eyes 35% increase in potato production (BS 9.1.14)
The govt is giving a final shape to the proposed potato development Policy
Uttar Pradesh is looking to augment potato production by 35 per cent to achieve 18 million
tonnes (MT) of produce.
Likewise, potato acreage would be increased by almost 25 per cent to 6,75,000 hectares.
To achieve these ambitious goals, the state government is giving final shape to the proposed
UP Potato Development Policy, 2014, aimed at increasing farm income.
The current level of state potato production and acreage stands at 13.3 MT and 5,48,000
hectares, respectively. UP Chief Secretary Jawed Usmani had recently directed officials to
speedily formulate the proposed policy.
The government would set up a centre of excellence for potato, while potato farmers would
be facilitated to avail of bank credit facilities based on the proposed ‘warehousing receipt
system.’
The mandis situated in potato belts would be converted to ‘potato mandis’ to boost inter-state
trade. Exhibitions/buyers-sellers meets would also be organised in other states to facilitate
tie-ups between local buyers and UP’s potato producers.
Besides, Agricultural and Processed Food Products Export Development Authority (APEDA)
and state mandi parishad would be roped in for branding of state potato and export
promotion.
Training programmes would be organised at the district, block and village levels to
disseminate latest technical knowledge about potato cultivation.
The state government had already speeded up efforts to ramp up warehousing capacity by
50
over 1.8 MT under Private Entrepreneur Guarantee (PEG) Scheme, 2008, under which UP
State Warehousing Corporation (UPSWC) would set up warehousing capacity of almost 1.67
MT, followed by the Food Corporation of India and Central Warehousing Corporation at 1.85
MT and 6,500 tonnes, respectively.
The state needs more cold storage and warehousing capacity for efficient post harvest
management of crops and food grain. The lack of proper warehousing leads to colossal
wastage of agricultural crops, especially during the agricultural marketing seasons.
At present, there are 1,522 functional cold storages in the state with a combined capacity of
about 11.13 MT.
UP has emerged as a hub for fruits and vegetables with compounded annual growth rate of
over 15 per cent. The fresh arrival of vegetables to the wholesale markets rose from 2.8 MT
in 2008-09 to over 4.3 MT in 2011-12, according to a study by Assocham.
Guava, litchi, mango and pomegranate are leading fruits produced in UP. While, brinjal,
cabbage, cauliflower, onion, peas, tomato, potato and sweet potato are the leading vegetables
produced in the state. Over 18.5 MT of vegetables are produced in UP annually and the state
commands second highest share of 12 per cent out of 150 MT vegetables produced in the
country.
Onion exports have increased after reduction in the MEP to $150 a tonne (ET 14.1.14)
Robust exports and good domestic demand have kept the onion prices firm despite heavy
arrivals. However, fear of a fall in onion prices is still there due to an expected bumper
production of the bulb.
The wholesale onion prices in Maharashtra are between Rs 8 a kg to Rs 10 while the retail
prices are in the range of Rs 20 a kg to Rs 25.
Bangladesh is one of the prime buyers of Indian onions. "Currently, there is very good
demand for Indian onions from Bangladesh. A rake full of onions is going to Kolkata every
alternate day from Nashik district," said CB Holkar, director, National Agricultural Co-
operative Marketing Federation ( Nafed).
China's onion export has slowed down recently, making India the largest onion exporter in
Asia at the moment. Although Pakistan, Iran and Egypt are competing with India, the exports
have increased substantially after the reduction in the minimum export price (MEP) to $150 a
tonne. "Our onions are being exported everywhere in the world. We are currently leading in
onion exports. The demand from the Middle East will be less next week due to Muslim
festival. However, it will pick up again after a week," said Ajit Shah, president, Onion
51
Exporters Association.
Along with exports, good demand from the domestic market has given support to the farmer-
level prices, which are firm between Rs 9 a kg to Rs 11. "The late kharif crop is coming from
Maharashtra, Madhya Pradesh, Gujarat and Karnataka, supplying to the rest of the country,"
said RP Gupta, director, National Horticulture Research and Development Federation
(NHRDF).
Due to favourable weather and an increase in area, the late kharif crop is expected to be good.
Although the prices are firm for now, traders expect them to come down by Rs 2-Rs 3 a kg in
the next two to three weeks as arrivals will increase. "Removing the MEP completely will be
useful for preventing further price fall," fall," said Holkar.
Potato prices ease as early varieties enter markets (FE 17.1.14)
With the arrival of early varieties, potato prices in West Bengal dropped by 33 per cent over
last week.
According to Patit Paban De, a member of the West Bengal Cold Storage Association, prices
in the wholesale market are hovering at about Rs 800 a quintal (Rs 750 at the farm-gate),
against Rs 1,200 a quintal a week ago.
However, the tuber’s prices are currently on the higher side compared with the same period a
year ago. At this time last year, they were ruling at Rs 700 a quintal.
“Though prices were supposed to drop even further with the arrival of early varieties (i.e. S6,
Pukhraj) and the onset of the harvesting season, they are still higher than last year due to
delayed sowing and slow harvest,” De told Business Line.
“The next 15-30 days are key for determining both production and prices of potato,” he said.
Stating that this year, potato production in West Bengal is expected to cross 100 lakh tonnes
(91 lakh tonnes last year), Subrata Biswas, Agriculture Secretary, West Bengal, said:
“Current price movements can be attributed to the muted arrivals of the crop so far.”
Retail market
Meanwhile, in major retail markets, early varieties are ruling at Rs 16 a kg. It is Rs 11 a kg in
suburban markets.
According to Biswas, Kolkata retail markets witnessed a “unique phenomenon” as both early
varieties and some old stock are sold at the same price. Price trend in the suburbs and districts
are normal, he said.
52
Onion exports in Apr-Dec period rose by 59% to Rs 2,532 cr (BS 23.1.14)
Exports during the same period in 2012-13 fiscal stood at Rs 1,590.79 crore
Onion exports in value terms during April-December period of 2013-14 have risen by 59% to
Rs 2,532 crore on account of higher export price fixed by the government.
Exports during the same period in 2012-13 fiscal stood at Rs 1,590.79 crore, according to
National Horticultural Research Development Foundation (NHRDF) data.
In the entire 2012-13 discal, the country had exported onions worth Rs 2,294.90 crore.
During April-December period of 2013-14, in quantity terms onion exports declined by 30%
to 9.87 lakh tonnes as compared with 14.04 lakh tonnes in the corresponding period of
previous financial year.
India exported 18.22 lakh tonnes of onions in the entire 2012-13 fiscal.
The government imposed MEP on onion in September and then it was raised several times to
curb exports and boost domestic supplies as retail prices had shot up as high as Rs 100 per kg
in major parts of the country. The country had to even import onion to control price rise.
On December 26, onion MEP, which is the benchmark price below which the commodity
cannot be exported, was reduced to $150 a tonne from $350 a tonne.
Before that, MEP was reduced to $350 per tonne from $800 a tonne on December 19, while it
was cut to $800 a tonne from $1,150 on December 16.
With improved domestic supplies and fall in wholesale rates, the Centre has now reduced the
MEP sharply to boost exports and stabilise the domestic prices. Wholesale rates in Lasalgaon
mandi in Nashik have risen to Rs 11.25 per kg from around Rs 10 per kg last month.
53
SUGARCANE/SUGAR
Sugar mills' rescue package cleared (BS 28.12.13)
The CCEA cleared the modalities for implementing the earlier decision on a Rs 6,600-crore
interest-free loan package for sugar mills
The Union Cabinet and its empowered arm, the Cabinet Committee on Economic Affairs
(CCEA), met separately on Thursday to clear a number of decisions.
The CCEA cleared the modalities for implementing the earlier decision on a Rs 6,600-crore
interest-free loan package for sugar mills. A senior official said the loans would be disbursed
through a separate bank account to ensure the utilisation was monitored. A nodal bank would
also be appointed for this.
The interest burden, estimated at Rs 2,750 crore over the next five years, will be borne by the
government from the Sugar Development Fund. The loans will be provided by banks
exclusively for making payment to sugarcane farmers, including arrears. The loans would be
equivalent to the excise duty, cess and surcharge on sugar paid by the mills in the past three
years.
Mills have to repay the loans in five years and can avail of a moratorium on repayment for
the first two years. “No interest subvention (is) to be provided for the period of default in the
principal repayments,” an official statement said. Loans will be given to mills functional
during the 2013-14 season (October-September).
Those with loans classified as non-performing assets by the banks will also be eligible,
provided the state governments concerned give a guarantee. All loans sanctioned by June 30,
2014 ,and disbursed by September 30, 2014, by the lending banks would be covered under
the interest subvention facility.
The lending will be subject to the various norms on scrutiny, future cash flows of five years,
establishing the viability and debt servicing capacity, including the restructuring guidelines,
as notified for the sugar industry from time to time. The loans will be backed by security and
collateral of the unit availing it, including personal guarantees and other assets of promoters
which are free from encumbrances.
The Rs 80,000-crore sugar industry has been facing a cash crunch due to higher cost of
production and lower selling prices, in the wake of surplus output over the past few years.
Providing interest-free loans was one recommendation of the group of ministers set up by the
Prime Minister under the chairmanship of Agriculture Minister Sharad Pawar to address the
industry's cash crunch.
54
UP sugar output breaches Million Tonne mark (BS 1.1.14)
As per latest data, 119 operational mills have collectively produced 1.08 MT after crushing
about 12.29 MT of sugarcane
The sugar output in Uttar Pradesh, the country’s second largest sugar producer, has breached
a Million Tonne (MT) mark in the ongoing 2013-14 crushing season.
During 2011-12 and 2012-13, UP sugar production stood at 6.97 MT and 7.47 MT
respectively.
As per latest data, 119 operational mills have collectively produced 1.08 MT after crushing
about 12.29 MT of sugarcane.
However, the sugar production is almost 40% less compared to the last crushing season so
far. During the corresponding period, the mills had produced nearly 1.78 MT of the
sweetener.
The lower sugar output is due to the delayed start of mills owing to prolonged standoff
between private millers and the government over the contentious cane price issue.
The private mills, which account for 95 operational mills out of 119 units in UP, were
unwilling to start crushing unless the state ‘rationalised’ cane price by linking it to the
prevailing sugar price.
The pressure tactics of the state failed to convince the millers. Finally, the crisis was defused
when the government allowed certain sops and exemptions to mills. The government allowed
millers to pay the cane price in two installments of Rs 260 and Rs 20 per quintal.
The state also conceded to incur cane societies’ commission on behalf of mills. In the recent
winter session of state assembly, the Akhilesh Yadav government had made a provision of Rs
126 crore for paying commission.
Meanwhile, the mills have paid about Rs 410 crore to cane farmers against arrears of Rs
1,000 crore in the current season. In fact, total arrears stand at much higher level of Rs 3,380
crore, however, millers are allowed 14 days to settle cane dues.
Besides, the private mills also have to clear cane arrears of Rs 1,984 crore pertaining to 2012-
13 crushing season.
Sugar output declines 29% in first quarter (BS 3.1.14)
Sugar mills have stepped up crushing operations, narrowing down the deficit in the current
season's output
55
Sugar output declined 29 per cent in the first three months of the current sugar year (October–
September), thanks to a delay in crushing activities in sugar mills across the country.
The Indian Sugar Mills Association (ISMA) said total sugar production stood at 5.74 million
tonnes (mt) in the first quarter of the current season, as
compared to 8.03 mt in the corresponding period last year.
Sugar mills have stepped up crushing operations, narrowing
down the deficit in the current season’s output. By
December 15, the production deficit was reported at 50 per cent.
Sugar mills across the country started operations towards the last
week of November, more than two weeks late from the
normal crushing season due to the rift between the
government and the mill owners over cane prices for the
current year.
However, sugarcane crushing picked up pace towards the end of December after 476 mills
started operations, though this is 23 less than last year’s figure, said ISMA.
In terms of number of sugar mills, Maharashtra topped the list with 154 sugar mills
processing about 21.7 mt of sugarcane so far this year. Last year, 161 mills in the state
processed about 27.8 mt of sugarcane. Sugar output in the state recorded at 2.21 mt this year
as against 2.91 mt in the corresponding period last year.
Sugar output in Uttar Pradesh stood at 1.13 mt with 119 mills remaining operational. Total of
about 12.88 mt of sugarcane has been crushed with 8.75 per cent recovery. There is a 42 per
cent dip in the sugar production this year. However, 122 sugar mills were operational last
year.
Karnataka and Andhra Pradesh reported 0.12 mt and 0.25 mt of sugar output respectively this
year so far.
ISMA predicted this year’s sugar production to be at 25 mt, almost similar to the last year’s.
Rs 300 cr for sugarcane farmers (BS 4.1.14)
The amount will be paid to sugarcane farmers through the respective deputy commissioners
The Karnataka government has decided to release Rs 300 crore towards additional support
price to sugarcane farmers for the year 2013-14.
During the winter session of the state legislative assembly the state government had
announced that it will give Rs 150 per tonne additional support price to farmers.
56
"The amount will be paid to sugarcane farmers through the respective deputy commissioners.
The sugar mills would be crushing an estimated 30 million tonnes of sugarcane during the
current sugar season," said Prakash B Hukkeri, minister for sugar.
Hukkeri said the budget session of the legislative assembly will be held in Bangalore over a
period of 10 days and the joint session of the house will be addressed by Governor H R
Bhardwaj.
The chief minister would announce the date of the commencement of the session soon, he
said. Briefing reporters on the outcome of cabinet meeting chaired by chief minister
Siddaramaiah, here on Friday, T B Jayachandra, minister for law and parliamentary affairs
said the government has decided to set up one more milk dairy in Chamarajanagar district at a
cost of Rs 83 crore.
Maharashtra may exempt sugarcane purchase tax for current sugar season for industry
(BS 4.1.14)
In its budget had hiked the sugarcane purchase tax from 3% to 5%
The Maharashtra government may exempt sugarcane purchase tax for the current sugar
season started in October 2013.
According to officials close to the development, following the difficult in cash flow situation,
the government may altogether exempt the purchase tax to be collected at the rate of 5% of
the total purchase price. It will be for the current season in 2013-14.
In order to bring relief to the drought hit farmers, the Maharashtra government in its budget
2013-14 had hiked the sugarcane purchase tax from 3% to 5%.
However for past years, the state is saddled with tax arrears of around Rs 500-600 crore
(mainly sugarcane purchase tax). Accordingly the state revenue department has directed its
field formation to get into recovery drive. Official sources said for non tax payment of taxes,
the tax department usually freezes bank accounts. But in case of sugarcane industry, mostly
these factories have loan accounts. Therefore the viable option is the seize property which
they have done in many cases.
The revenue department also proposes to direct the co-operative banks handling the accounts
of the sugar factories and millers to deduct the sugarcane purchase tax on behalf of the
government. There have been serious and several defaults in this sector, said a source.
Some time back the state had devised this system of recovery through the cooperative banks
57
which did not work out as these cooperative banks hardly get their loans repaid, said sources.
Usually the sugar factories hypothecate their produce in the form of bags to these banks
against the loans they get from the banks before selling. Thus the five per cent purchase tax
comes to Rs 100 per bag. According to the proposal, the government may ask the cooperative
banks to deduct the purchase tax before issuing clearance certificate for selling.
Meanwhile the central government in its bid has approved modalities for providing interest-
free loans worth Rs 6,600 crore to the sugar industry for payment of cane price arrears.
Reeling under the impact of high cane costs and slump in sugar prices, the industry is
currently saddled with arrears of around Rs 3,000 crore.
With cane crushing gaining momentum in the current 2013-14 season, the payment dues for
the current season have started building up. In order to ease the cash flow situation, these
loans will carry a two-year moratorium and would have to be repaid in five years. The loans
would be meant exclusively for the effecting cane price payment by the sugar mills.
Sugar undertakings with loans will be classified as non-performing assets and will also be
eligible for the loans, provided the State Governments concerned stand guarantee for the new
loans.
The industry expects a relief package to reduce the interest burden of around Rs 500 crore
annually, over the next five years.
Govt notifies norms for sugar mills to get interest-free loans (BS 6.1.14)
The interest burden on the loans is estimated at Rs 2,750 cr over the next five years
The government has notified the modalities for the beleaguered sugar industry to avail of
interest-free loans to the tune of Rs 6,600 crore from banks for payments to cane growers.
The Cabinet Committee on Economic Affairs had approved loans for the cash-starved sugar
mills last month.
“The central government, with a view to improve liquidity position of sugar factories for
enabling them to clear cane price arrears of previous seasons and timely settlement of cane
price of current season, hereby notifies ‘the scheme for extending financial assistance to
sugar undertakings 2014,” according to the notification issued by the Food Ministry.
The interest burden on the loans is estimated at Rs 2,750 crore over the next five years and
will be borne by the Centre from the Sugar Development Fund.
“Interest subvention up to 12 per cent or at actual rate charged by the banks, whichever is
lower as per normal banking practice, shall be provided to sugar mills through participating
scheduled commercial banks, regional rural banks and cooperative banks for five years,” the
58
notification said.
The loan will be disbursed through a separate bank account to ensure the utilisation of money
is monitored and the government will release interest subvention amounts on a quarterly basis
in advance to the nodal bank.
Sugar mills should submit a utilisation certificate, verified by the sugarcane commissioner,
stating the loan has been used for the specified purpose, the notification said.
The state sugarcane commissioner should monitor utilisation of the loan.
“Any failure to submit the utilisation certificate shall lead to non-reimbursement of interest
subvention by the central government,” it said.
Mills have to repay the loans in five years and can avail of a moratorium on repayment for
the first two years.
According to the notification, loans will be given to sugar mills that have been functional
during the 2013-14 season (October-September) and the quantum of loan would be
equivalent to the excise duty, cess and surcharge on sugar paid by the mills in the past three
years.
Sugar mills with loans classified as non-performing assets by banks will be eligible for the
credit provided the state governments concerned guarantee their new loans.
Loans that sugar mills have already applied for and that are sanctioned by June 30, 2014, and
disbursed by September 30, 2014, by the lending banks, pursuant to the notification, would
also be covered under the interest subvention facility.
The Finance Ministry will issue instructions to banks to operationalise the scheme, including
the appointment of the nodal bank.
GoM headed by Sharad Pawar okays incentives for raw sugar export (ET 16.1.14)
An informal group of ministers (GoM), headed by Agriculture Minister Sharad Pawar, today
approved incentives to the beleaguered sugar industry for exports of up to 40 lakh tonnes of
raw sugar for two years.
The PM-constituted panel was set up to address the financial problems being faced by
the sugar industry.
In line with the panel's recommendations, the Centre has already announced interest subsidy
on bank loans to be availed by sugar mills for paying cane farmers.
"We have decided to give incentives to promote raw sugar as a new product. Incentives will
be given for export of up to 40 lakh tonnes for two seasons," Food Minister K V Thomas told
reporters after the meeting.
59
The quantum of incentives would be worked out soon, taking inputs from the Finance
Ministry, he said.
This proposal may come for discussion in the next Cabinet meeting, he added.
Thomas said the policy of incentives is compatible with WTO norms and would be reviewed
constantly.
Incentives would be given per tonne raw sugar basis from the Sugar Development
Fund of the Food Ministry, he added.
Besides Thomas, Finance Minister P Chidambaram and Civil Aviation Minister Ajit Singh
were present at the meeting.
According to sources, the Food Ministry has proposed an incentive of Rs 2,390 per tonne on
raw sugar with the burden to be shared by both the Centre and state governments.
However, the panel is believed to have disfavoured and asked to rework the quantum of
incentives, they said.
Indian Sugar Mills Association has suggested an incentive of Rs 3,500 per tonne.
Export of raw sugar presently would lead to a loss of Rs 4,500 per tonne because global
prices are ruling lower at Rs 22,500 per tonne as against the production cost of Rs 26,500 per
tonne, sources said.
Traders are of the view that an incentive below Rs 3,500 per tonne is not viable for sugar
mills to undertake raw sugar exports at current global prices.
Sugar mills are facing cash crunch as sugar prices have come down below the cost of
production in view of surplus availability. They are also saddled with huge cane arrears.
Sources said an incentive of Rs 2,390 per tonne as suggested by the Food Ministry would
cost the government around Rs 1,000 crore for two years.
If incentive is raised to Rs 3,500 per tonne, it would cost the exhequer Rs 1,400 crore for
export of 40 lakh tonnes in two years, they added.
Sugar output down 21% to 85.5 lakh tonnes so far in 2013-14 FY (ET 17.1.14)
India's sugar production fell by 21 per cent to 85.5 lakh tonnes till January 15 of the current
marketing year that started in October on account of delay in crushing operations, according
to industry data.
Sugar output stood at 108 lakh tonnes in the year-ago period. Marketing year runs from
October to September.
"Sugar production in the country is in full swing. Till 15th January 2014, the country has
60
produced 85.50 lakh tonnes of sugar with 484 mills under crushing operations," Indian Sugar
Mills Association (ISMA) said in a statement.
ISMA noted that production is catching up, evident from the fact that drop in sugarcane
production has narrowed to 21 per cent from 29 per cent a fortnight back.
Sugar production is lagging behind as sugarcane crushing operation started late in Uttar
Pradesh because of stand-off between industry and state government on high cane price.
Production in Maharashtra has declined to 31 lakh tonnes till January 15 of 2013-14
marketing year compared with 37.7 lakh tonnes in the year-ago period.
Uttar Pradesh's production has dipped by 28 per cent to 19.8 lakh tonnes.
"Across UP, yields are reported on the lower side compared to last year, but this could be
compensated with higher reported sugar recoveries, which is about 0.04 per cent more than
last year," ISMA said.
Production in Karnataka has fallen to 16 lakh tonnes from about 20 lakh tonnes, while output
in Andhra Pradesh fell to 3.85 lakh tonnes from 4.6 lakh tonnes during the period under
review.
Tamil Nadu has produced about 2.8 lakh tonnes of sugar during October 1-January 15 period
against 4.90 lakh tonnes in the year-ago period.
Till 31st December, 2013, sugar mills have produced 5.5 lakh tonnes of raw sugar. Exports of
both white and raws of about 5.3 lakh tonnes has happened from October 2013 till December
2013," ISMA said.
This month, the association would review initial production estimates of 250 lakh tonnes for
2013-14 marketing year.
India, the world's second largest producer and biggest consumer, had produced 251 lakh
tonnes of sugar in 2012-13. The annual domestic consumption stands at around 230 lakh
tonnes.
Sugar industry's problems show no signs of disappearing (BS 21.1.14)
Unless policy framework is changed, the issues are likely to crop up again
It appears that the issues confronting the sugar sector have taken a backseat after mills in
Uttar Pradesh started crushing cane. But have its problems disappeared? Not really. The woes
that afflicted it early this year are likely to haunt it again later this year as the policy
61
framework remains the same.
The steps provided by the government too are not helping matters much as the bigger
problem of disconnect between the sugarcane price and price of sugar and its by-products in
almost all states where the crop is grown still remains unresolved.
Officials in the sugar industry said the fundamental problem lies in the pricing. In the last 14-
16 months, ex-mill sugar prices have dropped by Rs 7-8 a kilogram, but the expenses which
also include price paid to farmers have only risen.
“Until and unless reforms are done on the sugarcane pricing front, the fundamental problem
with the sugar industry will remain and all these interest-free loans, or export incentives are
short-term measures,” B B Mehta, chief executive officer of Dalmia Sugar Ltd told Business
Standard.
“We need to ensure that the Rangarajan Formula of price sharing is implemented in full both
on the raw material side and also on the side of finished products as it is beneficial to both
farmers and industry,” said Ajit Shriram, deputy managing director of DCM Shriram
Consolidated Ltd.
He said for farmers, the formula suggested by Chairman of Prime Minister’s Economic
Advisory Council (PMEAC) C Rangarajan is beneficial as currently they sell cane based on
weight irrespective of recovery rate, but if the Rangarajan Formula is implemented, then
sugarcane with higher sucrose content will get a better price than the lower ones. “This will
encourage farmers to plant better varieties of sugarcane,” Shriram said.
C Rangarajan had suggested a revenue-sharing formula for cane, one based on sugar price
and the second one including price of by-products. His recommendations were part of a
report on reform in the sugar sector.
Of the major sugarcane producing states, industry players said Maharashtra has accepted the
Rangarajan formula, Karnataka has done it in part, while Uttar Pradesh has set up its own
board to determine an ideal sugarcane price. Maharashtra and Karnataka too have announced
the formation of such boards.
In Uttar Pradesh, the cost of producing sugar is around Rs 35-36 per kg, while the ex-mill
price is Rs 28-28.5 a kg. In Maharashtra, it is around Rs 30-31 a kg, while the ex-mill price is
hovering around Rs 26-26.5 a kg. “Clearly, the current price of sugar is not remunerative for
the mills,” Abinash Verma, Director General of the Indian Sugar Mills Association said.
He said the recent government decision to provide interest-free loans to the tune of Rs 6,600
crore to sugar mills is also full of conditionality which has made availing them difficult for
mills.
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“In 2007-08 (the last time when the government had sanctioned interest-free loans), it was
mandatory for banks to sanction those loans to mills. But this year, the government has
imposed conditions like the viability of sugar mills, their cash flow in the next 5 years and
security of mills,” Verma said.
In Uttar Pradesh, according to industry estimates, sugarcane arrears to farmers had climbed to
around Rs 4,400 crore till December 31, 2013 of which almost Rs 2,250 crore was more than
14-day old.
According to government orders, payment for sugarcane purchased from farmers has to be
paid within 14 days by the mills after which it is calculated as dues. “Already, cane arrears
are piling up this year and from last year too, around Rs 1,881 crore is still pending,” Verma
explained.
He said even if all the mills get the promised Rs 6,600 crore, share of mills in Uttar Pradesh
will be to the tune of Rs 1,920 crore as 30% of the country’s sugar production comes from
the state.
“With this money, sugar mills will only be able to clear last year’s dues accruing to farmers
and nothing from the arrears accruing in the 2013-14 crop season,” Verma said.
Supporting Verma's views, Mehta of Dalmia sugar said,"We have started making payments
to farmers, but most of them are last year’s dues.”
Sugar mills across the country, mostly in Uttar Pradesh, suspended their operations in
November last year, expressing inability to pay a higher cane price due to their precarious
financial position.
The Uttar Pradesh government later kept the State Advised Price for the 2013-14 season
unchanged at last year’s level of Rs 280 a quintal. Part of this, that is Rs 260 a quintal will be
paid up-front, while the remaining will be paid only if mills make profits.
However, like the mills, farmers associations too are not satisfied. Their grudge is, however,
against the payment being made by mills. “This (the price agreed by the UP government for
payment to sugarcane farmers) does not even cover our basic cost of producing sugarcane,” a
senior farmer leader said.
“The sugarcane arrears which were estimated to be around Rs 12,000 crore in 2012-12 will
swell to almost Rs 15,000-20,000 crore by the end of the 2013-14 season unless the
government makes availing interest-free loans smoother and also helps in absorbing the
surplus sugar,” Verma of ISMA said.
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Chart for sugar production (in million tonnes)
Year Production
2010-11 24.35
2011-12 26.29
2012-13 25.74
2013-14 24.4
*Estimated
NOTE: Sugar season runs from October to September
Source: Department of Food and Consumer Affairs
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65
INPUTS
Chhattisgarh's 1.7 million farm labourers get insurance cover (BS 26.12.13)
State govt launches ambitious scheme to commemorate former PM Atal Bihari Vajpayee's
birthday
The 1.7 million farm labourers in Chhattisgarh have reason to smile on former Prime
Minister Atal Bihari Vajpayee’s birthday today. The state government launched a scheme
that will provide them insurance cover.
Soon after taking over as the chief minister of Chhattisgarh for the third term in a row,
Raman Singh announced to launch an insurance scheme for the labourers working in farms.
The state government is celebrating Vajpayee’s birthday as Good Governance day.
“Since Vajpayee ji formed Chhattisgarh for the welfare and growth of the people, the state
government is committed to translate his vision into action,” Chief Minister Raman Singh
said.His birthday (as Vajpayee turns 89 today) was the auspicious time to launch the scheme
that would be known as “Atal Farm Labourers Insurance Scheme”.
Under the scheme, a farm labourer’s nominee would get Rs 75,000 in case of accidental
death and Rs 30,000 for natural death. The labourer would be entitled to get Rs 75,000 in
case of complete disability.
Singh clarified that no scheme was there in place to provide insurance cover to the labourers
meeting tragedy because of lightening, snake bite and other unnatural causes.Besides, the two
children of the insured labourer would get a scholarship of Rs 100 every month while
studying in high and higher secondary classes. They would be entitled for scholarship while
studying in Indian Technical Institute (ITI) also.
“It is seen that the family members of the farm labourer face economical problem if he dies,”
Singh said, adding that the scheme would provide a strong cover. In all, 1.7 million farm
labourers would be benefited under the scheme.
“After ensuring food security, the BJP government is now taking care of poor people’s health
and economic condition,” he added.The Life Insurance Corporation (LIC) would be
executing the insurance scheme. The panchayat and rural welfare department had handed
over a cheque of Rs 5 crore to the LIC. The claim process has been made flexible with a
clause to clear the settlement within 20 days.
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Cabinet okays entities' merger for good seeds to farmers (BS 27.12.13)
The move aims to provide quality, affordable seeds to every farmer, no matter how remote his
residence in the country
In order to benefit farmers, the cabinet Thursday approved the merger of two public sector
units, the State Farms Corporation of India (SFCI) and the National Seeds Corporation
(NSC), a statement released by the government said.
The move aims to provide quality, affordable seeds to every farmer, no matter how remote
his residence in the country.
The statement said the move will serve the interest of farmers and enable them to handle
better the changing requirements of the agriculture sector.
The merged entity is expected to occupy the prime position in the Indian seed industry by the
year 2020.
The combined turnover would increase from Rs.1,180 crore to Rs.2,046 crore by 2017, and
be about Rs.3,112 crore by 2020, the statement said.
ICAR ends '13 on a high (BS 1.1.14)
Releases 104 improved varieties in 2013
The Indian Council of Agriculture Research (ICAR) has managed a number of achievements
and released several technologies covering the entire spectrum of agriculture and allied sector
during 2013.
For productivity enhancement, the ICAR released 104 new improved varieties / hybrids for
different agro-climatic regions which include an early-maturing basmati rice variety, Pusa
Punjab Basmati 1509 with moderate resistance to leaf blast and brown spot diseases; a late
sowing wheat variety HD 3059; and the large seeded (>30g/100 seeds) kabuli chickpea
variety, CSJK 6, moderately resistant to root rot and tolerant to wilt, ICAR said in a press
release.
During the year, 11,835 tonnes of breeder seeds, 14,984 tonnes of foundation seeds, 22,281
tonnes of certified seeds, 14,939 tonnes of truthfully labeled seeds and 5,237 tonnes of
quality planting material were also produced for distribution among stakeholders.
In horticultural crops, Arka Rakshak - a tomato variety resistant to bacterial wilt, TLC V and
Alternaria (yielding over 90 tonnes/hectare) were released. The first variety of makhana
(Euryale ferox Salisb.) named Swarna Vaidehi (production potential of 2.8-3.0
tonnes/hectare) and a new red-skinned advance potato hybrid 2001P-55 (potential yield of
300-350 quintals/hectare) moderately resistant to late blight suitable for eastern plains of
Bihar, West Bengal, Assam, Odisha and Jharkhand, were also released.
AgrInnovate India Ltd., the registered company owned by the Department of Agricultural
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Research and Education (DARE) and Indian Council of Agriculture Research (ICAR) is
working towards promotion and commercialisation of ICAR tech- nologies, and licensed the
technology of tissue culture of oil palm and related know-how for commercialisation.
US-based soil fertility maps (macro, secondary and micronutrients) were prepared for 20
districts in 2013, totalling 170 districts across 21 states to ensure site specific balance
fertilisation and thereby improving soil health and crop productivity in the country. Atlas on
Vulnerability of Indian Agriculture to Climate Change and established Model Climate Smart
Village in 100 most vulnerable districts was also developed.
To augment the availability of FMD (foot and mouth disease) vaccine, Agrinnovate has
initiated the establishment of a modern vaccine production plant with a capacity for 100-150
million doses in the public-private partnership (PPP) mode at the Bangalore campus of the
Indian Veterinary Research Institute, Izatnagar. The company is also assisting DARE on
projects related to establishment of facilities for soil, water and tissue testing, seed production
and demonstration, ICAR said in a statement.
The National Agricultural Innovation Project (NAIP), made satisfactory progress in
enhancing the competence of NARS towards steering the agriculture R&D and introducing
pragmatic pluralism. About 91 public-private partnerships were established in 203 NAIP
supported sub-projects, including three with GEF support. New 51 rural industries were
piloted and over 3,800 hectare area of farmers' agricultural land brought under sustainable
land management practices.
According to ICAR, the monsoon-driven Indian agriculture witnessed 106 per cent of long-
term average rainfall during the cropping season 2013 that enabled 105 million hectare of
total area sown during kharif 2013 as compared to about 100 million hectare during 2012.
The first advance estimates target foodgrain production of 259 million tonnes and a growth
rate of over 5 per cent for agriculture and allied sectors in 2013-14.
Meanwhile, Uttarakhand, Odisha and Andhra Pradesh were struck by natural calamities of
different, but severe intensities. The ICAR prepared doable and location-specific action plans
of agriculture and allied sectors for rehabilitation and restoration of the affected areas through
technological backstopping.
The ICAR demonstrated climate resilient technologies in 100 most-vulnerable districts under
NICRA. The ICAR has also prepared the climatic vulnerability atlas of the country and
district level contingency plans to enable farmers to choose appropriate means and methods
for mitigating the climatic variability in different agro-climatic regions.
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Farm credit rises seven-fold during UPA's tenure (ET 6.1.14)
Agriculture credit jumped seven-fold to Rs 7,00,000 crore in the past ten years of UPA
government, boosting foodgrain output to a record and enabling enactment of food law.
"To keep pace with the UPA government's resolve to provide food and nutritional security to
the people, especially the poor, efforts to increase foodgrains production have yielded
results," according to a UPA government report card released by Prime Minister Manmohan
Singh.
Efforts to strengthen the agri-sector have led to record production of foodgrains since 2004
and the UPA government has enacted the National Food Security Act.
Foodgrains output has increased to over 255 million tonnes in 2012-13 crop year (July-June)
from 198 million tonnes in 2004-05.
The food law aims to provide a legal right to families of Antyodaya Anna Yojana (AAY) for
35 kg of foodgrains per month and other families of five kilo per person at subsidised rates
under the ration shops.
Listing out measures taken to boost the farm sector, the UPA government said in its tenure
farm credit has been raised to Rs 7,00,000 crore in 2013-14 fiscal from Rs
1,04,500 crore in 2004-05 fiscal, while 11 crore kisan credit cards have been issued under
various schemes to assist farmers.
The minimum support price (MSP) of commodities has been increased steadily to ensure
farmers' welfare. Wheat and paddy MSP has more than doubled in the last ten years.
Wheat MSP has been hiked from Rs 640/quintal in 2004-05 to Rs 1,350/quintal in 2012-13.
Whereas paddy MSP has been increased to Rs 560/quintal to Rs 1,250/quintal in
2012-13.
The support price of cereals has also been increased three-fold and is now better than wheat
and paddy.
That apart, the share of Indian agri-exports in the global market rose to 2.6 per cent in 2012.
In fact in 2013, the country exported farm items worth US $ 41 billion against agri-import of
only US $ 20 billion, giving a net surplus of USD 21 billion.
Stating that food subsidy has also been increased more than three-fold in the last ten
years, the UPA government said this reflects its commitment to ensure adequate food at
affordable prices for all, especially the poor.
The foodgrains stock was at an historical record of more than 80 million tonnes in the
government's FCI godowns as on July 1, 2012.
The new land acquisition law was also enacted for the benefit of farmers as the legislation
stipulates mandatory consent of 70-80 per cent land owners for land
acquisition and compensation up to to four times the market value of the land besides assures
69
arrangements for rehabilitation and financial benefits for affected people.
Private equity firms invest about Rs 940 crore in agri-logistics and cold chain industry
in past three years (ET 6.1.14)
India, with an extremely high rate of food wastage, is seeing an increasing interest from
private equity investors in the agri-logistics and cold chain industry, attracting high
valuations for their scalable and high growth businesses.
PE firms have invested about $151.55 million (Rs 940 crore) in 11 companies in the sector in
the past three years, according to Venture Intelligence. Sohan Lal Commodity received the
largest investment of $33 million so far by Everstone, Mayfield, Nexus Ventures and ICICI
Bank. More investments are lined up for the year ahead.
"There are at least 8-10 companies in the market looking to raise funds. Anybody who has
annual revenue of more than Rs 10 crore is looking," said Hemendra Mathur, managing
director, SEAF India Agribusiness International Fund.
Agri-logistics and cold chain companies, which are seeing revenue growth anywhere between
20 per cent and 100 per cent annually, are hoping to raise anywhere betweenRs 15 crore and
Rs 100 crore each, to scale operations across the country, a necessity for growing this
business faster. Suri Agrofresh, which is half owned by Europe's Total Produce, is looking to
dilute 10-20 per cent equity in the company, its managing director Hitin Suri told ET. It has
been in talks with more than 10 private equity firms. Some other companies scouting for
private equity are Origo Commodities, Dev Bhumi Cold Chains, Scheduler Logistics and IG
International.
India, which is primarily an agrarian economy, ironically has limited cold chain, warehousing
infrastructure in place. At least 40 per cent of all fruits and vegetables are
lost in India between the grower and the consumer mainly due to lack of storage facility,
weak transportation system and bad roads, according to a recent food wastage report by
Institution of Mechanical Engineers "The primary growth driver is the government
inefficiencies and massive shortage of storage, transport facilities," said Hetal Gandhi,
managing director, Tano India Advisors.
Tano recently invested Rs 80 crore in Shree Shubham Logistics. Another huge growth driver,
he said, is the increasing private participation in procurement of agricultural produce and
rising demand from banks to manage agri-loan collateral. Private equity is hoping for first-
mover advantage as this capital-starved, but fragmented sector slowly moves towards
corporatisation.
Also, as organised retail players make inroads into the country while import of fruits and
vegetable picks up, cold chain businesses are seeing fortunes grow. Investors are, however,
unhappy with the high valuation expectations, which range from 15-20 times EBITDA
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multiple. Few organised players with fewer people with operational background are driving
valuations high.
Many businesses in the sector are family-run and not open to outside control. The balance
sheets also tend to be unreliable. This emerging sector is still nascent and in need of
professional handholding. "The theory is that private equity will bring in a network of
relationships, additional investors, corporate governance oversight and experience with
mergers and acquisitions," said Nikhil Shah, senior director at Alvarez & Marshal India. He
is advising many private equity players on opportunities in this space.
Though these businesses are growing fast and have potential to grow faster, the gross margins
tend to be in the range of just 5-6 per cent. More domain expertise and knowledge could help
weed out inefficiencies. Despite the seasonal and rainfall dependent nature of the business,
private equity is betting on the potential scalability of organised players in the segment.
Domestic tractor market beats slowdown (BS 15.1.14)
In last six months, tractor market grew by about 20% against 10% growth during 2012-13
fiscal
The domestic tractor market has stood up strong to the general slowdown affecting other
segments.
In the last six months, the tractor market grew by about 20% against the growth of 10%
during 2012-13 fiscal.
“The growth of tractor segment mainly depends upon two factors namely monsoon and the
price index of food and agricultural commodities, both of which indicate rural incomes,”
Escorts Agri Machinery chief sales and marketing officer Sameer Tandon told Business
Standard.
He said rural and farm incomes had increased last year due to good monsoon and higher
prices of food and agri commodities.
As such, he underlined, the effect of general slowdown, inflation and higher interest rates had
no impact on the domestic tractor market, which is pegged at 5,80,000 units annually.
Escorts commands a market share of 11.5% in India. In Uttar Pradesh, the company has a
better share of 18-19%. “The instances of loan repayment defaults are much lower in rural
areas compared to the urban markets,” he added.
The domestic market is dominated by smaller 30-40 Horsepower (HP) tractor segment, which
in UP account for almost 70% of the segment.
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Tandon said the second hand tractor space was growing fast in the country as institutional
finance is readily available at competitive rates. “There is a ready market for second hand
tractors, which get sold to new buyers after asset depreciation of about 40%,” he informed.
Meanwhile, Escorts unveiled its new range of tractors Powertrac DS – Plus Euro Series
combines power, economy and superior design.
The usage of tractors for non-agricultural purposes has been growing in India, such as being
deployed in sand mines, brick kilns, road making, ferrying passengers etc.
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OTHER AGRI /FARM NEWS
Veerappa Moily to seed a change, likely to approve GM food crops in India
(ET 28.12.13)
Environment Minister Veerappa Moily is expected to cast his vote in favour of allowing
genetically modified (GM) food crops in the country, overturning the position of his
immediate predecessors - Jayanthi Natarajan and Jairam Ramesh.
Moily's support will pave the way for the government to submit an affidavit in the Supreme
Court acquiescing to field trials of GM food crops on a conditional basis. The apex court is
hearing a Public Interest Litigation (PIL) on the issue and the Prime Minister's Office as well
as the agriculture ministry have pushed hard to submit such an affidavit, but were unable to
do so because of resistance from Natarajan. Her opposition to field trials has been cited as
one of the reasons for her departure from the Cabinet last week.
The new minister will need to take a decision on the GM issue soon, as the government is
required to file an affidavit in the Supreme Court early next year. Senior government sources
told ET that Moily is likely to agree to allow field trials in the country.
GM food is an emotive issue both in India as well as internationally, with powerful lobbies
ranged on both sides of the debate. In 2009, then environment minister Ramesh had
announced an indefinite ban on the sale of Bt Bringal ..
Several applications are pending
While Ramesh did not ban field trials, he made it mandatory for state governments to give
their consent for such trials. With most state governments opposed to GM food, no field trials
have been held in the country since 2009.
Bayer Bioscience, Mahyco, BASF India, Monsanto India and Hyderabad-based
Directorate of Oilseeds Research had in March received permission from the Genetic
Engineering Appraisal Committee (GEAC) to conduct field trials for genetically modified
rice, wheat, maize and castor. But the environment ministry under Natarajan decided to put
the decision on hold in view of the PIL in the Supreme Court.
If the apex court rules in favour of the government's submissions, these companies could
commence trials.
There are 53 more applications for field trials pending before GEAC. Field trials are pilot
projects conducted to test efficacy of seeds.
The PIL, filed by activist Aruna Rodrigues, demanded that field trials be put on hold till an
independent and effective regulatory system had been put in place.
A Technical Expert Committee (TEC) set up by the court had recommended an indefinite
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moratorium on such trials unless certain shortcomings in the regulatory process were
plugged. But one member of the committee - RS Paroda, former director-general of the
Indian Council of Agricultural Research, and the agriculture ministry's nominee - submitted a
dissenting note opposing the moratorium.
The Supreme Court subsequently asked the government to submit its position on the issue.
Keen to ensure a common position, the Prime Minister's Office had asked the Cabinet
secretary to work out a consensus position, one that would permit field trials to be carried out.
But it was stymied as Natarajan opposed the consensus position.
"If the prime minister has overruled Jayanthi Natarajan and appointed a new environment
minister to do his bidding, then science goes out of the window. This PM has an agenda to
foster the biotech industry and support the US in this endeavour," Rodrigues told ET.
Moily is also expected to abandon Natarajan's position on the use of cooling gases
hydrofluorocarbons (HFCs), used in air-conditioners and refrigerators, and bring it in sync
with the prime minister's position. Singh had consented to reducing the use of HFCs at the
G20 meet in St Petersburg a few months ago. He later reiterated it in a joint statement with
US President Barack Obama. At the Warsaw climate negotiations, however, Natarajan had
refused to allow any mention or even a discussion on the reduction of HFCs.
BARC using nuclear technology for agriculture (ET 30.12.13)
The nuclear technology is making valuable contribution to the agriculture in India,
a scientist from Bhabha Atomic Research Centre said here.
Sanjay J Jambhulkar, a senior BARC scientist, said that BARC has a separate department for
nuclear agriculture and bio technology including the food technology.
This technology -- specifically called mutation breeding -- plays a crucial role in
the development of varieties of oils seeds and pulses, he said.
As of date, BARC has developed 41 new varieties of pulses and oil seeds, he added.
These varieties have no side-effects, he added. After the development, the variety is handed
over to the state agriculture universities or the Indian Council of Agriculture Research,
Jambhulkar said.
Universities, ICAR test these seeds for three years before introducing them in the market.
BARC recently developed a groundnut variety TAG-24, he said.
Banana production increases in TN (BL 30.12.13)
The production of banana in Tamil Nadu has increased over the past four years to more than
eight million tonnes in 2012-13.
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Agriculture company Syngenta India in a statement said this was compared to the total
industry production of 30.8 million tonnes during the same period.
“In 2009-10, the production of banana in Tamil Nadu was over 4.9 million tonnes”, it said.
Meanwhile, at the ongoing Tamil Nadu Banana Festival in Coimbatore, the company’s stall
was inaugurated by the State Agriculture Minister S Damodaran. Trade body Confederation
of Indian Industry (CII) and Tamil Nadu Banana Growers Federation are organising the
festival in Coimbatore.
As part of offering its services to banana growers in banana cultivation due to diseases
affecting the crop, Syngenta India Commercial Unit Head, Katragada Phanindra said his
company has conducted over 45 mega farmer training programmes to educate them on crop
protection.
Three cheers for Indian agriculture! (FE 1.1.14)
The year 2013 is something to cheer about the performance of Indian agriculture
The year 2013 is something to cheer about the performance of Indian agriculture. Given the
good rainfall, agricultural GDP in the 2013-14 agri-year (July-June) is likely to grow between
5.1% and 5.7%, almost three times higher than last year. New records in production and trade
are being achieved. Take these: Horticultural production is likely to touch 269 million tonnes
(mt) and perhaps for the first time going to surpass the foodgrain production (of 260 mt or so)
in 2013-14. Milk production is likely to scale a new peak of 139 mt, and this commodity will
be the biggest agri-commodity in terms of value, even bigger than rice or wheat. Cotton is
likely to touch 37 million bales, and so on.
On the agri-trade front, our exports in 2012-13 were $41 billion against agri-imports of $20
billion, giving a net trade surplus of $21 billion. This feat is going to be repeated this year
too. India is the largest exporter of rice, guar gum meal, beef (buffalo meat) and the second-
largest exporter of cotton. India exported 22 mt of cereals, never done before in its history of
more than 3,000 years! India’s ‘revealed comparative advantage’, as measured by the Balassa
Index, is 1.6 against that of manufacturing at 0.98, indicating clearly that Indian agriculture is
much more competitive globally than our manufacturing sector.
Behind the success of each of these commodities, in production and/or trade, is a fascinating
story, the story of well-designed policies, or processes, or investments, or technology, but
above all, the entrepreneurial spirit of our farmers. Let me narrate just three stories here,
which have had a large impact on our agriculture and benefiting millions of farmers,
consumers and the country at large. The idea is to distil lessons for future policy direction so
that we can scale these up, with much larger gains.
First, let us talk about milk. In 1951, when the US was producing 53 mt of milk, India’s milk
production was just 17 mt. In 2013-14, US milk production is likely to be around 91 mt and
India at 139 mt! Project this for the next 10 years and see its implications. And so far, most of
this is done by small farmers with an average herd size of about four cows and/or buffaloes.
This is an outstanding example of inclusive growth, which the developing world with
smallholders needs to emulate.
76
Verghese Kurien and his team were the people behind this but the political credit of this goes
to Lal Bahadur Shastri, who spent a night (October 31, 1964) in a village in Anand talking to
farmers till 2 am and decided the next day to scale up activities of AMUL by setting up the
National Dairy Development Board in 1965, which later on launched Operation Flood to
make India self-sufficient in milk. Shastri also gave us the slogan ‘Jai Jawan, Jai Kisan’. But
so far, not more than 20% of this milk is being processed through the organised sector.
Lesson: We need massive scaling up of processing activities, be it by cooperatives or
domestic or international private players to reap the full benefits of this ‘white revolution’
and take it to its next stage.
Second, Atal Bihari Vajpayee extended the slogan of ‘Jai Jawan, Jai Kisan’ to include ‘Jai
Vigyan’. The cotton story reveals the power of science (vigyan). In 2002-03, as per central
government statistics, India produced only 8.6 million bales (Cotton Advisory Board
estimates were somewhat higher) of cotton. This is likely to cross 37 million bales in 2013-
14, giving an annual export of around 10 million bales valued around Rs 20,000 crore. All
this was made feasible through Bt cotton (genetically modified), which came through the
research of a big multinational seed company and was launched in India through its Indian
partner. Today, more than 90% of cotton area is under Bt cotton varieties. Yet there are
apprehensions about GM technology in policy circles and some NGOs, and the government
has dithered on the Bt brinjal case. Lesson: While due transparency in the approval process is
necessary, it needs to be done more expeditiously. Bold moves in biotechnology are
necessary, from investments to linkages with private sector players and its proper extension
to farmers, if we have to produce enough food, feed and fibre for a large and increasing
population.
Third, let us talk about Pusa basmati. It has raised India’s basmati exports from less than 1 mt
to about 3.8 mt in 2013. The annual additional benefit from this is anywhere from Rs 15,000
crore to Rs 20,000 crore. It was invented in the public sector through research under the
Indian Council of Agricultural Research, with meagre resources. Just one good piece of
research, by VP Singh and his team, gave 100 times more returns on investment than India
did on all varieties of rice for several years. Lesson: Investments in agri-R&D have very high
pay-offs. We need to significantly scale up our investments, and incentivise our scientists to
convert their research into economic benefit for the country.
There are several other stories in Indian agriculture to be proud of. Yet, at times, we feel
pessimistic whenever there is severe drought, or farmers commit suicide, or farmers agitate
for better prices, and so on. Lesson: The agricultural glass is more than half full, and it can be
filled even more if we make our agri-policies farmer-centric. It is not just the tonnage that is
important, the smile on the faces of farming families is equally important. Only a happy
family can give the best to the nation and make us all feel proud.
(Ashok Gulati is chairman of the Commission for Agricultural Costs and Prices. These are
his personal views.)
Karnataka lacks 2.1 MT food grain storage capacity (BS 1.1.14)
Nabard has estimated an investment potential of Rs 1,100 crore for creation of storage
godowns by 2016
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Karnataka, which ranks seventh in the infrastructure development index in the country, is
facing acute shortage of food grain storage capacity. The state requires an additional storage
capacity of 2.18 million metric tons for PDS and Non-PDS commodities. The investment
required to build this capacity is estimated at Rs 1,100 crore.
According to a warehousing gap assessment study conducted by National Bank for
Agriculture and Rural Development (Nabard), the effective storage capacity for PDS
commodities in Karnataka is only 1.05 million metric tons in the year 2012-13, about 54.3%
of the total requirement of 1.94 million metric tons.
“We have conducted a scientific study on finding the storage gap in Karnataka. It is not a big
difficulty to arrange funds for the state government. They have scope to borrow funds under
the Rural Infrastructure Development Fund (RIDF) of Nabard and also contribute through
budget every year,” G R Chintala, chief general manager, Nabard told Business Standard.
The state government can spend Rs 200 crore each year and borrow the rest of the money
from Nabard and also involve the private sector in creating the capacity over the next four
years. Nabard is ready to give as much funds the state government requires, he said.
The warehouses built in the country before the year 2000 were not constructed scientifically
and are not capable of preventing rodents and fire accidents. There is a need to build the
storage godowns keeping these issues in mind, Chintala said.
However, for Non-PDS commodities, the state had a surplus capacity for the storage of
surplus crop produce in 2012-13. Based on the past trend, the study has projected that by the
year ending 2016-17, the state requires an additional storage capacity of 2.18 million metric
tons, of which 1.79 million tonnes for PDS commodities and 385,000 metric tons for Non-
PDS commodities.
As storage and distribution of PDS commodities are critical factors for reducing poverty and
inequality, the study suggested that the state government may take suitable initiatives for the
construction of additional warehouses for the storage of PDS commodities. Keeping in view
the wide reach of PACS (Primary Agriculture Cooperative Societies), it appears prudent to
explore the possibility of expanding the storage capacity through the PACS, Nabard said in
its study.
These societies may also explore the possibility of extending pledge loan to farmers.
However, the resource base, local demand for storage and other requisite capabilities with
PACS need to be examined before taking such a decision.
The godowns can be used for storage of PDS and non-PDS commodities, outreach of storage
facility for marginal and small farmers will increase, provided PACS builds the godowns, the
Nabard study said.
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It also highlighted that market watch and the level of confidence of farmers will increase.
Distress sale of the farmers will also decline, once the society starts giving pledge loan based
on the stock in its godown, the study added.
Nabard conducted the study in eight districts such as Mysore, Shimoga, Davanagere,
Dakshina Kannada, Bijapur, Raichur, Gulbarga and Bellary to understand different
operational issues relating to warehouses and farmers' participation in storage of agricultural
produce.
It is a matter of concern that between 2012-13 and 2016-17, while number of households is
expected to increase at an annual rate of 1.79%, area under food grains is expected to decline
at 0.52%. However, the surplus rice / wheat after meeting the consumption need, which was
1.11% of the total production in 2012-13, is expected to be 8.07% of the total production by
the year ending 2016-17, the study said.
Farmers should get access to larger markets to get benefits of APMC reform
(ET 7.1.14)
Last week's missive from Congress leader Rahul Gandhi, to states ruled by his party,
allowing farmers to sell their produce of fruits and vegetables to anyone they want —and not
necessarily route it through mandis— will not be transformative for Indian farmers on its
own. For that to happen, the governments need to back this reform in the Agriculture Produce
Marketing Committee (APMC) Act by supporting the rise of alternative models through
which farmers can access larger markets, and by setting up regulatory mechanisms that
supervise the functioning of these models.
"Bihar too had abolished the APMC Act some years ago," says S Sivakumar, the chief
executive of ITC's agribusiness unit. "But not much has happened there." New linkages
between farmers and consumers have not come up; neither have farmers received their fair
share of higher realisations nor consumers the benefit of lower prices. According to
Sivakumar, it is incontrovertible that the APMCs have outlived their utility. Before they were
created, traders used to buy produce from farmers by visiting villages. Often, at very low
rates.
To supervise these transactions, and give farmers a better deal, the government came up with
the idea of having all agricultural produce transactions at predetermined locations — where
officials could supervise them.
Sivakumar feels APMC yards (essentially, mandis) are not needed anymore. "They were
needed in the 1960s as a competitive price discovery mechanism, compared to the village
trader system, prevailing till then. But now one can discover prices sitting in the village, by
leveraging new technologies, and bypass the APMC mandis. This certainly reduces
transaction costs, including handling losses." The APMC yards have also seen instances, as in
the case of onions, where a small number of traders have come to control the market, giving
them undue pricing power over farmers.
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There are other problems. According to YK Alagh, former chairman of Institute of Rural
Management Anand (IRMA), not only are Indian farmers responding to the higher demand
for non-cereals, they are also heading to small towns to sell their produce. "We are simply not
creating the processing, market and transport infrastructure for them," he says.
For that reason, he adds, "the APMC noise is largely misplaced. It will not have much impact
either on food prices or farmer incomes, because it does not address the problem of
improving the marketing infrastructure where it is needed -- close to the demand centres."
Without addressing these questions of market access, not much will change. Says Narasimha
Reddy, a Hyderabad-based researcher who specialises in Indian agriculture, even under the
new non-APMC regime, smaller farmers might struggle to access larger markets. If anything,
the networks and individuals who control the existing trade in fruits and vegetables might
become more dominant.
These new models could be like Hyderabad's Rythu Bazaars. For the longest time, Sekhar
Goud, a farmer in Andhra Pradesh's Rangareddy district, used to sell his vegetables to traders
in mandis. That changed in 1999, when the state government rolled out Rythu Bazaars
(Telugu for 'farmer markets').
In these markets, set up in urban centres, farmers can sell directly to consumers, thus realising
a better price. The model is working, says Goud. "We are happy with the prices we get."
Today, Rythu Bazaars account of 41% of all vegetable supplies in Hyderabad, and about 10%
of the total urban requirement in the state. They attract even small farmers, who bring their
produce from 25-30 km afar in a state transport bus. That distance can be, at times, a
limitation. "We see a lot of farmers sell their produce in distress in the evenings to clear
stocks for the day (and return home) and fear of perishables," says MK Singh, CEO of Rythu
Bazaars. "Wastage is anywhere between 30-50%."
This is one of the factors cited by Singh for a steady, rather than a brisk, expansion of the
bazaars. There currently number of bazaars stands at 107 which is expected to increase by 26
in the next one year. "Over 60% of the existing Rythu Bazaars are doing well," adds Singh.
In contrast, another model, like the Safal Mandi, on the outskirts of Bangalore, works on a
larger scale. These started coming up about 10 years ago. Here, farmers from a 100-150
km radius are aggregated into producer organisations.
They send their produce in truckloads to the mandi, where consumers - typically, businesses
like retail chains or eateries — buy through an electronic auction after the produce has been
graded.
However, such models —or procurement by companies outside mandis — are still the
exception rather than the norm.
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"These models were struggling to come up till now as there was a monopoly on
agricultural marketing," says Sivakumar. "Without the APMC, there is a
possibility that we that we might see new ones come up."
Another problem with APMCs, says Sivakumar, is they made the relationship between
farmers and the next level in the value chain purely transactional. "Each of them is only
looking to maximise value for themselves; in the process, the whole chain became expensive
due to added costs and risks." If the newer models are collaborative between buyers and
farmers, they can also trigger investments and raise productivity. As diverse models come up,
India will need to ensure better price discovery across multiple channels.
It will also need to ensure that unfair practices do not take place. For that reason, there will
still be a need for the APMC regulations.
Says Sivakumar: "APMC mandis should exist as an auction mechanism, competing
with other agri marketing alternatives such as direct marketing or contract farming, but these
mandis must operate under the jurisdiction of the Competition Commission or a new
regulatory authority for agricultural produce marketing."
Feeding the nation, and the world (BL 10.1.14)
The northern region has emerged a major hub for agri-processing industry
The Northern States led by Punjab, Haryana, Uttar Pradesh, Rajasthan, Himachal Pradesh,
Jammu and Kashmir and Uttarakhand have played a major role in boosting the country’s
agricultural output in the past few decades.
As a result, India has emerged as a major exporter of foodgrains in the recent years.
These States account for a major chunk of the over 250 million tonnes of foodgrains
produced by the country last year. Also they account for a bulk of the 126 million tonnes of
vegetables and the 64 million tonnes of fruits produced annually in the country.
While Punjab, Haryana, Uttar Pradesh and Rajasthan are the main producers of cereals such
as rice, wheat, pulses and oilseeds, the other States – Himachal Pradesh, Uttarakhand and
Jammu and Kashmir have emerged as the key producers of vegetables and fruits.
The favourable agro-climatic zones and large tracts of irrigated lands have helped these
States diversify their agricultural and horticultural products base and the emphasis going
forward is expected to be on processing of these food items.
processed foods
The Northern States lead others in terms of converting farm produce into packaged and
processed foods.
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This is even as the Indian agriculture witnesses a major shift from traditional farming to
horticulture, meat, poultry and dairy products.
The Northern States process about a fourth of fruit, vegetables and milk against the national
average of around 10 per cent.
Major food processing companies in North include PepsiCo, Nestle, Amul, ITC, Mother
Dairy, Dabur, Haldirams and Milk Food, among others.
Investments continue to pour into the region in the agri and food processing sector, where the
corporates see a major potential.
investment agreements
At the recent Progressive Punjab Investors’ Summit, Punjab has reportedly signed investment
agreements with about 53 companies to the tune of Rs 4,881.99 crore in the agri-processing
category.
Prominent among these include a proposal by Cargill India to set up a Rs 70-crore ultra
modern cattle feed plant and Rs 680-crore proposal of ITC to set up an integrated food
processing and logistics centre in the State. Even Uttar Pradesh is seen attracting investments
of to the tune of Rs 1,700 crore in some new food processing projects that are in the planning
stages.
Dairy major Amul is likely to invest Rs 1,000 crore in a milk processing plant with a daily
capacity of 10 lakh litre, while Allansons Ltd, a leading exporter of processed food products
and agro-commodities, may invest Rs 700 crore for setting up five agri-based plants in the
State.
cold chains
Further, the Northern States also lead others in terms of consuming processed and packaged
foods.
Such a trend has led to creation of back-end infrastructure such as cold chain in these States
not only in the public sector, but also in private sector in the past few years.
The capacity of total cold chain infrastructure in the country now exceeds 30 million tonnes,
half of which has come up in the past eight years.
Major investments in cold chain infrastructure by companies such as Adani AgriFresh,
Concor owned Fresh and Healthy Enterprises, Bharti Field Fresh, Dev Bhoomi and Suri Agro
Fresh have been largely in the Northern states of Himachal Pradesh, Haryana and Punjab.
These companies have invested in cold chain facilities for fruits such as apples, oranges,
grapes, litchi, pomegranates and vegetables such as okra, baby corn and tomatoes grown in
the region.
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The food processing sector has been growing at over 14 per cent and is poised to retain a high
growth in the near future. The Indian food market is estimated at over $ 182 billion, and
accounts for about two thirds of the total Indian retail market.
The emergence of organised retail coupled with changes in foreign investment norms in the
expected to provide a fresh impetus to the food processing sector.
The demand for processed foods and vegetables is on the rise driven by the changing
lifestyles, demographic profile, rising urban population, disposable incomes and
transformation in consumption habits.
Value addition
Besides, the Government’s policy push to promote value addition in agriculture is also aiding
the growth.
The Government is aiming to increase the level of processing of perishables such as fruits
and vegetables from six per cent to 20 per cent of the total produce.
Besides, it also aims to enhance value addition to farm products from the present 20 per cent
to 35 per cent in the years to come.
Agri Ministry to bring down market fee in APMC yard (BS 13.1.14)
The Ministry of Agriculture proposes drastic reduction in the market fee and commission
charges paid in the Agricultural Produce Marketing Committee (APMC) markets.
To this effect, it also suggest abolishing the present system of licensing of traders /
commission agents by substituting it with system of registration. Accordingly, there will be a
single unified registration for the main market and collection centres across the states to
bring down the transaction charges.
The proposed Agricultural Produce Inter State Trade and Commerce (Development and
Regulation) Bill could be implemented in states with immediate effect for enabling trading
of perishable agricultural commodities to start with single unified registration.
As per the recommendations of the Committee of the State Agricultural Marketing Ministers,
the ministry has sought recommendations from all the states on these proposals with the
objective to better remunerise the farming community and make the pricing of the
agricultural commodities competitive in the global market to improve trade.
Accordingly, market fee/cess including rural development fund, social development fund and
purchase tax should be maximum 2% of the value of the agricultural produce. The
commission charges should not be more than two% for food grains/oil seeds and 4% for
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fruits and vegetables. In some states according to official sources, all inclusive these
charges work up to around 15% and on an average rule around 5-8% of the total value of the
produce.
In order to encourage private sector investment in market infrastructure , the minister
proposes to exempt market fee on trade transaction taking place inside the private market
yard while states can levy minimal user charges not exceeding 0.5% of the value of the
produce transacted.
Besides mandi fee/ APMC market fee) should only be levied on primary agricultural produce
and secondary products like ghee, flour etc should be exempt from the mandi fee, while user
charges can be levied. Further, if a direct marketing entrepreneur is proving minimum
specified infrastructure facility to the farmers, the concerned states should waive off market
fee for such direct marketing activity. Similarly, developmental fee charged from private
markets should be at par with APMCs and should be spent on infrastructure development
outside the mandi.
While there should be a single window unified registration for traders and market agents to
function across states, market fee also should be levied only for the first transaction between
farmer and trader and not in the subsequent stages of sales. However for subsequent stages,
service charge could be levied.
Over 8.67 lakh Tamil Nadu farmers left agriculture in the last decade (ET 13.1.14)
Nearly 8.67 lakh farmers have quit agriculture and shifted to other sectors during the last 10
years in Tamil Nadu as per te 2011 census, a farmer's body leader said today.
Federation of Tamil Nadu Agricultural Associations Secreatary S Nallasami said that the
Census suggested that from 2001 to 2011, 8,67,582 farmers have stopped agriculture due to
various reasons, including huge loss.
Moreover, there was an increase in the number of agricultural labourers during the period, as
the farmers sell their land to real estate and prefer to work on daily wage, he said in a release
here.
He attributed the reason for the plight of the farmers to wrong import policy of the Centre,
unremunerative prices for farmers' produce, industrialistion and urbanisation, coupled with
the failure to divert the rain and other waters going to sea to the farmers' fields, by linking
rivers.
On fixing prices for the produce, like sugarcane, Nallasami said while the Government was
implementing the recommendations of the Pay commission immediately, it was not bothered
about the suggestions of the Commission for Agriculture Cost and Price, leaving the farmers
in the lurch and at the mercy of the middlemen.
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AP to miss foodgrain targets (BL 13.1.14)
Cotton, rice, groundnut impacted most by cyclones
Foodgrain production in Andhra Pradesh has missed the target, with three cyclones causing
extensive damage to agriculture. Against a target of 225 lakh tonnes for the year, the State is
likely to achieve 207 lakh tonnes. Paddy, groundnut, cotton and maize will be major losers.
The Government has pared the advance estimates for the full year after assessing the
situation. The State is expected to produce 137 lakh tonnes of rice, missing the target by 10
lakh tonnes.
“This, however, is still higher than the normal production of 131 lakh tonnes. In 2012-13, the
State produced 111 lakh tonnes,” a senior Agriculture Department official told Business Line.
Average yield per hectare dropped 250 kg. The three cyclones, occurred in three different
stages of crop growth in kharif and rabi, drastically affecting yields.
The target for groundnut production would also be missed as production is expected to be at
the normal level of 11 lakh tonnes. The State aimed at producing 17.50 lakh tonnes of
groundnut in 2013-14. The State would produce 52 lakh bales (of 170 kg of lint) as against a
target of 78 lakh bales. The average production is put at 55 lakh bales.
Crisis deepens
Prof. K.R. Chowdhary, agricultural economist, feels that the drop in production targets might
not hit the availability of foodgrains for people as the country has enough stocks. “But loss of
production and productivity would mean lesser incomes for farmers, who are already in deep
financial crisis. This would lead to lesser investments in agriculture as their ability to repay
and generate new loans comes down. This, in turn, would deepen the crisis,” he said.
Maize gains
The advance estimates, however, shows better prospects for maize. Maize production could
go up to 53 lakh tonnes against the target of 51 lakh tonnes. Increase in some sugarcane areas
could be a reason for this growth. The maize area has crossed the 10-lakh-hectare mark in
2013-14 against a target of 9 lakh hectares.
The average maize area is eight lakh hectares. It, however, has been witnessing a gradual
increase in the last two years. It reached 9.60 lakh hectares last year. With sugarcane
becoming unviable and less dependable, farmers in the coastal districts and in Telangana
areas are slowly shifting to maize, which is giving assured returns.
Need to further liberalise agricultural trade: RBI (BS 14.1.14)
The Reserve Bank of India (RBI) believes there is a need to further liberalise agricultural
trade to ensure the food economy doesn’t pose a major risk to non-inflationary growth.
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“There is a need to further liberalise agricultural trade by modifying agricultural produce
marketing committee (APMC) Acts by state governments and exempting perishables such as
fruits and vegetables from the provisions of APMC to give wider access to both producers
and traders for better price discovery,” said RBI Executive Director Deepak Mohanty. He
added there was substantial wastage of agricultural produce, particularly perishables. This, he
said, had to be reduced by improving supply-chain logistics — setting up cold chains and
processing facilities at producing clusters.
“One important way of productivity expansion is through greater mechanisation. However,
the dominance of small land holdings puts a constraint on the choice of technology.
Therefore, contract farming and leasing of farmland, while protecting the ownership rights of
small landholders, should be facilitated to enhance production and productivity,” he said.
Dispensation of social welfare benefits through cash transfers would not only help rationalise
the demand for food products, but also limit the distortionary effect on the labour market,
resulting in greater economic use of labour supply, Mohanty said.
According to Mohanty while the major policy actions to augment food supply may not be in
the domain of monetary policy, it may have to perform a careful balancing act so that a sharp
action does not choke off supply response and a weak response hardens inflationary
expectations.
Food Corporation of India opts for sea route to send foodgrains from Andhra Pradesh
to Kerala (ET 17.1.14)
Amid shortage of railway racks, government has for the first time allowed state-run Food
Corporation of India to use the sea route for transporting 20,000 tonnes of foodgrains from
Andhra Pradesh to Kerala.
FCI moves foodgrains for public distribution system (PDS) from producing states to
consuming states largely through road and rail routes. In hilly areas, foodgrains are
transported using helicopters.
"A beginning in this regard has been made with Food Minister K V Thomas approving
the container movement of 20,000 tonnes of rice per month from Kakinada, Andhra
Pradesh to Kochi in Kerala through ship," an official statement said today.
FCI, which has been moving huge quantities of food grains from one part of the country to
another mainly through road and railways, has decided to take recourse to movement of food
grains through sea route also, the statement added.
The decision to take the sea route has been taken to reduce the bottlenecks and stress
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experienced in the inland transportation of food grains and also it would be cheaper and
easier in the long run.
In future, FCI will explored more ports in Kerala and other parts of the country and could
take recourse to the sea route for transportation of food grains from one part of the country to
another, it added. Traditionally, Kerala receives boiled rice from Andhra
Pradesh to the extent of 70,000-80,000 tonnes per month.
Urad, moong, groundnut coverage slips in rabi sowing (BL 17.1.14)
Area under wheat, rapeseed/mustard, chana at record
Despite the total rabi acreage rising five per cent, coverage of key crops such as urad, moong
and jowar besides oilseeds such as groundnut and sunflower is lower for the week-ended
January 17.
According to data from the Agriculture Ministry, sowing of wheat, rapeseed/mustard and
gram (chana) has increased to a record high. Totally, 625.65 lakh hectares (lh) have been
brought under various crops this rabi season against 596.20 lh during the same period a year
ago.
Against a normal coverage or 286.36 lh, wheat has been sown on 313.69 lh. Last year, 295 lh
had been brought under the cereal during the same period. The area could increase further as
sowing is yet to be over in Uttar Pradesh.
The area under rice, which trailed initially, has increased to 10.51 lh (7.67 lh). Rabi rice
plantings continue until late February and normally 45 lh come under the crop.
Among coarse cereals, while jowar acreage has dropped with farmers shifting to other
beneficial crops, the area under maize and barley has increased. Overall, the acreage is down
at 58.55 lh (60.08 lh)
Rabi pulses crops, one of the key contributors to food inflation, are witnessing a mixed trend.
While sowing in chana has topped 100 lh, a record against a normal coverage of 82.18 lh, the
area under lentils, peas and other pulses is also higher.
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The rise in chana acreage is despite farmers in Madhya Pradesh switching over to wheat since
the State Government has announced a bonus payment over the minimum support price of Rs
1,400 a quintal. However, coverage of moong, lathyrus and urad is down between 50,000
hectares and one lh.
Rapeseed/mustard sowing has increased to a record of over 70 lh against the normal coverage
of 61 lh. Rabi groundnut coverage is down by 55,000 hectares at around six lh. Similarly,
sunflower acreage is lower by 70,000 hectares.
The area under sesame, safflower and linseed is up marginally.
higher storage levels
A major reason for the increase in rabi acreage is higher storage levels in the 85 major
reservoirs and better soil moisture. However, deficient rainfall under the North-East Monsoon
has affected coverage of pulses and a few other crops such as jowar. The North-East
monsoon showered excess rainfall in central parts of the country but was generally deficient
over the rest of the country.
The storage level in the reservoir is currently at a decade high of over 100 billion cubic
metres (BCM) against the 105.153 BCM capacity.
Cogencis reports: The Centre has called a meeting of food secretaries of various States in
the second week of February to review arrangements for procurement of wheat in the new
marketing season that begins on April 1, a Food Ministry release said.
In the meeting, estimated marketable surplus ratio of wheat for each State and estimated
procurement of wheat for rabi marketing season will also be discussed.
Foodgrain output to exceed 260 mt this year: Pranab (BL 19.1.14)
Need to dispel fears over GM crops, says President
India’s foodgrain production is expected to touch a record high and cross 260 million tonne
this year, President Pranab Mukherjee said today, during his visit to Baramati, the
constituency of Agriculture Minister Sharad Pawar.
He also called for greater awareness about genetically modified (GM) crops to address public
concerns.
He was speaking at a conference of vice chancellors of agricultural universities, directors of
ICARs and farmers in Baramati.
Improve awareness and biotech education to allay public concerns on GM crops, said the
President.
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The President referred to the benefits that India has got through cultivation of Bt cotton and
the wide adoption of GM crops, though he said there was a need to pursue “these new
technologies for the benefits they provide.”
“The development of transgenic crop varieties having the novel trait of insect resistance,
herbicide tolerance and hybrid production has led to significant cultivation of GM crops.
These crops currently occupy 170 million hectares in 28 developed and developing countries.
In India, Bt cotton has boosted production and enhanced export earnings,” Mukherjee said.
India is targeting record foodgrain production in the current fiscal.
Pointing out that the agriculture sector was a part of a dynamic and increasingly globalised
world economy, he called for “the development and institutionalisation of user friendly
knowledge systems to support decision making by various client groups.”
“A greater understanding of market intelligence mechanisms, good trade practices and legal
aspects of the multilateral trade regime and intellectual property rights is necessary,” the
President added.
The current record is 259 million tonne production achieved in 2011-12, after which the
production had slipped to 255 million tonne in 2012-13.
Madhya Pradesh, Gujarat, UP to get surplus rain during Feb-April (BL 19.1.14)
Rains have suddenly dried up since the New Year, with all-India surplus of 18 per cent as on
December 31, 2013, evaporating as if into thin air.
The first 15 days of year 2014 show an all-India deficit of 40 per cent, with practically the
entire western part recording scanty rainfall.
REGIONAL DEFICITS
Individual regional deficits amount to 100 per cent in entire Gujarat and Karnataka and
western parts of Maharashtra and adjoining Andhra Pradesh.
January is not known exactly for heavy showers but north-west and central India can do with
the usual sprinklers which aid ground-level moisture.
If the situation does not look foreboding, it is thanks to the bountiful run of the 2013 South-
West monsoon 2013 over most parts of the geography under reference here. But even here,
States such as Tamil Nadu have been left high and dry. The southern State has posted fresh
rain deficit of 44 per cent in the New Year (33 per cent as on Dec 31). North-West India may
have had a good southwest monsoon; but winter rains have largely skipped them by.
MAY REVERSE
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November and December have mostly brought dense fog, cold wave and ground frost over
these regions. Seasonal forecasts put out by European Centre for Medium-Term Weather
Forecasts suggest things might return to normal from February.
In fact, February-March-April may even see surplus rain over Madhya Pradesh, east Gujarat
and southwest Uttar Pradesh. There is no major deficiency being forecast even for the South,
including Tamil Nadu and the entire peninsula.
But most of peninsular India will undergo a very hot summer during these months, according
to these forecasts.
SEARING SUMMER
Almost entire Andhra Pradesh, central Tamil Nadu, adjoining Karnataka and Rayalaseema
may witness searing summer conditions. In contrast, entire northern half of the country may
see itself sitting pretty with comparatively cooler climes during this period.
Meanwhile, global models have hinted that year 2014 may see El Nino conditions
establishing over central and east Pacific.
El Nino represents a seasonal see-sawing of sea-surface temperatures from April onwards
with likely implications for the Indian monsoon that follows.
There is no direct cause-effect relationship between the two but El Nino has in the past
coincided with drier monsoons, though with notable exceptions.
Exporters exemption from stock holding welcomed (ET 20.1.13)
Welcoming exemption of exporters of edible oil and rice from the purview of stock holding
limits, the Commerce Ministry today said the decision will help reduce their transaction cost.
"The Commerce and Industry Minister Anand Sharma has welcomed the order issued by
Department of Consumer Affairs to exempt stocks of edible oil, edible oilseeds and rice
meant for export from the stock holding limit under the Essential Commodities Act," an
official statement said.
The commerce ministry said that the exporters have been demanding that they should not be
subjected to stock holding limit prescribed under the Act, if they have merchandize stocks of
such commodities meant for shipments.
"This will address the long felt need of such exporters and reduce their transaction cost," it
said.
In November last year, the Union Cabinet has exempted exporters who have IEC Code issued
by the Directorate General of Foreign Trade (DGFT) from stockholding limits imposed under
the Essential Commodities Act, 1955.
However, this exemption is limited only to the stocks meant for export and not domestic sale.
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The country, which meets 50 per cent of edible oil demand through imports, exports small
quantities of groundnut, sunflower and rapeseed oils to cater to expatriate demand.
Foreign shipments of edible oil in branded consumer packs are exempted from the ban.
Domestic production of edible oil is just around 7 million tonnes, against the annual demand
of 17-18 million tonnes. The shortages are met via imports.
India is the world's second largest rice producer and one of the biggest exporter.
'Govts need to act in cutting down supply chain barriers' (BS 21.1.14)
WEF report emphasises the need for urgent implementation of the Bali trade accords
Governments and businesses should make efforts to reduce supply chain inefficiencies, which
among others significantly contributes to loss of as much as 1.3 billion tonnes of food every
year, says a report.
Titled 'Enabling Trade: From Valuation to Action', the report released today by the World
Economic Forum (WEF) emphasised the need for urgent implementation of the Bali trade
accords and deeper reforms to "sustainably meet world food demand".
"Government leaders need to step out of traditional ministerial silos to lead value-chain
reforms and reap the benefits in domestic investment and global trade," it said.
According to the report, supply chain inefficiency contributes significantly to the 1.3 billion
tonnes of food lost each year.
"Attacking these barriers would help improve the livelihoods of billions of the world's
poorest people, and cut emissions, energy and water use.
"Lost or wasted food costs over $ 750 billion per year. Yet, agriculture and consumer policy
remains focused on production and retail improvements, with insufficient action on supply
chain and trade connections," it said.
Overly strict product standards, poor transportation infrastructure, border delays, and poor
business climates are among the main supply chain barriers for agriculture.
Noting that major manufacturing investments could be unlocked by accelerating cross-border
connectivity, it said that roughly $ 6 billion is spent each year by the automotive industry on
inventory-carrying costs at borders.
"If redirected into product development, this could pay for up to six new car launches every
year," the report added.
Mark Gottfredson, partner at Bain & Company said that WTO agreement announced in
December in Bali was a tremendous step toward trade liberalisation and efficiency.
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"Now is the time for governments and businesses to take action on the detailed and difficult
work ahead," he said.
The report has been prepared by WEF in collaboration with Bain & Company.
Soaring rural wages created low-growth, high-inflation: Report (FE 21.1.14)
The report, however, noted that the economy is now entering the adjustment phase, but most
of the outcomes will depend on policymakers as well as the private sector investment, which
it feels will pick up post-elections. Reuters
A spike in rural wages, which jumped from 10-13 per cent in FY08 to 18.7 per cent FY'11,
after NREGA scheme, is a major reason for the sharp fall in growth and sharper rise inflation,
as the UPA's pet scheme has not contributed to productivity gains, says a report.
"We believe the National Rural Employment Guarantee Act (NREGA) Scheme has been one
of the key factors pushing rural wages without matching gains in productivity...
"....which in turn led to a massive spike in inflation. Rural wages moved up from 10-13 per
cent in H1 of FY'08 to an average of 18.7 per cent during the past three years, but without a
matching increase in productivity," Morgan Stanley India said in a note today.
According to the report, factory output grew only 0.7 per cent in the past two years and CPI
inflation averaged at 10 per cent during the same period, creating a stagflationary
environment-low growth, high fiscal deficit and declining investment.
"While growth is weak, high inflation is constraining the central bank from easing. In this
context, the current cycle has been unusual in that inflation has been showing almost no
response to a deceleration in growth and the resulting negative output gap," the report said.
It further said "the NREGA has been one of the key factors resulting in higher food, services
and overall CPI inflation as well as inflation expectations."
Since the 2008 credit crisis, while fiscal deficit-induced consumption rose, investment
remained weak with public and private investment declining from the peak of 26.2 per cent of
GDP in FY'08 to 17.9 per cent in FY'13.
The report, however, noted that the economy is now entering the adjustment phase, but most
of the outcomes will depend on policymakers as well as the private sector investment, which
it feels will pick up post-elections.
"Post-elections, we believe the new government will have to respond quickly to the
deteriorating macro environment," the report said.
The report listed out four reasons for this poor growth mix -- growth supported by high fiscal
deficit, declining investment to GDP ratio; lower corporate sector investment; and
government intervention in labour market pushing rural wages higher without a matching
increase in productivity.
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Develop entire agricultural network to implement newer technologies: Mukherjee (BS
21.1.14)
President Pranab Mukherjee inaugurated a new building of the Krishi Vigyan Kendra (KVK)
in Baramati and a technology exhibition over the weekend.
Speaking on the occasion, Mukherjee said technology-induced agricultural growth is the way
ahead for the country.
He called upon the entire network of agricultural research, education and extension
institutions to develop and implement newer technologies for greater farm development.
He stated that the Science, Technology and Innovation Policy, 2013 has underlined the
importance of fostering innovations in agriculture.
"This policy has also envisaged a greater mentoring role for grass-root institutions like
KVKs," he said.
He stated that he was happy to learn about ICAR proposing a Farm Innovation Fund to
validate and document farmer innovations.
He said that this would encourage the development of new products, technologies, processes
and methodologies by the farmers for the benefit of farmers.
The president stated that the extension system has to be re-engineered with active
participation of government agencies, non-governmental organizations, corporate sector,
farmer organizations and self-help groups (SHGs).
In this innovative concept of public-private-people partnership in extension, the KVK system
has to play crucial role. He added that micro-enterprises in agriculture and allied sectors
operated by women have proved to be successful.
The capacity of women to create synergy between their multi-faceted roles and skill
development has to be recognized. More SHGs have to be therefore promoted. Models like
paddy task force of rural women developed and tested by KVKs in Kerala can be replicated
in other areas.
Mukherjee said India is a leading producer of many horticulture crops. The scope for further
development is high.
KVKs have to train growers and encourage them to form associations for collective
bargaining in procuring inputs and selling their produce.
The exemplary work in Maharashtra - setting up of model farmers' organizations like
sugarcane cooperatives and fruit growers organizations, generation of employment through
development of horticulture, micro-irrigation and water budgeting - is worthy of emulation
by other states.
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Mukherjee said there is a need to transform the agro-processing sector by improving post-
harvest management, focused on reducing wastage and increasing value addition. Dairy and
fisheries are other sectors that have immense potential for development.
He stated that India ranks first in milk production and second in fish production in the world.
Given the rising demand for these food items, a focused strategy is required to leverage their
production potential. Technology-led growth in horticulture, livestock, dairy, and fisheries
sectors would help usher in a Rainbow Revolution in agriculture.
Mukherjee said growth in agriculture has to benefit all sections of society. Studies have
indicated that a one percentage growth in agriculture is two times more effective in poverty
eradication as compared to growth in other sectors.
The National Food Security Act was enacted in September, 2013 to provide legal guarantee
for food grains at affordable prices to more than 800 million people. The roll out and
successful implementation of this world's largest social sector programme would depend on
the success of our agriculture sector.
The consistently good production of food grains during the last nine years gives confidence
that the country would be able to fulfill the obligation of food security to the people.
Scrap Agriculture Produce Marketing Committees Act: Assocham (ET 22.1.14)
Industry body Assocham today said the Agriculture Produce Marketing Committees Act
needs to be scrapped because it is creating hindrances for organised retail sector in some
states.
Much more investment would have been possible in the domestic organised retail if only it
was easy to procure directly from farmers, it said.
Much more investment would have been possible in the domestic organised retail if only it
was easy to procure directly from farmers, it said.
Making a strong case for reforms in agri-procurement by scrapping the APMC Act,
Assocham said in a statement that cumbersome rules discourage the organised retail to
flourish since an efficient supply chain is an integral part of the organised retail and
not just a front end.
It said: "Even for companies like ITC, it is extremely difficult to procure wheat since they
need individual licence for each of the mandis in the state.
"This is so in several states which do not give one licence for the whole state. If a company
wants to procure grains from 50 mandis it will need 50 licences."
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The Act has resulted in cartelisation of mandi intermediaries who fleece both consumers and
the farmers, it said, adding that "we need to scrap this cartel and help farmers establish a
direct contact with retailers".
Assocham said that without these reforms in the state laws, it would be extremely difficult for
any global retailer to set up stores in the country even if a particular state allows FDI in multi-
brand retail.
The industry body also sought a clarity on environmental laws and notifications which lack
clarity.
Citing the new environment regulations in Western Ghats, it said that lack of clarity is
creating confusion in states like Maharashtra and Karnataka which are active in producing
and processing horticulture products.
It added: "Different states have different rules in regard to food industries. A company
operating pan-India has to deal with different rules."
AGRI COMMODITY/ FOOD PRICES
Why food prices stay up (BS 31.12.13)
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The Agricultural Produce Marketing Committee law allows mandis to remain in the grip of a
middlemen cartel, with clear links to politicians who run the governments
Congress Vice-President Rahul Gandhi has, in effect, told chief ministers of party-ruled states
that if food inflation is to be controlled, as many items as possible must be got out of the
purview of the Agricultural Produce Marketing Committee (APMC) Act.
For the time being, these states are to delist fruit and vegetables from the APMC Act, so that
growers of these are able to sell their produce directly to consumers. The closest the
government came to get states on - board to do this was in 2012. A committee headed by a
senior member of the Planning Commission had recommended that states do this in six
months.
“Almost all states had agreed and the Planning Commission was given the task of monitoring
the progress of this crucial reform, along with the Prime Minister’s Office,” a top official
says.
REGULATION MISSING FROM REGULATED
MARKETS
Number of regulated markets — 7,246
Average area served by a regulated market is
450 sq km, making it inaccessible to many
farmers with surplus produce
Opaque auction system followed, e-auction
not adopted
No transparency in traders’ commission
Farmers receive only 20-25% of the consumer
price, mark-up adds up to 60-75%
Reluctance on the part of states to change
APMC legislation
The department of agriculture framed a model law which would have smoothened inter-state
movement of agricultural commodities, including perishables such as fruit and vegetables,
but a sudden change in focus halted the intention. Half-hearted attempts were made to
address the issue, as a result of which the objective was not realised.
Numerous other government and non-government committees have recommended exempting
fruit and vegetables from the APMC Act but with little success. The last such attempt was the
recommendations of a committee of 12 state ministers, headed by Maharashtra minister of
cooperation Harshvardhan Patil, which gave a report in January 2013. It had recommended
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the abolition of mandi tax from fruit and vegetables, along with a host of other reforms in
APMCs. The committee was also constituted at the initiative of the PMO but things did not
move.
At present
The APMC law is nearly 50 years old. Almost each state has one; it seeks to regulate the
trade in agricultural commodities. The idea was to protect the interest of farmers and ensure
trading becomes orderly. The Act resulted in creation of regulated markets, also called
mandis; there are 7,246 of these. The average area served by a regulated market is 450 sq km.
These mandis control almost the entire wholesale trade in agri goods. How these operate have
a huge bearing on the retail prices of fruit, vegetables and other produce.
A close look at the functioning of mandis suggests these neither protect the interests of
farmers or orderly trade. “The auction is rigged, shortages are created and there is no
transparency in the way traders extract commission. How else will you explain that onion
prices, Rs 100 a kilo prior to the recent Assembly elections, started falling just after the
elections,” says a trader at Delhi’s Azadpur mandi.
A farmer in Uttar Pradesh’s Hapur learnt the functioning of a mandi the hard way. He
approached one mandi with nearly 50 kg of cucumber. Upon arrival, he was greeted by a
group of traders who did an instant auction and decided a price far below the market one.
Having travelled quite a distance, there was no way he could take his produce back. “The
actual farmer got a pittance for his produce but the trader sold the entire stuff at a huge
premium to the retailer,” says the farmer.
“The process of auction at mandis is a sham. The same system has been followed since
Independence. What is most bizarre is that the actual producer does not get to know the price
at which he is selling till the auction is over and the auction winner reveals the final price,”
says Brahm Yadav, former chairman of the Delhi Agricultural Marketing Board that controls
Azadpur mandi, one of the largest in the country. He adds hoarding and creating artificial
shortages by not allowing an auction platform for commodities in demand for a few days,
thereby creating price shocks, is a norm. He asks why there is no electronic auction and no
effective system of communicating wholesale rates to consumers on a daily basis.
Distortions at mandis lead to huge difference in the price a consumer pays and what the
producer gets. A 2011 Indira Gandhi Institute of Development Research paper by Gokul
Patnaik quotes a research on fruit and vegetable supply in Delhi, Mumbai, Bangalore and
Kolkata. It found that “on an average, there are five-six intermediaries between the primary
producer and the consumer. The total mark-up in the chain added up to 60-75 per cent. The
primary producers receive only 20-25 per cent of the retail price.”
Way forward
Bharatiya Janata Party Kisan Morcha president Omprakash Dhankar says it is wrong to
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blame traders or the operations of mandis for rising food inflation. “Mandis at least provide
some platform to farmers to sell their produce. The system has some flaws but these can be
rectified. You cannot do away with mandis unless you have a better system in place.”
For a better system, the central government had formulated a model APMC Act in 2003. It
permitted private and corporate bodies to set up a marketing network and to demolish the
well-entrenched mechanism of middlemen and arthiyas. And, for allowing private mandis.
But state governments’ approach has been partial adoption of some of these provisions. Less
than 10 per cent of trade in agricultural commodities takes place in private mandis. Some
states have allowed contract farming, others have allowed direct purchase from farmers. But
comprehensive reform of APMC legislation is yet to take place in any state.
Why, despite these known deficiencies, are state governments reluctant to reform the system?
Says S K Bansal, former chairman of the Azadpur mandi: “It is all about politics.” In most
states, mandis are controlled by politicians. It is one of the remnants of a quota-permit-raj,
where obtaining a trading licence is akin to winning a lottery. Politicians have kept the entry
barrier high, hurting both consumers and farmers.
Additives score over principal agri commodities in 2013 (BS 1. 1.14)
Tomato, potato and onion as the highest gainers, pulses the highest loser
Tomato, potato and onion were the three perishable commodities known largely as additives
that disturbed kitchen budget with highest inflation in both wholesale and retail markets in
2013. Pulses, edible oils and sugar proved as saviors for consumers with a steep fall in their
prices despite an upsurge in the Wholesale Price Index (WPI) and Consumers Price Index
(CPI).
Data compiled by the Ministry of Food showed that the retail prices of tomato and onion
jumped through the roofs in the third quarter of the calendar year hitting almost Rs 90 and Rs
100 a kg respectively in the national capital. Hoarding of the middlemen coupled of spoilage
in the godowns created an artificial shortage of these vegetable additives. Also, added by the
delay in showing and harvesting of these new season crops due to extended season monsoon
rainfalls.
While the government made huge attempt to bridge the shortage of onion through imports
from major producing countries, yet it was insufficient to control the price rise. These
perishable commodities, however, softened with improvement in arrivals of the new season
crops.
'Network of retail cooperatives may help tame food inflation' (ET 4.1.14)
The government's key policymakers are drawing up plans to tackle the problem of
stubborn food prices and may rope in cooperative entities to set up standalone stores to sell
vegetables and other food products across the country.
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The race to tackle the inflation problem, identified as one of the factors for the rout of the
Congress in the recent state elections, has gathered momentum in the run-up to the 2014
national polls. Double digit food inflation and spiralling prices of vegetables have hurt
households across the spectrum and triggered anger and unease among voters.
C Rangarajan, who heads the Economic Advisory Council to the Prime minister, has floated
the idea of a "government organized initiative" involving the cooperative sector
and states to ease the pain of high food prices. "We should create a network of retail outlets in
our country and these networks should focus on a limited number of commodities. I think that
will have a salutary effect on the market prices," Rangarajan told TOI. 'The cooperative
institution is the most ideal for it. And what we should focus on is not cooperative retail
outlets catering to a very large number of commodities... I
think that is not what is required. Actually the focus has to be on perishables, certain kinds of
grain, certain kinds of dal," he added.
Food prices fall globally, but keep rising in India (ET 12.1.14)
When it comes to slower economic growth, the government never fails to point out
the problems in the global economy but there seems to be little link between Indian and
international food prices.
Latest data released by the United Nation's Food and Agriculture Organization shows that the
Food Price Index fell 3.5% in December 2013, compared to a year ago. For the full year, the
index averaged 209.9, which was 1.6% lower than 2012, the Rome-based gency said. In
November 2013, the Food Price Index fell 4.4%.
While the government will release the consumer and wholesale price inflation numbers next
week, food inflation based on the WPI was estimated at close to 20% in November 2013. By
all accountsRswith vegetable prices coming down in December, food inflation is expected to
moderate but there is no way it is going into low double-digitsRsat least at the moment.
High rate of inflation, especially for food products, has been identified as a key reason for the
Congress's drubbing in the recent state elections. High inflation and low growth in recent
years have emerged as a major headache for households . At his press conference last week,
prime minister Manmohan Singh had put much of the blame on the global economy and
international commodity prices.
Barring dairy products, where there has been a spurt in prices in recent months,
internationally prices of other food groups tracked by FAO remain subdued. In fact, sugar
and cereal prices slumped significantly in DecemberRs while meat stayed flat and vegetable
oil was 1.4% more expensive in November and 2.8% costlier in DecemberRsthe FAO said.
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The high demand for milk powder, especially from China, has prompted processors
to focus on it, ignoring butter and cheese, which has resulted in high price for dairy products.
Prices of cereals are at their lowest level since August 2010 as good wheat and maize
harvests have kept prices subdued . It is the government's decision to hold on to record public
stocks that has resulted in high prices in India.
Times View:
Those who grew up in India in the seventies and early eighties would remember how the
'foreign hand' would frequently be invoked by Indira Gandhi to explain away political turmoil
and strife. Of late, we have been seeing an economic variant of the mantra with the
government always keen to blame the 'external environment' for the country's woes.
As this report shows, some of the most pressing economic problems we face have little to
do with the global situation. The government would do better to focus on tackling
problems that are homegrown rather than lamenting those beyond its control.
Retail inflation falls to three-month low of 9.87% in December (BS 14.1.14)
Led by softening of vegetable prices; many hope this may mean RBI will not raise policy rate
at end-Jan review
A month after touching a record high, consumer price index-based inflation came down to a
three-month low of 9.87 per cent in December, thanks to vegetable prices.
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This has led quite a a few economists to expect the Reserve Bank of India (RBI) to retain,
instead of raising, its policy rate at the review due later this month. CPI-based inflation had
touched 11.16 per cent in November.
Official data issued on Monday showed the rate of price rise down to a single digit in
December after two months. However, in rural areas it remains in double digits, at 10.49 per
cent, though down from 11.66 per cent in November. In urban
areas, it fell to 9.11 per cent from the earlier 10.53 per cent.
The rate of price rise in food items went down from 14.72 per
cent in November to 12.16 per cent in December. This was a
result of the cooling in vegetable price rise. Vegetable
inflation fell to 38.76 per cent in December from 61.6 per cent in
November.
“Retail inflation has significantly eased, more than the
anticipated levels,” said Rupa Rege Nitsure, chief
economist at Bank of Baroda.
Among food items, protein-rich products saw an uptick in inflation in December. Prices of
non-vegetarian items rose 12.64 per cent in December compared to 11.96 per cent in
November. The rate of price rise in milk products was 9.87 per cent, from 9.06 per cent in
November.
Also, the price rise in clothing, bedding and footwear products went up from 8.94 per cent in
November to 9.25 per cent in December.
Analysts said RBI could now maintain status quo on policy rates in its review on January 28.
“RBI had stated that if it saw signs of moderation in food items, it might not go for a hike,”
noted Abheek Barua, chief economist at HDFC bank.
RBI had maintained status quo on the repo rate at 7.75 per cent in its mid-quarter monetary
policy review, on the back of an expected softening in vegetable prices. Nitsure said going by
the sluggish industrial output numbers and core wholesale inflation going down in the past
months, RBI might not opt for a rise in rates.
The Index of Industrial Production contracted 2.1 per cent in November against a decline by
one per cent a year before in the same month. This had dashed hope of economic recovery in
at least the third quarter of this financial year. The economy grew only 4.6 per cent in the first
half of 2013-14, against 5.3 per cent in the corresponding period of 2012-13. In all of 2012-
13, the economy expanded at a decadal low of five per cent.
Dec WPI eases to 5-month low of 6.16% (BS 15.1.14)
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October WPI inflation revised to 7.24% vs 7% earlier
WPI inflation eased to 5-month low of 6.16% in December compared to 7.52% in November.
October WPI inflation was revised to 7.24% vs 7% earlier.
Earlier, retail inflation also fell to 3-month low of 9.87% for December.
Highlights:
Fuel and power group inflation 10.98% vs 11.08% m-o-m
Manufactured products inflation unchanged mom at 2.64%
Primary articles inflation 10.78% vs 15.92% m-o-m
Food articles inflation at 13.68% vs 19.93% m-o-m
Dip in food prices eases inflation to 5-month low at 6.16% in December (BL 15.1.14)
A sharp slide in vegetable prices on the back of better farm supplies helped moderate
headline inflation to a five-month low in December, at 6.16 per cent.
The dip in inflation has cemented expectations that the RBI will not hike policy rates on
January 28. Besides, the Government expects foodgrain production to touch an all-time high
this year on timely and widespread monsoons. This may further aid the softening trend in
food inflation.
Vegetable prices declined nearly 30 per cent month-on-month in December 2013, official
data showed.
Prices of food articles fell 6.4 per cent month-on-month, while primary articles were down 5
per cent.
Wholesale Price Index inflation in December 2013 is significantly lower than the headline
inflation of 7.52 per cent in November last year.
In conjunction with the recent dip in retail inflation to 9.87 per cent, it validates RBI
Governor Raghuram Rajan’s belief that prices will fall. Last month Rajan had left interest
rates untouched.
RBI pause
The consensus view among economists and bankers is that the news of a significant fall (136
basis points) in inflation will prompt the RBI to pause on January 28.
But, the other view is that the RBI will be guided largely by the core inflation movement and
hence a hike in policy rates this year cannot be ruled out.
A cut in policy rates is, however, not on the cards even as industry on Wednesday urged the
RBI to lower interest rates, say economists.
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Meanwhile, the headline inflation for October 2013 has now been revised upwards to 7.24
per cent from 7 per cent, official data released on Wednesday showed.
The fall in headline inflation cheered the stock markets, with the benchmark Sensex closing
at a two-week high.
While the Sensex rose 256 points, the 50-share Nifty rallied 79 points to close at 6320.90, the
highest level since December 10 last year.
The yield on 10-year Government bonds fell nearly 10 basis points.
On the farm front, things are looking better for the Government. Growth is expected to be
higher, at around four per cent, thanks to a good monsoon.
“We will be approaching an all-time record production of foodgrain this year,” said
Agriculture Minister Sharad Pawar, addressing the 85th Annual General Meeting of the
Indian Council of Agricultural Research, on Wednesday.
The second advance estimates on foodgrain output are expected in February.
India’s foodgrain production had touched an all-time high of 259.29 million tonnes in 2011-
12. But it fell marginally in the subsequent year to around 255.36 million tonnes on account
of poor rains in some parts of the country.
V. Kannan, Chairman and Managing Director, Vijaya Bank, said he expects policy rates to be
maintained on January 28.
On whether the RBI is expected to cut or hike policy rates in March, Kannan said it was too
early to say anything.
Upasna Bhardwaj, Chief Economist, ING Vysya Bank, said the good news on headline
inflation will be a breather for the central bank but may only be a temporary comfort given
the focus on core inflation.
Core inflation, which has inched up to 2.8 per cent, will be closely monitored and the RBI
will be mostly guided by this indicator in the coming months, she said.
“I expect the RBI to pause on January 28. I am not ruling out a hike in the coming months.
But I certainly don’t see any policy rate cut,” Bhardwaj told Business Line.
Vegetable prices ease across the board (BL 19.1.14)
Will help rein in inflationary expectations among consumers
103
Policymakers, economists and India Inc heaved a sigh of relief when the consumer price
index (CPI) data for December showed annual inflation in vegetables fall to 38.76 per cent
from a record 61.6 per cent the previous month.
Well, they’ll be thrilled when the data for January is out in less than a month’s time.
Most vegetables – onion, cauliflower, cabbage, carrot, bottle gourd, brinjal, peas, radish and
beans – are currently retailing not just below their November peaks, but even their January
2013 levels.
Prices are ruling higher than a year ago only in a few vegetables, according to information
accessed from a leading modern-format retailer for the National Capital Region. Even in their
case – potato, tomato and capsicum, for instance – prices have dropped considerably since
November (see table).
These could translate into low single-digit, if not negative, inflation in vegetables for January.
Given the already low/negative CPI inflation rates for pulses (2.15 per cent in December),
edible oils (0.7 per cent) and sugar (minus 5.61 per cent), it may further reinforce an easing of
price pressures in food items.
“Vegetables prices matter for inflationary expectations among consumers since these, unlike
say white goods, are bought on a daily basis,” said Devendra Kumar Pant, Chief Economist at
India Ratings & Research.
Normalcy restored
Pradipta Sahoo, Business Head (Horticulture) of Mother Dairy Fruit & Vegetable Pvt Ltd,
attributed the decline in vegetable prices to the end of an extended period of weather
aberrations.
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“In 2013, the Monsoon arrived early and left late. The prolonged rains disrupted cropping
cycles, more so in vegetables where harvesting got delayed. The impact of it all got
concentrated in November,” he said.
But now, with weather conditions stabilising, the positive effects of a good monsoon are
being felt through increased vegetable arrivals across all mandis. “We are actually seeing a
glut developing,” said Sahoo.
Onion-potato effect
The price turnaround in vegetables originated with onions, where Cyclone Phailin in October
and the ensuing unseasonal rains led to the crop in Andhra Pradesh and Karnataka being
harvested about three weeks late.
Once that crop started arriving, onion prices at Lasalgaon — the main reference mandi — fell
from over Rs 50/kg in mid-October to Rs 17-18 by end-November and Rs 9-10 at present.
Next to follow was potato, where prolonged monsoon rains pushed forward the normal late-
September/early-October Rabi sowings by 15 days.
“For a country that consumes one lakh tonnes daily, it meant meeting the demand for that
unforeseen extra 15 days from the earlier crop kept in cold storages. Prices, therefore, spiked
in November,” said Hemant Gaur of Siddhivinayak Agri Processing, a potato supply chain
company.
But with the same late-sown 90-day crop starting to arrive, wholesale prices in Agra halved
from Rs 13.5-14 to 7-7.5/kg between November and now.
Once onion and potato prices fell, the effects have spilled over to other vegetables — a
“normal cross-price elasticity of demand phenomenon,” as Gaur pointed out.