i

Agrinews: April 2013

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

ii

News compiled from Economic Times, Business Standard, Business Line and

Financial Express from dated 26.3.13 to 25.4.13. These are partial or full news

stories for reference purposes.

iii

CONTENTS

SECTION TITLE PAGE

I HIGHLIGHTS 1

II AGRICULTURAL POLICY 3

III RICE 9

IV WHEAT 17

V MAIZE/COARSE GRAINS 33

VI PULSES 36

VII EDIBLE OILS AND OILSEEDS 40

VIII VEGETABLES/ ONION-POTATO-BANANA 47

IX MILK 49

X SUGARCANE/SUGAR 53

XI INPUTS 73

XII OTHER AGRI COMMODITY/NEWS 76

XIII AGRICULTURAL COMMODITY/ FOOD PRICES 87

XIV AGRICULTURAL COMMODITY FUTURES 94

a

1

I HIGHLIGHTS

Agricultural Policy

Organic food may be exempt from farm products’ export ban (BL 26/3/2013)

Government to encourage private traders for buying wheat from farmers (ET

3/4/2013)

Govt set to review buffer stock norms (ET 11.4.13)

Rice

Basmati exports up 10% in FY13 (BS 5.4.13)

Bihar crosses national average in rice production: Nitish Kumar (ET 24.4.13)

Wheat

Scientists unlock key genetic code of wheat (BL 26.3.13)

India, US to launch joint research collaboration on wheat( ET 9.4.13)

Wheat harvest seen at record on high-yield seeds (BS 10.4.13)

India likely to export 7.5 MT wheat, says UN body (BS 17.4.13)

Wheat exports feasible as global prices firming up: FCI (ET 22.4.13)

Pulses

World pulses trade meet to look into demand-supply outlook (BL 15.4.13)

Edible Oils and Oilseeds

Stockists begin building edible oil inventories (BL 2/3/2013)

India's vegoil imports down 7.5% (BS 14.4.13)

Vegetables/ Onion- Potato

It’s a hot potato, thanks to steady demand (BL 29/3/2013)

Punjab announces 50% subsidy on diggers for potato plantation(ET 25/4/2013)

Milk

New Zealand drought fuels boom for Indian dairies (BL 2.4.13)

India’s milk pouch model appeals to Europe, Pakistan (ET 22.4.13)

Sugarcane/Sugar

India's 2013-14 sugar output looks positive: ISO chief ( ET 26.3.12)

Sugar mills given free hand to sell open market quota (BL 26/3/2013)

Government releases 10.4 million tonne sugar for open market (ET 27/3/2013)

Sugar production falls by 2% at 230.5 LT in H1 2012-13 (ET 2/4/2013)

Government removes control on sale of sugar in open market (ET 5.4.13)

Centre to bear extra PDS sugar subsidy for 2 years: FM (ET 6/4/2013)

2

Sugar producers to benefit from govt-mandated compulsory blending of ethanol

with petrol (ET 17/4/2013)

Other Agri / Farm News

India's agriculture output to be worth 29 lakh crore by 2030: CII-McKinsey report

(ET 14.4.13)

Branding can propel India among top five farm produce exporters by 2030 (BS

15.4.13)

Govt seeks precision in monsoon forecasting by 2017 (ET 17.4.13)

Private forecaster Skymet expects normal monsoon this year (ET 18/4/2013)

Programme to provide pre-harvest crop estimate (BL 24/4/2013)

Agricultural Commodity/ Food Prices

Food habit change in rural areas fuelling inflation: RBI (BL 6/4/2013)

World food prices rise 1 per cent in March: Food and Agriculture Organisation

(ET 12.4.13)

Cheaper veggies pull down March inflation to 5.96% (FE 15.4.13)

Retail price inflation to remain in double digits in 2013 and 2014: IMF (BS

17.4.13)

Agricultural Commodity Futures Prices

Commodity markets will be drivers of economic growth’ (BL 3/4/2013)

FMC wants exemption for processed farm products from CTT (BL 10/4/2013)

3

II AGRICULTURAL POLICY/ RELATED ISSUES

Organic food may be exempt from farm products’ export ban (BL 26/3/2013)

The Government may exempt organic products from export ban imposed on farm

commodities from time to time to check the spiralling prices in the domestic market.

The move, when implemented, is expected to give a boost to exports from the fast-

growing sector by making supplies in the overseas market more predictable.

The Commerce Department is formulating a proposal for exempting organic products

from export ban on the lines of the recent exemption given to processed food and is

expected to soon discuss it with other ministries concerned.

Organic food is grown without the use of chemical fertilisers and pesticides and is in

great demand all over Europe, the US, Australia, Canada, Japan, South Africa and West

Asia.

Exports of organic products jumped almost three times to touch $360 million in 2011-12

from $130 million in the previous year.

“Buyers of our organic products will have more confidence in their suppliers if they

know for certain that exports will not stop due to Government intervention. Continuous

exports will also encourage farmers to grow more organic food,” the official said.

Export of organic food products from the country include basmati rice, pulses, honey, tea,

spices, coffee, oil seeds and fruits, according to farm products export body APEDA,

Exempting organic produce from export ban would not harm the interest of domestic

consumers at the time of shortage of supply in the local markets as it is a minuscule part

of total farm exports.

Exports of agricultural commodities monitored by APEDA in 2011-12 was a whopping

Rs 82,000 crore ($15 billion) compared with organic products exports at Rs 1,800 crore

($360 billion).

4

In January, the Cabinet Committee on Economic Affairs exempted processed food and

value-added agricultural produce from export ban.

These include wheat of meslin flour, cereal flours, meal pellets and grains, milk products

including casein and its products, butter and other fat derivatives from milk and dairy

spread, cheese and curd and value added products of onion and peanut butter.

“We want the same logic to be extended to organic products. The Commerce Department

is preparing a paper on why organic products should be exempted from export ban and it

would be discussed with other ministries soon,” the official said.

Organic food is gaining ground in many parts of the world. According to US-based

environmental research organisation The Worldwatch Institute, which has carried out a

study on the growth of global organic agricultural practices, acreage under organic farms

has trebled globally since 1999 to 37 million hectares despite a dip in 2009-10.

Government to encourage private traders for buying wheat from farmers (ET

3/4/2013)

Anticipating huge surge in wheat procurement this year, the government is considering

options to encourage private traders to buy the grain directly from farmers, Food

Minister K V Thomas said today.

"Let the private traders come and procure this time. We are working out a mechanism.

We don't want to give signal that we will procure wheat for private parties," Thomas said

on the sidelines of CII AGM here.

The government is aiming to buy a record 45 million tonnes of wheat in the ongoing

2013-14 marketing year, as against 38 million tonnes last year, he said.

"Our wheat requirement is 28-29 million tonnes. I was forced to procure 38 million

tonnes wheat last year as private traders did not want to buy at minimum support

price (MSP). Although our burden is huge, but we have to procure to ensure MSP to

farmers," Thomas explained.

Private players had not been buying wheat directly from farmers for last two years due to

higher taxes in states like Punjab. Also, they were waiting for the government

agency FCI to procure entire wheat and sell later to private traders at lower rates via open

market sale scheme (OMSS), he said.

Thomas also sought suggestions from the industry chamber CII on ways to encourage

private sector in wheat procurement. Allaying fears of storage crisis due to possible huge

wheat buy, Thomas said, "It is a huge challenge. We have got enough storage. I am

confident that we will manage this year."

5

Wheat procurement will start in fullswing after Baisakhi festival on April 14. So far, FCI

has purchased over 5 lakh tonnes of wheat at the support price of Rs 1350 per quintal.

As on March 1, the Food Corporation of India (FCI) had foodgrains stocks of 62.8

million tonnes, of which wheat was 27.1 million tonnes. The storage capacity is 74

million tonnes.

The government's wheat purchase has been on the rise due to record output in the last two

consecutive years. The wheat production this year is also expected to surpass last year's

record 94.88 million tonnes.

‘Creating non-farm jobs must for farmers’ (BL 3/4/2013)

There is a need to create more non-farm opportunities in rural areas and to facilitate

farmers’ migration to those jobs so as to ensure income security for them, Agriculture

Secretary Ashish Bahuguna said today.

“We are food secured country. We will remain food secured for foreseeable future. But

what is not secured is farmers’ income. This we need to address,” he said at CII AGM

here.

“We should get together and see how we can create non-farm opportunities in rural areas

and facilitate migration from agriculture sector,” Bahuguna added.

Presently, there is inequity in distribution of wealth among farmers as more than 50 per

cent of the population is dependent on farming sector, which contributes only 13 per cent

of the country’s gross domestic product (GDP), he said.

Based on 2010 prices, average income per person in India is estimated at Rs 45,000.

While farm income is estimated at Rs 10,000, non-farm income at Rs 80,000, he said

during a panel discussion on India’s food security and 2nd green revolution.

“If this is the kind of variation in generation of wealth, we must address this and reduce

burden on agriculture,” Bahuguna said.

On crop diversification, the Secretary said farmers will shift to non-foodgrains crops like

horticulture responding to price signals but the problem they face is when the market is

distorted through controls.

The government is promoting crop diversification through a central scheme in states such

as Punjab where water table has depleted due to mono-cropping of wheat and rice.

6

National Food Security Bill to lead to massive PDS reforms, says KV Thomas (ET

3/4/2013)

Aiming to provide food security to 75% of the rural and 50% of the urban population

along with a special focus on nutritional needs of children, pregnant and

lactating women, the National Food Security Bill will lead to massive PDS reforms

including doorstep delivery of food grains, end-to-end computerisation, leveraging

"aadhaar", etc.

This was stated by Prof. K.V. Thomas,minister of state for consumer affairs, food and

public distribution while addressing the special session on "India's food security and the

second green revolution" at CII's annual general Meeting & National Conference on

Wednesday.

Expressing hope that the National Food Security Bill will be passed by Parliament in the

coming second part of the Budget Session, Prof. Thomas said that a large part of the

debate on Indian agriculture concentrates around food security concerns of the people of

the country and the day is not far off, when India will be known the world over for taking

this important step towards ensuring food security to the masses.

Speaking further on the challenges of food security the minister highlighted the

achievements of the agricultural sector in achieving record production of grains and

horticulture produce and further said that "in order to be able to ensure food security in a

sustained manner, it is necessary to maintain the growth momentum in food grains

productions by ensuring 'ever-green revolution" in the country. This requires harnessing

the ample natural resources of eastern region of the country".

Highlighting the need for income security and more equitable distribution of income in

rural areas, Mr Ashish Bahuguna, secretary, department of agriculture & cooperation,

stressed on the need creating greater nonfarm employment opportunities in the rural

areas. He further remarked that the key challenges that continue to threaten sustainable

growth of agriculture can be adequately addressed through effective public private

partnerships.

Speaking on the food security bill Dr Ashok Gulati, chairman, Commission for

Agriculture Costs and Prices said that the leakages in the PDS is one of the biggest

challenge in the food distribution system and need to be addressed. He also stressed on

7

the need for rethinking on MSP.

Mr Ajay Jakhar, Chairman, Bharat Krishak Samaj called for reforms in the agriculture

sector to improve rural economy. Highlighting the need for agricultural diversification

Mr Jakhar stressed on the need for reforms in the government policies in areas of

research, extension and marketing which are crucial for enabling diversification.

He also suggested the need for creating a national food security advisor for effective

coordination among multiple ministries, departments and institutions governing

agriculture.Moderating the session Mr Rakesh Bharti Mittal Chairman, CII National

Council on Agriculture recommended reforms in agriculture such as delisting of

perishables from APMC and long term leasing of land.

According to the speakers small land holdings, poor marketing infrastructure and late

introduction of technology were the main roadblocks, which according to them were not

allowing farmers to grow economically. The speakers supported more effective public

private partnership to address the current challenges and scale operations in agriculture

Govt set to review buffer stock norms (ET 11.4.13)

The government is reviewing the norms for keeping buffer stocks of wheat and rice

required at a particular time of the year to feed the public distribution system and welfare

schemes.

The demand for wheat and rice distributed through welfare schemes is expected to rise

with the implementation of the food security law.

"The government is looking at the issue and we are discussing it with different

departments," KV Thomas, minister for consumer affairs, food and public distribution,

told ET. He said he was going to take up the issue with the Commission for Agricultural

Costs and Prices (CACP). The prime minister has already recommended the issue to C

Rangarajan, chairman, Prime Minister's Economic Advisory Council.

Thomas said the government was looking at three issues which would determine the

buffer norms.

"We are looking at the government's role in procurement and marketing of the grains,

protecting the farmer's interest by setting a minimum support price and the subsidy we

are giving to private traders for bulk purchase under the Open Market sale Scheme

8

(OMSS)," he said. Buffer norms for wheat and rice have not been revised since April

2005.

According to the norm, the minimum quantity of grains available with the government

should be 4 million tonne (mt) of wheat and 12.2 mt rice on April 1 every year. But as on

April 1 this year, the Food Corporation of India (FCI) was holding 24.2 mt wheat and

35.5 mt rice.

The government anticipates that by July1, stock holding of grains will touch 93 mt

including wheat stocks at 60 mt.

"The government had kept buffer norms at a time when grain production in the country

was low, which is not the situation now. As per our projection till 2040, we will have

grain (wheat and rice) production touching 253.24 mt compared to the 2013-14

projection of 192.02 mt," said Thomas.

According to FCI officials, the expenditure incurred by the government on holding one

lakh tonne wheat per annum was 25 crore and 32 crore for rice.

"It is high time that the country evaluated how much buffer stock we need and liquidate

excessive stock. This will tame food inflation, reduce food subsidy and bring

rationalisation to grain market," said Ashok Gulati , chairman, CACP.

The National Centre for Agricultural Economics and Policy Research (NCAP) has

submitted its recommendations on buffer norms a few months ago. "We feel that buffer

norms have to increase with rising production and population," said Ramesh Chand,

director, NCAP. He said the Food Security Act will now ensure that the government will

need around 64 million tonne wheat for the scheme as against 56 million tonne currently

required to run the public distribution system.

9

III RICE

Basmati exports up 10% in FY13 (BS 5.4.13)

Increasing acceptability for Indian basmati rice

in the international markets has resulted in a 10

per cent rise in exports of the commodity (in

volume terms) in 2012-13; realisations

increased 30 per cent.

Exporters are confident of a stellar show this

financial year, too. The exporters' lobby is

confident of selling higher volumes this year,

owing to the new high-yield variety, Pusa

1509. Vijay Setia, a leading exporter from

Haryana, said in 2012-13, supplies fell short of

demand. The Pusa 1509 variety was likely to help basmati exporters meet the increasing

export demand in the coming years, he added.

The Pusa 1509 variety, developed by Punjab Agricultureal University, Ludhiana, is a

short-duration crop. Its seeds cost Rs 100 a kg, compared with Rs 50 a kg for the Pusa

1121 variety; its projected yield is six tonnes a hectare, against Pusa 1121's four tonnes.

Besides better acreage, the new variety would help save irrigation costs, as a short-

duration crop exerts less pressure on water and soil health.

Since 2009 (when the Pusa 1121 variety was given the status of basmati by the

agriculture ministry), basmati exports have seen a substantial rise. In 2011-12, non-

basmati exports stood at 5.8 million tonnes (mt), compared with basmati exports of 3.2

mt.

On the rise in basmati exports, Mahender Pal, president of the All India Rice Exporters

Association, said, "A 10 per cent increase in exports (in 2013-14) is quite realistic."

Setia said the coming year would see good growth, as payment issues with Iran had been

resolved (Iran imports substantial quantities of basmati rice from India).

Ashwani Arora, joint managing director of L T Foods, said West Asian countries were

major growth drivers for the Indian basmati industry. He added basmati exports by his

company would rise 15-20 per cent. Though L T Foods also exports non-basmati rice,

this is primarily marketed in African countries.

10

P P S Pangli, president of the PAU Kisan Club, is optimistic about the new variety and its

export potential. "In the domestic market, a farmer gets about Rs 3,300 a quintal for Pusa

1121 basmati; this may be temporary. We want consistency in prices. Remuneration of

Rs 2,500 a quintal is also lucrative. If the price registers a slightly downward trend due to

higher acreage, it would not hurt farmers, as they would get better realisations by selling

higher volumes. The new, improved variety would help farmers get higher yields."

Rice rallies as millers hold on to stocks (BL 8/4/2013)

An unexpected rally in the market pushed up aromatic and non-basmati prices further by

Rs 70-500 a quintal on Monday.

An uptrend in the market was expected but a rally at this time was not expected, said

Amit Chandna, proprietor of Hanuman Rice Trading Company.

Market sentiments are still largely positive at present and market may witness some good

buying in the coming weeks, he said.

Apart from low availability of stocks and good domestic demand, new trade enquires are

also giving good support to the market.

When asked about the low availability stocks, Amti Chandna said that rice millers are

expecting that rice prices may go up further and, hence, they are not off-loading heavy

stocks in the market.

In the physical market, Pusa-1121 (steam) went up by Rs 300 and sold at Rs 8,100, while

Pusa-1121 (sela) quoted Rs 200 up at Rs 7,000.

Pure basmati (raw) moved by Rs 100 to Rs 8,600. Duplicate basmati (steam) moved up

by Rs 500 and traded at Rs 7,000.For the brokens of Pusa-1121, Dubar improved by Rs

300 and quoted at Rs 3,700; Tibar up by Rs 400 and sold at Rs 4,700; Mongra was

quoted Rs 200 up at Rs 2,900.Similarly, non-basmati varieties improved on buying

interest.

Sharbati (steam) moved up by Rs 300 and quoted at Rs 5,300; while Sharbati (sela) was

Rs 200 up at Rs 5,000.

Prices of PR-11 (sela) increased by Rs 200 and sold at Rs 3,400-3,450 while PR-11

(Raw) improved by Rs 250 and quoted at Rs 3,100-3,150. Permal (raw) went up by Rs

100 and sold at Rs 2,500 while Permal (sela) went up Rs 70 to Rs 2,400.

11

Bulk buying keeps bullish trend intact in rice (BL 10/3/2013)

The bullish trend in the rice market continued with prices of a few aromatic and sharbati

rice varieties moving up by Rs 50-400 a quintal on Wednesday.

Tara Chand Sharma, Proprietor, Tara Chand and Sons, told Business Line that a sudden

increase in demand lifted prices of aromatic and sharbati rice varieties.The market has

witnessed some frantic buying by bulk buyers and retail traders in last two days, he said.

According to market experts, domestic demand is improving and the aromatic and non-

basmati varieties may continue at current levels for the next few days, said Sharma.The

market is getting good demand from the overseas markets too, he said.

In the physical market, Pusa-1121 (steam) sold at Rs 8,100, while Pusa-1121 (sela) went

up by Rs 100 and quoted at Rs 7,100. Pure basmati (raw) moved by Rs 400 and quoted at

Rs 9,000. Duplicate basmati (steam) traded at Rs 7,000.For the brokens of Pusa-1121,

Dubar improved by Rs 300 and quoted at Rs 4,000, Tibar up by Rs 200 and sold at Rs

4,900, while Mongra was Rs 100 up at Rs 3,000.

Similarly, sharbati rice varieties went up on rising demand. Sharbati (steam) moved up by

Rs 100 and quoted at Rs 5,400, while Sharbati (sela) was Rs 50 up at Rs 5,050.On the

other hand, after witnessing an uptrend earlier this week, PR varieties remained

unchanged.

Govt aims to switch 5-10% paddy area to other crops in 3 states (BS 11.4.13)

Govt urges farmers in Punjab, Haryana and western UP to shift to alternative and

lucrative crops

In view of the depleting water table in north India, the government would like farmers in

Punjab, Haryana and western Uttar Pradesh (UP) to switch 5-10 per cent of the total area

of paddy cultivation to other crops such as maize, pulses, horticulture and agro-forestry.

The National Mission on Crop Diversification, launched in the 2013-14 Budget, aims at

encouraging farmers in the traditional paddy growing areas of north India to shift to

alternative and lucrative crops. The mission was launched with an initial allocation of Rs

500 crore.

"The water table in north India is dropping because of excessive use and paddy, being a

water-intensive crop, is the main culprit," said a senior official with the agriculture

ministry. "Also, the use of fertilisers and other chemicals has gone up sharply in the

12

hitherto green revolution areas, which has compelled the government to plan for this

switch."

The ministry has invited inputs from Punjab, Haryana and UP on how to help farmers

shift from paddy to other crops without affecting their income. Paddy is one of the most

sought after crops in north India because of its assured returns. In 2011-12, the area under

paddy in the three states was 10.01 million tonnes, which is about 23 per cent of India's

total paddy cultivation area. Production from these states was almost 27 per cent of the

country's rice production.

"To start with, we might provide some special incentives to those growers who switch to

crops such as maize and pulses from paddy and might even consider free seeds of such

alternative crops," said the official. "We have already started the 'Bringing Green

Revolution To Eastern India' programme, through which we plan to raise rice production

in the eastern states of Bihar, West Bengal, Assam, Jharkhand and Odisha."

According to him, while it is necessary to encourage farmers to shift their cropping

pattern, it is also important to provide proper avenues to market their products. "The

mission will work towards all that," the official added.

The idea is to gradually reduce the dependence of the government's main procurement

agencies on the three regions for foodgrains, mainly rice, he said. However, as the

procurement mechanism in these states is not developed, a major portion of the

procurement will initially have to be north India, the official added.

Paddy is the largest foodgrain produced in the country. In the 2012-13 crop marketing

year that ends in June, India is expected to produce 102 million tonnes, marginally less

than 105 million tonnes in 2011-12.

13

Panel moots 5% cap on hike in paddy support price (BS 11.4.13)

As with wheat, the Commission for Agricultural Costs and Prices (CACP) has

recommended no more than a five per cent increase in the Minimum Support Price

(MSP) for paddy for the 2013-14 kharif crop marketing year, starting October.

Officials said its latest price report on kharif crops has recommended the MSP of

common grade paddy at Rs 1,310 a quintal, just Rs 60 more than the current one. For

Grade ‘A’ paddy, it has proposed Rs 1,340 a quintal; it is now Rs 1,280 a quintal.

If approved by the Cabinet, this will be one of the lowest increases in the MSP of paddy

in the past five-odd years. Officials in the know said this was to correct the market, which

had moved up sharply in recent years because of a steep rise in MSP. The marginal

increase is also meant to check the government’s rising food subsidy bill, expected to

exceed Rs 100,000 crore in 2013-14.

Between 2010-11 and 2012-13, the MSP of common grade paddy was raised 25 per cent

and of grade ‘A’ by 28 per cent. Some officials said the nominal increase was also in line

with the government policy to encourage cultivation of alternative crops such as oilseeds

and pulses, in place of foodgrain such as wheat and rice.

No rise has been suggested for the MSPs of tur, urad and sunflower. For maize, moong,

groundnut, yellow soybean and medium staple cotton, the recommended percentage rises

are 11.5, 2.27, 8.1, 14.3 and 2.7, respectively, officials added.

In its earlier price recommendations, the CACP had recommended freezing the MSP of

wheat for the 2013-14 crop marketing season that will start from April.

The government disagreed because of the sharp increase in diesel prices. The MSP of

wheat for 2013-14 was finally settled at Rs 1,350 a qtl, about Rs 65 more than the earlier

MSP of Rs 1,285 a qtl.

The Commission is also believed to have, for the first time, ranked states on the basic

ease of marketing farm produce. The rank indicates how efficient is the agricultural

marketing system in a state and how suitable it is for farmers to sell produce.

“We have also tried to highlight the massive paddy marketing problem in the eastern

states of Bihar, West Bengal, Odisha and so on, where farmers are forced to sell produce

14

at 15-20 per cent below the MSP because the official procurement system is weak,” said

another senior official from the department of agriculture.

The report on kharif price policy for 2013-14 is also expected to highlight the plight of

farmers of eastern India, who have been left out of MSP regime because of inefficient

procurement mechanism. “In many places of east India farmers had to sell their produce

at 15-20% below the government determined MSP, which makes the whole exercise

somewhat irrelevant,” another official said.

J&K's RS Pura Basmati rice available in US food stores'(ET 12/4/2013)

The Jammu and Kashmir government today said the state's famous basmati rice variety

Ranbir Singh Pora is now available in USA and Middle East markets, after it lifted the

inter-state ban on its supply.

"Soon after taking over the charge of agriculture ministry, the first decision I took was to

lift the inter- state ban on RS Pura (Jammu) Basmati rice," state's Agriculture

Minister Ghulam Hassan Mir said after laying the foundation stone of a Kissan Kendra

here.

The Minister further said that in due course of time, the same basmati achieved

international recognition by persuading the Centre to allow the export the same and now

the RS Pura Basmati rice is available in USA and Middle East markets.

Mir, who laid foundation of Kissan Kendra here, said that introduction of modern

agriculture techniques has started showing results on the ground and government was

now focusing on to provide market linkages to help the farmers to get better returns of

their produce.

Every step was being taken to facilitate the farming community at all levels, including

facilitation of market linkage with local and national markets for good returns, he said.

The state government was also conducting orientation programmes to educate farmers

about the market strategies.

15

Asserting that the growth of agriculture was going upward, Mir said that this has become

possible due to farmer- friendly decisions taken by the government during last four years

with regard to introduction of technology, hybrid seed, quality fertiliser, farm

mechanisation besides exempting VAT and Tax on all agriculture inputs.

He said these decisions have given major relief to farmers and youth are coming forward

to adopt farming as a full time occupation.

TN to sell 1 lakh t rice at Rs 20/kg (BL 18/4/2013)

The Tamil Nadu Government on Wednesday launched a market intervention programme

to control rice prices by selling one lakh tonnes of rice at Rs 20 a kg.

The move is in line with the announcement in the budget when the State Government

said it would strengthen the programme by doubling the price stabilisation fund to Rs 100

crore to buy and distribute essential commodities at cost price.

The market intervention fund was announced last year.

The rice will be sold in the open market at Rs 20 a kg through cooperative stores and

special outlets.

The Chief Minister J. Jayalalithaa launched the programme from the Tamil Nadu Civil

Supplies Corporation’s warehouse complex in Nandanam, said an official press release.

The rice will be available in the Civil Supplies Corporation-run Amudham retail outlets,

cooperative stores and special outlets to be opened.

Bihar crosses national average in rice production: Nitish Kumar(ET 24.4.13)

Hailing Bihar farmers for breaking China's record in rice production, Chief

Minister Nitish Kumar today said the state has gone ahead of national average in terms of

paddy cultivation and would soon do so in wheat.

"Though Chinese scientists are disputing the feat but it is a fact that a Bihar farmer has

broken their record in rice production," Kumar said, addressing a function to launch Sri

method of agriculture.

The CM said the state was already ahead of national average in terms of per hectare

production of maize and achieved this in the field of rice in 2012-13.

"We will soon cross the national average in per hectare cultivation of wheat," he added.

16

The CM said the state was largest producer of honey in the country.

He said the state has formulated agriculture roadmap for five years which would increase

income of the farmers.

Saying that power shortage was a big problem in agriculture, he emphasised on

dedicatedfeeder to provide uninterrupted electricity for farming.

In a veiled attack on his rival Lalu Prasad, he said, "We should always remember from

where we began our journey and where we have reached."

The Bihar CM said faster growth in the state has earned faith of outsiders to invest in the

state.

17

IV WHEAT

Scientists unlock key genetic code of wheat (BL 26.3.13)

Scientists from China and the United States have mapped a key genetic code for bread

wheat, a discovery that will help improve the crop’s productivity and ability to withstand

extreme conditions.

The sequencing and drafting of the A genome, one of the three basic genomes of wheat,

was published on the Web site of the journal Nature today.

Researchers present the generation, assembly and analysis of a whole-genome shotgun

draft sequence of the genome of wheat T. urartu, the donor of the A genome, the state-run

Xinhua news agency has reported.

The identification of around 38,000 wheat genes is expected to help provide a valuable

resource for accelerating deeper genomic breeding studies and offer a new foundation for

the study of wheat evolution, domestication and genetic improvement, the report said.

The research, launched by a team from the Institute of Genetics and Development

Biology under the Chinese Academy of Sciences, was conducted by Shenzhen-based

BGI, a leading genomics organisation, and the University of California, Davis.

Bread wheat (Triticum aestivum) is one of the most widely cultivated and consumed food

crops in the world. It feeds about 40 per cent of the world’s population and provides 20

per cent of a human’s daily recommended amounts of calories and protein.

Major efforts are underway around the world to increase the crop’s yield and quality by

boosting genetic diversity and resistance to cold, drought and disease.

However, the extremely large size and polyploid complexity of the wheat genome have

so far posed substantial barriers for researchers to gain insight into its biology and

evolution.

China is the world’s largest producer of wheat followed by India and the United States.

Wheat harvesting may be delayed in Punjab, Haryana (BL 29/3/2013)

Wheat harvesting is set to get delayed by 10—15 days in wheat growing states of Punjab

and Haryana because of untimely rains and unanticipated low temperature.

Though there were some reports of crop flattening in a few areas of Punjab because of

rains lashing various parts of the northern region, farm experts asserted that there was not

going to be any adverse impact on overall output of winter crop in both these states.

18

However, experts fear of damage to crop if rains accompanied by thunderstorm occur in

wheat growing areas.

“There is going to be delay of more than 10 days in harvesting of wheat crop in Punjab

and Haryana due to rains and unexpected cool temperature prevailing in these parts of the

country,” said Karnal—based Directorate of Wheat Research, Project Director, Indu

Sharma.

“At this time we need warm temperature for the maturity of wheat crop but it is

unexpectedly remaining cool which will certainly delay in harvesting,” she said, adding

that the crop in various parts of Punjab and Haryana had not ripened yet.

Maintaining that there were no reports of any major damage to wheat crop in Punjab and

Haryana due to rains, Sharma said the prospects for wheat output are looking positive.

“However, if rain along with storm occurs in this region during next few days, then there

could be damage to the crop,” she said.

Punjab has projected wheat output of 161.59 lakh tonnes while Haryana is eyeing

production of 124 lakh tonnes in the rabi season on the back of prolonged winter and

containing attack of fungal disease on wheat crop efficiently.

Pawar pitches for more FCI wheat export to ease storage crisis (ET 1/4/ 2013)

Anticipating storage problems during the peak wheat procurement season, Agriculture

Minister Sharad Pawar today said there is scope for exporting more wheat

from FCI godowns to clear space for new crop.

In the 2012-13 fiscal, the government permitted 9.5 million tonne of wheat from FCI

godowns. Of this, 5 million tonnes was allowed for exports by private players last month.

and is yet to be shipped.

"Wheat harvesting will start in full swing from April 14. We are aiming to procure 45

million tonnes and there is last year's stock of 9 million tonnes in FCI godowns. This is

huge stock, where to keep, it should be exported," Pawar told PTI.

"We have to export more wheat from FCI godowns as stocks are expected to reach 54

million tonnes," he said.

Stressing the need to fasten wheat shipments due to storage concern, the Minister said,

19

"Exports are delayed. We need to export fast so that some surplus stocks is reduced and

space is available during peak harvesting period."

Asked how much more wheat can be shipped, Pawar said, "I cannot say now. The Food

Ministry should know."

As on March 1, Food Corporation of India (FCI) had total foodgrains stock of 62.8

million tonnes, of which wheat was 27.1 million tonnes. Storage capacity is 74 million

tonnes.

Food Corporation of India (FCI) has started procuring wheat at support price and so far

purchased 5 lakh tonnes. It aims to procure 45 million tonnes this year as against 38

million tonnes in 2012-13 marketing year (April-March).

On impact of recent rains on wheat crop, the Minister said that there is no impact on the

crop and "I believe wheat output will be more than last year's 94.88 million tonnes."

Higher output is coming from Punjab, Haryana, Western Uttar Pradesh and Madhya

Pradesh. "In Madhya Pradesh, area under crop is less but crop condition is good," he

said.

Pawar also mentioned that the crop condition of other crops like pulses and oilseeds was

promising.

Haryana bans import of wheat from other States (BL 1/4/2013)

It is the third consecutive time that not a single grain of wheat was available in mandis

for procurement on April 1.

Rabi marketing season officially started on Monday and the Government agencies began

procuring wheat for buffer stocks.

Extended cold conditions in the North have resulted in delay of the crop's ripening.

Harvest normally peaks during second and third week of April but this year, it could peak

between fourth week of April and first week of May.

In 2011, procurement operations were delayed by a week while last year, arrivals were

delayed by three days. This time, arrivals are likely to be delayed by more than 10 days,

as the crop is not fully matured yet.

20

BAN IMPOSED

Haryana is the second biggest contributor of wheat to buffer stocks in central pool.

Following the hopes of a bumper production and fears of inadequate storage capacity,

Haryana has banned the import of wheat from neighbouring States. Commission agents

have been directed not to purchase produce from the farmers of neighbouring States.

ARRANGEMENTS

Mahavir Singh, Director General-cum-Special Secretary, Food and Supplies Department,

said that a number of measures have been adopted to ensure smooth procurement and to

create space for the new wheat stocks.

Officials have been directed to ensure adequate space for new stocks by placing old

stocks somewhere else, he added. Farmers have been advised to bring their produce to the

market after proper cleaning and drying. Moisture level should not be more-than 12 per

cent while the foreign matter should not be more-than 7 per cent, said Singh.

The Centre has fixed the MSP for wheat this year at Rs 1,350 a quintal against Rs 1,285

last year.

Arrangements have been made for procuring 87.30 lakh tonnes for the central pool during

the coming season. A record 87.16 lakh tonnes was procured last season from Haryana

Rajasthan mulls bonus to procure wheat (BL 2/4/2013)

Restricted trading in the market kept dara wheat and flour prices firm on Tuesday.

Radhey Shyam, a commodity expert, told Business Line that millers and bulk buyers are

buying according to their requirement currently as prices are likely to fall this week.

Traders expect that wheat prices may drop by Rs 30-50 a quintal this week.

Flour mills are procuring stocks from the Food Corporation of India also to meet their

demand at Rs 1,460, excluding tax.

According to trade experts, wheat arrivals in Haryana could fall this year as the farmers

living in villages adjoining Rajasthan would be tempted to sell wheat in their State.

Sewa Singh Arya, State President BKU, told Business Line that those Haryana farmers,

whose villages share border with Rajasthan, may sell their produce in Rajasthan as the

Ashok Gehlot Government is likely to announce Rs 150 a quintal bonus over wheat MSP.

In the physical market, dara was quoted at Rs 1,520-1,525. Around 100 quintals of dara

variety arrived from Uttar Pradesh and stocks were directly offloaded at the mills.

21

Mill delivery was at Rs 1,520, while delivery at the chakki was Rs 1,525. Desi wheat

variety was quoted at Rs 2,700.

On the National Commodity and Derivatives Exchange, wheat futures improved on

Tuesday. Wheat for April contracts increased by Rs 8 and traded at 1,382 with an open

interest of 5,990 lots.May contracts improved by Rs 5 to Rs 1,385.

Wheat futures traded with a positive note on expectations of rise in demand while, wheat

spot prices on the exchange went down by Rs 50 and traded at Rs 1,500.

FLOUR PRICES

After witnessing a fall last weekend, flour remained unchanged and quoted at Rs 1,735.

Similarly, Chokar ruled flat and sold at Rs 1,320-1,340.

Wheat procurement not started yet in Punjab, Haryana (BL 2/4/2013)

With wheat harvesting getting delayed because of untimely rains and low temperature,

wheat purchases for central pool could not take place in Punjab and Haryana on April 1,

which is the first day of rabi marketing season 2013-14.

“Wheat procurement has not started yet in Punjab as crop harvesting has delayed,” an

official of FCI said here today.

“There has not been any arrival of crop in Haryana so far. Therefore, wheat purchase has

not commenced,” an official of Haryana Food and Supplies department said here.

Wheat harvesting in Punjab and Haryana is expected to pick up after mid of April as crop

has still not ripened in view of untimely rain lashing the various parts of northern region

last week and unexpectedly low temperature, farm experts said.

Key wheat growing states of Punjab and Haryana are eyeing all-time high crop buying of

227.30 lakh tonnes, up by 5 per cent over last season’s purchase.

About 500 tonnes of wheat had arrived in Haryana on April 1 last year.

Punjab has planned to procure record 140 lakh tonnes of wheat during Rabi marketing

season 2013—14.

Haryana has made arrangement for procuring 87.30 lakh tonnes for the central pool in the

coming season. A record 87.16 lakh tonnes was procured last season from Haryana.

Both Punjab and Haryana are eyeing wheat output of 161.59 lakh tonnes and 124 lakh

tonnes respectively for the current rabi season.

22

Government to encourage private traders for buying wheat from farmers (ET

3/4/2013)

Anticipating huge surge in wheat procurement this year, the government is considering

options to encourage private traders to buy the grain directly from farmers, Food

Minister K V Thomas said today.

"Let the private traders come and procure this time. We are working out a mechanism.

We don't want to give signal that we will procure wheat for private parties," Thomas said

on the sidelines of CII AGM here.

The government is aiming to buy a record 45 million tonnes of wheat in the ongoing

2013-14 marketing year, as against 38 million tonnes last year, he said.

"Our wheat requirement is 28-29 million tonnes. I was forced to procure 38 million

tonnes wheat last year as private traders did not want to buy at minimum support

price (MSP). Although our burden is huge, but we have to procure to ensure MSP to

farmers," Thomas explained.

Private players had not been buying wheat directly from farmers for last two years due to

higher taxes in states like Punjab. Also, they were waiting for the government

agency FCI to procure entire wheat and sell later to private traders at lower rates via open

market sale scheme (OMSS), he said.

Thomas also sought suggestions from the industry chamber CII on ways to encourage

private sector in wheat procurement.

Allaying fears of storage crisis due to possible huge wheat buy, Thomas said, "It is a

huge challenge. We have got enough storage. I am confident that we will manage this

year."

Wheat procurement will start in fullswing after Baisakhi festival on April 14. So far, FCI

has purchased over 5 lakh tonnes of wheat at the support price of Rs 1350 per quintal.

As on March 1, the Food Corporation of India (FCI) had foodgrains stocks of 62.8

23

million tonnes, of which wheat was 27.1 million tonnes. The storage capacity is 74

million tonnes.

The government's wheat purchase has been on the rise due to record output in the last two

consecutive years. The wheat production this year is also expected to surpass last year's

record 94.88 million tonnes.

MMTC gets no bids for govt wheat export tender: Sources (ET 5.4.13)

State-run trader MMTC Ltd has not received any bids in its latest wheat export tender,

trade sources said on Friday.

India is considering lowering the floor price for wheat sales to private traders for export

from state warehouses, government sources said on Thursday, after State Trading

Corporation was forced to cancel a wheat export tender.

Earlier this week, MMTC floated the tender to sell 65,000 tonnes of wheat for shipments

by May 9 from warehouses located on the west coast as part of the government's plan to

cut huge stocks as the new harvest starts arriving in April.

State-run companies such as MMTC, STC and PEC have been floating export tenders to

ship out wheat from overflowing government warehouses since July 2012.

Export of govt wheat remains unviable at current rate: USDA (BL 8/4/2013)

Amid relative slowdown in demand, the export of government wheat will remain

unviable unless the mandated floor price is brought down, a latest report of the USDA

said.

Last month, the Centre had allowed export of additional 5 million tonne wheat (of 2011-

12 crop) from its godowns via private trade to ease storage burden. The export allocation

was to be done via bidding process with floor price set at $274 per tonne (Rs 14,800) plus

12.5 per cent state taxes.

“The government approval of exports of an additional 5 million tonnes via private trade

appears unviable unless the mandated floor price is reduced, which would increase the

implied export subsidy,” the US Department of Agriculture (USDA) said in its grain

report.

Besides, Food Corporation of India (FCI)’s requirement of 100-percent advance payment

for the consignment, even before wheat is lifted from the warehouse, is likely to be

24

another major disincentive for the private trade to source the FCI wheat for exports, it

said.

Given the historically unprecedented pressure of massive grain stocks and lack of

sufficient storage space, the USDA emphasised that “the government will have to explore

measures for improving the viability of exports of government wheat”.

Market sources, however, report the government may contemplate open auction of FCI

wheat at lower floor prices without end-user conditions such as the auctioned wheat

could be bought either by local millers or exporters.

At the current floor price, the total cost of government wheat for private trade is

estimated at Rs 17,600 ($326) per tonne after accounting for the cost of moving the wheat

from the warehouse to seaport and unloading and FOB (freight on Board) charges, the

USDA explained.

“Trade sources report that the government’s floor price for old crop wheat is too high to

be viable for exports due to weak international prices and expected availability of new

crop wheat at lower prices,” the report noted.

Given the record crop, the new wheat is expected to be available in Uttar Pradesh at

around Rs 14,800-15,700 ($274-291) per tonne at FOB seaport. Also, the new crop is

likely to be better than the year-old government-held wheat, it said.

The government has already allowed exports of 4.5 million tonne wheat through public

trading agencies. But wheat exported via PSUs is currently selling much lower, around

$305 per tonne delivery in the current month, it said.

The report also warned that expected foodgrains stocks of 90 million tonne by June 1 on

higher procurement would pose an unprecedented storage crisis for the government. The

current storage is estimated at around 71 million tonne.

Wheat production is expected to surpass last year’s record of 93.90 million tonne in

2012-13 crop year (July-June).

India, US to launch joint research collaboration on wheat( ET 9.4.13)

India and the US will launch a multi-million dollar joint research collaboration to develop

wheat varieties, which can tolerate high temperatures.

25

The need for such varieties is being felt urgently in view of the global warming and rise

in temperatures, which experts and scientist feel could adversely affect the production of

important crops like wheat.

Led by an Indian American scientist from the Washington State University, the project

involving scientists from both countries will be supported by US Agency for International

Development (USAID), the Indian Council of Agricultural Research (ICAR) and the

Directorate of Wheat Research (DWR).

The endeavor is a part of US government's global hunger and food security initiative,

'Feed the Future'.

Researchers are aiming to have first set of climate-resilient varieties in five years, a

USAID statement said yesterday.

"The research will focus on the North Indian River Plain, which is home to nearly one

billion people and faces challenges such as limited water and rising temperatures", said

Kulvinder Gill, project director and the Vogel Endowed Chair for Wheat Breeding and

Genetics.

He added that while the effort is critical for food security, the results will reach far

beyond the North Indian River Plain.

They will contribute in Feeding the Future generations and partners' efforts to more

efficiently and effectively address global food security, particularly with respect to the

challenge of global climate change, limited resources and a growing population.

"With the newly developed 'Climate Resilient' cultivators will be better equipped to deal

with these challenges," he said, adding the project will benefit all wheat growing regions

of the world, as heat during flowering is an issue in most of the wheat growing regions.

Researchers will combine conventional breeding and newly developed breeding tools to

identify genes or sets of genes associated with heat tolerance, a rarely studied trait with

an outsized importance in yields.

A wheat plant's productivity falls off dramatically when temperatures rise above 82

degree Fahrenheit, as every rise of every couple of degrees above that in a plant's

flowering stage cuts yields by up to four percent.

"Support from USAID will leverage over USD 11 million from other partners and fund

research at WSU and other project-related activities in India", Gill said.

26

The effort will include a team of researchers from Kansas State University, the seed

manufacturer and processor DuPont Pioneer.

It also includes two Indian institutes (Directorate of Wheat Research and National Bureau

of Plant Genetics Resources) and four universities (CCS Meerut University, GB Pant

University, Punjab Agricultural University, and Rajendra Agricultural University) along

with two private companies.

As many as 35 PhD students and 30 post-doctoral or research fellows will also be

involved in the effort, Gill added.

Lower offtake pounds wheat ( ET 9/4/2013)

Dara wheat and flour prices continued to tumble on account of easy availability and low

off-take on Tuesday.

The situation of the market was anticipated and wheat and flour prices are likely to fall

further in coming days, said Sewa Ram, a trade expert.

About 10,000 bags of dara wheat arrived at the Karnal Grain Market Terminal on

Tuesday and stocks were unsold due to high moisture.

Wheat procurement by Government agencies has not started yet, his said.In the physical

market, dara wheat prices eased further by Rs 20 a quintal and quoted at Rs 1,480-1,485.

Mill delivery was at Rs 1,480 while delivery at the chakki was Rs 1,485. Desi wheat

variety was quoted at Rs 2,600. In the national Capital, wheat mill quality traded at Rs

1,560.

On the National Commodity and Derivatives Exchange, wheat futures traded higher on

Tuesday. Wheat for April contracts increased by Rs 5 and traded at 1,425 with an open

interest of 2,450 lots. May contracts went up by Rs 4 to Rs 1,410.

Wheat futures trade higher on NCDEX on renewed buying interest for new crop and a

range-bound movement likely to be witnessed in the coming days, said market experts.

Wheat spot prices on the exchange went down by Rs 10 and traded at Rs 1,445.

Following a downtrend in wheat, flour, too, went down by Rs 10 and quoted at Rs 1,715.

Similarly, Chokar dropped by Rs 20 and sold at Rs 1,250.

27

Wheat harvest seen at record on high-yield seeds (BS 10.4.13)

Production in the year ending June may be higher than the 94.9 mn tonnes harvested a

year earlier

Wheat harvest in India, the second- biggest grower, may reach a record for a sixth

straight year after farmers increased use of high-yielding seeds and winter rains boosted

crop prospects, a state-run researcher said.

Production in the year ending June may exceed 94.9 million tonnes harvested a year

earlier, Indu Sharma, director at the Directorate of Wheat Research, said in a phone

interview yesterday. The agriculture ministry predicts the crop to drop to 92.3 million

tonnes this year.

A bigger harvest may prompt India to increase exports as it runs out of space to store the

grain, potentially reducing global food costs, which fell for a fifth month in February.

The country has approved shipments of 9.5 million tonnes from state reserves since July

as inventories expanded, according to the food ministry. Futures slumped to a nine-month

low in Chicago early this month on signs that expanding supplies will outpace demand

amid concern that global growth will falter.

"The government is sitting on a huge stockpile and if the harvest is going to be better it is

natural for the government to go for more exports," said Prasoon Mathur, an analyst at

Religare Commodities Ltd. "If huge quantity is exported some pressure on global prices

may be seen."

The contract for May delivery fell 0.3 per cent to $7.105 a bushel in Chicago at 4:07 pm

in Mumbai. Futures tumbled to $6.5975 on April 1, the lowest for a most-active contract

since June 20. The contract for May delivery on the National Commodity & Derivatives

Exchange Ltd. rose as much as 0.8 per cent to Rs 1,417 per 100 kg ($26) and was at Rs

1,412.

Rising inventories State stockpiles expanded 27 per cent to 27.1 million tonnes at the start of last month.

The government plans to boost purchases from farmers to 44 million tonnes in the

marketing year that began April 1 from 38.1 million a year earlier, the food ministry said

February 19.

Farmers have begun harvesting in Gujarat and Madhya Pradesh states and yields look

better than a year earlier, said Veena Sharma, secretary of the Roller Flour Millers

Federation of India. Crop arrivals will accelerate in about 10 days as rains in some areas

have delayed harvest, she said.

"High-yielding varieties and timely sowing by farmers in high production areas will help

28

a harvest better than last year," Sharma said. "Effective and timely rains in February were

good for the crop. The temperatures have been conducive."

Wheat exports from India were 4.03 million tonnes between April 1, 2012 and February

22, according to the food ministry.

Private wheat exporters, millers turn active in UP as arrivals pick up (BL 16/4/2013)

Private players – led by wheat exporters such as ITC, Emmsons International and Cargill

– stockists and millers have turned active buyers in Uttar Pradesh, covering their

positions as arrivals gain momentum.

Trade sources estimate the total wheat arrivals in various UP markets between 8 and 10

lakh tonnes a day, half of which is being bought by the exporters at prices ranging

between Rs 1,300 and Rs 1,451 a quintal.

Uttar Pradesh is the largest wheat producing State followed by Punjab and Haryana. The

private trade is more active in the UP markets compared with other States, as the

Government procurement is largely inactive.

Meanwhile, procurement by State agencies in Haryana and Punjab has also gained

momentum.

In Punjab, procurement has touched 3.65 lakh tonnes.

TENDERS FLOATED

The Food Corporation of India on Tuesday floated tenders to empanel exporters for sale

of wheat from the 2011-12 crop year at a floor price of Rs 1,484 a quintal, from the

Central pool stocks from Punjab and Haryana.

The Government has decided to allow the private players to export about five million

tonnes from the Central stocks.

The idea is to create storage space for fresh wheat that is arriving in the mandis of Punjab

and Haryana.

This export is in addition to the 4.5 million tonne allowed to ship by the State-run

agencies – STC, MMTC and PEC.

Meanwhile, exports from India by State-run agencies seem to have slowed down, as

buyers are staying away from high-priced Government stocks.

29

SLACK EXPORTS

While Indian wheat is priced at $310-315 a tonne, the ones originating from Black Sea

are commanding a price of around $280 a tonne.

However, on Tuesday, State Trading Corporation received the highest bid of $302.48

from Peter Crèmer for 40,000 tonnes of the 70,000 tonnes offered by the State agency

from the Chennai port.

“There were only three bidders for the STC tender on Tuesday against 10-11 bidders for

such tenders about a month ago,” an analyst said. Such a trend reflects that buyers are

staying away from the high-priced Indian wheat from Government stocks.

FLOOR PRICE

Exporters have been demanding that the Government revise the floor price downward in

tune with the global market. However, the Government is undecided on the reducing the

floor price.

Wheat stocks with the Government stood at 24.2 million tonnes as on April 1, and by

June 1, the stocks are expected to rise to 62 million tonnes..

India likely to export 7.5 MT wheat, says UN body (BS 17.4.13)

India’s wheat exports are likely to touch a record high of 7.5 million tonnes in the current

marketing year ending June 2013, on account of record crop and larger carry-over stocks,

while many other exporting nations are expected to face tight supplies, an Food and

Agriculture Organisation (FAO) report said.

In 2011-12 marketing year (July-June), shipments from the country remained lower, as

wheat export was allowed via private trade only after lifting the ban on the same in

September 2011, according to market experts.

“One striking feature of this season is the exceptional size of wheat exports by India,

which are forecast to reach 7.5 million tonnes,” the FAO said in its latest report. Wheat

shipments from India, the world's second biggest grower, are anticipated to surge on

account of estimated record harvest and larger carry over stocks, it said.

To reduce stocks built up due to record harvest, India is encouraging export of

government-held stocks. It has already allowed state-run firms to export 4.5 million

tonnes of wheat. Recently, it permitted private traders to ship additional five million

30

tonnes of the grain.

According to the FAO report, wheat plantings in India are around last year’s good level

and another bumper crop is in prospect although forecast slightly below the 2012 record

(93.90 million tonnes) because of limited rainfall in some important producing areas.

At global level, total wheat trade is expected to decline five per cent to 140 million

tonnes in 2012-13, as against 147 million tonnes in the previous year, it said.

Russian Federation, EU, Australia are forecast to face tight supplies which will lead to

reduced exports from these countries, but larger exports by India will help ease the

market situation, the report added.

The expected sharp retreat in global wheat imports in 2012-13 reflects reduced purchases

by several countries, namely, Afghanistan, Algeria, Egypt, Kenya, Saudi Arabia,

Thailand, Turkey and Uzbekistan, it added.

Wheat exports feasible as global prices firming up: FCI (ET 22.4.13)

Amid demands from traders to cut floor price of government wheat for exports, Food

Corporation of India (FCI) today said global price of the grain is firming up and it is still

feasible to undertake shipments.

Last month, the Centre had allowed export of additional 5 million tonnes (MT) wheat (of

2011-12 crop) from its godowns via private trade to ease storage burden. The export

allocation was to be done via bidding process with floor price set at USD 274 per tonne

(Rs 14,840) plus 12.5 per cent of local taxes.

"Traders are demanding reduction in the floor price. But currently, our wheat is sold at

USD 304-306 per tonne, while Australia and the US wheat at USD 260 and 270 a tonne.

Why our wheat is purchased above Rs 300 level? It is still feasible," FCI Chairman and

Managing Director Amar Singh told PTI.

He noted that the global wheat prices fell sharply in the last one month but have started

firming up now. "If international prices remain firm above USD 300 a tonne, it is feasible

to export," he said.

The FCI has floated a tender for empanelment of traders for export of 5 MT of wheat.

These empanelled traders will then participate in the FCI wheat tender to be issued next

31

week, he added.

"We will issue tender for sale of wheat (2011-12 crop) to private exporters next week.

We will sell wheat to the highest bidder among the empanelled traders," Singh said.

When asked what if it receives poor response to the tender, the FCI chief said, "We have

40 lakh tonnes of wheat from the 2011-12 crop. If exports do not happen, we can supply

each month 7-8 lakh tonnes of wheat through PDS and clear it."

In a recent report, the US Department of Agriculture (USDA) had emphasised that India

will have to explore measures for improving the viability of exports of FCI wheat given

the historically unprecedented pressure of massive grain stocks and lack of sufficient

storage space.

The report had also warned that expected foodgrains stocks of 90 MT by June 1 on higher

procurement would pose an unprecedented storage crisis for the government. The current

storage is estimated at around 71 MT.

Wheat production is expected to surpass last year's record of 93.90 MT in 2012-13 crop

year (July- June).

Govt wheat purchases up 30% as arrivals rise (BL 23.4.13)

Procurement of wheat by Government agencies has picked up as arrivals have gained

momentum in States such as Punjab and Haryana.

In the Rabi marketing season, so far, the Government agencies have procured 11.94

million tonnes of wheat, about 30 per cent more than 9.23 mt in the same period last year.

In Punjab, the Government has procured 4.3 mt so far, more than double the 1.99 mt, it

had procured last year.

The Government had procured 12.83 mt from Punjab last year, while overall procurement

across the country stood at 38.14 mt.

In Haryana, the procurement, so far is marginally lower at 3.7 mt against last year’s 3.79

mt.

The Government had procured 8.66 mt of wheat from Haryana last year.

In Madhya Pradesh, the procurement this year is higher 17 per cent at 3.63 mt against last

year’s 3.09 m t.

32

The Government had procured 8.49 mt last year from Madhya Pradesh.

However, in Uttar Pradesh, the country’s largest wheat producing State, the procurement

by State agencies is still sluggish due to a weak procurement mechanism.

The Government agencies have bought about 75,765 tonnes of wheat in UP, almost half

of last year’s 1.4 lakh tonnes.

The total wheat crop this year is expected to be higher than last year’s 93.9 mt and is

pegged at around 96 mt.

The Centre expects to procure a record 44 mt, about 6 mt or 15 per cent more than 38.14

mt procured last year.

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

stocks are expected to rise to 62 mt.

Wheat procurement in Punjab touches 43.26 lakh tonne (BL 23/4/2013)

Wheat procurement in Punjab reached 43.26 lakh tonne in the ongoing rabi marketing

season.

Out of the total procurement, government procurement agencies procured 43.05 lakh

tonne whereas private traders procured 21,728 tonnes of wheat.

Among agencies, Pungrain procured 7.66 lakh tonne, Markfed lifted 9.66 lakh tonne and

FCI bought 7.52 lakh tonne.

Punjab is eyeing to procure 140 lakh tonne during the current season.

33

V MAIZE / COARSE GRAINS

Corn struggles to find buyers as global prices slide (ET 11.4.13)

(As global supplies rise, India could see corn sales fall as much as a quarter to between

3.0 million and 3.5 million tonnes in the year to September)

Aggressive corn exports look set to hit a wall as a slide of more than 13 per cent in global

prices since mid-March has made shipments from the South Asian nation uncompetitive,

prompting buyers to seek cheaper cargoes from South America.

A drop in shipments from Asia's top exporter would give South American suppliers the

chance to grab a larger share of the Asian market, and support Argentinean prices, which

have dropped after a selloff in the benchmark Chicago futures.

As global supplies rise, India could see sales fall as much as a quarter to between 3.0

million and 3.5 million tonnes in the year to September, from 4.0 million to 4.5 million

tonnes shipped a year ago, traders and analysts estimated.

Brazil and Argentina, the world's second and third largest corn exporters after the United

States, are forecast to produce bumper crops this year while US farmers are gearing up to

boost planting.

Buyers in Indonesia, Vietnam and Malaysia, the top destinations for corn, are shying

away from signing new contracts, hoping to negotiate better deals when shipments from

Argentina peak in May and June, traders said.

"Fresh deals are not being signed because of lower global prices and pressure from

arrivals in Argentina," said Sanjeev Garg, chief executive of Commcorp International

LLP, a Delhi-based trading house.

"Exporters are meeting their contractual obligations that were signed earlier and this is

likely to continue for another 15 to 20 days."

Chicago Board of Trade corn dropped to its lowest in nine months last week after a US

government report showed larger-than-expected supplies.

The US Department of Agriculture surprised the market in its quarterly stocks report on

March 28 with higher old-crop supplies, easing a near-term supply crunch ahead of a

34

potentially record crop to be planted in the next few weeks.

LATAM VS INDIAN CORN

As a result, South American corn being offered in Asia has dropped to $290 a tonne,

including cost and freight (C&F), from $325 a tonne quoted before the USDA report at

the end of March.

Indian corn is quoted around $280 a tonne in Southeast Asia for June shipment.

"Corn had a huge cost advantage to South America in March, when the spread between

the two origins was $40 a tonne but that has now narrowed to just $10," said one

Singapore-based trader who sells feed grain in Southeast Asia.

"Importers are typically attracted to Indian corn when it is $15 to $20 cheaper than

Argentine corn."

Corn export deals have slowed this week, with traders reporting the sale of just one cargo

of around 15,000 tonnes to Vietnam at $280 a tonne, C&F, for May shipment.

"There is not much Indian corn being sold. This deal with Vietnam was driven by the

buyer's need to cover some immediate demand," another Singapore trader said.

Exporters have been aggressively selling corn this year, with 450,000 tonnes contracted

for shipment to Indonesia in April and May, some 100,000 tonnes to Vietnam and 60,000

tonnes to Malaysia.

Indonesian feed millers paid between $280 and $295 a tonne, C&F, for new-crop Indian

corn before the slide in global prices.

Although corn prices have eased slightly, strong demand from the domestic poultry

industry and the government's minimum support prices underpins the market, traders

said.

"Prices are already close to the minimum support level," said Prerana Desai, vice-

president of research at Kotak Commodities. "We don't expect a big decline in corn

prices as local maize consumption is rising because of higher demand from the poultry

industry."

The farm ministry has estimated 2012/13 corn output at 21.06 million tonnes, down about

35

3 per cent from 21.76 million tonnes the year earlier. Traders said a drop in the summer

sown crop, due to a delayed monsoon, caused a decline in total output, but a good winter

harvest made up for that slightly.

Maize rises on pick up in demand (BL 15/4/2013)

Maize prices rose by Rs 20 per quintal in an otherwise steady wholesale grains

market today on pick up in demand from retailers.

However, other grains moved in a narrow range in limited deals and settled around

previous levels.

Marketmen said pick up in retailers demand mainly led to rise in maize prices.

In the national capital, maize rose by Rs 20 to Rs 1,590-1,600 per quintal.

36

VI Pulses

Pulses prices remain steady in narrow movements (BL 30/3/2013)

The wholesale pulses market ended on a steady note on Saturday as prices of most of

pulses moved in a tight range in scattered deals and settled around previous levels.

Traders said adequate stocks position against scattered deals and settled around previous

levels.

The following are today’s pulses rates per quintal: Urad 3,700-4,100, Urad Chilka (local)

4,550-4,900, best 5,000-5,500, Dhoya 5,500-5,700, Moong 5,150-5,650, Dal Moong

Chilka local 5,600-6,000, Moong Dhoya local 6,000-6,100 and best quality 6,700-6,800.

Masoor small 3,800-4,000, bold 3,950-4,100, Dal Masoor local 4,500-4,600, best quality

4,600-4,700, Malka local 4,300-4,400, best 4,500-4,600, Moth 3,600-4,200, Arhar 4,150-

4,700, Dal Arhar Dara 5,850-6,050. Besin Rajdhani and shaktibhog Rs 1700 each per 35

kg bag.

Gram 3,350-3,700, Gram Dal (local) 4,000-4,100, best quality 4,300-4,400, Besan (35

kg) Shakti bhog 1,700, Rajdhani 1,700, Rajmah Chitra 8,300-9,400, Kabli Gram small

4,000- 6,100, dabra 2,700-2,800, imported 4,700-5,100; Lobia 3,500- 4,600, Peas white

2,675-2,700 and green 2,750-2,800.

Pulses turn bullish on lower arrivals (BL 3/4/2013)

Bearish sentiment in pulse seeds and pulses prevailing last week has ended as weak

arrival and robust buying support from the millers in the new financial year has lifted

prices of almost all the pulse seeds and pulses in Indore and other mandis of Madhya

Pradesh which opened in full throttle after 4-5 days of holidays today..

Weak arrival and strong buying support from the millers has lifted prices of tur, moong

and masoor in local mandis in the past few days to a new high. Tur in the past one week

has risen by almost Rs 250 a quintal as demands outstripped arrival. On Wednesday, tur

(Maharashtra) ruled at Rs 4800 a quintal, while tur (Madhya Pradesh) rose to Rs 4300-Rs

4400 a quintal. Last week tur (Maharashtra) had been ruling at Rs 4550-75 a quintal,

while tur (Madhya Pradesh) ruled at Rs 4100-Rs 4200 a quintal.

According to trade experts, amid lower crop output this year which is set to decline by

25-30%, compared to its production last year, future of tur appears to be bullish and it

may cross the level of Rs 5000 a quintal in the coming days, said Mr Prakash Vora, an

37

Indore-based pulse trader. Tur output in the country this year has been estimated at 22-23

lakh tons against 32-33 lakh tons last year. Besides decline in domesic crop output,

higher import with report of fall in tur output in Burma, will also added to bullish

sentiment in tur in the coming days, said another trader talking to the Business Line.

Strong buying support from millers and weak arrival have also lifted moong by about Rs

300 a quintal in the past one week. Moong (bold) in local mandis on Wednesday ruled at

Rs 5700-Rs 6000 a quintal, while moong (medium) at Rs 5200-Rs 5400 a quintal (up Rs

200 from last week).

Masoor and its dal also witnessed an uptrend on strong buying support and weak arrival.

Masoor (bold) raised to Rs 4250 a quintal, while masoor (medium) ruled at Rs 3700-Rs

3800 a quintal. In the past few days masoor has also seen a gain of Rs 250 a quintal in

local mandis.

World pulses trade meet to look into demand-supply outlook (BL 15.4.13)

With nearly 1,000 delegates streaming in from over 50 countries to discuss latest

developments in the world pulses sector and crystal-gaze into the future, the atmosphere

here at the annual meet of International Pulses Trade and Industry Confederation

(CICILS-IPTIC) is one of heightened expectation.

Producers, processors, industrial consumers, traders and related others are keen to know

from specialists what the market holds for them in 2013-14. Experts are slated to discuss

a wide range of topics over the next three days including global pulses demand and

supply outlook, global food security from health and nutrition perspective, product

innovation, emerging markets and global influences, and specific product-wise panel

discussions.

A cross section of traders and millers Business Line spoke to said that the world market

was adequately supplied this year and therefore, the opportunity for a bullish trend was

rather limited. At the same time, supply stress can develop in case of specific crops such

as lentils in the coming months.

CICILS-IPTIC is attempting to get 2016 declared as the International Year of Pulses by

the United Nations. According to Hakan Bahceci, President of the confederation, pulses

play a vital role in advancing the world’s food and nutrition security, and their role

assumes greater importance for developing or poor countries that face pervasive

malnutrition or under-nutrition.

India, the world’s largest producer, importer and consumer of a wide range of pulses, is

obviously a focus of attention at such events, especially for exporting countries such as

Canada, Australia, US and Myanmar.

India’s pulses production in 2012-13 is an estimated 17.7 million tonnes (mt), up from

last year’s 17.1 mt.

38

India’s annual imports of pulses are estimated at about 30 lakh tonnes valued at over Rs

9,000 crore.

For 2013-14, the Government has fixed a production target of 19 mt, with specific

measures including crop diversification and mixed cropping.

A steady increase in minimum support price in the last three years has provided some

encouragement to growers.

Market participants are also wondering as to when India will start exporting pulses in an

unrestricted policy environment. South Asian countries such as India, Pakistan,

Bangladesh and Sri Lanka are all importers of pulses.

Weak millers’ offtake pounds pulses (BL 17/4/2013)

Pulse seeds and pulses in Indore mandis either ruled flat or declined marginally on

slack demand and increased arrivals.

Tur has declined by Rs 100 a quintal on weak buying support and demand from the

millers.

Tur (Maharashtra) in Indore mandis declined to Rs 4,700-50 a quintal (Rs 4,775-4,800)

on weak demand, tur (Madhya Pradesh) ruled stable at Rs 4,200-4,300.

Despite marginal decline, a bearish tend in tur is unlikely in the coming days given lower

crop output this year and higher import with depreciation of the rupee against dollar.

Traders anticipate tur prices to rise to Rs 5,000 a quintal and more amid decline on

domestic crop output and costlier import.

Tur dal (full) was at Rs 6,700-6,800, tur dal (sawa no) at Rs 6,000-6,100, while tur marka

is ruling at Rs 7,400.

Moong (bold) ruled at Rs 5,800-6,000 a quintal, while moong (medium) was at Rs 5,400-

5,500. Moong prices last week had soared to Rs 6200 a quintal on strong buying support

and weak arrivals.

However, given rise in arrivals of summer moong in local mandis in the coming days,

bullish trend in moong for the time being appears unlikely.

Moong dal was unchanged with moong dal (medium) at Rs 6,900-7,000, moong dal

(bold) at Rs 7,300-7,400 while moong mongar ruled at Rs 7,500-7,800.

39

Slack demand also arrested uptrend in urad with urad (bold) ruling at Rs 3,500-3,600

while urad (medium) ruled stable at Rs 3,100-3,200.

Increased arrivals pound pulses (BL 25/4/2013)

Pulse seeds and pulses in Indore mandis either ruled flat or declined marginally on slack

demand and increased arrivals.

Tur has declined by Rs 100 a quintal on weak buying support and demand from the

millers.

Tur (Maharashtra) in Indore mandis on Wednesday declined to Rs 4,700-4,750 (Rs

4,775-4,800) on weak demand, tur (Madhya Pradesh) ruled stable at Rs 4,200-Rs 4300.

Compared with last week, tur (Maharashtra) is ruling Rs 100-150 lower.

Traders see tur prices going as high as Rs 5,000 and more.

Tur dal ruled stable on subdued demand and buying support with tur dal (full) in local

mandis being quoted at Rs 6,700-6,800, tur dal (sawa no) at Rs 6,000-6,100, while tur

marka is ruling at Rs 7,400.

With summer moong hitting local mandis, albeit in small quantity, moong prices have

also declined by Rs 200.

On Wednesday, moong (bold) ruled at Rs 5,800-6,000, while moong (medium) at Rs

5,400-5,500. Moong prices last week had soared to Rs 6,200 on strong buying support

and weak arrivals.

Moong dal however, remained unchanged compared with its prices last week on subdued

demand.

Moong dal (medium) ruled stable at Rs 6,900-7,000, moong dal (bold) at Rs 7,300-7,400,

while moong mongar ruled at Rs 7,500-7,800 .

Slack demand has also arrested uptrend in urad with urad (bold) ruling at Rs 3,500-3,600,

while urad (medium) ruled stable at Rs 3,100-3,200.

40

VII EDIBLE OILS /OILSEEDS

Groundnut, cotton oil flat on limited buying (BL 26/3/2013)

Groundnut oil and cotton oil were traded unchanged on Tuesday on nominal demand.

According to edible oil traders, due to March year-ending buying from the mills was very

limited.

COTTON OIL

Similarly, cotton oil also remained steady on the back of weak demand.

Cotton oil wash was traded at Rs 580-583 for 10 kg and cotton oil new tin at Rs 1,040-

1,045 for 10 kg.

Imported edible oils rule steady on demand (BL 26/3/2013)

Edible oils market witnessed a mixed trend on Tuesday also. Despite weak closing of

Malaysian palm oil futures, imported palmolein and soyabean refined oil were unchanged

due to demand. Groundnut and sunflower oil ruled steady.

Rapeseed oil dropped by Rs 5 for 10 kg.

A local refinery raised its rates for soya refined oil on higher demand, said sources.

Stockists begin building edible oil inventories (BL 2/3/2013)

Edible oils prices ruled steady on Tuesday despite a sharp rebound in Malaysian palm oil

futures and higher physical demand. Imported palmolein and soyabean oil ruled

unchanged as the Government reduced the tariff value of imported palm oils by $9-15 a

tonne and crude soyabean oil by $54.

Brands’ offtake warms up groundnut, cotton oil (BL 2/4/2013)

Groundnut oil and cotton oil increased on Tuesday on the back of rising demand.

Moreover, retail demand is also going up which supported the price movement.

Edible oils up on millers buying, global cues (ET/4/2013)

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

market today on fresh buying by vanaspati millers amid a firm global trend.

41

Castor oil in the non-edible section, also showed some strength on increased industrial

offtake.

Traders said fresh buying by vanaspati millers and a firm global trend after inventories in

Malaysia probably fell the most in more than two years in March, as exports increased for

the first time in five months from the world's second-largest producer, mainly influenced

the market sentiment.

Meanwhile, palm oil for the contract in June advanced 1.3 per cent to USD 783 a tonne

on the Malaysia Derivatives Exchange.

In the national capital, sesame mill delivery oil shot up by Rs 200 to Rs 12,400 per

quintal.

Mustard expeller (Dadri) and cottonseed mill delivery (Haryana) oils also rose by Rs 50

and Rs 100 to Rs 6,800 and Rs 6,100 per quintal, respectively.

Taking positive cues from overseas markets, soyabean refined mill delivery (Indore) and

soyabean degum (Kandla) oils moved up by Rs 100 each to Rs 6,950 and Rs 6,500, while

crude palm oil (ex-kandla) edged up by Rs 50 to Rs 6,450 per quintal, respectively.

Palmolein (rbd) and palmolein (Kandla) oils followed suit and traded higher by Rs 100

each to Rs 6,850 and Rs 6350 per quintal, respectively.

In the non-edible section, castor oil went up by Rs 50 to Rs 8,800-8,900 per quintal.

Select edible oils fall on sluggish demand, global cues (ET 10/4/2013)

Select edible oil prices fell by Rs 50 per quintal on the wholesale oils and oilseeds market

today owing to slackened demand at prevailing levels amid a weak global trend.

However, non-edible oils moved in a narrow range on lack of worthwhile buying activity

and settled around previous levels.

42

Traders said sluggish demand at prevailing higher levels mainly helped select edible

oilsprices to surrendered fresh ground.

They said a weak global trend before the release of data from Malaysia which may show

that inventories dropped last month, while output climbed for the first time in six months,

also influenced the sentiment.

Meanwhile, palm oil for the contract for June fell 0.5 per cent to USD 787 a tonne on

theBursa Malaysia Derivatives exchange.

India's vegoil imports down 7.5% (BS 14.4.13)

Country's March palm oil imports fall for 2nd month in a row

India's imports of palm oil fell for a second straight month in March, as domestic supply

improved and purchases by the world's biggest buyer continued to suffer from an import

levy imposed in January.

The world's biggest importer of vegetable oils, buys mainly palm oil from Malaysia and

Indonesia and a small quantity of soyoil from Brazil and Argentina.

Palm oil imports dropped 12 per cent to 708,262 tonnes in March, Mumbai-based trade

body the Solvent Extractors' Association, said in a monthly update.

Imports of all vegetable oils, including non-edible oils, fell 7.5 per cent to 896,714 tonnes

in March, pulled down by the drop in palm oil imports, the data showed.

Higher domestic cooking

oil supplies, as the

rapeseed harvest season

peaked last month, helped

to curb imports. Rapeseed

is the main oilseed crop

grown in winter.

Buyers also drew on

stockpiles, as import prices rose.

43

Stockpiles of edible oil at ports fell nearly nine percent during March to 850,000 tonnes,

the trade body said, off a record of 930,000 tonnes on March 1.

"Stocks were still on the higher side despite the decline in monthly imports," said BV

Mehta, executive director of the SEA.

Mehta said overall stocks -- including those in transit from ports to refineries -- could

depress domestic prices before the summer oilseed planting season. Total stocks had

edged up to an all-time record of 2.1 million tonnes by April 1.

Traders said the high level of stocks, both at ports and in transit, could keep imports

capped between 800,000 and 885,000 tonnes for the current month.

India's imports of palm oil hit an all-time high in January as leading producers Indonesia

and Malaysia made exports more attractive by varying tax levels.

To protect domestic refiners and oilseed growers, India retaliated with a duty of 2.5 per

cent on crude palm oil in the second half of January, which had hit imports in February.

On March 21, Malaysian palm oil futures touched their highest since February 25,

making imports more costly.

The country imports about 60 per cent of its cooking oil needs of 17 million tonnes. Palm

oil makes up nearly 80 per cent of that. In 2011-12, the country imported 10 million

tonnes of cooking oil.

The country's demand for cooking oils is rising as its population grows and becomes

better off. New Delhi tries to encourage domestic oilseed production, partly by

guaranteeing minimum prices to farmers, but has had limited success.

Soyoil imports also declined a quarter to 46,990 tonnes last month, as demand faded at

the tail end of the marriage season.

Select edible oils extend losses on weak demand, global cues (ET 15/4/2013)

Select edible oils extended losses for the third straight day with prices losing up to Rs 200

per quintal on the wholesale market today on subdued demand against increased supplies

amid a weak global trend.

44

However, non-edible oils moved in a narrow range in scattered deals and settled around

previous levels.

Traders said subdued demand against increased supplies from producing belts mainly

kept pressure on select wholesale edible oil prices.

Further, a weak global trend where palm oil declined to the lowest level this year after

crude oil fell, reducing the appeal of biofuels, as economic growth unexpectedly slowed

in China, the world's second-largest consumer, also influenced the sentiment.

Madhya Pradesh soya output seen at record high (BS 17.4.13)

State claims to attain record production of

soyabean have stunned processors which

according to them are 'shocking and

unbelievable'. The commissioner land

records has projected 82 lakh ton of soya

production this year against last year’s

64.97 lakh ton produced last year.

However acreage posted a minuscule

increase from 57.86 lakh hectare to 60.62

lakh hectare.

The state land records in its third and

final forecast has project soya yield at

1,363 kg per hectare against 1123 kg per

hectare. Speaking to Business Standard SOPA spokesperson Rajesh Agrawal said, “Since

acreage of soya has not gone up and yield may not go up as high, it is unbelievable.” On

the other hand the agriculture officials do not subscribe to what SOPA says.

“We have initiated ridge and furrow method in soyabean. Ridge and furrow topography

was a result of ploughing with non-reversible ploughs on the same strip of land each year.

Farmers do planting on the top or side of the ridge made in their fields and a certain depth

at a certain distance. In this method, the rainwater is conserved in the furrow and avoids

water logging. Make sure that soil has fully charged with rainwater or irrigation to ensure

good and uniform germination and seedling emergence. More and more farmers are using

it which is why our output is higher than the previous year,” said D N Sharma, director,

agriculture department.

45

Madhya Pradesh grows 80% of the soyabean of the country and the processors consume

almost all soya grown in domestic fields. Barring last year the acreage and productivity

remain stagnant and hovers between 50 lakh hectare and 50-55 lakh tonne of production.

In year 2008-09 the soyabean acreage stood at 52.95 lakh hectare with productivity

stands at 59.24 lakh ton with an yield of 1,120 kg per hectare.

Similarly in 2009-10 the acreage was 54.54 lakh hectare but production improved slightly

better at 64.28 lakh ton at 1,180 kg per hectare. During 2010-11 the production stood at

67.77 lakh ton from an acreage of 55.52 lakh hectare with an yield of 1,222 kg per

hectare. The year 2011-12 witnessed a record production in agriculture when growth rate

stood at 18.91% in farm sector. The soyabean production during the year also healthy at

64.97 lakh ton from an acreage of 57.86 lakh hectare with an average yield of 1,123 kg

per hectare.

Mustard crackles on slack buying (BL 18/4/2013)

Mustard oil prices declined in Indore and Neemuch mandis on slack buying support at the

higher rate on Thursday. In Indore, mustard oil declined to Rs 652 (down Rs 4), while it

was down by Rs 6 in Morena to Rs 650 for 10 kg. In Rajasthan mandis also, mustard oil

ruled stable with prices in Kota and Ganga Nagar being quoted at Rs 660 each, while it

was Rs 675 in Jaipur. In Gujarat also, mustard oil declined by Rs 5 to Rs 640.

According to trade experts, notwithstanding slack demand, the bullish trend in soya oil

and soya seeds both in the physical and future markets has added to current uptrend in

mustard oil and it will likely to continue in the coming days.

Notwithstanding higher crop output which is expected to increase by 20 per cent to 71

lakh tonnes, mustard seeds have also been witnessing bullish trend for the past couple of

weeks.

Select edible oils fall on sluggish demand, global cues (ET 22/4/2013)

Select edible oils fell up to Rs 300 per quintal on the wholesale oils and oilseeds market

today on sluggish demand amid a weak global trend.

Linseed oil in the non-edible section, also eased on reduced offtake by consuming

industries.

Traders said sluggish demand against adequate supplies amid a weak global trend where

palm oil fell to the lowest level in four months mainly pulled down select wholesale

edible oil prices.

46

Meanwhile, palm oil for the contract for July delivery lost 1.4 per cent to USD 744 a

tonne, the lowest since December 14 on the Bursa Malaysia Derivatives.

In the national capital, groundnut mill delivery (Gujarat) fell by Rs 300 to Rs 11,000 per

quintal on adequate supplies.

Taking negative cues from overseas markets, palmolein (RBD) and palmolein (Kandla)

oils fell by Rs 150 each to Rs 6,400 and Rs 5,900, while crude palm oil (ex-kandla)

traded lower by similar margin to Rs 6,200 per quintal, respectively.

In the non-edible section, linseed oil declined by Rs 50 to Rs 6,400 per quintal.

Edible oils weaken on bearish futures (BL 23/4/2013)

Edible oils prices ruled weak on Monday tracking bearish futures markets. Mumbai

traders observed an one-day token bandh in support of call given by trade association call

against the Local Body Tax. Malaysian palm oil futures extended last week’s loss further

on Monday, hitting a four-month low, as volatility in commodities markets overall and

losses in soyabean weighed.

Analyst said that palm oil futures faced pressure from sluggish export data that showed

shipments from Malaysia were down nearly 5 per cent during April 1-20 compared with

the same period a month ago. Sources said that in the local market, a meagre 80-100

tonnes of palmolein changed hands in isolated resale trade. Bearish foreign markets led

local refineries to reduce rates for palmolein by Rs 2-3.

Due to bandh, wholesalers kept away from fresh buying. At the national level, mustard

arrivals declined to 5.20 lakh bags and they were quoted at Rs 3,350-3,500 a quintal.

47

VIII VEGETABLES/ ONION-POTATO

It’s a hot potato, thanks to steady demand (BL 29/3/2013)

You may soon have to shell out more for your favourite potato wafers or wedges. In just

a fortnight, potato prices in West Bengal, the top producer, have inched up by almost Rs

60 a quintal in the wholesale market.

The price rise effect will be felt particularly in Maharashtra, Odisha, Tamil Nadu and

Bihar that buy the tuber from the eastern State.

Prices are likely to inch up by Rs 100-150 a quintal in the next one/two months because

of the steady demand from other States, market sources said. The wholesale price of the

Jyoti variety is ruling at Rs 560 a quintal compared with Rs 500 two weeks ago.

According to Patit Paban De, member of West Bengal Cold Storage Association, there

has been a steady rise in the demand for Bengal’s potatoes. “This year, the quality of

Bengal potatoes is better and prices are comparatively lower than the UP potatoes that are

selling at Rs 650/quintal. So, there is a good demand for these potatoes in other States,”

De told Business Line.

While nearly 40 per cent of what it produces gets exported to other States, West Bengal

itself consumes 50-55 lakh tonnes a year. Potato production in the State is up by 12 per

cent this year at 95-98 lakh tonnes. The 400-odd storage units in the State can hold up to

60 lakh tonnes.

Farmers usually retain up to 10 per cent of their produce after filling up in the cold

storages. This year, however, farmers are left with nearly 15 per cent of the stock due to

higher production, De pointed out.

“Prices usually inch up once potatoes get loaded onto the pick-up vehicles of cold

storages. With the loading process in most storage units nearly done, prices are bound to

move up to some extent,” said a trader in the Singur-Ratanpur area.

At farmgate, Rs 480-500 a quintal is on offer now against Rs 380-400 two weeks ago,

said Sahu Sufi Mondal, a farmer of Abhirampur village in Hooghly district, nearly 90 km

from Kolkata.

“Prices had come down sharply two weeks ago. However, once the government

announced plans to procure potatoes, they started to move up. This brought back

confidence into the market. Traders and stockists who were refusing to pick up stocks

started coming forward to procure potatoes,” Mondal said.

48

ained from increasing it as earlier attempts to ban exports or raise the floor price has me

Punjab announces 50% subsidy on diggers for potato plantation (ET 25/4/2013)

In a bid to boost potato cultivation in Punjab, Chief Minister ParkashSingh Badal today

announced to enhance the subsidy on diggers, graders and planters from 10 per cent to 50

per cent.

A decision to this effect was taken by Badal during a meeting with a deputation of potato

growers of the state, an official release said.

The Chief Minister apprised the delegation that the state government had already initiated

the process for setting up of Indo-Dutch Potato and Seed Centre as a joint venture with

Holland.

A Dutch team would visit India next month when all the modalities would be finalised in

consultation with the Centre, Badal said.

He directed the Financial Commissioner Development to expedite the process and take

up matter with the Centre for early setting up this centre.

On the demand of potato growers, Badal directed the Chairman, Powercom, to streamline

the supply of electricity in all the potato growing areas of the state to ensure adequate

day-time power supply for better yield.

49

IX MILK

New Zealand drought fuels boom for Indian dairies (BL 2.4.13)

A severe drought in New Zealand that has sent global milk prices soaring is proving to be

a boon for Indian dairies, especially the co-operatives, which have seen a surge in

demand for skimmed milk powder in recent months.

The Gujarat Milk Marketing Co-operative Federation, which owns the Amul brand, saw

its exports rise to 4,000 tonnes since the Government lifted the ban on shipments in June

last year.

“Exports of SMP are good. Currently, we have an order book of about 3,000 tonnes,”

said R.S. Sodhi, Managing Director, GCMMF.

Co-operatives such as Amul and the Karnataka Milk Federation seem to have more milk

powder stocks than their private counterparts. Sources at the Karnataka federation said

that they had exported about 5,000 tonnes and were now expecting global prices to go up

further. Global skimmed milk powder prices are hovering around $3,800-4,000 a tonne.

Smp exports

“India, which has ample milk powder stocks, can continue exporting about 10,000 tonnes

a month for the next few months,” said Sodhi.

Since June last year, the total exports from the country are estimated at over 60,000

tonnes in the just-ended fiscal. These exports are largely destined to the milk-deficient

South Asian countries such as Bangladesh, Sri Lanka and Pakistan.

Indian exporters are realising between Rs 170 and Rs 180 a kg for the milk powder

against the Rs 140 a kg realised four months ago.

The increase in SMP exports is notwithstanding the onset of summer in North India,

when milk production declines.

“Our daily milk procurement is still high by about 15 per cent over last year and such a

trend is expected to continue for some more months,” said Sodhi.

Flush season

Private players such as Hatsun Agro Product Ltd and Sterling Agro Industries, who were

actively exporting milk powder till a couple of months ago, have now slowed down for

various reasons.

50

Hatsun Agro, the country’s largest exporter, has shipped over 12,000 tonnes in the last

financial year. “We have to wait for at least three months for the next flush season,” said

R.G. Chandramogan, Chairman and Managing Director, Hatsun, which largely operates

in the South, where the flush or peak milk producing season ended some three months

ago.

However, in North India, where the ongoing flush season in last phase, private dairies are

focussing more on the domestic market.

“Milk powder exports are no longer viable as domestic demand is picking up,” said

Kuldeep Saluja, Managing Director, Sterling Agro, makers of the Nova brand dairy

products. Sterling has exported about 7,000 tonnes in 2012-13.

Sterling, which recently launched pouched liquid milk under the Nova brand in the Delhi-

National Capital Region, has seen its sales touch one lakh litres a day in 1.5 months,

Saluja said.

“We are aiming to sell 5 lakh litres by December 2014,” he said.

India-EU FTA: Dairy sector seeks insulation (BL 15.4.13)

The dairy industry, led by the country’s largest milk cooperative that owns the Amul

brand, has opposed the proposed India-EU free trade agreement (FTA) on the ground that

it would led to subsidised dairy products from Europe flooding India.

“This will rob the domestic dairy industry and 80 million farmers that are connected to it,

from their rightful access to a growing market within India,” said R.S. Sodhi, Managing

Director, Gujarat Co-operative Milk Marketing Federation, in a press release.

Sodhi argued that the Government had encouraged the co-operative model in the dairy

sector with active policy protection. “It does not make sense that now dairy trade will be

opened up to unfair competition from subsidised European exports under this FTA, just

when it shows potential to grow into a vibrant industry,” he said.

Farmer body Bharatiya Kisan Union (BKU) is also opposed to the proposed trade pact

which, it claimed, would benefit the EU more as more than 60 per cent of Indian farm

exports already go to the EU duty free.

So far, India has protected the dairy sector in all the free trade pacts signed including

ones with the Asean countries, Japan and South Korea. Pressure is, however, mounting

on it to open up the sector in the FTAs India is negotiating with Australia and New

Zealand. These countries are keeping a keen watch on the India-EU FTA negotiations to

see how much access they could push for in their own trade deals with India.

51

India’s milk pouch model appeals to Europe, Pakistan (ET 22.4.13)

Mother Dairy, Gandhinagar, a unit of the Gujarat Co-operative Milk Marketing

Federation (GCMMF) has now emerged as world's largest milk film manufacturer. And,

the Indian dairy model of supplying daily milk to consumers in the form of pouches is

now being adopted by the western world and even in neighbouring Pakistan.

Marketers of Amul brand, GCMMF, has enhanced the milk film producing capacity of

the Bhat village-based plant near Gandhinagar as the demand for pouched milk is fast

increasing in the country.

The plant, which had a capacity of producing 8,000 metric tonnes of milk film, now can

produce 17,000 metric tonnes a year with capacity expansion that was carried out with Rs

80 crore investment.

To top it, the homegrown dairy major has already decided to double the milk film

producing capacity from the present 17,000 metric tones per annum to 34,000 metric

tones per annum by next year.

If one puts all dairy brands together, a total of 8 crore milk pouches are sold daily across

India. Of these, Amul counts for 1.80 crore milk pouches.

"Even after expansion, the entire capacity of our Gandhinagar plant is fully utilized for

packaging our own products including milk, buttermilk and dahi. Now, we will be

doubling this capacity," managing director of GCMMF R S Sodhi told TOI.

"For the western world, supplying milk in pouches was earlier an unthinkable idea.

Traditionally, they have used plastic jars for supplying milk to their consumers. But now

they too are shifting and adopting the Indian model because supplying milk in pouches in

easy, cost-effective and environment friendly. In Pakistan and some parts of Europe, they

have already started supplying milk through pouches while we regularly get delegations

to study the milk film packaging at our plant," said Sodhi.

Named 'Amul Sealk', the Gandhinagar plant of GCMMF is the backbone of Amul's liquid

milk business and ensures supply of milk film (about 424 brand variants) to 16-member

unions of the federation which are having about 41 milk packing stations across India.

The fully automatic plant with machineries imported from Germany manufactures three-

layer polythene from 100 per cent virgin material. "This film is very environment

52

friendly," said Sodhi.

The habit of Indian women of stocking empty milk pouches and selling it to kabadi or

pastiwallas ensure that these pouches are re-cycled for manufacturing of irrigation pipes

used in the agriculture sector and for manufacturing of tarpaulin sheets used during

monsoon.

"You will never find empty milk pouches in dustbins or garbage bins as even after the

milk is drained out, the empty pouches remain a profitable business for waste pickers!"

he said.

53

X Sugarcane / Sugar

India's 2013-14 sugar output looks positive: ISO chief ( ET 26.3.12)

Sugar production in India in the next year looks positive despite concerns about drought

situation in some states like Maharashtra, a top official of the International Sugar

Organisation (ISO) said today.

Asked if drought in key sugarcane growing states would impact overall sugar output in

India, London-based ISO Executive Director Peter Baron said, "Drought in some states is

a concern. But we are positive about sugar production next year."

He however did not provide any estimates for sugar production during 2013-14

marketing year (October-September) in India. Sugar output this year is pegged at 24.5

million tonnes.

Due to drought this year, cane growers in Maharashtra and Karnataka have not yet started

sugarcane planting. Drought in Maharashtra has been so severe that the state government

has ordered saving water for drinking purpose.

Baron was speaking to reporters on the sidelines of a conference organised by the World

Association of Beet and Cane Growers (WABCG).

On sugar decontrol, ISO chief said that he was "hopeful" of sugar decontrol soon.

"Quicker the better as it would send an positive signal to global sugar market," he said.

"India is a very complicated country. Everybody speaks about decontrol but it is not that

easy for the government to take decision as growers and consumers interest need to be

taken into account," Baron said.

Speaking separately, National Federation of Cooperative Sugar Factories Ltd ( NFCSFL)

Managing Director Vinay Kumar said that the country's sugar output in 2013-14

marketing year could decline to 22-23 million tonnes, as against 24.5-25 million tonnes

this year.

"It is too early to say but we see production to fall to 22-23 million tonnes next year

because of drought in some states," Kumar told reporters.

The shortage of water in major parts of cane growing areas has affected the fresh planting

in Maharashtra, he added.

54

Sugar mills given free hand to sell open market quota (BL 26/3/2013)

The Government, on Tuesday, gave freedom to sugar factories to sell their open market

quota.

Mills have now been given a free sale quota covering a period of six months, against the

existing practice of fixing the quantity to be sold every month.

On Tuesday, the Government released 10.4 million tonnes sugar for April to September,

which mills can freely dispose of any time during these six months.

In other words, they do not have to wait for quotas to be fixed every month.

While this is certainly a move towards decontrol of the sugar industry, it has, however,

also raised questions.

“When there is already talk of the Government dispensing with the release mechanism

altogether along with freeing the industry from levy obligation, why have they announced

this piecemeal measure? Does it mean decontrol is off for the moment, despite Food

Minister K.V. Thomas saying that it will be taken up by the Cabinet on Thursday,” an

industry observer said.

There are others who feel the proposed de-control will anyway take off only from the

sugar year starting October 2013.

To that extent, allowing a six-month release window for April-September could prepare

the industry toward a decontrolled regime.

“A longer-period quota could possibly help millers prepare how to handle their

inventories in a de-controlled scenario” a UP-based miller said.

Also, the fact that the Government has said “there would be no conversion of unsold non-

levy quota into levy quota during the period of current release that is from April-

September”, is an indication that decontrol has virtually taken place vis-à-vis the release

mechanism.

The 10 per cent levy can only go for the sugar that gets produced from October onwards,

he added.

An official statement on Tuesday said “The sale and delivery/dispatch period for 10.4

million tonnes would be from April 1, 2013 and up to September 30, 2013, without any

inter-month restrictions”.

55

The non-levy quota would be apportioned and released only among those sugar mills

which have submitted online production returns at the time of release.

Mill-wise quota apportionment would discount the entire non-levy quota released for

October 2012-March 2013 and any quantity left unsold would not be not be available for

sale during the period of April-September 2013.

Welcoming the Government’s decision, the sugar industry said such a move will give

flexibility to millers to plan their cash flows.

“The decision not to convert any unsold non-levy quota into levy and also not have any

inter-month restrictions of six-monthly quota are important steps towards reforming the

sugar sector, said Abinash Verma, Director General, Indian Sugar Mills Association

(ISMA).

Following the Government decision, the sugar futures reacted negatively.

The April contract on NCDEX ended lower by a little over one per cent to close at Rs

2,915 a quintal.

Similarly, the contracts for May and June also ended lower by about one per cent each.

Typically, the summer months of April to June form the peak season for sugar, when

consumption peaks on rising demand from ice cream and beverage makers rises during

these months.

For the current 2012-13 sugar year ending September 30, production is expected to be

24.6 mt, against domestic demand of around 23 mt.

Sugar market awaits sale quota, decontrol decision (BL 26/3/2013)

Sugar prices in physical market fell further by Rs 10-15 a quintal on bearish sentiments

on Tuesday. Slack domestic demand and continuous selling by producers pulled down

naka rates by Rs 20-30. Mill tender rates dropped by Rs 10-20.

Everyone is now waiting for fresh cues to set new direction for the market.

Announcement of new quota, decision on decontrol of sugar sector, hike in excise duty

are the issues that may help lift the sentiment, said sources.

A Vashi-based wholesaler said: “Being the last week of the financial year and month-end

time, local retail and semi wholesale demand continued to be lower. Ample supply from

producers since the last two months in the local markets in absence of upcountry buying

has built up sufficient inventory local level. Hence stockists are not very keen to add

56

more stocks. Domestic futures market extended small gain on second day after sharp fall

last week”.

Government releases 10.4 million tonne sugar for open market (ET 27/3/2013)

Sugar mills will be able to sell 10.4 million tonne of non-levy sugar in theopen

market during the first half of the next financial year.

Non-levy sugar, or free sale sugar, is thequota sugar mills can sell in the open market. In

the levy sugar system, mills are required to contribute 10% of their production to the

government at cheaper rates for distributing through the ration shops.

The Centre on Tuesday released 10.4 million tonne sugar as non-levy quota for open

market sale for the 6 months from April to September 2013.

The non-levy quota would be apportioned and released only among those sugar mills,

which have submitted online production returns at the time of release, said the official

statement from the government.

In October 2012, government released 11 million tonne of non-levy sugar for sale in the

open market for a period of 6 months ending March 2013. Any quantity left unsold from

this period would not be available for sale during the current period of April to

September 2013, said the statement.

There would also be no conversion of unsold non-levy quota into levy quota during the

period of current release. "The industry welcomes the Centre's decision to release non-

levy sugar quota for the 6-month period.

Sugar market looks to new fiscal for direction (BL 29/3/2013)

Sugar spot and futures prices have been heading towards south for over a month on

ample supply and slack demand.

On the Vashi wholesale terminal market, spot rates dropped further by Rs 20-30 a quintal

on Friday. Naka prices declined by Rs 20 as producers sold sugar at Rs 10-15 lower

previous day evening. The sentiment was weak due to higher selling.

57

Sources said that due to year ending and month-end, traders were not interested in

making a big deal.

Demand in start of the new month will decide the further trend.

Domestic futures market was closed due to Good Friday holiday but the continuous

bearish trend in futures market since start of the year kept physical market also under

pressure.

Commodity analyst said “since start of the year NCDEX April futures dropped by Rs 480

from Rs 3,375 to Rs 2,895 on Thursday.

“Slack demand and ample supply due to higher production, sugar prices are continuously

declining since Diwali”.

“Prices in other main producing centres are ruling at a par with Maharashtra, diverted

upcountry buying especially eastern side, Gujarat, Rajasthan, Madhya Pradesh etc. to

their nearby areas.

“Less than expected demand pulled down physical market prices by Rs 190-200 in

January-March in Mumbai,” analyst said.

Government has declared ample quota for the next six month (April-September) at 104

lakh tonnes which is 7.50 lakh tonnes more than same period last year.

Sugar edges up on demand expectations (BL 1/4/2013)

Sugar prices were slightly firm on Monday tracking extended gain in futures market and

on expectation of higher demand in start of the month. Vashi APMC wholesale market

observed one-day token bandh in support of call given by Federations of Associations of

Maharashtra (FAM) against the State Government’s decision to implement local body tax

in place of octroi in seven cities of the State

Sugar production falls by 2% at 230.5 LT in H1 2012-13 (ET 2/4/2013)

Country's sugar production fell by two per cent to 230.5 lakh tonnes in the first six

months of the 2012-13 marketing year that started in October last year due to drop in

output in Maharashtra and Karnataka.

Sugar production of India, the world's second largest producer after Brazil, stood at 234.5

lakh tonnes in the year ago period.

Sugar marketing year runs from October to September. "Till end of March 2013, country

has produced 230.5 lakh tonnes of sugar by crushing about 2285 lakh tonnes of sugarcane

with 10.09 per cent recovery. Till date sugar production is about 2 per cent less than last

58

year," Indian Sugar Mills Association (ISMA) said in a statement.

Maharashtra has produced 77 lakh tonnes of sugar during the period, which is about four

per cent less than last year. Karnataka has produced 32.9 lakh tonnes of sugar, which is

seven per cent less compared to last year.

The fall in production in Maharashtra and Karnataka is due to drought-like situation in

many parts of these two states on account of poor rainfall during 2012 monsoon season.

Sugar production in Uttar Pradesh stood at 67.5 lakh tonnes during October-March period

of 2012-13 marketing year against 66.7 lakh tonnes in the year-ago period.

"ISMA has estimated 246 lakh tonnes of sugar production in the full 2012-13 marketing

year as against 263 lakh tonnes in the previous year.

ISMA, however said, that production would be about 16 lakh tonnes more than the

expected sugar quota to be released by the government at 230 lakh tonnes for 2012-13.

PTI MJH TVS

Sugar gains on reports of hike in excise duty (BL 2/4/2013)

Sugar prices in the physical market ruled firm on Tuesday. On the Vashi wholesale

market, spot prices inched up Rs 10-20 a quintal tracking firm reports at the upper level.

Naka rates increased by Rs 20-30, while mill tender rates improved by Rs 10-20.

The expectation of hike in excise duty and lower than expected output till March pushed

up the sentiment in physical market, said traders.

Sources said that the sentiment improved slightly due to industry data released on

Tuesday and increase in local demand at the start of the month.

Increase in temperature will also push up consumer demand for the commodity. The

Vashi market currently carries more than 120 truckloads of inventory. With improvement

in demand, stock pressure will be reduced. From next month market may see an upward

trend, sources said.

On the NCDEX, sugar May futures was down by Rs 6 to Rs 2,992 , June contracts lower

at Rs 3,053 (Rs 3,059) and July declined by Rs 14 to Rs 3,098 till noon.

In Vashi market, arrivals were 64-65 truckloads (each of 100 bags) and local dispatches

were 62-63 loads. On Monday evening, about 14-15 mills offered tenders and sold

59

38,000-40,000 bags at Rs 2,930-2,980 (Rs 2,920-2,960) for S-grade and Rs 2,980-3,140

(Rs 2,970-3,130) for M-grade.

Bombay Sugar Merchants Association's spot rates: S-grade Rs 3,086-3,171 (Rs 3,082-

3,161) and M-grade Rs 3,172-3,371 (Rs 3,150- 3,361). Nakadelivery rates: S-grade Rs

3,020 -3,070 (Rs 3,020-3,050) and M-grade Rs 3,100-3,250 (Rs 3,100-3,220).

Sugar output down 2% at 23.05 mt till March (BL 2/4/2013)

As the crushing season in most parts of the country enters the last phase, more than half

of the 520 mills that were operational have stopped functioning. Photo: Kamal Narang

Sugar production till March-end of the current 2012-13 sugar year is down 2 per cent at

23.05 million tonne, the Indian Sugar Mills Association said. In the corresponding last

year, sugar output stood at 23.45 million tonnes.

Average recovery or the amount of sugar produced from the cane crushed stood at 10.09

per cent during the current season, about 0.2 per cent lower than year.

As the crushing season in most parts of the country enters the last phase, more than half

of the 520 mills that were operational have stopped functioning. Cane crushing will soon

end in states such as Karnataka, Andhra Pradesh, Bihar, Punjab and Madhya Pradesh.

Despite drought impacting cane production in Maharashtra, the State has produced 7.7

million tonnes of sugar, about 4 per cent lower than last year. Sugar recovery is

marginally lower at 11.33 per cent against last year’s 11.53 per cent. About 116 mills

have closed their operations in Maharashtra.

60

In Uttar Pradesh, sugar output stood at 6.75 million tonnes, marginally higher than

corresponding last year’s 6.67 m t. About 102 mills are still operational in UP, where

crushing is likely to go on till end-April.

Karnataka has produced 3.29 million tonnes of sugar till March-end, about 7 per cent

lower than last year. Similarly, Tamil Nadu’s sugar output is down 3 per cent at 1.35 m t.

ISMA has estimated sugar output to 24.6 million tonnes for the 2012-13 season,

marginally lower than 26 mt produced in the previous year.

Sugar manufacturers gain on hopes of easing curbs (ET 4/4/2013)

Government might go ahead with the long-pending decision of sugar decontrol on

Thursday. The heavily regulated sector will be eased of the obligation of selling levy

sugar to the government for sale to ration shops at cheaper rates.

The move will also dismantle the release mechanism under which the government

decides the amount a sugar mill needs to sell in the open market.

In the anticipation of an open market, stocksof sugar companies are gaining on the stock

exchange.

Sugar manufacturers gain on hopes of easing curbs (ET 4/4/2013)

Government might go ahead with the long-pending decision of sugar decontrol on

Thursday. The heavily regulated sector will be eased of the obligation of selling levy

sugar to the government for sale to ration shops at cheaper rates.

The move will also dismantle the release mechanism under which the government

decides the amount a sugar mill needs to sell in the open market.

In the anticipation of an open market, stocksof sugar companies are gaining on the stock

exchange.

Government removes control on sale of sugar in open market (ET 5.4.13)

The government has thrown open the sugar market, removing one of the last vestiges of

the control era and continuing the burst of reforms that began last September with a more

liberal regime for foreign investment in retail.

It has abolished the decades-old practice of regulating how much sugar a mill can sell in

the market and the "levy" system in which a company is forced to sell 10% of the output

at a loss to sweeten supplies to the public distribution system. This comes into effect for

61

output since September 2012, the start of the sugar year, and will be reviewed after

watching its impact on the market and farmers for two years.

The planned review has raised some concern, but most industry leaders are upbeat. "This

is a good decision in a positive direction. Competition will reveal that nothing needs to be

reviewed after two years. No positive reform has ever been reversed. It's the levy that is

for two years and not the decision on decontrol," said Vivek Saraogi, managing director,

Balrampur Chini.

The government, which has already taken difficult decisions like substantially raising

diesel prices and has opened up the troubled aviation sector to foreign airlines, does not

expect any adverse fallout from sugar decontrol.

"By arriving at the decision in the cabinet, we've kept the interest of all stakeholders,

farmers, consumers and the industry in mind," Food Minister KV Thomas said.

To continue subsidised supply to the poor, states will now have to buy sugar at market

rates and maintain the existing PDS sale price of Rs 13.50/kg, which has not been revised

for a decade and is substantially lower than the current price of Rs 32 a kg in the Mumbai

market. The Centre will pay the states for this, and its sugar subsidy burden will rise to

Rs 5,300 crore from Rs 2,600 crore a year. The government was earlier expected to raise

the excise duty on sugar to foot the higher subsidy bill. Some industry officials were also

concerned that there was no announcement about excise duty - an issue that had been

actively discussed and was seen as the reason why the cabinet had earlier deferred

adecision on sugar decontrol.

Sugar mills will continue to be subjected to controls by the state governments, which

decide cane prices and regulate various as

Gursimran Kaur Mann, executive director, Simbhaoli Sugars, said the removal of levy

sugar will help farmers get a better price of cane. "The next move by the industry would

be linking sugar and sugarcane prices," she said.

Shares of sugar companies rallied in anticipation of the liberal move that was announced

after the market closed. Bajaj Hindustan rose 7.7%, Dhampur Sugars was up 6.3%, Shree

Renuka Sugars closed 7% higher, and Balrampur Chini gained 4%.

62

Sugar futures up as govt partially decontrols sector (ET 5/4/2013)

Sugar futures prices today rose sharply by Rs 31 to trade higher at Rs 3,039 per quintal as

speculators enlarged their positions after the government partially decontrolled the sugar

sector.

However, ample supplies in the market, capped the gains. At the National Commodity

and Derivatives Exchange, sugar for delivery in May traded Rs 31, or 1 per cent, higher

at Rs 3,039 per quintal, with an open interest of 38,330 lots.

The sweetener for delivery in April also gained Rs 17, or 0.58 per cent to Rs 2,963 per

quintal after rising to Rs 2,970 in an open interest of 14,300 lots.

Marketmen attributed rally in sugar prices at futures trade speculative positions created

buy participants as the government partially decontrolled the sugar sector.

In a major reform, the government yesterday partially decontrolled the Rs 80,000-crore

sugar sector by giving freedom to millers to sell in the open market and removed their

obligation to supply the sweetener at subsidised rates to ration shops.

Sugar succumbs to profit-booking in futures trade (ET 8/4/2016)

Amid profit-booking by speculators and ample supplies in the spot market, sugar

futures prices today fell by Rs10 to trade lower at Rs 2,948 per quintal as speculators.

However, the government's decision to partially decontrol the sugar sector, limited the

fall.

At the sugar for delivery in May traded Rs 10, or 0.34 per cent, lower at Rs 2,948 per

quintal, with an open interest of 49,720 lots.

The sweetener for delivery in April also fell Rs 7, or 0.24 per cent to Rs 2,894 per quintal

after rising to Rs 2,894 in an open interest of 9,680 lots.

Marketmen attributed fall in at futures trade to profit-taking by participants after recent

63

gains on the back of partial decontrol of the sugar sector by the government.

In a major reform, the government last week had partially decontrolled the Rs 80,000-

crore sugar sector by giving freedom to millers to sell in the open market and removed

their obligation to supply the sweetener at subsidised rates to ration shops.

Food Min to notify sugar decontrol steps next week(BS 8.4.13)

On Apr 4, CCEA had decided to partially decontrol sugar sector, the only industry left

under govt control

The Food Ministry is likely to notify next week its decision to give freedom to mills to

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

subsidised rates for ration shops.

On April 4, the Cabinet Committee on Economic Affairs (CCEA) had decided to partially

decontrol the sugar sector, the only industry left under government control.

"We will notify changes in regulatory controls on sugar mills next week. We are

preparing the notification," a senior Food Ministry official told PTI.

As per the CCEA decision, regulated release mechanism, under which sugar quantity for

open market sale is fixed by the government, will be abolished with immediate effect.

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

government at cheaper rate to meet ration shop demand.

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

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

after the decontrol.

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

difference between RIP and the ex-mill price of Rs 32/kg, which is capped for two years,

will be given as subsidy to states.

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

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

64

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

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

tonne.

Sugar production declines 2 per cent in current marketing year (ET18/4/2013)

India's sugar production in the current marketing year reached 24.1 million tonnes as on

April 15, down 2% from 24.5 million tonnes in the same period last year.

Sugar output has come down due to low sugar recovery, currently standing at 10.11%,

less by 0.18 units in comparison to last year, the Indian Sugar Mills Association (ISMA)

said.

Currently, 131 sugar mills in the country are operational against 169 during the same

period last marketing year. Sugar marketing year runs from September to October. The

sugarcane crushing season for this year will come to an end soon.

Uttar Pradesh has crushed 793 lakh tonnes of sugarcane to produce 7.2 million tonnes of

sugar, which is about 5% higher than last year. Overall recovery in the state is 9.19%,

which is about 0.13 units higher than last year.

Though there are contrasting trends in sugar recoveries in different parts of UP. While

Western & Central Uttar Pradesh reported higher recovery than last year, Eastern Uttar

Pradesh showed a downward trend in recoveries over last year.

Though, apart from UP, sugar output in all other states is quite low. Maharashtra has

produced 7.9 million tonnes of sugar with 11.38% recovery. With only 18 mills are

crushing, sugar production is down by 7% till date, with 0.19 units less recovery.

Karnataka, which has already closed its 2012-13 crushing season with 3.3 million tonnes

of sugar, about 10% less than last year. Reported recovery of 2012-13 of 10.44% is less

by 0.52 units than last year.

Andhra Pradesh, Tamil Nadu and Gujrat produced 0.9 million tonnes, 1.4 million tonnes

65

and 1.1 million tonnes of sugar respectively. The sugar mills operating in these states will

close down their crushing soon. Same for sugar mills operating in Haryana and

Uttaranchal. ISMA has estimated 24.5 million tonnes of sugar production in the full

2012-13 marketing year as against 26 million tonnes during the 2011-12 marketing year.

Centre to bear extra PDS sugar subsidy for 2 years: FM (ET 6/4/2013)

The Centre will bear an additional annual subsidy of Rs 2,600 crore on account of

decontrolling the sugar sector only for two years, Finance Minister P Chidambaram said

today.

Sugar decontrol will ensure timely payment of sugarcane growers, he said.

Earlier this week, the CCEA had partially decontrolled the sugar sector by giving

freedom to millers to sell in the open market and removing their obligation to supply the

sweetener at subsidised rates to ration shops.

Following the decontrol, Chidambaram said: "States are free to procure sugar through

competitive bidding or otherwise sugar mills at a price or inclusive price not exceeding

Rs 32 a kilo. The Government of India will bear the difference as a subsidy for two

years."

He said the decision of decontrol was overdue and has been taken after nearly about 20-

21 years.

"Now, this decision means that eventually the states have to make their own

arrangements (for PDS sugar). But for a period of two years, we are supporting a

transition arrangement," the Minister said.

Noting that the Centre's sugar subsidy will rise after the decontrol, Chidambaram said:

"Some of you have pointed out correctly, the subsidy bill will go up. It will go up by

approximately Rs 2,500-2,600 crore per year."

Presently, the sugar subsidy is around Rs 2,600 crore. Post decontrol, it would go up to

Rs 5,300 crore.

"We have decided we will bear additional (subsidy) bill for 2 years in the interest of the

farmers, who have demanded for long that the sector should be decontrolled," he said.

He recalled that during the P V Narasimha Rao regime, the government had nearly taken

a decision to decontrol the sector. "But due to some reason, we pulled back at the last

minute."

66

Asserting that decontrol will help farmers, Chidambaram said: "We believe now with this

step, the cane growers will be paid price for sugarcane promptly and they will not be

denied their dues when the money is due to them.

"To hold back the farmers' money for six months is virtually equal to driving him to

death. So this is a major step that will benefit farmers as well the industry," he said at a

press conference.

Chidambaram informed that during the CCEA meeting Agriculture Minister Sharad

Pawarhad said that sugarcane arrears at present are in the range of about Rs 11,000 crore,

as against Rs 15,000-20,000 crore two-three years ago.

India is the world's second largest sugar producer after Brazil, and the biggest consumer.

The output is estimated at 24.5 million tonnes in 2012-13 marketing year against an

annual domestic demand of 22 million tonnes.

Sugar rules steady on festival demand (BL 9/4/2013)

Sugar prices on the Vashi wholesale market ruled unchanged on higher festival demand.

Naka and mill tender rates dropped by Rs 10-20 a quintal on higher selling amid lower

bulk demand at higher prices.

Producers continued selling at prevailing prices to cut inventories. The domestic futures

market was range-bound after dropping Rs 80 in the previous three sessions.

Sugar prices end flat in thin trade (FE 09/4/2013)

The wholesale sugar market ended on a flat note today as prices moved in a narrow range

on alternate bouts of trading and settled around previous levels.

Marketmen said adequate stocks position following increased supplies from millers

against sporadic demand mainly kept sugar prices flat.

The following were today's quotations per quintal:

India must have a buffer stock for sugar (BL 11/4/2013)

The world sugar market is in a state of surplus for the third year in a row. With a

projected consumption of 170 million tonnes and estimated production of 178 million

tonnes for 2012-13, the surplus is a clear 8 million.

67

No wonder, raw sugar prices have remained soft for a length of time, with prices

averaging 18 cents a pound in the first quarter of 2013.

Considering the market surplus, futures bourse New York ICE has recorded a high level

of speculative short positions.

Looking ahead, in the next three quarters, sugar prices do not face any significant upside

risk, barring really exceptional circumstances.

In other words, sugar is likely to trade globally within a range — between a low of 17

cents and a less-probable high of 20 cents a pound and more around 18-19 cents.

India finds itself in a peculiar situation. Although the industry at present has substantial

stocks , the outlook for the next three quarters is fraught with possibilities. For the 2012-

13 season, production is likely to end up at anything between 23.5 million and 24.5

million (more likely towards the lower end); consumption projections suggest the market

is very finely balanced.

POTENTIAL RISK FOR PRICES

A delicately balanced domestic market is a potential risk for prices. In such a market,

even a small change in either demand or supply, will have a disproportionate impact on

prices. The Government, especially the Union Ministry of Food, has to exercise caution

in the matter of potential upside risks to sugar prices.

There is compelling reason to believe that next year (2013-14), the country’s sugar

production may fall from the current level to about 22-23 million tonnes. Although final

planted acreage data are not yet available, lingering drought conditions, especially in

Maharashtra, Karnataka and Tamil Nadu, are a matter of concern. Large cane arrears in

Uttar Pradesh and high cane costs are likely to act as constraining factors for mills.

Worse, if there is any aberration in the onset and progress of southwest monsoon,

sugarcane yields could be hurt.

However, demand for the sweetener could rise manifold from July starting with Ramzan

till Diwali (October/November). Domestic sugar prices could spurt suddenly; and there is

no guarantee that the industry will not seek to benefit from tightening availability.

Given that de-control is now a reality, policymakers are sure to come under intense

pressure to quickly augment supplies and contain price rise. This is the kind of situation

the world market is waiting for.

If India is forced to import, world sugar prices will rally dramatically. Elections also are

likely to force the Government to take drastic steps.

68

Unpopular measures such as storage control may have to be imposed. Such a potentially

embarrassing situation can be avoided if New Delhi decides to build a buffer stock of at

least one million tonnes of sugar (if not more) right away.

On current reckoning, there is every possibility India may turn into a sugar importer next

year; when India enters the world market as an importer, the impact on prices can well be

imagined. It is better to be safe than sorry.

Building a buffer stock of one to two million tonnes of sugar at the current attractive

price levels, is a safe bet for the Government, both politically and commercially

Weak physical buying, bearish futures sour sugar (BL 16/4/2013)

Sugar prices, at the Vashi wholesale market, declined by Rs 10-20 a quintal on Tuesday

on weak physical demand and bearish futures markets.

Ample supply from mills in local market in the absence of upcountry off take lead to

sufficient inventories in the Vashi markets, hence, stockists kept away from fresh bulk

buying.

As usual, local retail demand also eased in middle month. Under current of the market

remained weak, said traders.

Sources said slack demand pulled down naka rates by Rs 10 for S-grade and Rs 45 for M-

grade on higher selling.

Mill tender rates dropped by Rs 10-30.

Domestic futures prices were down by more than Rs 20 till noon as producers continued

selling to ease inventory burden.

Neighbouring states buying is lacking since long in Maharashtra as prices in the other

producing centres are ruling at par with Maharashtra’s parity.

A wholesaler said “Traders are strongly opposing local body tax (LBT). Federation of

Associations of Maharashtra (FAM) and Navi Mumbai Merchants Chamber have called a

meeting on Tuesday evening to decide the future course of action.

Sugar market will decide what to do after that meeting. Majority of sugar traders are in

favour of total removal of LBT.”

69

Sugar prices fall on ample supply, reduced offtake (ET 15/4/2013)

Sugar prices dropped by Rs 20 per quintal in the national capital today following

slackness in demand amid increased arrivals.

Marketmen said reduced offtake by stockist and bulk consumers, such as soft-drink

and ice-cream making industries, mainly pulled down sugar spot prices.

Sugar ready M-30 and S-30 prices moved down by Rs 20 each to Rs 3320-3460 and Rs

3305-3430 per quintal, respectively.

Ample supply keeps sugar on leash (BL 17/4/2013)

Sugar prices ruled steady following routine demand and supply on Wednesday. On the

Vashi wholesale terminal market, spot prices for S-grade declined by Rs 10, while for M-

grade the price was up Rs 20 . Naka and mill tender rates ruled steady on usual activities.

Domestic futures prices were up by Rs 14-17 on speculative buying on speculation of

higher demand in the coming days.

An analyst said, “Sugar market is currently passing through normal fundamental factors

such as ample supply and need-based demand. Despite lower output projected for the

next season, the market is not responding because closing stocks are expected to be

sufficient at the end of current year”.

Sugar producers to benefit from govt-mandated compulsory blending of ethanol

with petrol (ET 17/4/2013)

Sugar producers will benefit from the government-mandated compulsory blending

of ethanol with petrol. This coupled with the recent decontrol measures will lead to

improvement in earnings of sugar companies.

In November last year, the government issued a directive to oil marketing companies, or

OMCs, for compulsory blending of 5% ethanol with petrol. Subsequently, OMCs had

called for tenders for procuring 110 crore litres of ethanol.Sugar companies, who are the

major suppliers of ethanol, have offered to supply it at Rs 34-36 per litre. This is 20%

70

higher than the current selling price of Rs 27 per litre, which was fixed by the

government in 2010.

Although the benefits of this initiative will start accruing form the June quarter, a

meaningful improvement will be seen from the September quarter this year. According to

ETIG estimates, major companies such as Balrampur Chini and Shree Renuka Sugar will

see 15% and 18% rise in net profit, respectively, on a year-on-year basis in the September

quarter, while Bajaj Hindusthan will see a Rs 0.5 rise in its earnings per share.

Despite the recent easing of government control over the sector, investor sentiment has

been weak in major companies. This can be attributed to lower profitability from the

sugar division this year due to flat sugar prices and higher cane costs.

Despite a drought in major sugar producing regions in Maharashtra and Karnataka, sugar

production this season (October 2012 to September 2013) until April was 24.1 million

tonnes, just 2% lower than in the same period last year.

Sugar prices witness divergent trend (ET 17/4/2013)

A divergent trend was witnessed at the Vashi wholesale sugar market here today with

Medium sugar recovering on fresh demand from stockist and retailers while, Small sugar

continuing its downtrend due to subdued offtake from bulk consumers.

Sugar ends lower on sluggish demand, heavy stocks (ET 17/4/2013)

Sugar prices fell by Rs 100 per quintal in the national capital today following reduced

offtake amid increased supply from mills.

Marketmen said absence of buying support and regular supply from mills, mainly kept

the sweetener prices in red zone.

Levy sugar withdrawal unlikely to have bearing on retail price (ET 23/4/2013)

The decision to free millers from levy sugar obligation is unlikely to have any bearing on

the retail price as there is surplus availability of the sweetener in domestic and

international markets, government said today.

71

"...the open market prices are likely to remain stable in view of surplus availability of

sugar in domestic and international markets," Consumer Affairs Minister K V Thomas

sain in a written reply in Rajya Sabha.

He was responding to queries on whether the Ministry has taken steps to address the

concern of the consumers regarding the rise in price of sugar to the new decision

(withdrawal of levy system for procurement of sugar).

Following recommendation of the C Rangarajan Committee on deregulation of the sugar

sector, government had earlier this month decided to do away with levy sugar obligation

on sugar mills for sugar produced after September, 2012.

This lead to the speculation that the retail price of the sweetener will go up.

Earlier, mills were to sell a portion of the sugar they produced at a fixed rate of about Rs

20 per kg to government, under the levy sugar obligation. Following the decision, they

are free to sell all of their produce in the open market.

Thomas said there would be neither be withdrawal nor any change in the price of sugar

distributed under the Targetted Public Distribution System and it would remain at the

existing price of Rs 13.50 per kg.

Under the new arrangement, states would procure sugar from the open market through a

transparent system and Centre would reimburse the subsidy at the rate of Rs 18.5 per kg,

limited to the quantity based on their existing allocations.

"The said arrangement will be reviewed after two years," Thomas said.

Sugar remains down on weak demand, higher supplies (ET 23/4/2013)

Falling for yet another session,sugar futures prices today declined by Rs 7 to Rs 2,989 per

quintal largely on higher supplies against weak demand from bulk consumers in the spot

markets.

72

Though, expectations that demand for the sweetener might pick up in coming days

limited the downside.

At the National Commodity and Derivatives Exchange, sugar for delivery in most-active

June contracts traded Rs 7, or 0.23 per cent, lower at Rs 2,989 per quintal, with an open

interest of 25,110 lots.

The sweetener for delivery in May also fell Rs 3, or 0.10 per cent, to Rs 2,933 per

quintal, in an open interest of 42,780 lots.

Marketmen attributed persistent fall in sugar prices at futures trade to off-loading of

positions by participants, triggered by higher supplies in the spot markets and weak

demand from bulk consumers.

Sugar remains down on weak demand, higher supplies (ET 24/4/2013)

Falling for yet another session,sugar futures prices today declined by Rs 7 to Rs 2,989 per

quintal largely on higher supplies against weak demand from bulk consumers in the spot

markets.

Though, expectations that demand for the sweetener might pick up in coming days

limited the downside.

At the National Commodity and Derivatives Exchange, sugar for delivery in most-active

June contracts traded Rs 7, or 0.23 per cent, lower at Rs 2,989 per quintal, with an open

interest of 25,110 lots.

The sweetener for delivery in May also fell Rs 3, or 0.10 per cent, to Rs 2,933 per

quintal, in an open interest of 42,780 lots.

Marketmen attributed persistent fall in sugar prices at futures trade to off-loading of

positions by participants, triggered by higher supplies in the spot markets and weak

demand from bulk consumers.

73

XI INPUTS

P&K fertiliser subsidy may be slashed by Rs 2,000-2,700 a tonne (BL 26/3/2013)

The Government is likely to cut the subsidy on phosphatic and potassic (P&K) fertilisers

such as di-ammonium phosphate (DAP) and muriate of potash (MoP) by Rs 2,000-2,700

a tonne on account of weakening of global prices.

“The Fertiliser Ministry is expected to reduce the subsidy on DAP by Rs 2,000 per tonne

to Rs 12,350 a tonne and that on MoP by Rs 2,700 per tonne to Rs 11,700 a tonne for the

2013-14 fiscal,” an official in know of the development said.

Under the nutrient-based subsidy regime introduced on April 1, 2010, retail prices of 22

varieties of P&K fertilisers have been freed, but the government reimburses companies

the difference in cost of selling these soil nutrients at lower price to farmers.

In the current fiscal, which ends this month, the Government had fixed subsidy on DAP

at Rs 14,350 per tonne and on MoP at Rs 14,400 a tonne. Subsidy on DAP and MoP for

the 2011-12 fiscal was at Rs 19,763 and Rs 16,054 per tonne, respectively.

“The decision to cut subsidy on these crop nutrients was made on account of falling

global prices of DAP and MoP. The subsidy is benchmarked against international prices.

So, if global rates are coming down, subsidy too have to be cut,” the official added.

Another ministry official said the new subsidy rates, to be applicable for 2013-14, are

subject to Cabinet clearance, which will be taken up before April 10.

The Government’s fertiliser subsidy bill has shot up due to a weak rupee and rise in

global prices of DAP and MoP during the first two quarters of this fiscal.

Last week, the Minister of State for Chemical and Fertilisers Srikant Jena told Parliament

that “Budget estimates for fertiliser subsidy in 2012-13 was Rs 65,874 crore. Against a

projected requirement of Rs 1,02,207.38 crore, the Revised Estimates (RE) allocated is

Rs 70,628 crore.”

There is likely to be a carryover liability to the extent of shortfall of funds based on the

actual requirement and funds made available under RE, he had said.

India imported 78.64 lakh tonnes of urea till February of this fiscal, against 78.34 lakh

tonnes in the entire previous financial year. During April—February period of 2012—13

fiscal, import of DAP stood at 57.79 lakh tonnes and that of MOP at 18.14 lakh tonnes.

On an average, India consumes about 30 million tonnes of urea and around 25-26 million

tonnes of DAP, MoP and complex fertilisers annually.

74

Centre may fund irrigation projects in Naxal-hit areas (ET 5/4/2013)

The government may provide 90% funding for minor irrigation projects in areas affected

by Left-wing extremism, a move that could improve the livelihood of families in these

areas. "The proposal of the ministry of water resources for extending 90% central grant

assistance to minor irrigation schemes benefiting the Left-wing extremism-affected

districts has been agreed to by the expenditure finance committee," Planning Commission

deputy chairman Montek Singh Ahluwalia said in a letter to the rural development

minister, a copy of which was reviewed by ET. The ministry of water resources will now

seek Cabinet approval of this decision shortly.

The move to include the affected districts in the government's Accelerated Irrigation

Benefit Programme is expected to benefit parts of Jharkhand, Odisha and Chhattisgarh.

"Assured irrigation is absolutely essential for livelihood security," rural development

ministerJairam Ramesh told ET. The minister has been spearheading the government's

development response to counter Maoism.

At present, states in the general category receive funding for minor irrigation projects

only when at least 50 hectare of land to be irrigated serves tribal and drought prone areas.

All Left-wing extremism-affected states are in the general category. The decision to

provide assured irrigation under the central scheme of Accelerated Irrigation Benefit

Programme is a step forward in the government's developmental approach to countering

Maoist influence.

States such as Jharkhand that are seriously affected by Leftwing extremism have been

consistently demanding coverage under the 1996 irrigation scheme. This demand had

been raised at the National Conference of Water Resources held last year as well. In

October, the then deputy chief minister of Jharkhand, Sudesh Kumar Mahto, had written

to the then water resources minister, Pawan Kumar Bansal, stressing the need to exempt

the Naxal-affected districts from the criteria laid down for general category states.

"Jharkhand being a badly affected LWE state (17 out of 24 districts are affected by Left-

wing extremists), I would urge upon you to kindly extend the AIBP norms to all IAP

75

districts in the state-...The amendment would provide a developmental weapon in out

fight against the extremists," Mahto had written.

76

XII OTHER AGRI/ FARM NEWS

India asks Russia to lift ban on rice, groundnut (BL 13/4/2013)

India is mounting pressure on Russia, a growing importer of farm products, to lift the ban

on rice and peanuts from the country imposed early this year and accept bovine meat

tested in Indian-Government certified labs.

It has also invited officials from the country’s quality control department to visit India

later this month to inspect the quality of rice and buffalo meat being exported from the

country. With Russia emerging as a major buyer of farm products, especially of bovine

meat and processed food, India wants it to remove existing restrictions hindering exports

from India.

“We have just started the process of establishing a toe-hold in Russia’s fast growing

market for farm produce and have run into quality issues. We hope to sort these out

soon,” a Commerce Department official told Business Line.

India’s export of rice to Russia increased five times to $25 million in April-December

2012 compared to $4.5 million in the same period of the previous year before breaks

were applied by the Russian Federal Service for Veterinary and Phyto-sanitary

Surveillance (FSVPS) on exports in February this year.

The country placed a temporary ban on import of both rice and peanuts from India

following detection of Khapra Beetle in Indian rice consignments.

“Strong measures have been taken since then by the National Plant Protection

Organisation (NPPO) India in conformity with terms of a MoU signed with Russia in

2009,” the official said.

The NPPO has withdrawn the authority of the two officials issuing phyto-sanitary

certification to Russia and suspended accreditation of the two pest-control organisations

for fumigation of export consignments to Russia. It has also issued an advisory to all

phyto-sanitary certification authorities directing them to be cautious and vigilant in

carrying out inspection of exports to Russia. “We have now asked Russia to reconsider

the ban. Detailed investigation in both cases of non-compliance is already underway and

details would be shared with Russia soon,” the official said.

BOVINE MEAT

Russia is also a huge market for bovine meat which India has not been able to tap as the

authorities want specific quality norms to be adhered to which are too stringent. India

wants Russia to accept quality certification given by Government accredited labs as

77

India’s buffalo meat is accepted in 60 countries worldwide and there has not been any

complaint.

“We want to discuss all aspects of phyto-sanitary regime and have written to Moscow

inviting the FSVPS delegation for discussions during end-April, the official added.

Bilateral trade between India and Russia in 2012 increased to $6.7 billion, registering 14

per ce

India's agriculture output to be worth 29 lakh crore by 2030: CII-McKinsey report

(ET 14.4.13)

Given the expected rise in consumption, the country's agricultural output by 2030 could

reach 29.28 lakh crore level and food exports could jump to over 7 lakh crore, a CII-

McKinsey report on Friday said.

"Consumption demand is increasing as India's per capita GDP is expected to increase by

320% in the next 20 years...agricultural output (at farm-gate prices) could grow from

12.69 lakh crore to 29.28 lakh crore by 2030. Processing could grow from 1.1 lakh crore

to 5.65 lakh crore by 2030 while India's food exports could grow from 1.4 lakh crore to

7.72 lakh crore by 2030," the report, which was released today, said.

The new Food and Agriculture Integrated Development Action ( FAIDA) report focuses

on mango, banana, potato, soya bean and poultry which represent categories that are

likely to drive the next wave of growth.

The report spells out a 12-point agenda that recommends improvement in yield and

farming technology, removal of supply side barrier in using scientific inputs and

practices, increased farmer-industry partnerships, favourable policy for agricultural

marketing and promoting food processing business by branding the products, among

others. Yields can grow by improving quality inputs, extending irrigation facilities, farm

mechanisation, and enhanced practices during sowing, farming and harvesting, it said.

"It is now imperative that India upgrade its agricultural practices and techniques, as well

as well as accelerate growth in allied business fields such as food processing, in order to

support the country's consumption demand changes over the next 20 years," Adil

Zainulbhai, Chairman, McKinsey & Co, India said while releasing the report. He said

although Indian farmers have matched demand growth dynamics in the past decade, the

country is yet to realise full potential in terms of yield, processing and exports as food

habits are now changing.

Despite India being world's third-largest agricultural producer, it doesn't rank among the

top five exporters said Barnik Chitran Maitra, Partner, McKinsey & Co.Maitra said food

habits have changed over the past decade and Indian spend on cereals has come down

and it has shifted to higher order nutrients such as milk, meat, fruits and vegetables due to

high disposable income.

78

The report suggested launching a agriculture and food export mission, attracting private

capital and global expertise, a pan-India infrastructure for sorting, harvesting, packaging,

transportation and storage. It also recommended setting up mega hubs to allow

companies procure, store and process and export their products from a single location,

setting-up world class agriculture universities and setting-up agri-business focused angel

and capital funds as a PPP model between central and state governments and private

capital providers.

Branding can propel India among top five farm produce exporters by 2030 (BS

15.4.13)

India's share in the Rs 90 lakh crore world food market is just 2%

India can become one of the world’s top five exporters of farm produce and generate

greater returns for its farmers apart from giving assured quality to consumers if extensive

investment is made on branding of food and fresh farm products, the third Food and

Agriculture Integrated Development Action Report (FAIDA) jointly prepared by

Confederation of Indian Industry (CII) and McKinsey and Company said.

“In India the move towards brands has picked up vigour in the last decade and the Indian

consumer’s tastes and preferences were in line with the global trends with an

overwhelming 84 per cent supported branded items… which makes a strong case for a

large opportunity for branding in various fresh and processed categories,” the report said.

India’s share in the Rs 90 lakh-crore world food market is just two per cent and it

exported only eight per cent of the food it produced between 2006 and 2010, which rose

to 12-13 per cent by 2012. Packaged food is likely to grow by 9 per cent annually to

become a Rs 6 lakh-crore industry by 2030.

The report said in India the extent of branding in food items is mixed. In edible oil almost

40 per cent of the market is captured by branded products, while in flour it is 10 per cent,

in rice it is 10 per cent, in dairy products it is 20 percent and it less than two per cent in

sugar.

“Lack of safety standards, completely undifferentiated products and sub-scale units

currently unshackle the branded food industry in India, which can be pushed up and

extended to fresh food as well,” the report said.

It said, globally, examples Chiquita and Dole in banana and pineapple, Greenvale in

potatoes, Foster Farms in poultry are instances were branding has been successfully

79

extended to fresh food and vegetables. However, to expand India’s share in the world

food market on the back of branding, the report highlighted some key points, which

included categorising key sources of supplies based on several parameters, efficiency in

procurement and minimisation of post-harvest and on-

farm losses, aggressive marketing of the brand and launching variants of the same

product to help the customer see value.

Branding campaigns like the ‘Incredible India’ campaign could be undertaken to

showcase India’s food diversity as well and thereby the corresponding potential of the

market, the report said.

“Branding will help consumers see the difference between the same product, which does

not happen now, hence he declines to pay a premium for branded items,” said Adil

Zainulbhai, chairman-India of McKinsey and Company.

The report also advocated launching a ‘National Agriculture and Food Export Mission’ in

select categories by the government targeted at select products in identified markets.

Not overly worried about bad monsoon: Agriculture Secretary (ET 17/4/2013)

states like Maharasthra and Gujarat facing drought, the Agriculture Ministry today said it

was not "overly worried" about a bad monsoon affecting crop production as the country

has become resilient to the vagaries of nature.

"Weather plays a role but over time we have become slightly resilient to weather. So, I

am not overly worried about bad weather (monsoon)," Agriculture Secretary Ashish

Bahuguna told reporters here.

India Meteorological Department (IMD) is expected to release the monsoon forecast for

this year by the next week. Meanwhile, weather analytics firm Skymet has projected

south- west monsoon to be adequate and well distributed.

On the progress of sugarcane sowing, Bahuguna said that acreage in Maharasthra, the

country's second biggest sugarcane growing state, is expected to be lower because of

drought.

80

"Drought situation in Maharashtra is really bad. Area under sugarcane in Maharasthra is

obviously going to be down. Cane area is mainly irrigated. Dams in some parts of the

state are dry and sowing will all depend on monsoon," he said.

He said there should be some shift in area under sugarcane to other short-duration and

drought-resistant crops.

On cotton sowing, he said the planting has been delayed due to late harvest. "Sowing will

start in next two weeks in north India, especially Punjab and Haryana," he added.

Sugarcane and cotton sowing begins before monsoon, while planting of other kharif

crops like paddy starts with the onset of south-west monsoon in June.

Govt seeks precision in monsoon forecasting by 2017 (ET 17.4.13)

Govt has roped in almost all the world's major weather forecasters in its effort to

accurately forecast monsoon rains in the next four years, the country's top weather

official said, raising prospects for a rise of up to 15 percent in farm output.

Getting monsoon forecasts right is essential for Asia's third-biggest economy, of nearly

$2 trillion. Agriculture, employing more than half India's population of 1.2 billion,

contributes about 15 percent to this figure.

India's 235 million farmers rely on monsoon rains from June to September to water more

than half the farm area in the world's second-biggest producer of rice, wheat and sugar, as

only about 45 percent of arable land has irrigation facilities.

"About half-a-dozen Indian, and almost an equal number of foreign, weather offices have

joined hands to help us bring more precision in forecasting," L. S. Rathore, director-

general of the state-run India Meteorological Department (IMD), told Reuters in an

interview.

"We are hopeful of more accuracy in the monsoon forecast by 2017 with this

collaborative research initiative," he added.

The IMD, which initially tied up with Britain and the United States, has also teamed up

with the weather offices of Japan, Australia, and South Korea.

81

The department aims to deploy more radars and observatories on the ground and

completely overhaul its mathematical model as the two main thrusts of its new

programme, Rathore said.

The National Centre for Ocean Information Services, the Indian Institute of Tropical

Meteorology, and the National Centre for Medium Range Weather Forecasting are

among the Indian bodies involved in the collaboration.

The Indian weather office now forecasts monsoon rains based on its long-term rainfall

data for the past 130 years. It also considers ocean temperatures and atmospheric

pressure.

There are two annual forecasts, one in April and the other in June, after the monsoon

rains cover half the country.

The improved model would help the IMD issue four to five monsoon forecasts instead of

two, and provide region-specific information as well, Rathore said.

"Almost all premier institutions of the world and India are involved in the exercise to take

a look at the whole gamut of the meteorological process to sharpen our forecast," he said.

India has been able to accurately forecast monsoons, but finds it hard to predict extreme

weather events such as drought, he said, adding that the new effort would end that

handicap.

The IMD failed to foresee the worst drought in nearly four decades in 2009. As a result,

rice output fell and India had to import sugar, sending global prices to a 30-year high.

"Precision in the monsoon forecast can raise farm production by 10 percent to 15 percent

in rainfed areas," said Ravinder Singh, head of agricultural physics at the Indian

Agricultural Research Institute.

Accurate forecasts would eliminate such sharp output swings as farmers would choose

drought-resistant crop varieties and the government would make timely contingency

plans, Rathore said.

The Indian weather office has twice gone wrong in its forecast during the eight years

since 2005, in 2009 and 2007.

It predicted an average monsoon year in 2009 but the season ended with a rainfall deficit

of 22 percent, making for the worst monsoon in nearly four decades.

In 2007, in contrast to the forecast of below average rainfall, the 2007 monsoon turned

out to be above average.

82

Private forecaster Skymet expects normal monsoon this year (ET 18/4/2013)

However, the report says that there seems to be weakness in eastern Uttar Pradesh, Bihar

and northern Madhya Pradesh in June and July and in Peninsular India in August.

India received 92% of the 50-year average of about 89 centimeters of rain in the June-

September monsoon season in 2012, creating drought-like conditions in parts of

Maharashtra and Karnataka.

With nearly two-thirds of Indian agriculture is dependent on rain, a good monsoon is the

lifeline for Indian farmers and food security of the country. A normal monsoon would

ensure timely sowing of cotton, paddy, soya bean, and pulses across the country.

Private weather forecasterSkymet has predicted normal monsoon rains from June to

September, joining a series of international meteorologists that have made a similar

assessment. Skymet expects a few dry patches in parts of eastern and central India but on

the whole it is optimistic.

The official forecast from the India Meteorological Department (IMD) is expected in a

week, but several international agencies as well as private forecasters have already issued

their prediction.

Most of them expect normal rainfall but a few say that erratic rainfall cannot be ruled out.

No agency, including the IMD, has been consistently accurate in its forecast and nobody

had forecast the devastating drought of 2009.

"The monsoon might be 103% of the long period average (LPA) of 89 cm for the four

month period," said Jatin Singh, CEO, Skymet Weather Services. Skymet will issue a

monthly report on wea-ther forecast to cater to its wide-ranged clients from Tata Power,

Reliance Infra, The World Bank , ICICI Lombard and others.

"As the volume of rainfall in the first two months look normal, the onset and progress

should be timely. It means that by June 1 monsoon should hit Kerala, by June 7 Mumbai

and by June 29 Delhi as per our current calculations," he said. Central India is expected

to have the least fluctuation with normal rainfall through June, July, August and

September.

83

"The sugarcane crop will be normal. However, there might be a slight dip in precipitation

in August," said Jatin. The slight weakness in the latter part of the monsoon could be

attributed to an evolving negative Indian Ocean Dipole (IOD). The IOD is a phenomenon

wherein the East Indian Oceans (waters near Indonesia) warms or cools, in turn affecting

the monsoon.

Jatin is of the opinion that power markets this year should not get stressed as a good

chance of timely onset will reduce agriculture load. Further, there is a likelihood of

higher hydel power availability, he added.

Rural job scheme did little to raise farm wages: CACP (BS 23.4.13)

Even as the United Progressive Alliance government is touting the Mahatma Gandhi

National Rural Employment Guarantee Scheme (MGNREGS) as its biggest step for the

uplift of the rural poor, a discussion paper floated by the Commission for Agricultural

Costs and Prices (CACP) suggests compared to this scheme, growth in overall gross

domestic product, agriculture or construction raises real farm wages four to six times

more.

The analysis, based on wages between 1990-91 and 2011-12, showed growth in real farm

wages decelerated to 2.1 per cent in 2000s, against 3.7 per cent in the 1990s. The paper

said this meant if the trend seen in the 1990s had continued in the 2000s as well, farm

wages would have been much higher than what they are today. “The results (of the

analysis) points to the fact that a ‘pull strategy’ is more desirable than a ‘push strategy’,

meaning growth-oriented investments are likely to be a better bet for raising rural wages

and lowering poverty than the welfare-oriented MGNREGS,” the paper said.

A state-specific analysis shows growth is the main driver of farm wages, not MGNREGS.

To augment its point, the paper showed real farm wages had fallen between 2001-02 and

2006-07, when agriculture growth decelerated. The paper questioned the government’s

decision to spend about Rs 2,00,000 crore on MGNREGS since its inception in 2006 to

increase investments with a view to raise farm wages. A better bet would have been

spending the money on increasing investments in rural-urban construction, overall

growth or agriculture growth. “These investments would have raised the growth rates in

these sectors, and ‘pulled’ the real farm wages through a natural process of development,

whereby wages increase broadly in line with rising labour productivity,” the paper said.

It also questioned the MGNREGS, saying the nature of the scheme wasn’t clear---was it

an investment policy or a welfare scheme?

“Since its inception in 2006, MGNREGS claims almost 51 per cent of its expenditure has

84

been on works related to water conservation and irrigation and over 19 per cent on works

related to rural connectivity,” it said.

In its present form, the Mahatma Gandhi National Rural Employment Guarantee Act

allows works such as irrigation and horticulture, development on private land of small

and marginal farmers, which implies a coverage of 80 per cent of land holdings.

However, the impact of such expenditure on agriculture growth was still unclear, the

paper said.

It said the best way to overcome this anomaly would be to fuse MGNREGS and farm

operations. To formalise this, CACP suggested farmers register their demand for

MGNREGS labour with panchayats. The MGNREGS in-charge could have groups of

such labours that specialised in particular agri-operations and shift these them from one

farm to another, it said. “These workers can be given wage rates from the MGNREGS,

which can be topped by a farmer in any ratio of his choice,” the report said, adding this

would ensure more money than current MGNREGS wages and solve the problem of

labour shortage in agriculture.

Programme to provide pre-harvest crop estimate (BL 24/4/2013)

The government has developed a system for pre-harvest crop production forecast

using satellite data, Minister of State for Agriculture and Food Processing

Industries Tariq Anwar said on Tuesday.

Under Space Agro-Meteorology and Land Based Observations (FASAL) programme, the

pre-harvest forecast would be available using the satellite data provided by Indian Space

Research Organisation (ISRO), Anwar said in a written reply to the Lok Sabha.

"Forecasting agriculture using FASAL programme has been developed in collaboration

withISRO to have better pre-harvest crop production forecast for major crop at state/

country level in the country using satellite data for assessing cropped area and agro-

meteorological model for estimating yields," said Tariq.

Under the FASAL, pre-harvest satellite data of Rice (karif and rabbi both), wheat, potato,

mustard and jute are obtained.

Tariq further informed that technologies developed by the ISRO are now being

85

implemented through the Mahalanobis National Crop Forecast Center from April 2012.

The government had allotted Rs 8.66 crore for this project during last fiscal.

12th plan allocation for agri-research insufficient: panel (BS 24.4.13)

A Parliamentary panel has pulled up the government for allocating meagre budget of Rs

25,553 crore for agricultural research during the 12th Five Year Plan (2012-17) saying

the government has "failed to understand the urgency of timely infusion of capital in the

system".

The Department of Agricultural Research and Education under the Agriculture Ministry

had proposed Rs 57,887 crore allocation for 12th plan, while the Working Group of the

Planning Commission had recommended Rs 55,000 crore.

But the gross budgetary support communicated to the Department is Rs 25,553 crore for

the 2012-17 period, it said.

"The Committee do not appreciate the downsizing of allocation, if the communicated

figure is taken on its face value, which is less than 1 per cent of agriculture GDP," the

Parliamentary Standing Committee, headed by Basudeb Acharia, said in the report on

demands for grants for 2013-14 fiscal.

The proposed outlay of the Department has been reduced by about 44 per cent for the

12th Plan and this will affect the ongoing research projects and slacken new initiatives, it

said.

"It is a matter of deep concern that high-end research projects such as agro-diversity,

genomics, nanotechnology, conservation agriculture, health foods, farm mechanisation

etc may either have to be shelved or postponed indefinitely," the report said.

The panel further observed that both the Planning Commission and government "failed to

understand the urgency of timely infusion of capital in the system so as to give an

impetus for developing technologies for emerging challenges."

Emphasising agriculture research is second to none in the development process, the panel

suggested the Department should draw the attention of the government and seek

enhanced allocation for agri-research not only for this fiscal but for the entire plan period.

It said the government's allocation for agriculture research should be one per cent of the

sector's GDP as several studies reveal that higher investment will help in substantial

reduction in poverty by stimulating agri-growth and reducing food prices.

"In the Indian context, results have shown that about Rs 13.5 are returned for every rupee

86

invested in agriculture research and development. Another study found that around 1/4

growth in wheat output and cotton, 1/5th in case of bajra and 13 per cent in paddy and

maize, were due to R&D work".

Sustainable development, climate change, bio-security, bio-safety are some of the upfront

areas requiring detailed research, it added.

87

XIII AGRICULTURAL COMMODITY PRICES

Food habit change in rural areas fuelling inflation: RBI (BL 6/4/2013)

Impressive rise in rural incomes is fuelling food inflation as people’s dietary habits are

changing for the better and increasing consumption, the RBI Governor, D Subbarao said

today.

Subbarao said here the poor segments of the population are seeing an increase in income,

leading to shift in their dietary habits.

People are shifting from cereals to protein and eating more of egg, meat, milk,

vegetables, pulses and fruits and “that’s causing food inflation”.

“Now we have evidence. Over the last five years rural wages have grown by 20 per cent

every year” which RBI Governor termed as a “remarkable success story”.

When the incomes of poor people rise, almost all of that goes for consumption, leading to

demand pressures, he said, in an address on “India’s macroeconomic challenges — Some

Reserve Bank Perspectives” at a meeting, organised by the Federation of Karnataka

Chambers of Commerce and

Retail inflation declines to 10.39% in March (BL 12/4/2013)

Retail inflation declined to 10.39 per cent in March, snapping a five-month rising trend,

as prices of vegetables and protein-based items eased.

The Consumer Price Index (CPI) based inflation was at 10.91 per cent in February. The

inflation, however, continued to remain in double digit terrain for the fourth consecutive

month in March.

The prices in the vegetables basket eased to 12.16 per cent in March. It was 21.29 per

cent in February.

Inflation in protein-based items — egg, meat and fish — stood at 14.36 per cent during

the month. In oils and fats segment, it stood at 11.72 per cent.

Among all the constituents that make the CPI, cereals recorded the highest inflation of

17.55 per cent in March, according to data released today.

Besides, inflation in pulses stood at 11.38 per cent and in sugar at 11.65 per cent on an

annual basis.

The price rise in the clothing and footwear segment stood at 10.64 per cent during the

month.

88

In urban areas, retail inflation declined to 10.38 per cent in March from 10.84 per cent in

the previous month. The CPI for the rural population fell to 10.33 per cent during the

month from 11.01 per cent in February.

The data for wholesale price index (WPI)-based inflation is expected on Monday. The

WPI figures for February stood at 6.84 per cent, much higher than RBI’s comfort level of

5-6 per cent.

Meanwhile, industrial output growth in February stood at a meagre 0.6 per cent in

February, compared to a growth of 4.3 per cent in the same month last year.

The RBI will take into account double digit retail inflation and slowdown in factory

output while formulating its annual monetary policy, which is scheduled on May 3.

World food prices rise 1 per cent in March: Food and Agriculture Organisation (ET

12.4.13)

Global food prices rose in March, the United Nations' food agency said on Thursday, as

dairy costs surged and cereals prices held steady.

The Food and Agriculture Organisation's price index, which measures monthly price

changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 212.4 points in

March, up 1 pct from 210.7 in February.

The Rome-based agency raised its estimate of world cereal output in 2012 to 2.309

billion tonnes, up 3 million tonnes from a forecast made in March.

It said world cereal production could recover strongly in 2013, barring bad weather,

driven by an expansion of plantings brought about by attractive prices and a recovery in

yields from below-average levels in 2012.

Poor farm technology cause of food inflation: Report (FE 13.4.13)

On Friday, when the Central Statistics Office released data showing consumer inflation

for vegetables, fruits and eggs were all in double digits, a report released at the same time

showed why this trend was unlikely to ease off soon.

The report noted that agriculture, basically food products presently achieves less than 60

per cent of the potential yield for most crops due to poor technology adoption and weak

links between farmers and food processing industry, across India.

Yet a the same time Indians are now spending much more on high value foods with

consumption shifting from plant to animal based protein as disposable incomes rise.

89

The demand-supply asymmetry has become structural that can only be met through

radical increase in the production of certain high value foods such as soya bean, potato,

mango, banana, and poultry, notes the joint report by the Confederation of Indian

Industry and McKinsey & Company, FAIDA.

“It is now imperative that India upgrade its agricultural practices and techniques, as well

as well as accelerate growth in allied business fields such as food processing, in order to

support the country’s consumption demand changes over the next 20 years,” said Adil

Zainulbhai, India chairman of McKinsey.

Lead author of the report Barnik Mitra said the report suggests setting up of a farm gate

to market infrastructure authority which will incentivise setting up of infrastructure like

national cold chains.

He acknowledged this will need centre and state coordination but did not comment if it

was a means to bypass the Agricultural Produce Marketing Committee Act of each state

government that restrict the options for farmers.

The key to the changes was making more agro-crops run through the value addition

chain. Only if food processing, currently handling less than 10 per cent of the total

agricultural output reached close to 20 per cent could there be improvements in farm gate

income over the decade which in turn could double the income of farmers, the report

suggests.

Zainulbhai said they had focussed on the five crops selected in the Faida report based on

the feedback received from the state governments. Mitra said along with onion, brinjal

and tomatoes these were among the top ten non-cereal food products that India could

harvest.

“If India is to realise its vision of becoming a global powerhouse in food and agriculture,

it needs a second Green Revolution,” says Rakesh B Mittal, past chairman, CII National

Council on Agriculture said at the release. According to the report India must shift from a

programmes and schemes approach to a mission mode, to create an enabling environment

to attract large scale private sector investments in agriculture.

Cheaper veggies pull down March inflation to 5.96% (FE 15.4.13)

Declining price of vegetables pulled down inflation to over three-year low of 5.96 per

cent in March, which may prompt the Reserve Bank to consider a rate cut in its annual

monetary policy next month.

90

Inflation based on the Wholesale Price Index (WPI) stood at 6.84 per cent in February. In

March, 2012, it was 7.69 per cent.

The 5.96 per cent March-end inflation is much lower than Reserve Bank's projection of

6.8 per cent.

The decline in inflation and a slowdown in industrial output growth to 0.6 per cent in

February has raised expectations of a rate cut by RBI next month to boost growth.

The RBI will announce its annual monetary policy on May 3.

As per official data released today, inflation in the manufactured items category

witnessed a marginal decline at 4.07 per cent in March. It was 4.51 per cent in February.

Inflation in food articles category, which has a 14.34 per cent share in the WPI basket,

too declined to 8.73 per cent. Inflation in this category was at 11.38 per cent in February.

The easing in food inflation was helped by a sharp drop in prices of vegetables. Inflation

in vegetables stood (-)0.95 per cent in March, from 12.11 per cent in the previous month.

The rate of price rise in onion stood at 94.85 per cent for the month of March, as against

the inflation rate of 154.33 per cent in February.

Inflation in rice eased to 17.90 per cent in March, as against 18.84per cent in the previous

month.

Inflation for January was revised upwards to 7.31 per cent, from 6.62 per cent as per

provisional estimates.

Commenting on the inflation numbers, Planning Commission Deputy Chairman Montek

Singh Ahluwalia said inflationary pressure in coming down gradually.

"Inflation behaviour is consistent with what government has been saying that it is slowly

coming under control," Ahluwalia said.

As per the latest data, inflation rate in wheat and cereals eased to 19.87 per cent and

18.36 per cent, respectively, in March.

Potato and pulses prices declined to 20.06 per cent and 10.51 per cent in March.

While the inflation rate in egg, meat and fish category stood at 11.03 per cent, for milk it

was 4.42 per cent.

Inflation in fruits came down to 4.71 per cent.

For the fuel and power category, it was up by 10.18 per cent in March, compared to 10.47

per cent in February 2013.

91

Retail price inflation to remain in double digits in 2013 and 2014: IMF (BS 17.4.13)

Even as gold prices plummeted and oil rates declined to give comfort to policy makers on

the current account deficit front, the International Monetary Fund (IMF) today projected

India's CAD at 4.9% of GDP in 2013, only a tad lower than 5.1% in the previous year.

In its World Economic Outlook (WEO), IMF projected India's CAD to come down to

4.6% in 2014.

Actual CAD for 2012 and projected ones for 2013 and 2014 are much above the desired

level. Recently, Prime Minister's Economic Advisory Council (PEMAC) chairman C

Rangarajan said the country has to bring down its current account deficit (CAD) to

around 2.5% to achieve and sustain higher growth rate.

Gold along with oil were the two main culprit for increasing India's CAD. India officially

measures CAD in a financial year. Its CAD was as high as 6.7% of GDP in the third

quarter of 2012-13. India’s CAD in during April-December of 2012-13 was 5.4% of the

GDP.

CAD was stated to be bigger worry for India than fiscal deficit by Finance Minister P

Chidambaram.

Even as the wholesale price index-based inflation came down to a 40-month low of

5.96% in March, India may not witness relief on the consumer price index (CPI)-based

inflation, if IMF projections are to be believed.

IMF projected the CPI inflation to be 10.8% 2013, up from 9.3% in 2012. For,2014, IMF

pegged this inflation to be 10.7%.

Food articles which have over 45% weight in the index were blamed by IMF for high CPI

inflation.

Though IMF projected inflationary pressures to remain subdued in large parts of the

world due to economic slow down, lower food and energy prices, it stated that in India,

the inflation pressure is projected to be fairly high because of higher food prices.

"...spurred by food prices in some cases (India), and (inflation) could surprise on the

upside," the report said.

IMF projected India's GDP to grow by 5.7% in 2013 from four% in 2012. The IMF

92

projections were 0.2 percentage points lower than its earlier estimate for 2013. For 2014,

the Fund scaled down its projections for India's economic growth by two percentage

points to 6.2%.

Here it should be noted that IMF uses different methodology of GDP estimation than

official one in India. IMF includes indirect taxes in its estimations, which in technical

jargon is called GDP at market prices.

IMF said external demand, solid consumption, a better monsoon season, and policy

improvements are expected to lift activity in India.

The WEO said that improved external demand, and recent pro-growth measures adopted

by the government will stimulate India’s economic growth.

It said that structural challenges are likely to result in low output and high inflation in the

short run.

The report further said that India along with west Asian oil importers with high energy

subsidy spending, several emerging European economies are likely to face significant

fiscal challenges.

The need for fiscal consolidation is more urgent in economies where fiscal deficits are

large like India and Pakistan, or where there are structural impediments to growth, like

Egypt, India, Jordan, and Pakistan, it added.

Inflation eases for farm workers, inches up for rural labourers (ET 18/4/2013)

Retail inflation for farm workers eased marginally to 12.64 per cent in March from 12.72

per in February, while it inched up for rural labourers to 12.62 per cent last month from

12.52 per cent levels.

"Point to point rate of inflation based on the Consumer Price Index-Agriculture

Labourers decreased from 12.72 per cent in February to 12.64 in March whereas it

increased from 12.52 per cent in February to 12.62 per cent in March in respect of

Consumer Price Index-Rural Labourers," a Labour Ministry statement said here.

According to the statement, the retail inflation based on food index of CPI-AL and CPI-

RLare 13.51 per cent and 13.46 per cent respectively during March.

93

In case of farm workers, the index recorded an increase which varied between 1 to 13

points in 17 states and a decrease between 1 to 3 points in 2 states, whereas it remained

stationary in one state.

Haryana was placed at the top of the index table with 775 points for farm workers,

whereasHimachal Pradesh with 555 points was at the bottom.

In case of rural labourers, the index recorded an increase between 1 to 11 points in 18

states and a decrease between one to 3 points in 2 states.

Wwith 769 points, Haryana was again at the top of the index table for rural workers,

whereas Himachal Pradesh with the index level of 582 points was at the bottom.

Tamil Nadu registered the maximum increase of 13 and 11 points respectively for farm

and rural workers mainly due to increase in prices of jowar, bajra, ragi, ground nut oil,

meat goat, fish, vegetables and fruits, tea, among others.

On the other hand, Assam registered the maximum decline of 3 points each for CPI-AL

and CPI-RL due to decrease in the prices of rice, milk, onion, chilies green, vegetable or

fruits sugar, shirting cloth cotton mill and hair oil.

94

XIV AGRI COMMODITY FUTURES/ NEWS

Commodity markets will be drivers of economic growth’ (BL 3/4/2013)

The Indian commodities markets have emerged as the fastest growing sectors in the

economy with liberalisation. They will be drivers of economic growth in the near future,

said Ganga Murthy, Principal Advisor, Union Ministry of Consumer Affairs.

Speaking at a stakeholder awareness and education seminar on ‘Agribusiness and

Commodity Futures Market Price Risk Management’ organised by The Hindu Business

Line in association with Forward Markets Commission and the National Commodity and

Derivatives Exchange at the Tamil Nadu Agricultural University here, Murthy conceded

that instability in commodity prices was becoming an issue of concern not just in India,

but world over impacting income, economic growth and the poor adversely.

And price mortality is a bigger challenge for producers of primary commodities, more so

in India basically because we are an agrarian economy, she added.

Urging the participants, particularly farmers to participate in the market, she said the

environment of volatility in prices could be mitigated through these commodity

exchanges.

While stating thus, Murthy also pointed out that out of the 100 commodities in futures

trade only over 40 were actively traded and approximately twenty seven of these were

agri-commodity.

PRICE RISK MANAGEMENT

The fundamentals of demand and supply would determine the price and the futures

market acts merely as a platform for price discovery and price risk management for the

market participants. “Price risk management in commodities is not just a cliché, but a

necessity for the development of the futures market,” she added

95

She also said that the price discovery in the futures market would not be effective unless

spot markets were regulated and integrated.

“The physical spot market is fragmented. Out of the three spot markets, only two are

functioning and that too with a host of problems. Further, farmers’ participation in the

market is rather poor,” she observed and urged for better involvement.

The Wholetime Director of T Stanes and Co Lakshmi Narayanan said that about 35 per

cent of the country’s national income came from agricultural production and stressed the

need for gearing up with the transformation that was taking place on the agri-business

front.

The Vice-Chancellor of Tamil Nadu Agricultural University K. Ramasamy stressed the

need for fair price dissemination practices and protection to farmers.

FMC wants exemption for processed farm products from CTT (BL 10/4/2013)

The Forward Markets Commission has suggested that all the processed agriculture

commodities traded on the exchange platform should be exempted from the proposed

commodity transaction tax.

Some of the processed commodities traded on the exchanges include guar gum, refined

soya oil, soyameal, cotton oilseed cake and RBD palmolein. These commodities, which

attract good volumes, are not directly cultivated by the farmers, but derived from farm

products.

Unveiling the Budget in February, Finance Minister Chidambaram proposed a transaction

tax of 0.01 per cent on non-agriculture futures traded on the bourses.

Ramesh Abhishek, Chairman, FMC, said it has been the stated policy of the commission

to facilitate futures trading in agriculture commodities. That is one of the reasons why all

the processed agriculture commodities also in this list. “We thought it is fit to make this

suggestion as clarity was needed to avoid questioning by the income tax authorities in

future,” he said.

Commodity exchanges should guide farmers to futures platforms: K.V.Thomas (BL

12/4/2013)

Food Minister, K.V. Thomas, called on the commodity exchanges to help farmers, who

lack necessary expertise, to trade on futures platforms for managing price risks.

96

"Adequate knowledge on futures prices helps the farmers in taking pre-sowing and post

harvest decisions and the knowledge of futures prices increases his bargaining power vis-

à-vis the traders,” Thomas said releasing a book “A Million Jobs and A Million More

Opportunities” on Thursday night.

The book, a special study conducted by Tata Institute of Social Science (TISS) in

association with Multi Commodity Exchange of India (MCX), highlights the contribution

of the commodity exchange ecosystem on economic development.

Inclusive growth

Thomas said the increased participation of producers, consumers and others with

exposure to physical commodity market will enhance the price discovery process. He

further emphasised that the commodity derivatives market, unlike other financial

markets, touches the lives of all citizens of the country, either as producers or as

consumers.

The food minister said policy research and impact studies such as the one attempted

jointly by the TISS and MCX, will bring to light the contribution of commodity markets

in achieving the inclusive growth and the country’s social economic development.

The annual turnover of the commodity exchanges currently stands at Rs 1.4 lakh crore

and is estimated to grow multi-fold with the introduction of futures trading. “It is

expected that the commodity market’s annual turnover is estimated to be around Rs 55

lakh crore by 2015,” he said.

Spot exchanges

Thomas said the spot exchanges are helpful for farmers to sell their small lots and cited

the example of Kerala, where rubber growers benefited to a large extent in realising over

90 per cent of the final price through participating in the futures market.

“It cannot, however, be denied that there are certain reservations and suspicions on the

role of commodity exchanges as being contributory to price situation,” Thomas said.

However, the stated position of the Government is that an apparent connection between

the futures trading and the rise in inflation could not be established. He assured that the

Government is open to the concept of commodities exchange and futures trading as a

major economic activity in tune with international market integration.

97

Biggest revolution

Thomas further said that exchanges have to be extremely sensitive to the complaints

emanating from various parts of the country, especially from certain sections of the

farming community. “It is the endeavour of the Government and the Forward Markets

Commission to increase the participation of farmers and the other physical market

participants in futures market for price risk management”

Jignesh Shah, Vice Chairman, MCX said the creation of commodity exchange

infrastructure in the post-liberalisation phase is the biggest revolution in India.

Unlike telecom and automobile sector, where the international companies have played a

major role in the growth, the commodity exchange infrastructure was created by the

domestic companies without any tax exemptions or grants. The commodity exchanges

have the potential to create 5 million jobs in the years to come, he said.