A compilation of major news items relating to the overall farm sector and

selected food commodities covered under the study

Agricultural Outlook and

Situation Analysis Reports

March 2014 MONTHLY REPORT VOL 3 No. 14

agriNEWS

Contents

- Highlights - Milk

- Broad Sectoral Trends - Vegetables - Potato/ Onions

- Agricultural Policy - Sugarcane/ Sugar

- Rice - Inputs

-Wheat - Other Agri/ Farm News

- Edible Oils/ Oilseeds - Agricultural/ Food Prices

- Pulses - Coarse Grains/ Maize

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ONLY FOR REFERENCE BY PROJECT STAFF

AgriNews: March 2014

A compilation of major news items relating to the overall farm sector and selected

commodities covered under the study “Agricultural Outlook and Situation Analysis

Reports”

Prepared by

National Council of Applied Economic Research

11, I.P. Estate

New Delhi 110002

(Coverage from Feb. 26, 2014 to March 25, 2014)

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iii

CONTENTS

Section Title Page No.

1 Highlights 1

2 Broad Sectoral Trends 5

3 Agricultural Policy 11

4 Rice 17

5 Wheat 21

6 Coarse Cereals / Maize 33

7 Pulses 35

8 Edible Oils / Oilseeds 37

9 Milk 41

10 Vegetables – Potato/ Onions 45

11 Sugarcane / Sugar 49

12 Inputs 55

13 Other Agri / Farm News 59

14 Agricultural / Food Prices 91

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

Times, FE= Financial Express

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1

HIGHLIGHTS

Broad Sectoral Trends

Q3 GDP at 4.7%; economy heads towards worst year in decade: Numbers are lower than

the estimates of even pessimist economists who were expecting a growth of 4.9 per cent. (BS

28.2.14)

Crisil warns of El Nino impact on growth; pegs GDP at 5.2%: If El Nino condition

affects the monsoons, as is being forecast by foreign agencies, it can slow down the economy

to 5.2 per cent next fiscal from a projected 6 per cent, says a report. (ET 4.3.14)

Agricultural Policy

GM crops: Field trials get green signal: The Union ministry of environment and forests

(MoEF) has approved field trials of genetically modified (GM) food crops on a conditional

basis. (BS 28.2.14)

CACP recommends moderate increase in MSP of kharif crops: The Commission for

Agricultural Costs and Practices (CACP) has recommended moderate increase of 1-5% in

minimum support prices (MSP) of agricultural commodities for ensuing Kharif season 2014-

15. (BS 24.3.14)

Rice

Saudi Arabia-India to jointly build rice distribution hub in Dubai: A new Saudi Arabia

and India joint venture has been formed to build a rice distribution hub in Dubai to link

Indian production to consumers in the Middle East, according to a media report. (ET 28.2.14)

US to ease Basmati quality norms soon: The US has assured India that it will relax its

stringent tolerance norms for fungicide found in Basmati shipped from the country. (BL

14.3.14)

Wheat

Wheat output may fall below government estimate: Wheat output this year is likely to be

below the government estimate of 95.60 million tonnes as untimely rain, hailstorm and wind

have hit the crop in some states, a government official said. (ET 11.3.14)

Fields of gold in sight, FCI ups wheat target: Food Corporation of India has scaled up

wheat procurement target and plans to buy more grains from Madhya Pradesh, Maharashtra

and Gujarat this year. (ET 14.3.14)

Amid Ukraine muddle, global prices for wheat surge 3% to $290-300 a tonne: Russia's

standoff with the West over Ukraine and the threat of sanctions by the US seem to have come

as a boon for Indian wheat traders. Global wheat prices rose by 3% to $290-300 a tonne in a

week's time. (ET 20.3.14)

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Wheat harvesting to get delayed due to rains in Punjab, Haryana: Wheat harvesting in

Punjab and Haryana is likely to get delayed by at least 10 days due to untimely rains lashing

several parts of the northern region. (ET 24.3.14)

Coarse Grains / Maize

Maize prices in India are likely to remain subdued on increased global supply: Maize

prices in India are likely to remain subdued on increased global supply as US awaits record

harvest this year. (ET 26.2.14)

NCDEX to launch Bajra futures from April 1: Commodity bourse NCDEX today said it

will launch futures contract in Bajra (pearl millet) from April 1. (BS 20.3.14)

Pulses

Unseasonal rains dampen masur prospects: “The masur crop has been damaged by rains

in Uttar Pradesh and Madhya Pradesh. There could be a 15-17 per cent decline in

production,” said Pravin Dongre, Chairman of India Pulses and Grains Association. (BL

4.3.14)

Edible Oils / Oilseeds

Rapeseed output for 2013/14 to rise 11%: Solvent Extractors' Association of India:

Rapeseed output is expected to rise 11 per cent to 7.6 million tonnes in 2013/14, the Solvent

Extractors' Association of India (SEA) said in a statement on Friday, potentially helping New

Delhi cut vegetable oil imports. (ET 28.2.14)

February palm oil imports sink to almost 3-year low: Palm oil imports in February

plunged to the lowest in nearly three years, data from the Solvent Extractors' Association

(SEA) showed, as higher prices and hopes local supplies of rival rapeseed oil would improve

kept buyers away.(ET 14.3.14)

Milk

Educated farmers in Punjab venture into dairy farming: Worried over diminishing

returns from small holdings in the state, young and educated farmers in Punjab with an

entrepreneurial streak are venturing into commercial dairy farming. (BS 10.3.14)

Milk powder to drive dairy exports to record this fiscal: Dairy exports during the current

financial year are set to touch a new high, with shipments of skimmed milk powder (SMP)

doubling over last year. (BL 14.3.14)

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Vegetables – Potato/ Onoins

Onion price rises 50% in 2 weeks: After falling to the level of cost of production, onion

prices recovered to record a 50 per cent increase in the past two weeks, following controlled

supply from farmers. (BS 26.2.14)

Onion export floor price abolished: With onion prices in the wholesale markets of

Maharashtra and elsewhere dropping to Rs 6-7 a kg, the government on Tuesday abolished

the minimum export price (MEP). (BS 4.3.14)

Anyone can export onions again after four decades: For close to four decades, export of

onion could take place only through the agencies designated by the government. Now anyone

can export onions, as the Central government freed export of the bulb by removing this

condition last week. (ET 20.3.14)

Sugarcane / Sugar

Government notifies subsidy of Rs 3,300/tonne for raw sugar export: The government

today notified export subsidy of Rs 3,300 per tonne on raw sugar shipments undertaken

during the February-March of this year. (ET 3.3.14)

Oct-Feb sugar production declines 10.6% : The production of sugar in the country

declined 10.63% to 16.86 million tonnes in the October-February period of the ongoing

2013-14 marketing year, on lower output in most states, including Maharashtra and Uttar

Pradesh, industry body ISMA said today. BS 4.3.14)

Raw sugar export subsidy under WTO scrutiny: India’s recent decision to give subsidies

to exporters of raw sugar is facing international flak with many countries questioning its

validity under global trade rules.(BL 19.3.14)

Inputs

Fertiliser consumption set to fall for second year running: Total fertiliser consumption in

the country rose every year from 2002-03 to 2011-12, when it peaked at 59 million tonnes

(mt). (BL 10.3.13)

Other Agri / Farm News

El Niño scare: Govt prepares emergency plans for 500 districts: El Niño might impact

rain in 2014 but not as severely as in 2009.(BS 27.2.14)

Agriculture dependent population in India grew by 50%: Agricultural population of India

grew by a whopping 50 per cent between 1980 and 2011, the highest for any country during

this period, followed by China with 33 per cent, while that of the United States dropped by 37

per cent as a result of large scale mechanisation, a latest report has said. (ET 27.2.14)

Govt engages farm cos to boost output to meet food security targets: The government

has started focusing on the farmer producer organisations for exclusive production of critical

crops like pulses and millets. (BS 7.3.14)

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India keeps a close watch on El Nino: First monsoon forecast next month: The weather

department is keeping a close watch on the events and would come up with its first prediction

on monsoon’s arrival by next month.(FE 14.3.14)

Maharashtra issues NOC to 28 applications for GM trials: Most of the 28 strains cleared

for trials are for wheat, rice, maize and cotton. Among the GM crops whose trials

Maharashtra has permitted are transgenic rice and wheat. (BS 25.3.14)

Agricultural /Food Prices

February retail inflation slows to 25-month low of 8.1 per cent: Overall inflation in the

food basket, including beverages, slowed to 8.57 per cent in February from 9.9 per cent in the

previous month, according to Consumer Price Index (CPI) data released by the government

today. (ET 12.3.14)

Inflation eases to 9-month low of 4.68% in Feb: At 4.68 per cent, February's wholesale-

price index-based inflation was much below the previous month's 5.05 per cent and the

lowest since May 2013. (ET 15.3.14)

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SECTORAL ISSUES

Q3 GDP at 4.7%; economy heads towards worst year in decade (BS 28.2.14)

Numbers are lower than the estimates of even pessimist economists who were expecting a

growth of 4.9 per cent

All signs pointed towards a lower GDP print, yet the finance minister bravely hinted that the

remaining two quarters of the current fiscal could post a growth of 5.2%. Well he is wrong.

Numbers released by the government says that the country grew by only 4.7% in the third

quarter lower than estimates of even pessimist economists who were expecting a growth of

4.9%.

Government started the year with an assumption of nearly 6.1% growth (budget estimates)

but have subsequently reduced it blaming everyone else but its own policy paralysis.

Even a few days back in his pre-budget speech finance minister could not get the numbers

right. He estimated the growth in economy to be around 4.9%, which given the 4.6% growth

in the first half meant that the economy would have to grow at 5.2% in the second half. With

a 4.7% in the third quarter the economy will have to grow by 5.7% in order to prove the

finance minister right.

Earlier in the month IIP numbers were announced which posted a contraction of negative

0.6% for December 2013. With this the entire third quarter was a wash out with all three

months in the quarter posting contractions. Worst there is little sign that there might be any

improvement in the fourth quarter.

However, another set of data released by the government shows that maintaining the current

growth rate would be difficult. India’s fiscal deficit in the first ten months of the 2013/14

financial year crossed the target for the whole year.

Finance minister had in his speech brought down the deficit target to 4.6% of GDP from

4.8% expected earlier. However, with the target (in absolute terms) already crossing the

budgeted mark, it is unlikely that the government will be increasing its spending in the

coming months.

Along with the expenditure it is likely that the finance minister will reduce his growth target

one last time before the fiscal ends registering the decades slowest growth rate.

At 4.7%, GDP growth disappoints in Q3 (BS 1.3.14)

Govt's growth projection for FY14 unlikely to be met, say economists

The country’s economy grew 4.7 per cent in the quarter ended December, slower than the

previous quarter’s 4.8 per cent and dashing the government’s hope of a recovery from the

second half, data released on Friday showed.

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Gross domestic product (GDP) growth in the third quarter of the current financial year was at

a sub-five per cent level for a seventh straight quarter. It had expanded 4.4 per cent in the

third quarter of the previous year.

Economists attributed the decline in pace of growth to weak investment scenario due to

policy uncertainty ahead of the general elections. The outlook for the future, too, appeared

bleak, as eight core industries, which have a little more than one-third weight on the Index of

Industrial Production, grew only 1.6 per cent in January, compared with 2.1 per cent in

December. Besides, exports continued to expand at a single-digit rate for a third straight

month in January.

GDP data showed both mining and manufacturing declined in the three-month period to

December — mining contracted 1.6 per cent, while manufacturing was down 1.9 per cent.

Both these sectors have seen a contraction in the first nine months of the current financial

year.

Agriculture growth, too, slowed to 3.6 per cent, against 4.6 per cent in the previous quarter.

However, expansion in the services sector picked up to stand at 7.6 per cent in the October-

December period, compared with 5.9 per cent in the previous quarter.

This was mainly on account of a sharp rise in government spending, which led to seven per

cent growth in personal, community and social services in the third quarter, against 4.2 per

cent in the second. The rise in government spending could also be gauged from the fact that

the Centre’s fiscal deficit exceeded the revised estimate of 4.6 per cent of GDP till January

itself.

Analysts, as well as government officials, said the GDP numbers were below their

expectations. “It was slightly below expectations but I feel the overall growth rate of 4.9 per

cent would be achieved this year,” said C Rangarajan, chairman of the Prime Minister’s

Economic Advisory Council.

According to the advance estimates of the Central Statistics Office, GDP is expected to grow

by 4.9 per cent in 2013-14, against 4.5 per cent in 2012-13. Rangarajan said there were signs

of a pick-up in industries and the government had in the past cleared several projects that

would reflect in the fourth quarter. However, he added, 1.5-1.7 per cent growth in

manufacturing would be required for that.

Economists did not share Rangarajan’s optimism. “These numbers clearly show that attaining

a growth rate of 4.9 per cent in 2013-14 is not possible,” said Rupa Rege-Nitsure, chief

economist, Bank of Baroda.

For the economy to grow at 4.9 per cent, GDP needs to expand 5.5 per cent in the fourth

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quarter of 2013-14. If that happens, it will be the highest growth rate since the quarter ended

December 2011. Nitsure expected the economic expansion would stand at 4.6-4.7 per cent in

2013-14.

Recently, the International Monetary Fund (IMF) had pegged India’s economic growth at 4.6

per cent in 2013-14. Since the economy had grown 4.6 per cent in the first half, it means that

IMF expects economic growth to be 4.6 per cent in the second half too. In the first nine

months, the economy had risen 4.6 per cent, tad higher than 4.5 per cent in the corresponding

period of the previous financial year.

Based on advance estimates, Finance Minister P Chidambaram had said in his interim Budget

speech: “Growth in Q2 of 2013-14 has been placed at 4.8 per cent and growth for the whole

year has been estimated at 4.9 per cent. This means that growth in Q3 and Q4 of 2013-14 will

be at least 5.2 per cent.”

Nitsure said investors were awaiting the Lok Sabha elections to be held in April-May before

taking decisions. “We do not see any leading indicator at least in the banking sector.

Investors are in the wait-and-watch mode ahead of the elections, as there is policy uncertainty

looming,” she added.

Investment, as shown by a proxy gross fixed capital formation, declined 1.1 per cent in the

third quarter, against a growth of 1.8 per cent in the year-ago period. Aditi Nayar, senior

economist at ICRA Ratings, said damage to kharif crops due to rains led to lower agricultural

growth. “Heavy rainfall over parts of the country in October 2013 caused some damage to

standing kharif crops and contributed to a moderation in agricultural growth,” she said.

The economist said agricultural growth would bounce back in the fourth quarter due to the

“rabi crop effect” but that would not be enough to make up for the “acute contraction” in the

industrial segments. Demand in the economy deteriorated, as private final consumption

expenditure rose 2.5 per cent in October-December, against 2.9 per cent in the previous

quarter. Inflationary pressures deterred consumers from buying products, economists said.

“Despite a healthy kharif harvest, domestic demand remained weak, partly on account of a

spike in food inflation during the festive season,” said Nayar.

Crisil warns of El Nino impact on growth; pegs GDP at 5.2% (ET 4.3.14)

If El Nino condition affects the monsoons, as is being forecast by foreign agencies, it can

slow down the economy to 5.2 per cent next fiscal from a projected 6 per cent, says a

report.

Several international weather forecasters see enhanced possibility of an El Nino this year,

according to a report by Crisil.

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An El Nino occurs when the Equatorial Pacific waters become unusually warm. It can

change ocean and wind currents across the globe, wreaking havoc on the climate.

"If, however, the monsoons were to get adversely affected this year, the economy

could grow by 5.2 per cent in FY15, much lower than our current forecast of 6 per cent," the

rating agency said today.

However, it said there is a fair degree of uncertainty associated with these early forecasts, and

it will be too premature to conclude that an El Nino condition will occur this year.

"Even the occurrence of an El Nino does not necessarily imply monsoon failure in the

country," it said.

For India, El Nino shifts rainfall patterns and can weaken or delay the Asian monsoons.

"In the last decade, it was one of the factors responsible for two of our most severe monsoon

failures (2002 and 2009)," CrisilBSE -0.01 % noted.

Poor rainfalls could push up the already high food inflation further and pump down GDP, the

report warned.

A normal monsoon, leading to 3 per cent growth in agriculture, was a key assumption behind

Crisil's 6 per cent GDP growth outlook for FY15.

In particular, the occurrence of an El Nino is said to cause rainfall deficiency in the

Northwest and Central areas of the country, and excess rainfall in the Northeast.

Northwest and Central regions together contribute 67 per cent of the country's agriculture

output, while the Northeast and Eastern regions together contribute just about 13 per cent.

Deficient monsoons will, therefore, not only pull down GDP growth but could also stoke

food inflation, the report said.

"A weaker monsoon could set off another spiral of poor rainfall leading to lower agriculture

output, sharper hikes in minimum support prices (MSPs) and higher food inflation," it said.

Crisil sees CPI inflation, with nearly 50 per cent weight of agriculture-related articles, rising

above the current forecast of 8 per cent in FY15 if El Nino occurs and affects the

monsoon.

The Urijit Patel committee has suggested bringing down CPI inflation to 8 per cent by

January next.

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"This is only possible if the downward momentum in food inflation continues for which a

normal monsoon in 2014 is critical," Crisil concluded.

Weak monsoon may lead to another year of sub-5% growth for India (ET 24.3.14)

India could face yet another year of sub 5 per cent growth, if monsoon are below normal this

year, a Citigroup report says.

According to the global financial services major, India is likely to clock a GDP growth of 5.6

per cent in FY15, provided there is normal monsoon and agri growth.

However, a "weak" or "bad" monsoon could lead to flattish or negative agri growth, lowering

GDP to 5.1 per cent or 4.7 per cent, respectively, Citigroup said.

"While admittedly trends in the SOI are volatile, given that a weak monsoon could result in

yet another year of sub 5 per cent growth," the report added.

Southern Oscillation Index (SOI) measures the development/intensity of

an El Nino.

El Nino (Spanish for 'boy') is a weather phenomenon that occurs every 2 to 7 years and

causes major shifts in rainfall. It is characterised by higher surface temperatures in the

Tropical Pacific Ocean and weaker trade winds.

El Nino conditions usually coincide with a period of weak monsoon in India. This

condition occurs every 4 to 12 years. It had last hit India's monsoon in 2009, leading to worst

drought in nearly four decades.

The Indian Meteorological Department (IMD) will be releasing its monsoon estimates on

April 15th.

Given that agriculture constitutes around 14 per cent of India's GDP and food is 50 per cent

of India's CPI basket, a poor-bad monsoon could shave 50-90 bps from our current GDP

estimate of 5.6 per cent, the Citigroup research report says.

The report further said that the current reservoir levels are relatively higher than during the

same time in previous years and this could offset El-Nino risks. Moreover, food grains with

FCI remain well above the buffer stock norm and agricultural productivity has also been

rising.

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11

POLICY ISSUES

GM crops: Field trials get green signal (BS 28.2.14)

Decision to allow field trials of 200 crops

The Union ministry of environment and forests (MoEF) has approved field trials of

genetically modified (GM) food crops on a conditional basis. Environment Minister M

Veerappa Moily on Thursday said though the final call on GM crops would be taken by the

Supreme Court, there is no embargo by the apex court on field trials. The decision would

allow field trials of 200 such varieties, including in rice, wheat, maize, castor and cotton.

“We have given clearances for confined field trials by companies, based on certain

conditions,” Moily said.

These include consent from the Genetic Engineering Appraisal Committee (GEAC) and from

respective state governments. The ministry’s decision was based on the approval by GEAC in

March 2013 to allow about 200 successful gene modification trials. Moily has called the next

meeting of the statutory committee on March 21.

“We are hopeful the next GEAC meeting will clear the new applications before the coming

kharif season,” said Ram Kaundinya, chairman, ABLE AG, an association of biotech-led

enterprises. This is contrary to former minister Jayanthi Natarajan’s view, who had put the

decision on hold, raising legal concerns because of the pending Supreme Court decision. The

ministry of agriculture and MoEF might also file a joint affidavit in the Supreme Court,

pleading that field trials of GM crops be allowed. According to MoEF Secretary V

Rajgopalan, safety precautions would be ensured for conducting the trials.

The apex court had also set up a technical expert committee, in which a majority of members

batted for an indefinite hold on field trials unless a proper regulatory mechanism was in

place. In its March 2013 meeting, GEAC had cleared field trials of GM rice by Mahyco and

BASF India, by the Directorate of Oilseeds Research for GM castor, Monsanto India for GM

maize, Mahyco for GM wheat trials and GM cotton trials by Bayer, BASF and Mahyco.

CCEA hikes fixed cost of urea, modifies investment policy (BS 28.2.14)

Provision of bank guarantee of Rs 300 crore from companies has been included to encourage

new investment in the urea sector

The Cabinet Committee on Economic Affairs today cleared the hike in fixed cost of urea by

up to Rs 350 per tonne, a move that would lead to increase in subsidy by about Rs 900 crore.

It also approved changes to the policy that aims at encouraging new investment in the urea

sector by removing 'guaranteed buyback' clause and including a provision of bank guarantee

of Rs 300 crore from companies.

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For urea plants, the fixed cost mainly includes salary & wages, contract labour, repair &

maintenance and selling expenses.

"CCEA has approved raising fixed cost of urea by up to Rs 350 per tonne. It has also

approved amendments to the New Investment Policy for urea sector," sources said.

In line with the recommendation of the the Group of Ministers (GoM), the fixed cost of urea

has been increased by up to Rs 350 per tonnes. The minimum fixed cost, including the hike,

should be Rs 2,300 per tonnes under the New Pricing Scheme (NPS) III.

In the case of plants which are more than 30 years older, they will be given additional Rs 150

per tonne.

To boost investment in the urea sector, CCEA also cleared amendments to the New

Investment Policy for urea sector by dropping the 'guaranteed buyback' provision, that

assured buyback of urea for eight years from start of production.

Other changes in the policy include insertion of a provision of bank guarantee of Rs 300 crore

from companies keen to set urea plants under this policy. Government will provide subsidy

on sale of urea produced from the new plants.

The NIP policy was notified in January last year to incentivise firms to invest in the urea

sector and reduce dependence on imports.

Sources said the 'guaranteed buyback' provision had to be amended in the policy as

government had received 13 investment proposals entailing capacity addition of 16 million

tonne mainly due to this clause.

The proposed capacity addition by the applicants was more than double the actual

requirement, forcing the Fertiliser Ministry to have a second thought on this clause.

Urea production in the country is stagnant at 22 million tonnes and the gap of 8 million

tonnes is met through imports. So far, about 4 million tonnes of urea has been imported.

No plans to curb farm exports: Centre (FE 6.3.14)

The government on Wednesday said it has no plans to curb farm exports despite fears of an

impending El Nino that could affect the monsoons this year. “Our granaries are still

brimming with stocks,” said a senior official.

"We don't intend to curb farm exports. In fact, the government on Tuesday scrapped the

minimum export price of onion to help farmers get better realisation," said the official. "It's

too early to say whether El Nino will actually affect the monsoon, and, if yes, to what extent.

So we will wait for the forecast by the IMD (Indian Meterological Office)."

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The weather office is expected to firm up its first long-range forecast of the monsoon in

April.

India is the world's largest exporter of rice and guar gum and second-largest supplier of

cotton and also ships wheat in large volumes. The country's farm exports are projected to rise

9.8% to $45 billion in 2013-14, accounting for 13.8% of the total exports of $325 billion

targetted for the current fiscal.

The government is fully prepared to tackle any fluctuation in weather this year and states

have been asked to keep contingency plans ready, another official said.

Grain stocks with state-run agencies hit 41.1 million tonnes as of February 1, compared to a

requirement of 25 million tonnes for various welfare programmes. The projected record

harvest of wheat in 2013-14 is likely to boost the stock levels further, giving relief to

policymakers in case of a monsoon failure.

El Nino is warming of sea-surface temperature levels in the central and east Pacific and

cooling of the West that occurs every four to 12 years. It caused the worst drought in 37 years

in the country in 2009, dragging down grain production to 218.11 million tonnes from 234.47

million tonnes the year before.

Fears of widespread dry spells in many parts of Asia, including India, intensified this year

after Australia’s Bureau of Meteorology last month said that climate models surveyed by it

showed Pacific Ocean temperatures approaching or crossing El Nino thresholds in the austral

winter. A report in the PNAS, the official journal of the US National Academy of Sciences,

also said there was a 75% chance that El Nino could occur in late 2014.

Agriculture minister Sharad Pawar played down El Nino fears, saying the government was

keeping a tight vigil. The June-September monsoon season brings about 70% of annual rains

and is crucial to the summer-sown crops as more than 60% of the country's farmland is rain-

fed. The showers also boost ground water reserves for winter planting.

National procurement policy proposes to cover tree based oil seeds (BS 11.3.14)

Also backs subsidy for oil palm in ensuing kharif

The procurement policy for oilseeds and oil palm has been revamped for the ensuing kharif

season under the National Mission on Oilseeds and Oil Palm (NMOOP).

This is to give a boost to the tree based oilseeds (TBO) which have a utility as an alternative

source of energy in addition to fossil fuel.

Besides the overall policy objective will be to ensure remunerative prices for collection,

promotion and marketing of these non conventional oilseeds over and above the seven

oilseeds currently covered Minimum Support Price Scheme.

To this effect, the procurement policy is proposed to be extended to tree borne oilseeds.

TRIFED (Tribal Cooperative Marketing Development Federation of India Ltd ) under the

ministry of Tribal Affairs will be involved as a procurement agency for tree based oilseeds.

14

A lump sum grant of Rs 50 lakh per annum will be provided to TRIFED for promotion of

TBO seeds.

Tree borne oilseeds are Jatropha, Karanaj and Simarouba fruit and kernel which are useful

to develop alternative and complementary source of energy.

Besides, a comprehensive contingency plan has been worked out to ward off the impact of

the aberrant weather conditions on the food grain production which has gained additional

importance after the Food Security Bill and also to minimise imports.

This time an innovative scheme has been worked out called crop and fodder seed banks at

village level to ensure seed supply of in adverse conditions of crops fixed as per the

contingency plan. The bank assumes tremendous important for augmenting fodder supply

in dry lands during drought conditions.

Similarly, to protect interest of cultivators in oil palm, subsidy will be provided for setting

up of oil palm mill in north east other hilly states. The subsidy will be at the rate of 50%

cost of the plant and equipments up to a ceiling of Rs 2.5 crore per unit of 5 metric tonne per

hour processing capacity The subsidy will be provided to state government agencies,

cooperative sector, government recognised farmer associations. Further subsidy will be

provided for creation of additional capacity for crushing of fresh fruit bunches (FFBs) of

palm.

Currently, oil palm, since perishable in nature, hence the commodity is not covered under

MSP. However is covered under market intervention programme at the specific request of

the states.

Another measure for this season will be opening up of outlets for procurement of oilseeds by

nodal agency National Agricultural Cooperative Marketing Federation of India (NAFED).

This will be for seven oilseeds covered under MSP programme like groundnut, soyabean,

sunflower, sesame, niger, rapeseed and mustard and safflower.

CACP recommends moderate increased in MSP of kharif crops (BS 24.3.14)

Many commodities like pulses and oilseeds have witnessed sharp increase in prices year

before last that is 2012-13

The Commission for Agricultural Costs and Practices (CACP) has recommended moderate

increase of 1-5% in minimum support prices (MSP) of agricultural commodities for ensuing

Kharif season 2014-15.

These recommendations have been sent to the ministry of agriculture where the new cabinet

formed post election is expected to take a final call.

15

According to officials, many of the commodities like pulses and oilseeds have witnessed

sharp increase in prices the year before last that is 2012-13.

Even if the global prices and demand came off in 2013-14 compared to the available stock in

the country, the prices have to be maintained at MSP even if market prices fell.

Currently, for many items like groundnut, sunflower, tur, urad, government agencies are

engaged in procurement at MSP even when the market prices of these crops are ruling below

MSP.

The MSP for paddy has been recommended an increase in the range of 3-5% and the final

MSP going by CACP recommendation is expected to hover in the range of around 1350-1380

per quintal as against RS 1310 pq.

A statusquo has been maintained in groundnut and very minimal increase of 1-3% has been

suggested for MSP of pulses and edible oil seeds. MSP for commercial crops like sunflower

and cotton are expected to go up by Rs 50-100 per quintal, cotton on the lower side.

Continuing with the police free trade, the price policy report has suggested for freeing trade

in all commodities except for pulses and edible oil going by the domestic deficit in these

items.

The Cabinet Committee on Economic Affairs (CCEA) has approved continuation of National

food Security Mission during 12th Plan with an allocation of Rs 12,350 crores including Rs

150 crores for commercial crops. A target of additional food grain production of 25 million

tonnes consisting of Rice – 10 million tonnes, Wheat – 8 million tonnes, Pulses – 4 million

tonnes and Coarse Cereals – 3 million tonnes has been fixed by the end of 12thPlan (2016-

17).

Coarse Cereals including maize and commercial crops based cropping systems (Cotton, jute

and sugarcane) will be the part of NFSM in 12th Plan.

The new interventions included under NFSM during 2014-15 are cropping system approach,

assistance for availing the services of custom hiring centers, support to institutions /

organizations including NGOs for demonstration of crop production technologies.

There will be specific allocation for marketing support for Pulses and millets (incentive for

insurance cover, Dal Mill and Millet processing unit and value chain integration of small

farmers through formation of FPOs. An amount of Rs. 2,207.00 crores has been allocated

under NFSM as budget estimate (BE) for such marketing support for the year 2014-15.

16

17

RICE

Saudi Arabia-India to jointly build rice distribution hub in Dubai (ET 28.2.14)

A new Saudi Arabia and India joint venture has been formed to build a rice distribution hub

in Dubai to link Indian production to consumers in the Middle East, according to a media

report.

Prince Mishaal bin Abdullah bin Turki and global private investor V Raman Kumar have

formed the joint venture with India's rice producer, LEAF India (Lakshmi Energy and Foods

Ltd.), to create the Middle East and North Africa region's largest hub for rice storage and

distribution, Arab News said.

The venture, Innovo Specialty Foods JLT, created by an investment of about US $ 27 million,

aims to set up a storage, processing, polishing and packaging facility with a capacity of over

100,000 tonnes of Basmati rice during 2014, it said. Innovo will market and distribute

Basmati rice processed and packed by Pan Gulf Food and Industries exclusively across the

Middle East and North Africa.

"Our concept idea of creating this rice hub will aim to contribute and deliver food security

objectives in the UAE," Kumar was quoted as saying by the paper. "Food security is clearly

an immediate priority for the UAE and wider Middle East. The region is entering a new

period of economic growth underpinned by a burgeoning population with a high dependence

on imported food.

"Currently, 20 per cent of all UAE imports comprise food items and 90 per cent of food is

imported but there are only 3 months of basic food items stored, so food security cover is not

fit for the rapidly growing economy," he said.

Kumar said the 100,000 tonnes of Basmati rice capacity that will be created in Jebel Ali,

UAE, will be a giant step for this region to strengthen its food security strategy.

"We look to take this strategy to Saudi Arabia as well in the near future. We believe that

execution of a core food security strategy is essential to provide a sustainable growth

platform," he said.

The increasing demand for Basmati rice has been primarily driven by Saudi Arabia, Yemen,

Iran, Iraq, Bahrain, Oman, UAE and Kuwait, accounting for over 4 million tonnes of Basmati

rice consumption every year.

18

Eastern India can be country's rice bowl: Assocham (ET 3.3.14)

The country's eastern region has the tremendous potential to emerge as the country's 'rice

bowl', a recent study industry body Assocham said.

The study titled 'Towards Second Green Revolution in Eastern India: A Road Map' also said

the eastern region would be able to achieve a compound annual growth rate (CAGR) of about

ten per cent in paddy production, if the country manages to bridge the gap between potential

yield and actual yield.

"The paddy production in the eastern region of India can reach about 670 lakh tonnes (LT) by

2017-18 from the current level of over 580 LT as the region holds tremendous potential to

emerge as the 'Rice Bowl of India,' as every quintal increase in yield would push rice

production by over two million tonnes," the study said.

West Bengal spearheads eastern India in paddy production to the tune of about 150 lakh MT

followed by eastern UP (140 LT), Odisha (70 LT), Bihar (68 LT), Chhattisgarh (63 LT),

Assam (47 LT) and Jharkhand (34 LT), it said.

According to the study, Odisha's paddy production may reach 82 LT in three to four years

time period.

By 2017-18, the study predicted, Odisha can reach this feat through increased usage of high

yielding varieties of seeds, improved soil drainage, spreading rice-fish culture and taking

other such measures.

It also said that discouraging rice cultivation in marginal lands and diversifying in favour of

oilseeds and pulses, utilisation of rice fallows are certain significant steps required to increase

cropping intensity and crop productivity in Odisha.

In its study, Assocham has suggested that apart from rice suitable evaluation of promoting

other crops like maize, pulses and oilseeds should be undertaken for optimum utilisation of

land and local needs in the region.

US to ease Basmati quality norms soon (BL 14.3.14)

Washington working on a maximum residue limit’ for Tricylazole fungicide

The US has assured India that it will relax its stringent tolerance norms for fungicide found in

Basmati shipped from the country.

Basmati exporters from India have been battling rejections in the US market for over two

years as the country does not have a ‘maximum residue limit’ (MRL) for Tricylazole

fungicide. All consignments that have traces of the fungicide over the default level of 0.1

parts per million (ppm) are being treated as potentially harmful by US importers.

Moreover, consignments also have to go through detailed scrutiny because of ambiguity on

Tricylazole limits leading to cost and time over-runs as many Indian companies are under the

country’s import alert.

19

“We are hopeful that the US Environmental Protection Agency (EPA) will come up with a

MRL of 3 by July this year which will take care of most of the problems faced by our

Basmati exporters,” a Commerce Ministry official told Business Line.

Dow Chem, the manufacturer of Tricylazole pesticide, has supplied the complete dossier of

the insecticide to the US EPA which includes all information such as molecular composition

and toxicity data. The EPA will use this data to come up with a MRL for the pesticide.

“Our industry has had to pay Dow Chem for the services it has rendered as it is not within its

normal course of obligation to give submissions to the US Government. But, this is an

investment worth making,” the official said.

India exported Basmati rice worth $240 million to the US in 2012-13. In the first 10 months

of the current fiscal, Basmati exports to the country are at $121.8 billion.

“Once the US settles the matter satisfactorily, we expect Basmati exports to rise

substantially,” the official said.

20

21

WHEAT

Wheat prices bullish on global cues (ET 6.3.14)

India wheat prices remain firm in the global market with reports of crop loss doing the

rounds in the domestic market. Prices have firmed up to $280 atonne for March delivery from

a low of $265 a tonne in January. Business conglomerates like ITCBSE -0.81 %, Cargill,

Louis Dreyfus, Glencore and EmmsonsBSE 1.24 % have entered or actively looking at the

Gujarat market from where the exports are taking place.

Traders and companies forecast prices to remain firm till late April and then gradually slip as

wheat arrivals pick up across the markets in Madhya Pradesh, Uttar Pradesh, Rajasthan and

Punjab. "Prices of new crop from Gujarat have firmed by $10 a tonne. Current purchase for

March shipments is being quoted at $276-280 freight on board (fob) a tonne," said Rajnikant

Rai, COO (agribusiness division), ITC, which is currently catering to the Middle East market.

Rai added that with a higher acreage and good quality produce in Gujarat, traders' only option

was to buy from the state. Late rains and hail have impacted wheat crop across western Uttar

Pradesh, southern Rajasthan and Madhya Pradesh, resulting in delayed harvest, say traders.

Wheat output may fall below government estimate (ET 11.3.14)

Wheat output this year is likely to be below the government estimate of 95.60 million tonnes

as untimely rain, hailstorm and wind have hit the crop in some states, a government official

said.

"Wheat crop has been affected in three states - Madhya Pradesh, Rajasthan and Maharashtra

because of rain, hailstorm and wind, Agriculture Commissioner J S Sandhu told PTI.

Untimely rain is due to western disturbances in and around the coast of Gujarat and

this situation is likely to continue for some more days as forecast by the Met Department.

"Definitely there is some damage. Production would be below the current estimate.

It is difficult to say the extent of damage as the government is still assessing," he said.

Sandhu said wheat crop, which is ready for harvesting, has been covered in additional 61,000

hectares in the ongoing 2013-14 crop year (July-June).

"If the crop damage is in around 61,000 hectares, wheat production would be at last year's

level," he added. Last year, wheat production was 93.51 million tonnes. In the second

estimates released last month, the government had pegged the wheat output this year at a

record level of 95.60 million tonnes.

Sandhu said that the crop damage in some states could be compensated by other states. The

crop condition in Bihar and Gujarat is better, while the situation in top three producing states

Punjab, Haryana and Uttar Pradesh is not that bad, he added. Besides wheat, other rabi crops

have also been affected, especially in these three states.

22

Maharashtra and Madhya Pradesh governments have sought central aid for damaged crops. A

central team will soon visit the affected areas to assess the damage, the official added.

Sowing of wheat, the main rabi (winter) crop, begins from October, while harvesting from

April.

Fields of gold in sight, FCI ups wheat target (ET 14.3.14)

Food Corporation of India has scaled up wheat procurement target and plans to buy more

grains from Madhya Pradesh, Maharashtra and Gujarat this year.

Officials say that this year they are not likely to face any storage problem even as the

carryover stock is slated to be 22 million tonne. FCI targets to procure 31 million tonne wheat

in the 2014-15 season compared to 25 million tonne in the previous year. "Wheat crops in

Madhya Pradesh , Maharashtra and Gujarat are very good this year. Compared to these states,

it is expected to be less in Punjab," said an official of FCI in New Delhi.

He said that according to Madhya Pradesh's initial target, procurement from the state could be

8 million tonne. In the previous year, procurement by the central agencies from the state

touched 6.2 million tonne.

The 2014-15 wheat marketing year would begin from March 18 in Madhya Pradesh and from

April 1 across Punjab, Haryana and other states.

The procurement generally gets over by June. In Punjab and Haryana, preliminary reports

from fields and the agriculture department pointed to crop damage. "The damage is being

assessed and we should have a report soon," said Punjab Financial Commissioner

(Development ) Suresh Kumar.

Government agencies in Punjab have targeted to purchase 11 million tonne compared to 10.8

million tonne the previous year. Similarly, Haryana also has set a higher target

this year for the central pool at 6.5 million tonne compared to 5.8 million tonne procured in

the previous year.

Food ministry officials said that they were confident of procuring 31 million tonne this year.

Procurement by government agencies fell by 33 per cent in the previous year.

With the implementation of the Food security Act, the government would require over 62

million tonne of food grain, which guarantees 5 kg rice, wheat and coarse cereals a month at

heavily subsidised price to two -third of the nation's population.

23

Indian wheat may fetch high price of $290/tn on Ukraine issue (ET 14.3.14)

Indian wheat is likely to fetch a price as high as US $ 290 a tonne in global markets in

coming weeks as supply from Ukraine is likely to be hit by the escalating political turmoil

there, traders said today.

The price of Indian wheat has risen by US $ 15 in the last three weeks and ruled at US $ 281-

282 (free-on-board basis) this week, traders said on the sidelines of Global Grain Asia

summit here. The wheat price may touch a high ofUS $ 290 per ton on free on board (FOB)

basis in the coming weeks, they said.

"We see India exporting 500,000 tons of wheat to replace any shortfall from Ukraine due to

political uncertainties," an international commodity trader said.

Traders are also forecasting India to export 5 million tonnes of wheat this year, up from 3.6

million tonnes shipped last year. "The regional wheat market is certainly getting better for

India. We see Indian wheat exports increasing as long as prices are aboveUS$ 260 per tonne

FOB," said a West Asian trader, requesting anonymity.

Preparations were underway at Indian ports for April shipments, with private traders having

committed 200,000 tonnes and the state-tender basis volume of 150,000 tonnes to West Asian

and South-East Asian markets, traders said. They said Indonesian wheat mills were looking

for 40,000 tonnes from India while another said a 50,000 tonne Indian wheat tender was

confirmed for April shipment to Bangladesh.

Indian wheat export to Saudi Arabia is also forecast to increase to 200,000 tonnes this year,

up from 60,000 tonnes shipped last year, according to traders. If the Russian-Crimea political

tension escalates, and the US-led trade sanctions are imposed on Russia, Indian wheat would

cut into the Ukraine-Russian wheat share of West Asia and South East Asian markets.

Last year, the Indian wheat export was slower due to higher price bench mark. But prices are

improving day-by-day these days, especially caused by the Russian-Crimea tension,

according to the traders. India was sitting on a wheat stock of 28 million tonnes as on January

this year. The country had allowed export of 2 million tonnes of wheat for 2013-14 fiscal.

India may suspend wheat exports mid-way (BS 20.3.14)

Crop damage due to recent hailstorms may force government backtracking its earlier

decision

India might suspend exports of wheat even without achieving thescheduled target of 2 million

tonnes due to fears of crop damage from therecent hailstorms across the country.

"The decision is underway. While the Ministry of Food has alreadytaken final decision in this

regards, it will communicate to the public sectorgrain procurement agency the Food

Corporation of India (FCI) soon," an informed source said.

24

India has already accepted bids for 1.40 million tonnes of wheat exports so far this year out of

the 2 million tonnes target set by the FoodMinistry in August last year. The target was set to

be achieved by June 2014 to earn Rs 3,400 crore from wheat exports at an average price of

$300 a tonne, similar to last year's realisation. India's wheat export was recorded at over

4million tonnes last year.

But, because of price fall in global markets, the tenders including PEC and MMTC received

poor response. Consequently, importers negotiated bidprice upto $260 a tonne for some lots.

FCI is a facilitator of wheat supply tothese public sector grain trading agencies.

Sources said that proper assessment of the crop damage is yet to bedone. Hence, the

government decided to suspend wheat exports temporarily. Incase of insignificant crop

damage, exports can be opened to meet the target, he added. Wheat, a 100 per cent rabi crop,

is sown in India between October and December for harvesting between March and May.

Before hailstorms, Karnal (Punjab) -based Wheat Research Instituteforecast India's wheat

output at 95.6 million tonnes this year compared to 92.46 million tonnes in the previous year.

Wheat prices in global markets jumped by $27 to trade currently at $273 a tonne due to fears

of supply disruptions from Ukraine, one of the world's largest suppliers on the country's

stand-off with Russia.

Amid Ukraine muddle, global prices for wheat surge 3% to $290-300 a tonne (ET

20.3.14)

Russia's standoff with the West over Ukraine and the threat of sanctions by the US seem to

have come as a boon for Indian wheat traders. Global wheat prices rose by 3% to $290-300 a

tonne in a week's time. Indian traders feel that it is a good opportunity to cash in on and want

the government to allow more wheat exports from the government stock.

However, the pace of exports from the government granaries has been very slow. From

August 2013, wheat exports have been only 1.1 million tonne so far out of the targeted 2

million tonne till June 30.

Some tenders are due for bidding in the first week of April for a quantity of over one lakh

tonne.

"India now has the time to gain advantage of the global prices. The crisis is unlikely to get

over soon in Ukraine and the prices will further firm up," said Tejinder Narang, a grain

consultant.

Exporters say that with wheat production touching 95.6 million tonne this year, additional

exports of a few lakh tonne could be viable. "More tenders should be opened for exports and

hike allocation as these values will not come once Russian wheat arrival begins," said Pravin

Dongre, chairman of the India Pulses and Grain Association.

25

According to traders, Indian wheat demand in the global market would continue till July-

August, after which supplies will pick from the Black Sea countries, America and Australia.

Demand for Indian milling wheat was primarily coming from Bangladesh, the Middle

East, Southeast Asian and African countries.

According to the officials in the food ministry, India is unlikely to allow more wheat exports.

"The government wants to curtail the existing exports and no major tenders will be floated in

the coming months," said an official from one of the government trading firms.

State Trading Corporation, MMTCand PEC have been floating tenders for the exports at a

base price of $260 a tonne.

Another government official said that the reports of wheat loss across Madhya Pradesh and

Maharashtra could be another reason for the government to discourage more exports.

According to the agriculture ministry officials, wheat crop has been damaged on 0.53 million

hectare land in Maharashtra and on over 8 lakh hectare in Madhya Pradesh, owing to

unseasonal rains in the February-March period.

On March 1, wheat stocks in the Central pool were at 20.8 million tonne compared to 27.1

million tonne in the same period of the previous year. Wheat stocks on April 1, as per buffer

norms, should be 4 million tonne and strategic reserves at 3 million tonne.

A Food Corporation of India (FCI) official said that the stock position was comfortable for

the implementation of the Food Security Act.

"By June, we should be able to export another 0.35 million tonne wheat, taking total exports

at 1.45 million tonne. The tenders floated will be of small quantity like 25,000-30,000 tonne,"

he added.

Wheat production estimated at 4.8 mn tonnes in Guj (BS 21.3.14)

As per agriculture department's data, wheat production for 2013-14 has been estimated at

4.80 million tonnes as against 2.66 million tonnes in 2012-13

The state agriculture department has estimated wheat production in Gujarat in the current

financial year to be at about 4.80 million tonnes. It is 80.50 per cent higher than last year's

production.

With record production, domestic demand, mainly from South India, and export demand has

stabled the market and farmers are getting good price for their commodity.

26

"This year, good monsoon encouraged farmers of the state for higher sowing of wheat. In

addition, it has increased the yield of the crop and as a result, wheat production is likely to be

record high in Gujarat," said state agriculture minister Govind Patel.

As per agriculture department's data, wheat production for 2013-14 has been estimated at

4.80 million tonnes as against 2.66 million tonnes in 2012-13.

The yield of wheat has been estimated to be 3,200 kg per hectare for this year. Last year, it

was 2,800 kg per hectare.

Wheat was sown in about 1.5 million hectares this year while in last year, it was 950,000

hectares in previous year.

Since February end, arrival of the new crop has started mainly in Saurashtra.

At presently over 1,00,000 bags (a bag of 100 kg) arrives every day in various markets of

Gujarat.

According to traders, it will increase to 1,50,000 bags by March end.

In spite of high arrivals in the market, wheat price have risen in March because of demand

from South India and exporters.

Nayan Thakkar of Vinayak Industries said, "Demand from South India for mill quality wheat

is very good. In addition, export demand is also there in the market."

Exporters are buying for Indonesia, Malaysia, Philippine, United Arab Emirates (UAE) and

other gulf countries.

Vinayak Industries has sent about 10,000 tonnes mill quality wheat to South India this month.

Price for South India is ruling between Rs 1,500 per quintal and Rs 1,640 per quintal.

Farmers are getting good price of wheat as demand is good.

During March, wheat prices increased about Rs 25-40 per 20 kg in different APMCs of

Gujarat.

Price of Lokwan variety wheat is ruling between Rs 295 per 20 kg and Rs 364 per 20 kg

while Tukda wheat price is priced between Rs 297 per 20 kg and Rs 425 per 20 kg.

However, traders said that price will not rise further as arrivals are increasing.

27

Wheat to extend its rally (BL 24.3.14)

Global wheat prices, which were in a strong downtrend since 2012, have seen a sharp

reversal since January.

Wheat contracts traded on the Chicago Board of Trade (CBOT) had tumbled about 42 per

cent from the 2012 high of $9.47 a bushel to a low of $5.50 in January. The initial trigger for

the price reversal came from the unusually cold and freezing winter in North America and

dry weather in Latin America that could have caused damage to the crops and delayed

shipments from the US, Canada and Argentina.

The rally has gained momentum now after the Crimean crisis. Concern over a possible supply

threat from the Black Sea region is providing additional support for wheat.

According to data available from the International Grains Council, Russia and Ukraine

together, which ship from the Black Sea region, contribute about 15 per cent of the global

wheat export. The total supply of wheat for 2012-13 has been estimated by the US

Department of Agriculture (USDA) to fall by 4.6 per cent to 855 million tonnes from 896

million tonnes in 2011-12. However, supply is expected to increase in 2013-14 by some 4 per

cent to 888 million tonnes on higher production in India and Australia.

On the other hand, global demand, which is estimated to have dropped by 2.6 per cent in

2012-13 to 679 million tonnes, is projected to increase by 3.7 per cent in 2013-14 to 704

million tonnes. Expected increase in consumption from India, Australia, Iraq and Morocco

will contribute to increased demand, according to data from the USDA.

On the domestic front, wheat production has been projected lower by 2.5 per cent at 92.5

million tonnes in 2013-14 as compared with an estimated rise in supply of 9.2 per cent in

2012-13. Demand is expected to increase 4.4 per cent in 2013-14 from an estimated 3.4 per

cent increase in 2012-13.

Outlook

Long-term view: Wheat futures trading near ₹1,600 per quintal on the National Commodity

and Derivatives Exchange (NCDEX) is on a long-term uptrend.

There is still room left for the rally to extend within this uptrend. An important long-term

resistance is near ₹1,830. Failure to break this resistance could turn the outlook negative. A

28

reversal from ₹1,830 would have the potential to drag the contract lower to ₹1,400-1,350 in

the long term. On the other hand,

if the contract manages to breach the resistance at ₹1,830, the current rally can extend to test

the next resistance in the ₹1,930-1,950 zone. In the global market, CBOT wheat contracts,

which are currently trading near $6.93 a bushel, are nearing a crucial long-term resistance at

$8.

The contract has to breach this resistance to extend the current rally to $9 and $10. That said,

caution is required at this juncture, for failure to breach the resistances in global and local

chart can usher in deep declines.

Medium-term view: The medium-term trend is up for the NCDEX wheat contract. The 100-

week moving average currently at ₹1,530 is the key support.

As long as the contract trades above this support, it can rise to ₹1,800-1,830 over the

medium-term. The outlook would turn negative only if the contract falls below its 100-week

moving average. The subsequent targets on such a fall will be ₹1,500 and ₹1,450.

Short-term view: For the short-term, the contract could trade in a sideways range. The

resistance at ₹1,710 is holding well as of now. Inability to breach this resistance could keep

the contract in a range of ₹1,580 and ₹1,710 in the short-term.

However, the bias within this range would remain bullish. A breakout above ₹1,710 will then

take the contract higher to ₹1,780. The 55-week moving average currently near ₹1,585 is the

key short-term support for the contract. If the contract falls below ₹1,585, it can target

₹1,530. But the probability for such a fall is less as of now.

Wheat harvesting to get delayed due to rains in Punjab, Haryana (ET 24.3.14)

Wheat harvesting in Punjab and Haryana is likely to get delayed by at least 10 days due to

untimely rains lashing several parts of the northern region.

"Wheat harvesting will get delayed by at least 10 days because of rains," Punjab

Agriculture, Director, M S Sandhu said here today.

Wheat harvesting normally starts by March end or first week of April month.

Because of delay in harvesting, wheat arrivals in grain markets of Punjab are likely to pick up

only after the second week of April.

"The crop arrivals will also be delayed due to delay in harvesting because of inclement

weather conditions prevailing at this stage," said an official of Food Corporation of India (

FCI).

Last season, wheat arrivals picked up from April 10. Punjab is expecting wheat procurement

29

of 115 lakh tonnes for Rabi marketing season 2014-15 as against 110 lakh tonne procured in

2013-14 season.

Rains today lashed several parts of Punjab and Haryana including Faridkot, Ferozepur,

Mohali, Bathinda, Amritsar, Rajpura and Hissar.

The meteorological department has predicted rains accompanied by hailstorms in the next 24

hours.

Agriculture experts fear possible adverse impact on crop yield if showers continue for some

more days.

"At this stage, wheat requires sunshine for ripening. But rains at this stage can hurt prospects

of bumper crop," a farm expert said.

Notably, rains, which lashed earlier this month, had flattened crops at several places

including Ferozepur, Gurdaspur, Pathankot, Nawanshahar, Mohali, Tarn Taran in Punjab and

a few districts including Palwal and Yamunanagar in Haryana.

Amritsar district had faced maximum crop loss in Punjab because of untimely rains and

hailstorm, with state's overall crop yield getting affected by 5 to 7 per cent.

Punjab and Haryana, which are major foodgrain growing states, have 38 lakh hectares and 25

lakh hectares of area, respectively, under wheat in rabi season.

Wheat stands steady amid surging market crisis (ET 25.3.14)

Indian wheat prices remain firm in the global market with no signs of an ease off in the

Ukraine-Russia crisis. Delayed harvesting of wheat in Rajasthan and parts of Gujarat owing

to cool weather is also attributed to the rise in prices to $285-290 a tonne for May delivery

from a low of $265 a tonne in January.

However, in the volatile market industry sources say that private exporters are not keen on

further forward contracts and adopt a wait and watch policy. Business conglomerates from

ITC, Cargill, Noble, Louis Dreyfus, Glencore, Bagadiya Brothers and Emmsons have been in

the market since January.

"If the crisis in Ukraine-Russia continues we may see bulk buyers flocking to India and

domestic prices may go up due to sudden demand pull," said Tejinder Narang a grain analyst.

Indian wheat prices are currently the cheapest compared to Australian, Russian and French.

Exporters state that wheat was sold on multi-origin basis and specification and Indian wheat

could soon see arise in demand. "India wheat will be blended with high priced wheat from

European Union for Middle East market. The contract size will fall to 20,000 tonne from

50,000-60,000 tonne as being done earlier due to uncertain global and domestic market," said

a global player in wheat trade.

30

According to some exporters the buyers were ready to buy wheat at even $290 a tonne, but

sellers were reluctant in hopes of prices to firm further amid reports of Rajasthan government

likely to give bonus to wheat farmers this season. "I have been able to only buy 500 tonne

wheat from around Rajkot in Gujarat as supplies have been low," said another global grains

and oil seeds company official.

Since January this year, exporters have been doing forward contracts for March-April-May

delivery ahead of the wheat crop arrival from Russia, Ukraine, America and Australia. "The

market is taking a breather after 3-4 week of rally. We feel that it is a good time for market to

sell and not hold as the rally might not stay for long," said BK Anand, head, grain supply

chain, Cargill India.

Wheat procurement: FCI may see stiff competition from private traders (BS 25.3.14)

While procurement is scheduled to start in Punjab and Haryana on April 1, arrivals of early-

sowing varieties have softened prices

As was the case last year, government wheat procurement agencies, led by the Food

Corporation of India (FCI), are likely to face stiff competition from private traders this year,

too.

While procurement is scheduled to commence in Punjab and Haryana on April 1, arrivals of

early-sowing varieties have softened prices. In Madhya Pradesh, procurement has begun on

March 25. The Union ministry of consumer affairs, after a meeting with state food secretaries

on March 17, decided to set a procurement target of 31 million tonnes (mt) for this season.

On condition of anonymity, a trader said due to a fool-proof procurement system in major

producing states such as Punjab and Haryana, private traders might not find much room there.

They would purchase most of the commodity from Uttar

Pradesh, followed by Bihar, West Bengal and Gujarat.

For this season, the minimum support price (MSP) has

been determined at Rs 1,400 a quintal by the

Commission for Agricultural Costs and Prices. Uttar

Pradesh is lucrative for private traders, as the price is

below the MSP due to inadequate procurement

infrastructure. In Gujarat and Maharashtra, private

participation is likely to be significant, as exporters have

booked forward contracts for wheat. An Ahmedabad-

based wheat broker said traders in that city were

receiving Rs 1,660 a quintal for exports to Singapore, while the price in the domestic market

was Rs 1,675 a quintal. Due to a slowdown in the movement of cement from Gandhidham,

the number of trucks had been affected and this had increased freight costs. The trader added

with an improvement in arrivals, the traders would try to meet export commitments.

31

Private traders might get some wheat on premium prices, as rains in Madhya Pradesh might

affect the quality of grain in a few parts. The Rs 150/quintal bonus on wheat in the state

might not leave much room for private traders.

In the major wheat procurement states of Punjab, Haryana and Madhya Pradesh, inclement

weather might hit procurement. For 2013-14, procurement stood at 25.09 mt.

In the second week of March, wheat prices rose to Rs 1,700/quintal, as the government had

stopped tenders under the open market sales scheme. The price has now fallen to Rs 1,650 a

quintal in north Indian states. Traders are expecting prices of Rs 1,520-1,550 a quintal in New

Delhi in the second and third week of April.

Since wheat millers don’t have a pipeline of stocks, aggressive buying from private players is

expected, with more price corrections in the coming week.

With the weather playing truant in the North, arrivals in Punjab and Haryana are expected to

be delayed by a week to 10 days. Despite the demand from private traders, farmers in these

states prefer to sell at the MSP, owing to a strong network of commission agents.

MP govt downsizes wheat procurement estimates to 8 million tonnes for 2013-14 (BS

25.3.14)

Though unseasonal rainfall has dimmed Madhya Pradesh’s expectations of surpassing Punjab

in wheat production, the state has estimated procurement of 8 million tonnes of wheat this

year against earlier estimates of 11 million tonnes.

The procurement process of the commodity has already started in four divisions - Bhopal,

Indore, Ujjain and Narmadapuram (also known as Hoshangabad). Procurement in rest of the

divisions will begin from April 1.

Markfed and Civil supplies, the two state agencies, will procure the commodity at Rs 1,550

per quintal - Rs 1,400 Minimum Support Price (MSP) and Rs 150 bonus on it.

“We have completed all arrangements for procurement,” an official in MP Civil Supplies

Corporation said.

The civil supplies corporation will procure wheat in 27 districts while MP Markfed will

procure the commodity in the remaining 23 districts.

The state, which had yielded 16.13 million tonnes of wheat in 2012-13, had expected a yield

of 19.2 million tonnes this year. “Against all odds, our total output this year would not be less

32

than 17 million tonnes as January rains and favourable weather in February have brightened

prospects of a good crop in those areas, which have remained out of the unseasonal rainfall

territory,” an official in MP Farmers Welfare and Agriculture Development department said.

Since 2007, wheat production in the state is gradually on rise and had touched 16.13 million

tonnes in 2012-13 from 6.74 million ton in 2007-2008.

“Wheat has performed remarkably in the fields at an average rate of 2,959 kg per hectare in

2012-13 from 1,714 kg per hectare in 2007-08,” principal secretary in Agriculture department

Rajesh Rajora said.

Wheat was sown in the state on 5.7 million hectares this year as against 5.4 million hectares

last year.

Wheat production was also good during 2011-12 when it touched 2,770 kg per hectare up

from 2,073 kg per hecatare during 2010-11.

The state has devised a new e-procurement system to ensure transparency by informing pre-

enrolled farmers about procurement date and names of procurement centres through bulk

SMS.

33

COARSE GRAINS / MAIZE

Maize prices in India are likely to remain subdued on increased global supply (ET

26.2.14)

Maize prices in India are likely to remain subdued on increased global supply as US awaits

record harvest this year. The prices will also be impacted by record domestic

production, which is expected to touch 25 million tonnes. The production in US is likely to be

353.7 million tonnes, around 29% higher compared to last year, a recent report from US

Department of Agriculture (USDA) showed.

Record US production will increase global trade and therefore demand for Indian maize in

export market has been hit, which is fuelling domestic supply. Apart from US, production in

China and European Union too is expected to jump 5.5% and close to 10%

respectively, USDA report showed.

"Export prices in the global market have tumbled since last two-three months as new crop

arrivals rise from across major producers. Due to increased global supply, exports from India

have become unviable, which has resulted in domestic crop flooding the local markets. We

believe this situation is likely to persist till next season as Rabi sowing too is

higher than last year," Mr. Raju Choksi, Vice-President (Agri-Commodities), Anil

Nutrients Ltd. said.

Maize was sown on 15.53 lakh hectares in ongoing Rabi season as against 14.27 lakh

hectares last year, the data from Agriculture Ministry showed. As per the second advance

estimates of Ministry of Agriculture, maize production is expected at 23.28 mln tonnes as

against 22.25 mln tonnes as per final estimates for 2012-13.

Mr Choksi informed that India is currently not competitive as Indian maize is being offered at

USD 230 /MT FOB Kakinada/Vizag against Ukrainian origin which is being sold around

USD 240-245/MT CNF South Korea. In the domestic markets, maize is trading in the range

of Rs.1,150 to Rs. 1,250 per quintal at producing centers, much below minimum support

price of Rs. 1,310 per quintal.

NCDEX to launch Bajra futures from April 1(BS 20.3.14)

Commodity bourse NCDEX today said it will launch futures contract in Bajra (pearl millet)

from April 1.

The unit for trading and delivery for the contract will be of ten tonnes, while maximum order

size of the contract could be of 500 tonnes.

"We will launch futures contract in Bajra from April 1," NCDEX MD & CEO Samir Shah

34

told reporters here.

Shah added that there has been increase in trading volumes of agri-products, especially

soyabean, in the last few months.

".. In last couple of months, daily turnover in soyabean has jumped from Rs 500 crore to Rs

1,000 crore," he said.

Commenting on market sentiment, he said, "Due to NSEL crisis, there lack of confidence in

the market. But ... commodity markets will only move upwards."

Shah welcomed commodity market regulator FMC's decision to levy up to 5 per cent penalty

- of the shortfall in the required margin money - on members for failing to collect the

required amount from clients.

"It is a good step and will further streamline and structure the process of collecting margin

and the way margins are reported," he said.

35

PULSES

Unseasonal rains dampen masur prospects (BL 4.3.14)

A combination of cold weather and untimely rains in North India has affected masur (lentil)

crop during the current rabi season.

As a result, prices have increased in the last few weeks and they could tend to rule firm at

least until the weather clears also in Canada, a major exporter of the commodity.

Traders say that lentil production is down by at least 15 per cent this year. Lentil is treated as

“other pulses”.

According to the Agriculture Ministry, production of “other pulses will be up at 3.87 mt this

year against 3.40 mt last year.”

“The masur crop has been damaged by rains in Uttar Pradesh and Madhya Pradesh. There

could be a 15-17 per cent decline in production,” said Pravin Dongre, Chairman of India

Pulses and Grains Association.

Prices may rise

“Masur prices could rise sharply since the carryover stocks have also been less,” he told

Business Line much before a pulses trade meet at Goa in the third week of February.

“Rains in Uttar Pradesh in particular have caused heavy damage to masur crop. There are

more problems due to cold weather too,” said Mukesh Sodhia, a trader.

Masur is a small crop which is sensitive to weather developments. Though its consumption is

lower compared to other pulses, domestic production, too, is low.

“So far, there is no clear picture on the crop loss due to weather changes,” said Prakash Vora,

a trader in Indore.

An unclear scenario has led to rise in masur prices by Rs. 250 a quintal last week.

Currently, masur is ruling at Rs. 3,850 at Mandsaur in Madhya Pradesh with quality produce

commanding nearly Rs. 4,250. During the same period last year, prices ruled at Rs. 3,000 a

quintal.

Canadian imports

“More problems seem to be on cards since Canada, a major supplier, is unable to move farm

products due to cold snap in North America,” said Sodhia.

As a result, imported masur has become dearer at over $650 from $600 a couple of weeks

ago.

Cold weather and snow in Canada has affected movement of rail cars with more priority for

energy products. Also, rail companies are running services only on short routes since there

are problems with air brakes as gaskets tend to contract due to cold wave.

36

“Canada has plenty of masur to supply but the weather must clear first. Then, it could take at

least 45 days for shipments to reach Indian shores,” said an importer.

Until then, prices are likely to rule firm.

Output estimates

Though the Ministry of Agriculture has projected a higher production of pulses this season to

June, there are concerns over black matpe (urad) and masur.

In its second advance estimates, the Ministry projected this year’s pulses output at 15.45

million tonnes (mt) against 14.94 mt.

Production of gram (chana) is seen at a record 9.79 mt against 8.83 mt last year, riding on a

record acreage of over 100 lakh hectares.

Black matpe output is seen down at 1.59 mt against 1.90 mt.

Pulses trade is questioning the Ministry’s projection of chana production, pointing out to

effect of cold weather and rain on the crop.

It is also sceptical about estimates of a record acreage of the crop.

37

EDIBLE OILS/ OILSEEDS

Rapeseed output for 2013/14 to rise 11%: Solvent Extractors' Association of India (ET

28.2.14)

Rapeseed output is expected to rise 11 per cent to 7.6 million tonnes in 2013/14, the Solvent

Extractors' Association of India (SEA) said in a statement on Friday, potentially helping New

Delhi cut vegetable oil imports.

Favourable weather conditions have helped the rapeseed crop, the main winter-sown oilseed

grown in India, the world's top edible oil importer, the SEA statement said.

Traders expect local rapeseed oil output to rise 13 per cent in 2014, as farmers take advantage

of monsoon-soaked land to grow the more lucrative crop.

Farmers plant rapeseed in October and November. Harvest starts from March.

India seen curbing palm imports as spread with soyoil narrows: Traders (ET 3.3.14)

India, the world's biggest importer of vegetable oils, will boost imports of soybean oil at the

cost of palm in the year to October 2014 as the spread between the two competing products

has narrowed, traders said on Monday.

Crude palm oil is being offered at $940 to $945 a tonne, including cost, insurance and freight,

in India, comparable to the price of degummed soybean oil, traders said on the sidelines of an

industry conference in Kuala Lumpur.

Typically, palm oil trades at a discount of $100 to $150 a tonne to soybean oil but a rally in

Malaysian futures has driven prices higher.

"There has been dryness in Indonesia and Malaysia which is fuelling the rally in palm oil

prices," said Sandeep Bajoria, chief executive of Mumbai-based brokerage Sunvin Group.

"India will be importing less palm oil this year."

Malaysian palm oil futures on Monday jumped 2.1 percent to 2,860 ringgit a tonne, highest

since Sept. 2012, adding to gains of nearly 10 percent last month. February's rally

was the biggest since October.

India's palm oil imports are likely to drop to 7.8 million tonnes in 2013/14, from 8.3 million

tonnes a year ago, traders told Reuters at an industry conference in Kuala Lumpur.

38

The country's overall edible oil purchases this year are forecast to climb almost 9 percent to

11.3 million tonnes from 10.4 million tonnes a year ago, traders said.

"If you look at the demand we are growing by about 3-4 percent every year, plus

we are adding about 20 million people," said B.V. Mehta, executive director of

Solvent Extractors' Association of India.

Palm oil prices may rise 6% on climate change (BS 5.3.14)

Palm oil prices are likely to rise six per cent soon on expectations of unfavourable climatic

conditions in Malaysia and Indonesia, the two largest suppliers, said Dorab Mistry, director

of Godrej International.

In a presentation at Kuala Lumpur organised by the stock exchange there, he said:

“Production is underperforming and stocks are tight. A lot of the biodiesel business has been

locked in. The job of the market till June is to push demand away from palm oil. The oil does

not need to buy demand by price discounts. Therefore, crude palm oil (CPO) futures on the

Bursa Malaysia (exchange) need to quickly scale, to control demand and enable stocks in

Malaysia and in Indonesia to be maintained at a workable level.”

Prices should not rise beyond 3,000 ringgit a tonne unless climatic conditions change for the

worse. Even if the weather improves and rains come by next week, it will not alter the price

outlook up to June; demand rationing is needed. However, if the rains are normal and the

high cycle begins from July, prices can trade in a range between 2,900 and 2,600 ringgit a

tonne from July till October. In the event of an El Niño (bad weather)

development, CPO futures will cling to 3,000 ringgit beyond June, he added. Production is

likely to be affected from late 2014 and we might have 3,500 ringgit a tonne.

Meanwhile, Indonesia is expected to find it difficult to implement its biodiesel mandate.

Biodiesel producers which have committed large volumes at the current formula-based

pricing might find themselves in a difficult situation. For India, vegetable oil consumption

and imports are likely to set a new record this year. While consumption is likely to be 18.4

39

million tonnes during this oil year (November 2013- October 2014) as against 17.7 mt in the

previous one, imports could be at a new high of 11 mt this year, against 10.7 mt last year.

India's February oilmeal exports down 53 per cent on year: SEA (ET 6.3.14)

India's oilmeal exports fell 53.4 percent to 307,260 tonnes in February from a year ago, a

leading trade body said on Thursday, as high prices and tight supplies hit demand.

Exports of soymeal from Asia's leading supplier dropped 68.4 percent to 183,550 tonnes in

February from a year ago, the Solvent Extractors' Association (SEA) said in a statement.

Soymeal shipments fell 49.6 percent from a month ago, dropping for a third straight

month. Traders had expected lower soymeal exports in February as Indian supplies of the

animal feed were costlier than supplies from Latin America.

Indian soymeal prices have been driven up as rains at the start of the harvest season in

October damaged the oilseed crop, leading to lower availability of soybeans for crushing.

February palm oil imports sink to almost 3-year low (ET 14.3.14)

Palm oil imports in February plunged to the lowest in nearly three years, data from

the Solvent Extractors' Association (SEA) showed, as higher prices and hopes local supplies

of rival rapeseed oil would improve kept buyers away.

The second straight monthly drop in overseas purchases was also partly due to an

export duty structure at top producer Indonesia that promotes sale of refined palm oil

products.

Weak purchases by the world's top buyer could cap a recent rally in benchmark palm oil

prices, which surged to an 18-month high this week amid crop-damaging dry weather in top

producers Indonesia and Malaysia.

India's palm oil imports in February dropped 27 percent from a month ago to 403,685 tonnes,

the data showed on Friday, coming in at the lower end of traders' expectations of 400,000 to

550,000 tonnes.

This was also the weakest since April 2011 when the country had shipped in 350,469 tonnes.

"Expectation of a higher rapeseed crop largely kept palm oil importers on the sidelines,"

SEA's executive director B.V. Mehta said, adding that Indonesia's export duty also hurt

purchases.

Imports of crude palm oil fell 20.4 percent from a month ago to 268,686 tonnes in February,

while purchases of the refined variant dropped 40 percent to 125,142 tonnes

40

Traders said palm oil imports were around $40-$45 per tonne costlier in February

than the previous month.

The average import price of refined palmolein was at $870 per tonne versus $882 for crude

palm oil, the SEA data showed.

A year ago, cheaper prices kept palm oil imports higher at 805,362 tonnes, including 669,678

tonnes of crude palm oil.

Palm oil accounts for 80 percent of India's total vegetable oil imports that average 17 million

to 18 million tonnes. The country meets around 60 percent of its annual vegetable oil needs

through overseas purchases.

India gets palm oil from Indonesia and Malaysia.

In February, soyoil imports dropped 45 percent to 96,420 tonnes from a month ago, the data

showed. India imports small quantities of soyoil from South America.

Expectations of a bigger rapeseed harvest kept the monthly cooking oil imports down.

Harvest of rapeseed, India's main winter season oilseed crop which is crushed to produce

rapeseed oil, starts from February and peaks in March.

Rapeseed harvest in 2014 could rise 7.8 percent to 7.23 million tonnes, according to estimates

of the Central Organisation for Oil Industry and Trade (COOIT).

The latest harvest estimate for the highest oil-yielding crop is less than initial trade

expectations of 7.6 million tonnes as rains and hailstorm have damaged the crop in parts of

western India.

COOIT expects vegetable oil imports to rise as much as 5 percent to 11.2 million tonnes in

the year to October.

41

MILK

Educated farmers in Punjab venture into dairy farming (BS 10.3.14)

Worried over diminishing returns from small holdings in the state, young and educated

farmers in Punjab with an entrepreneurial streak are venturing into commercial dairy farming.

The farmers say that a commercial dairy farm gives them high returns compared with

conventional agriculture on small land-holdings, which is proving unsustainable.

There are about 6,000 progressive dairy farmers in Punjab and the state has more such

farmers than any other Indian state, with farms varying in size from 10 to 500 high-yielding

breeds of cows. Also, the daily production of milk by these farms is about 12-15 lakh litres.

The success of commercial dairy farming in the state can be gauged from the fact that seven

years ago, it had only about 600 commercial dairy farms, while today it has over 6,000 dairy

farms. Further, as word about these remunerative ventures is spreading, more and more

progressive and enterprising farmers are entering this business.

Harinder Singh, a progressive dairy farmer who is a graduate by qualification, told Business

Standard, "I was in the transport business, but I quit it as it was not remunerative. We have

around eight acres of land. Even a relatively small inheritance of four to five acres is enough

to set up a dairy farm with high-yielding cross-bred cows. So, initially, I started with 10

animals and today we have 270 animals." He said commercial dairy farming is remunerative

because of assured buying. "In order to control input costs, farmers are investing in

mechanisation and have installed state-of-the-art machinery in their farms, including milk

parlours and chillers," he added.

Another graduate farmer, Daljeet Singh, said, "After graduating, I wanted to start my own

business and dairy farming suited me. Today I have over 500 animals." Singh, who is also the

president of the Progressive Dairy Farmers Association (PDFA) - which provides hand-

holding support to farmers - said, "About 80 per cent of our association members are between

22 and 45 years of age and educated, which clearly suggests that more and more educated

youth are venturing into this business. Education helps them in early adoption of technology

and knowledge. The association is engaged in transferring knowledge to all new entrants to

ensure that each dairy farmer is guaranteed high returns."

Harinder Singh said that a major portion of commercial dairy farms in the state now have

machines for milking cows installed in milk parlours, fitted with the latest gadgets to keep a

record of each animal, open and well-ventilated sheds specially constructed to suit the needs

of cross-bred cows, total mixed ration wagons and other provisions designed to maximise

profit.

Balbir Singh, the PDFA's general secretary, said, "The farmers are fast adopting the practices

42

and latest technologies used by their counterparts in Europe and the US. In order to facilitate

the farmers we provide hand-holding support and also provide them with high-yielding

varieties of semen."

Having tasted success in Punjab, PDFA is now planning to promote commercial dairy

farming in other states. The association has formed the All India Progressive Dairy Farmers

Association and has plans to provide dairy farmers technical know-how in setting up

commercial dairies and other relevant information.

Dr Jaswinder Singh Bhatti, technical coordinator, PDFA, said, "Progressive dairy farming in

Punjab is a huge success and a role model for other states. So, the association is planning to

replicate this success in other states like Haryana, Uttar Pradesh, Gujarat, Karnataka, Andhra

Pradesh, Madhya Pradesh and Chhattisgarh. We will provide technical know-how to dairy

farmers to take this activity to a commercial scale."

Milk powder to drive dairy exports to record this fiscal (BL 14.3.14)

Dairy exports during the current financial year are set to touch a new high, with shipments of

skimmed milk powder (SMP) doubling over last year.

A drought in New Zealand early last year had fuelled demand for Indian SMP, mainly from

the developing markets.

Rising rupee

Till February-end this fiscal, SMP shipments stood at 1.22 lakh tonnes, nearly twice the

63,762 tonnes exported during the same time a year ago, official sources said.

However, shipments have now slowed down, with Indian SMP turning unviable in the export

market due to the recent decline in global prices and the rupee appreciating against the dollar.

The Amul story

“The domestic market is better now, as prices have moved up. We are getting a price of

₹280-290 a kg in the local market, against export realisations of about ₹260 a kg,” said RS

Sodhi, Managing Director of Gujarat Co-operative Milk Marketing Federation (GCMMF),

which owns the Amul brand.

GCMMF has seen a five-fold rise in its SMP shipments in the current financial year, with

exports of 20,000 tonnes in the current financial year, the highest so far, Sodhi said.

In the last financial year, Amul shipped out about 4,000 tonnes, after the Government opened

up SMP exports in June 2012.

43

GCMMF, which initially targeted an export turnover of ₹350 crore for the current year,

expects to close this fiscal with revenue of ₹500 crore from overseas, Sodhi added.

Improved prices

RS Khanna, an expert in the sector, feels the value of Indian dairy exports for the current

financial year could touch ₹5,000 crore. This has been driven by a strong growth in

shipments of SMP and improved prices.

Besides, demand from traditional markets, such as Bangladesh and Sri Lanka, Indian

shipments also got a boost from the product contamination scare faced by Fonterra, the

world’s largest exporter.

According to APEDA, exports of dairy products during April-December stood at ₹2,618.72

crore, up 162 per cent over ₹996.86 crore a year ago.

“The party is over for the Indian SMP exports. The surplus stocks that were built up in the

past couple of years have been exhausted and the domestic prices are attractive,” said

Sandeep Agarwal, Director at SMC Foods, which exported about 1,000 tonnes in the current

year.

44

45

VEGETABLES- POTATO/ONIONS

Onion price rises 50% in 2 weeks (BS 26.2.14)

Farmers reduce supply in tune with price fall, come back with price rise

After falling to the level of cost of production, onion prices recovered to record a 50 per cent

increase in the past two weeks, following controlled supply from farmers.

In the benchmark Lasalgaon (Maharashtra, near Nashik) market, Asia’s largest spot onion

selling yard, it was Rs 8-10 a kg on Wednesday, a steady increase from Rs 5-5.50 a kg two

weeks earlier. The model price announced by the Nashik-based National Research and

Development Foundation (NHRDF) showed a little over 50 per cent increase in the price on

February 15, to close at Rs 9.15 a kg on Tuesday from Rs 6 a kg two weeks earlier. The off-

spot prices were Rs 3.50 a kg two weeks before, with farmers planning to dump on the road

instead of selling in mandis.

“Total arrivals slumped to 322.5 tonnes when onion was ruling at Rs 6 a kg on February 15.

But, with the increase in prices, arrivals also increased. On Tuesday, total arrivals recorded at

1,640 tonnes, with the price quoted at Rs 9.15 a kg. This indicates farmers have full control

over supply,” said R P Gupta, director. NHRDF.

There is almost no export demand due to the short shelf life. The quality of the late kharif

season crop (largely harvested and supplied to the market currently) is poor, compared to the

rabi season crop which has a shelf life of 12 months. Hence, exporters are currently

abstaining from booking in large quantity.

“The current price rise can be attributed only to controlled supply from farmers, as their

holding capacity has increased. Both exporters and bulk consumers remained absent from the

market,” said a senior official from one of the largest onion export houses.

India’s exports declined 33 per cent to 853,000 tonnes in the first eight months (April-

November) of the current financial year. India exports onions to North Africa and West Asia,

Sri Lanka and a number of Southeast Asian and neighbouring countries. In 2012-13, the

country had exported 1.82 million tonnes. Our annual production is estimated at 13.15 mt,

with 773,000 hectares as the area under cultivation. In 2012-13, production was 1.66 mt.

Onion export floor price abolished (BS 4.3.14)

In December, the commerce ministry had reduced the MEP from $350 a tonne to $150 a

tonne to boost exports

With onion prices in the wholesale markets of Maharashtra and elsewhere dropping to Rs 6-7

a kg, the government on Tuesday abolished the minimum export price (MEP).

46

In December, the commerce ministry had reduced the MEP from $350 a tonne to $150 a

tonne to boost exports and check the sharp fall in domestic prices.

The MEP was imposed in September when prices were very high. Thereafter, the MEP had to

be raised several times to curb exports and boost domestic supplies as retail prices had shot

up to Rs 100 a kg. To control the rise, India even had to import.

But now the situation has reversed. According to reports, exports fell to 853,000 tonnes

during April-November of this financial year against 1,822,000 tonnes a year ago.

In FY13, India had exported 1.82 million tonnes. India's annual onion production is estimated

at 19 million tonnes in 2013-14, while in 2012-13 it was estimated to be 16.8 million.

Onion exports fall to 1.21 lakh tonnes in Jan (BS 11.3.14)

In December 2013, exports stood at 1.33 lakh tonnes

Onion exports in January fell marginally to 1.21 lakh tonnes compared with the previous

month due to lower export value realisation.

Onion exports stood at 1.33 lakh tonnes in December 2013 as well as in January 2013.

Onion shipments, however, have picked up since December 2013 after the government

lowered the minimum export price (MEP) to $150 a tonne from $350 a tonne.

According to data compiled by the National Horticultural Research and Development

Foundation (NHRDF), onion exports declined as the average export value realisation was Rs

9,300 per tonne in January this year, much lower than Rs 18,600 per tonne in the previous

month.

In value terms also, total exports were down at Rs 112.53 crore in January this year as against

Rs 247.91 crore in the previous month, it added.

During the April-January period of 2013-14, onion exports have declined by 28% to 11.08

lakh tonnes as compared with 15.39 lakh tonnes in the corresponding period of the previous

financial year.

India exported 18.22 lakh tonnes of onion during the entire 2012-13 fiscal.

The government had imposed MEP on onion in September 2013 and then it was raised

several times to curb exports and boost domestic supplies as retail prices had shot up as high

as Rs 100 per kg in major parts of the country. The country had to even import onion to

control price rise.

47

With improved domestic supplies and crash in wholesale rates, the Centre has now done

away with the MEP to boost exports.

Anyone can export onions again after four decades (ET 20.3.14)

For close to four decades, export of onion could take place only through the agencies

designated by the government. Now anyone can export onions, as the Central government

freed export of the bulb by removing this condition last week.

Onion export was canalised in 1974. National Agricultural Cooperative Marketing Federation

(Nafed) was the only canalising agency till 1999. Subsequently, 12 State Trading Enterprises

(STEs) along with Nafed were designated as the canalizing agency for export of onion. The

exporter had to pay 1% commission to these agencies in order to get the no-objection

certificate for exports.

As the country is expecting an all-time-high onion crop in 2014-15, the government about to

face the electorate, removed the minimum export price (MEP) restrictions, which were

imposed during winter season as retail prices touched Rs 100/kg.

Last week, the director general of foreign trade (DGFT) issued a notification to free onion

exports. There was a strong demand from growers and exporter to remove canalisation as it

did not serve any purpose.

"The canalising agencies did not use the money collected from the exporters to better the

condition of farmers," claimed Ajit Shah, president, Onion Exporters Association.

The 13 canalising agencies include NAFED, Maharashtra State Agricultural Marketing Board

(MSAMB), Spices Trading Corporation, AP State Trading Corporation. "Only five to six of

the STEs were actually functioning," said Nafed Director HB Holkar.

MSAMB, which was a leading agency issuing no objection certificates to onion exporters has

welcomed the decision. "Freeing up of onion exports will help boost onion exports. We never

looked at the commission charged for the certificates as a source of revenue for us," said

MSAMB Managing Director Milind Akre.

Exports would be crucial to avoid a crash in onion prices as the rabi harvest gathers pace

from April. The current unseasonal rainfall, though has damaged the standing onion crop,

will not affect the overall onion availability due to record area under the rabi crop. Despite

the arrival of rain-damaged crop in the market, domestic prices have remained firm at Rs 6/kg

to Rs 8/kg as the good quality bulb is getting a good price.

48

49

SUGARCANE/SUGAR

Government notifies subsidy of Rs 3,300/tonne for raw sugar export (ET 3.3.14)

The government today notified export subsidy of Rs 3,300 per tonne on raw sugar shipments

undertaken during the February-March of this year.

The Cabinet Committee on Economic Affairs (CCEA) had earlier approved a proposal in this

regard in February to help the cash-starved industry to pay arrears to sugarcane farmers.

"The incentive shall be at the rate of Rs 3,300 per tonne for February and March, and

thereafter, be recalculated every two months after taking into account the average exchange

rate of rupee vis-a-vis USD," the notification said.

There would be, however, a quantitative limit of 4 million tonnes for subsidy. Raw sugar

produced and exported during 2013-14 and 2014-15 marketing years (October-September)

are eligible for subsidy.

Sugar mills, which produce raw sugar and undertake export of the same either themselves or

through exporters are eligible for incentive. The date of shipment would be the basis for

determining the incentives.

India, the world's second-biggest sugar producer, is sitting on huge stock of the sweetener.

This year, output is likely to be 25 million tonne, higher than the domestic demand of 23.5

million tonnes.

The provision for giving incentives for raw sugar exports has been made by amending the

Sugar Development Rules 2014 to include another rule: "The Central government may, from

time to time, decide to defray expenditure for incentive towards marketing and promotion

services for raw sugar production."

As per the notification, sugar mills should utilise the incentive amount to make payment of

cane dues of farmers within three months of receipt of the subsidy amount. Mills are required

to submit a utilisation certificate to this effect within a month.

"The incentive due to a sugar factory shall be utilised for making payment to farmers and

shall be released after adjusting or recovering any amounts, if over-due, towards the Sugar

Development Fund loans...," the notification said.

To ensure the utilisation of released incentive amount for payment to farmers, the sugar

factory should either open a separate no-lien bank account and furnish details of the same at

the time of submission of the claim.

It has been made mandatory for mills to register their export contracts priorly with the

Director General of Foreign Trade (DGFT) for direct export of raw sugar or of deemed

export of supplies against invalidation to advance authorisation holders.

The incentive will be reviewed before the commencement of the next sugar marketing year,

the notification added.

50

The government has offered the export cash incentive to sugar mills as the industry faces a

liquidity crunch with prices of the sweetener falling below the cost of production.

Sugar production down 11.74% on late crushing (BS 4.3.14)

With the intensified crushing of operational mills, the production gap of 13% a fortnight ago

narrowed down to less than 12% now

India’s sugar output declined 11.74% in the first four months of this crushing season

(October–September) due to late start or cane crushing this year. Data compiled by the apex

trade body Indian Sugar Mills Association (ISMA) showed India’s total sugar output at 16.86

million tonnes between October 2013 and February 2014 period compared to 18.84 million

tonnes in the corresponding period lastyear.

With the intensified crushing of operational mills, the production gap of 13% a fortnight ago

narrowed down to less than 12% now. Currently 460 mills are operational in the country

which represents 23 mills higher thanaround the same time last year.“The season started with

10-15 days due to farmers’ agitations in Uttar Pradesh andMaharashtra, the country’s two

largest sugar producers, over fixation of caneprices.

In north Karnataka also crushing delayed over 15 days on high caneprices announced by the

state government. Therefore, sugar output has beenlower so far this year,” said Abinash

Verma, Director General of ISMA. Sugar mills in Maharashtra crushed 51.5 million tonnes of

cane to produce 5.71 million tonnes of sugarwith 11.1% of recovery. However, at the same

time, last year mills inthe state had crushed 59 million tonnes of cane to produce 6.57 million

tonnes of the sweetener with 11.15% of recovery.

Sugar Statistics in lakh tons

Season Sugarcane

Production

Sugarcane

crushed

Sugar

Production

Closing

stock

2008-09 2850 1449.77 145.38 43.64

2009-10 2923 1885.48 189.12 57.93

2010-11 3424 2398.07 243.94 60.05

2011-12 3610 2569.75 263.42 66.01

2012-13 3390 2505.98 251.4 92.77

Till date, 25 mills have closed their operations for the sugar season 2013-14, while last year

36 mills had stopped crushing by February 28. In Uttar Pradesh, sugar mills have produced

4.28 million tonnes of sugar from 47.5 million tonnes of cane crush with 8.99% of recovery.

Last year during same corresponding period, however, sugar mills in the state had crushed 56

million tonnes of cane to produce about 5.01 million tonnes of sugar with 8.94%of recovery.

All 119 mills are still under operation against 118 during same period last year. Sugar mills

have a total unpaid arrears of around Rs 14,000 crore of which sugar mills in Uttar Pradesh

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owe Rs 10,000 crore as on February 28, 2014.“Due to commencement of late, the crushing

season will end late by 7-10 days this year,” said Verma.

Oct-Feb sugar production declines 10.6% (BS 4.3.14)

Mills had manufactured 18.84 million tonnes of sugar in the same period of last marketing

year

The production of sugar in the country declined 10.63% to 16.86 million tonnes in the

October-February period of the ongoing 2013-14 marketing year, on lower output in most

states, including Maharashtra and Uttar Pradesh, industry body ISMA said today.

Also, sugarcane arrears to growers has touched Rs 14,000 crore as on February 28, 2014, of

which Rs 10,000 crore remains unpaid in Uttar Pradesh, it said in a statement.

Mills had manufactured 18.84 million tonnes of sugar in the same period of last marketing

year (October-September).

According to Indian Sugar Mills Association (ISMA), "The gap in sugar production has

narrowed down further from 13% to 11% over the last fortnight. 460 mills are still crushing

sugarcane, which is 23 more than last year."

Sugar production in Maharashtra, the country's top producer, fell to 5.71 million tonnes till

February of this year from 6.57 million tonnes in the year-ago period.

ISMA said mills in the state have recovered 11.1% of sugar, down from 11.15% of recovery

in the year-ago period.

But the overall sugar recovery is expected to be 11.41% in 2013-14, better than last year, it

added. Sugar production in Uttar Pradesh -- the country's second biggest producer -- also

declined to 4.27 million tonnes from 5 million tonnes in the review period.

However, recovery of sugar was slightly higher at 8.99% as against 8.94% in the same period

last year.

Production in Tamil Nadu also declined to 5,70,000 tonnes from 9,92,000 tonnes due to

lower recoveries and late starting of sugar crushing season.

Similarly, production in Gujarat was also down at 8,60,000 tonnes as against 8,89,000 tonnes

in the year-ago period.

However, sugar output in Karnataka remained higher by 3% at 3.15 million tonnes so far this

marketing year, ISMA added.

52

The country has exported 1.2 million tonnes of sugar so far, of which 5,00,000 tonnes was

raw sugar. Above this, 1,00,000 tonnes of sugar has also been exported against the Advance

Authorisation Scheme.

ISMA has pegged sugar production at 25 million tonnes for this year, which is higher than

the government's estimate of 24.1 million tonnes and sufficient to meet domestic demand of

23.5 million tonnes.

ISMA expects 5 per cent decline in sugar production (ET 18.3.14)

In its second advance estimates, ISMA ( Indian Sugar Mills Association) has estimated

238 lakh tons of sugar production, which will be 5% less than last year's actual sugar

production of 251 lakh tons, for the full season.

An ISMA release stated: "Till March 15, 2014, the country has produced 193.8 lakh tons of

sugar. The gap between this year's sugar production as compared to last year, during

same corresponding period, has been now narrowed down to 17.4 lakh tons. Last year till

March 15, 2013, the sugar production was 211 lakh tons. Upto February 28, this was 11 per

cent lower, which has now reduced to 8 per cent lower."

About 428 sugar mills are still crushing sugarcane as on March 15, 2014, against 362 mills

during same corresponding period last year.

Maharashtra has produced 64.10 lakh tons of sugar at an average of 11.2 per cent sugar

recovery. Last year, during same period, sugar mills in the state had produced 72.3 lakh tons

of sugar at 11.25 per cent of recovery. Till March 15, 2014, about 40 sugar mills, out of the

total 157 which operated during the current season, have closed for the season i.e. 117 are

still crushing cane. However, during same period last year, 97 mills were operational, out of

total 170 sugar mills which operated in SS 2012-13.

Uttar Pradesh, which has produced 50.7 lakh tons at an average of 9.11 per cent of sugar

recovery till March 15, 2014, is now trailing by 8 lakh tons against last year's sugar

production. Last year, during same corresponding period, UP sugar mills had produced about

58.98 lakh tons of sugar with 9.05 per cent of recovery. About 115 mills are still under

operation against 113, during same period last year.

Karnataka has produced 34.50 lakh tons of sugar, which is about 8 per cent higher than last

year. About 51 sugar mills are still crushing, against 23 sugar mills operational during same

period last year. Gujarat has produced 9.70 lakh tons of sugar against 9.91

lakh tons during same period last year, while, Tamil Nadu produced 8 lakh tons against 11.5

lakh tons of sugar production same period last year. Andhra Pradesh has produced 8.8 lakh

tons, which is about 4 per cent less lthan last year.

53

Till February 28, 2014, total production of raw sugar was around 11 lakh tons since October

1st, 2013 i.e. in SS 2013-14. About 6 lakh tons of raw sugar has been exported along with 5.2

lakh tons of whites, till 28th February, 2014.

From Oct, 2013- till end of February, 2014, about 100 lakh tons of sugar has been dispatched

by sugar mills for sale in the domestic market, as compared to 96 lakh tonnes of sugar

dispatched during the same period last year.

Raw sugar export subsidy under WTO scrutiny (BL 19.3.14)

Brazil, Australia, Colombia seek explanation on legal validity under global trade rules

India’s recent decision to give subsidies to exporters of raw sugar is facing international flak

with many countries questioning its validity under global trade rules.

Major nations such as Australia, Colombia and Brazil, which export agricultural products,

have said that the subsidies would affect their interests and distort the world market.

In February, the Cabinet approved a subsidy of ₹3,333 a tonne for export of raw sugar in

response to rising stocks of white sugar in the country. The incentive is valid till this month-

end. The incentive will then be reviewed by the Government before it decides if the subsidies

should continue.

Under pressure

“The pressure being piled on India at the WTO is largely to ensure that the subsidies do not

get extended for a longer period of time,” a Government official told Business Line.

The opposing countries, in separate representations to the WTO, have asked India to explain

the legal validity of the move under multi-lateral trade rules that do not allow new subsidies

for exports.

The issue will be taken up at the meeting of the Committee on Agriculture on Friday where

India, the world’s second largest producer of sugar, will have to explain its move.

“India’s defence is that WTO rules prohibit export subsidies only on finished products and

raw sugar is a semi-processed item. It is, therefore, exempt from such restrictions,” a

Government official told Business Line.

But other exporting countries, including the world’s top sugar producer Brazil, are not willing

to buy the argument.

Brazil, in its submission, has pointed out that developing countries are allowed flexibilities

for giving export subsidy (under Article 9.4 of the Agreement on Agriculture) only to meet

marketing or transportation costs and there was no legally-binding decision by the WTO to

extend its scope.

54

It also said that in case India says that the subsidies are for reducing marketing or

transportation costs, it should give evidence of how it is happening.

Australia, Colombia and the European Union have asked India to specify the quantities of

export that has already happened at the subsidised price and the period for which the

subsidies will continue.

Output, exports

White sugar stocks in the country at the beginning of the current sugar year (October2013-

September 2014) was a whopping 8.8 million tonnes (mt). Sugar output in the on-going year

is expected to be 25 mt against domestic demand of 22 mt.

Due to low global prices, Indian mills have exported less than 0.8 mt of raw sugar this

season.

If the Government continues its subsidy programme for the remaining months of the season,

exports could touch an estimated 4 mt.

Sugar production still lags behind past season, sales escalate (ET 19.3.14)

As cane crushing in the country reaches the fag end, sugar sale is escalating but the

production is still lagging behind last season. Till March 15, 2014, the country has produced

193.8 lakh tonne sugar.

This is 8% lower than the sugar production during same time last sugar season, said Indian

Sugar Mills Association (Isma). Isma revised its estimate on sugar production for the current

season (October 2013 - September 2014) to 238 lakh tonne from earlier 251 lakh tonne.

..

From October 2013 till end of February 2014, about 100 lakh tonne sugar has been

dispatched by mills for sale in the domestic market, compared to 96 lakh tonne sent during

the same period last year. Maharashtra has produced 64.10 lakh tonne sugar at an average of

11.2% sugar recovery. Last year, during the same period, sugar mills in the state had

produced 72.3 lakh tonne.

Uttar Pradesh has produced 50.7 lakh tonne till date and is trailing by 8 lakh tonne against

last year's sugar production.

Among the other states, Karnataka has produced 34.50 lakh tonne sugar, Tamil Nadu

produced 8 lakh tonne and Andhra Pradesh produced 8.8 lakh tonne.

Till February, total production of raw sugar in the country was around 11 lakh tonne in the

current sugar season. About 6 lakh tonne of raw sugar has been exported along with 5.2 lakh

tonne of white sugar.

55

INPUTS

Agri ministry starts equity grant and credit scheme farm cos (BS 4.3.14)

Ministerial body to promote setting up of 250 farmer producer organisations (FPOs)

covering 250,000 farmers

The ministry of agriculture has come up with an equity grant and credit guarantee fund to

promote the development of farmer producer organisations (FPO) in the agricultural sector,

thus declaring the 2014 as the year for FPOs.

Small Farmers’ Agri business Consortium (SFAC), a society promoted by Department of

Agriculture proposes to promote setting up of 250 FPOs covering 250,000 farmers. In

addition, the government has mandated SFAC to be procurement agency to conduct price

support operations for oilseeds and pulses but only for FPOs, in case prices fall below

minimum support price (MSP).

This proposal for credit guarantee and equity guarantee scheme was a budget announcement

in 2013-14 and the guidelines are released now. In order to lend support to the equity base of

FPOs, an amount of Rs 50 crore has been earmarked for the equity grant. Similarly, to

provide cover to banks over advance loans to FPOs, an initial corpus of Rs 100 crore has

been set aside as per the guidelines, an eligible FPO for equity grant should have minimum

individual shareholders of 50 and paid up equity does not exceed Rs 30 lakh.

An FPO is company set up by producers of agricultural commodities, and is typically

promoted by farmers, run by farmers and for the benefit of farmers. The objective of such a

firm is to improve returns to farmers through collective input purchases and collective

marketing besides enhancing quality by increasing productivity through better inputs, and

increasing the knowledge base of farmers.

According to officials, the basic objective of the FPO concept is to link small farmers to

technology as well as to the markets in association with private, corporate or cooperative

sector and if necessary, by providing backward and forward linkages. That is where the need

comes to bring in corporate structure to induce governance and monitoring.

As for information collected by officials of SFAC through its field meetings, the major

weakness of FPOs is lack of awareness about teh concept among producers, corporate sector,

input suppliers, commercial banks, district level and agriculture department officials. These

reports suggest that major hurdles lie in complex requirements, ranging from registration to

annual filing of information, lack of access to capital, particularly working capital, need for

both backward and forward linkages. Besides, policies that impede the growth of FPOs are

mandi laws, cooperative regulation, tenancy provisions, among other factors.

56

Fertiliser consumption set to fall for second year running (BL 10.3.13)

Urea bucks the trend as it is out of the ambit of the nutrient-based regime

Total fertiliser consumption in the country rose every year from 2002-03 to 2011-12, when it

peaked at 59 million tonnes (mt).

But last year, it fell bellow 54 mt. Based on the trend of sales by companies during April-

January, consumption could dip further in 2013-14.

“It won’t cross 52 mt: 31 mt urea, 7 mt di-ammonium phosphate (DAP), 6.5 mt NP/NPK

complexes, 4 mt single super phosphate (SSP), 2.5 mt muriate of potash (MOP) and one mt

of other fertilisers,” industry sources told Business Line .

Blessed by NBS

The declining consumption has been across all non-urea fertilisers, especially in so-called

low-analysis products such as SSP and NP/NPK complexes.

Sales of these fertilisers had received a boost initially after the Centre ushered in a nutrient-

based subsidy (NBS) system from April 2010.

The new regime – linking subsidy payable to the nutrient composition of individual fertilisers

as against being limited to specific products (urea, DAP, MOP) – made it more attractive for

firms to market SSP and complexes with varying proportions of nitrogen, phosphorous,

potash and sulphur.

Between 2009-10 and 2011-12, combined consumption of SSP (having lower phosphorus

than DAP, but containing sulphur) and complexes like 10:26:26 and 12:32:16 (alternatives to

both DAP and MOP) zoomed from 10.7 mt to 15.1 mt.

Setback

57

Since then, however, there has been a plunge in consumption of not only these ‘low-analysis’

fertilisers to a likely 10.5 mt this fiscal, but even DAP and MOP.

Only urea has continued to register increased consumption.

The reason: Urea being kept outside the purview of NBS and its administered maximum

retail price (MRP) going up only marginally from Rs. 4,830 to Rs. 5,360 a tonne since April

2010.

On the other hand, the corresponding increases in MRPs have been from Rs. 9,350 to Rs.

22,500 for DAP, Rs. 4,455 to Rs. 16,000 for MOP, and Rs. 7,197 to Rs. 20,900 for 10:26:26.

“The price differentials over urea were manageable till around October 2011, when DAP was

retailing at Rs. 14,000 and most complexes at Rs. 11,000-12,000 a tonne. But from kharif

2012, the gap became too large, leading to farmers applying more urea and less of other

fertilisers,” the sources pointed out.

Urea distortion

The villain here was urea prices that were left unchanged, while companies had no option but

to raise MRPs for other fertilisers, with international prices of both inputs and finished

nutrients going up alongside a depreciating rupee.

While landed prices of DAP eased from an average $580 a tonne (cost & freight) in 2012-13

to a low of $340 in October, they have started firming up again to $500 levels in line with the

overall El Nino-induced spike in global agri-commodity prices.

“We have reduced MRPs that had touched Rs. 24,000-26,000 for DAP and Rs. 17,000-

18,000 for MOP at one point. But now, we may have to raise them again, which will further

distort nutrient application by farmers,” the sources added.

58

59

OTHER AGRI /FARM NEWS

Govt keeping watch on monsoon; El Nino may not impact severely (FE 26.2.14)

Sharad Pawar said that the country may surpass the agriculture growth target of 4 per cent

during the 12th Five Year Plan (2012-17).

Amid reports of El Nino possibly impacting monsoon in India, Agriculture Minister Sharad

Pawar today said the government will keep a close watch on monsoon progress this year and

ruled out any major impact on foodgrain production.

"It is too early to say. I had discussion yesterday with Met officials. They said they will be

able to come out with monsoon forecast in second week of April," Pawar told reporters

replying to a query on monsoon forecast for 2014.

On concerns over El Nino conditions, he said, "Our Met Department is seriously

concentrating on this subject. This type of situation we have seen in 2009 as well. But

whatever assessment made by experts about this issue, they said it will not be that severe

which will impact overall production and productivity. But still, we are keeping a close eye

(on it)."

El Nino refers to the warming of ocean water in the central and east Pacific and cooling of

West. This condition occurs every 4 to 12 years. It had last hit India's monsoon in 2009,

leading to worst drought in nearly four decades.

Addressing the Kharif 2014 Conference, Pawar said that the country may surpass the

agriculture growth target of 4 per cent during the 12th Five Year Plan (2012-17).

Speaking on the sidelines of the conference, Pawar expressed concern that India's agriculture

is still dependent on vagaries of monsoon and asked farm scientists to develop drought

resistant varieties.

"Whether we like it or not, uncertainty of rains seems to be a permanent problem to this

country. Our scientists have to develop certain varieties which are resistant to various types

of stress particularly during delayed monsoon."

Scientists are developing such varieties but they need to focus more, he added.

Earlier, Agriculture Commissioner J S Sandhu said that the government must be prepared for

delayed and deficient monsoon this year in the backdrop of private agencies predicting below

normal monsoon for India.

More investments needed in farm sector: Gulati (BS 26.2.14)

More investments, including private ones, are needed in the agriculture sector so as to

achieve 5 per cent farm growth, Commission for Agricultural Costs and Prices (CACP)

Chairman Ashok Gulati said today.

He stated this at a seminar on 'Accelerating Agricultural Growth-Role of Policy and

Technology' at the Punjab Agricultural University here.

60

"We need to bring changes in farming to accelerate growth and reduce rural poverty," he

added.

At present, the agriculture growth rate is nearly 4 per cent and in 2013-14, it is likely to be

4.6 per cent, Gulati said.

Stating that farm technology alone could not do wonders, Gulati said high-value produce like

fruits, vegetables, poultry and fish would govern the country's farm sector in future.

"In 2012-13, India exported 22 million tonnes (MT) of cereals and we are likely to export 18

MT of wheat, rice and maize in 2013-14," he said.

In 2007-08, when global food prices went up, India had banned the export of wheat and rice.

During the period of five years from 2006-07 to 2011-12, food production increased by 42

MT. As the production was going up and export was banned, the surplus touched 80 MT in

2011-12, he said.

In September 2011, the central government opened up the export of wheat and rice.

Stating that the country has witnessed cotton revolution in the past few years, Gulati said

India is producing 36 million bales of cotton and exporting 10-13 million bales and has

become the second largest exporter of the commodity.

El Niño scare: Govt prepares emergency plans for 500 districts (BS 27.2.14)

El Niño might impact rain in 2014 but not as severely as in 2009

The government, on Wednesday, swung into action following reports that El Niño might

disrupt the monsoon in 2014, by giving shape to contingency plans for 500 districts.

It also asked states to be prepared for insufficient rainfall, even as impact of El Niño might

not be as severe as in 2009, when India had faced the worst drought in 30 years.

El Niño is a weather phenomenon that disturbs the formation of clouds due to warm waters

off western coast of south America. It emerges after a gap of every three-seven years and

affects monsoon rain in India.

Agriculture Minister Sharad Pawar said contingency plans were ready for 500 districts and

would be made operational in the event of low rainfall during monsoon.

He was talking to reporters on the sidelines of annual Kharif conference.

The plans include close monitoring of the situation, keeping ready sufficient quantities of

short-duration varieties of major crops, issuing location-specific advisories and taking the

help of research institutes.

61

Addressing the conference, Union Agriculture Commissioner S Sandhu urged state

governments to be prepared for any shortfall in rain.

Australia’s Bureau of Meteorology and the US Climate Prediction Center have warned of

increased chances of the return of the El Niño weather pattern that can trigger drought, hitting

production of key crops such as rice, wheat and sugar cane.

However, Pawar said, “Our Met Department is seriously concentrating on this subject. This

type of situation, we have seen in 2009 as well. But whatever assessment made by experts

about this issue, they said it would not be that severe which will impact overall production

and productivity. But still, we are keeping a close watch (on it). “

El Niño had been responsible for causing below normal rain three times in the last decade —

2002, 2004 and 2009 — in India.

Monsoon rain was 22 per cent below normal in 2002, while it was 17 per cent below normal

in 2004.

In 2009, when India faced one of the severest droughts in recent years, rain in the four-month

season was 27 per cent below normal. Food grains production in 2009-10 dropped to around

218.11 million tonnes, almost seven per cent less than the previous year’s. The year 2012 was

also an El Niño year, which witnessed seven per cent below normal rainfall.

Last month, India’s leading private weather forecasting agency, Skymet, had predicted

monsoon in 2014 could have a high chance of being “below normal” due to the emergence

of El Niño. Skymet said 2014 monsoon will most probably not experience a La-Nina year

(this phenomena correlates well with excess rainfall). Therefore, there is little chance of

excess rain.

The India Meteorological Department classifies monsoon rain between 96 and 104 per cent

of the long period average (LPA) as “normal”, while that between 105 and 110 per cent of

the LPA is considered “above normal”. More than 110 per cent of LPA is excess rainfall.

Also, rain between 90 and 94 per cent of the LPA is considered “below normal, “while rain

below 90 per cent of LPA is “drought”.

Crops in 18 districts of MP damaged due to rains, hailstorm (ET 27.2.14)

Crops of gram and wheat across 640 villages in 18 districts have suffered extensive damage

due to unseasonal rains and hailstorm in the last three days.

The government has ordered district collectors to conduct a survey of damaged crops and

submit their reports soon, official sources said.

The average rainfall recorded in 37 districts in the last three days stood between 15 mm to 50

mm.

62

Apart from gram and wheat crops, those for lentils, including arhar, also suffered extensive

damage.

The districts most affected by the rains and hailstorm are Bhopal, Raisen, Indore, Dewas,

Neemuch, Balaghat and Hoshangabad, they said.

Agriculture dependent population in India grew by 50% (ET 27.2.14)

Agricultural population of India grew by a whopping 50 per cent between 1980 and 2011,

the highest for any country during this period, followed by China with 33 per cent, while that

of the United States dropped by 37 per cent as a result of large scale mechanisation, a latest

report has said.

"Between 1980 and 2011, the economically active agricultural populations of China and India

grew by 33 and 50 per cent, respectively, due to overall population growth," the Worldwatch

Institute said in its report yesterday.

"The economically active agricultural population of the United States, on the other hand,

declined by 37 per cent as a result of large-scale mechanisation, improved crop varieties,

fertilisers, pesticides, and federal subsidies--all of which contributed to economies of scale

and consolidation in US agriculture," it said.

The global agricultural population--defined as individuals dependent on agriculture,

hunting, fishing, and forestry for their livelihood--accounted for over 37 per cent of the

world's population in 2011, the most recent year for which data are available.

This is a decrease of 12 per cent from 1980, when the world's agricultural and nonagricultural

populations were roughly the same size.

Although the agricultural population shrunk as a share of total population between 1980 and

2011, it grew numerically from 2.2 billion to 2.6 billion people during this period, writes

Worldwatch Senior Fellow Sophie Wenzlau in the Institute's latest Vital Signs Online trend.

According to the report, between 1980 and 2011, Africa's agricultural population grew by 63

per cent, and its nonagricultural population grew by 221 per cent.

Oceania's agricultural population grew by 49 per cent, and its nonagricultural population

grew by 65 per cent.

Asia's agricultural population grew by 20 per cent, and its nonagricultural population grew by

134 per cent, it said.

The combination of movement to cities and agricultural consolidation caused agricultural

63

populations to decline in Europe and the Americas between 1980 and 2011: by 66 per cent in

Europe, 45 per cent in North America, 35 per cent in South America, 13 per cent in Central

America, and 7 per cent in the Caribbean, the report added.

Global weather keeps February cool, spells good news for crops (ET 27.2.14)

Snowfall in North India has seen an unusually chilly and often rainy February with both

maximum and minimum temperatures dipping below normal, extending the winter for people

and preparing the ground for a bigger wheat harvest.

The unusual weather is linked global weather systems that have also triggered icy weather in

western countries, weather officials said. "We will attribute colder conditions to active

westerly regime which is also impacting North America and Europe. The Arctic is warmer

than normal leading to dip in temperature," said Laxman Singh Rathore, director general,

India Meteorological Department.

He said rainfall and cool weather would help crops. In Delhi and neighbouring areas,

February has been the coldest in five years, while Himalayan states have seen frequent

snowfall and rain as western disturbances influenced the weather. The Himalayas builds a

huge reserve that melts and flows down the rivers in warmer weather.

"February has been the coldest month across north India, since the past few years," said

Rathore said. He said rainfall over most parts of north India was normal or above normal.

Rainfall for the period January 1 till February 19th was 6% above normal. Above normal

rainfall was recorded in Uttar Pradesh, Uttarakhand, west Madhya Pradesh, South Gujarat,

Konkan, Madhya Maharashtra and Bihar.

Temperature in north India are expected to dip by 1-2 degree Celsius with another western

disturbance expected to bring snow across Jammu and Kashmir and Himachal Pradesh and

light spells of rains across north India in next 24 hours.

Met department said more than 5-6 spells of excessive snowfall particularly over the

Himachal Pradesh region in February had led to below normal temperature. "Till February

24, the Delhi-NCR recorded minimum temperature 9.3 degree Celsius and 22.3 degree

Celsius which is the lowest in the past five years," said a scientist at Delhi-based weather

forecaster Skymet Weather Services.

The cold spell is not expected to continue. Scientists forecast normal or above normal

temperature in the months ahead. "We are seeing an increasing trend of more cold wave in

winters. The snow cover was more and western disturbances were frequent," said D S Pai,

director, long range forecast, IMD. He said the rains and snow will also benefit kharif and

rabi crops. The weather conditions are likely to boost wheat, pulses, and oilseed production

64

besides helping horticulture and orchards (apples and other stone fruits). The dip in night

temperature is likely to increase the yield of wheat crop which is in the grain formation stage,

heading towards ripening.

Centre to states: Be prepared for erratic monsoon rains (ET 28.2.14)

The Centre has directed state governments to be "fully geared" up to meet any eventuality of

erratic rains following reports that the El Nino weather pattern would affect the monsoon this

year.

The southwest monsoon, the lifeline of Indian agriculture, starts in June and its progress

triggers sowing of kharif crops. Farmers depend on monsoon rain as 55 per cent of

agricultural land does not have irrigation facilities.

"In view of indications of erratic rainfall during the ensuing monsoon season, Agriculture

Secretary Ashish Bahuguna advised states to be fully geared up to meet any eventuality of

erratic monsoon rains," according to an official statement.

Bahuguna spoke after a two-day conference that discussed preparedness for the forthcoming

kharif (summer) sowing. He said the contingency plans, already prepared for over 500

districts, will provide the first point of reference for checking actions that need to be taken.

Action at the local level will be fine-tuned with inputs from scientists from Indian Council for

Agricultural Research institutes, agricultural universities and Krishi Vighyan Kendras, he

added.

"Karnataka, Rajasthan, Andhra Pradesh, Madhya Pradesh and Maharashtra that have higher

frequency of drought need to be prepared with sufficient seed of short-duration varieties of

kharif crops," Agriculture Commissioner J S Sandhu said at the conference.

The Indian Meteorological Department is likely to come out with its monsoon forecast in

mid-April and the impact of El Nino may not be as severe as it was in 2009, Agriculture

Minister Sharad Pawar had said on the sidelines of the inaugural session of the conference.

El Nino refers to the warmer-than-average sea surface temperatures in the central and

eastern tropical Pacific. This condition occurs every four to 12 years. It last hit India's

monsoon in 2009, causing the worst drought in almost four decades.

Warming of the tropical Pacific Ocean is likely in the coming months, with international

climate models showing temperatures approaching or exceeding El Nino thresholds,

Australia's Bureau of Meteorology said in a statement on its website on February 25.

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The conference, attended by state agriculture officials and scientists, decided to focus on

ensuring timely availability of fertilisers and quality seed and credit to farmers in the

forthcoming kharif season.

Rains may wash hopes of record foodgrain output (BS 3.3.14)

Untimely rains and hailstorms in large swathes of land across Madhya Pradesh (MP), Uttar

Pradesh, Rajasthan, Maharashtra, Haryana and Bihar in the last few days have caused damage

to standing crops of wheat, chickpea and mustard in some parts, which might dash

government hopes of reaping bumper foodgrain production in 2013-14.

According to senior government officials, the actual impact on wheat output would be known

only when harvesting started, but the damage had been widespread as of now. In mustard

seed and chickpea, officials said the damage to crops had been more severe than wheat as

these were in the pod-filling stage.

"There have been reports of 'lodging' (a condition when stems either break or become

extremely brittle) in the wheat crop of Madhya Pradesh and Rajasthan, but the extent of

damage will be known later," Indu Sharma, director of Karnal-based Directorate of Wheat

Research or DWR, told Business Standard.

She said the impact of this on final production estimates was

unclear as of now, but the output might drop by two to five

per cent if rains and hailstorms did not abate in the next few

days, or if there was a sudden increase in temperature from

March 15 onwards or the winter season did not subside. "In

many areas, the wheat crop is in the pollination stage and

these widespread rains and hailstorms are not good for it,"

Sharma said.

Madhya Pradesh, along with Rajasthan is among the major

wheat producing regions of India, besides Punjab, Haryana

and Uttar Pradesh. The government has estimated a record 96

million tonnes of wheat production in 2013-14 (June-July),

up from 93.5 million tonnes in 2012-13. The MP government

estimated that rainfall and hailstorms had affected 49 of 61

districts in the state, damaging 60-70 per cent of the standing

crop. Around 21 districts, including Kota, Churu, Jhalawar,

Karauli and Sri Ganganagar, have been impacted in

Rajasthan. In Maharashtra, standing crop in around 54,000

hectares has been damaged in the districts of Nagpur, Wardha, Bhandara, Gondia,

Chandrapur and Gadchiroli.

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El Niño shadows monsoon: CRISIL (BS 5.3.14)

Says If the monsoon were to get adversely affected this year, India's economy could grow by

5.2% in 2014-15

If the El Niño weather phenomenon drastically impacts this year’s monsoon as apprehended,

it could severely affect economic growth and raise retail inflation in the next financial year,

CRISIL Research said in a report issued on Tuesday.

El Niño is a prolonged warming in the Pacific Ocean sea surface temperature, disturbing the

formation of clouds; the effect spread worldwide.

Australia’s Bureau of Meteorology and the US Climate Prediction Center have warned of

increased chances of the return of an El Niño weather pattern that can trigger drought, hitting

production of key crops such as rice, wheat and sugar cane. However, the India

Meteorological Department is yet to come out with a prediction on this.

If one comes and it affects the rains, CRISIL said it might have to scale down the India

economic growth projection to 5.2 per cent for 2014-15 from the current one of six per cent.

Besides, consumer price index-based inflation, with nearly 50 per cent weight on agriculture-

related articles, will rise above its current forecast of eight per cent in 2014-15.

In its fight against weak growth and “intolerably high inflation”, the last thing India’s

economy needs is a monsoon failure, the report said. The economy grew 4.5 per cent in 2012-

13 and is officially projected to expand 4.9 per cent this financial year. However, it grew only

4.6 per cent in the first nine months, raising doubts over the official projections for entire

2013-14.

If the economy does not grow by six per cent in FY15, it would have repercussions on a

whole lot of things, including the tax targets set in the interim Budget, which assumed this

much of growth, and inflation at 7.3 per cent, to give a nominal gross domestic product

(GDP) growth of 13.4 per cent. Nominal GDP growth could still be the same but a slowing in

real GDP could affect tax collections.

CRISIL, however, added: “There is a fair degree of uncertainty associated with these early

forecasts, so it will be too premature to conclude an El Niño will occur in 2014.”

And, even the occurrence of one does not necessarily imply monsoon failure in India. Since

1991, of the seven times an El Niño was experienced, only two of the years synchronised

with a monsoon failure or a drought situation in the country. Past data, therefore, suggests a

nearly 30 per cent chance of an El Niño condition morphing into a monsoon failure, CRISIL

said.

Moily defends nod for GM field trials for food crops (ET 5.3.14)

Union Environment Minister M Veerappa Moily today said permission for gene

modification field trials for certain food crops had been given after taking expert opinion, and

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number of conditions have been put in place to take care of environmental concerns.

".....this permission (for gene modification field trials for certain food crops) has not been

given by me, they have been given by experts. After expert opinion, permission has been

given and nothing will be done to harm the fields," he told reporters.

Speaking on the sidelines of an event here, Moily in response to a question regarding

criticisms being expressed on his decision to permit field trials, told reporters, "...number of

conditions has been put so it will not harm the atmosphere and also the environment."

Moily had last week cleared a Genetic Engineering Appraisal Committee (GEAC) decision to

allow gene modification field trials for certain food crops after the same was put on hold for

about a year by his predecessor, Jayanthi Natarajan.

This nod will pave the way for GM field trials for rice, wheat, maize and cotton. Several

activists including environmental watchdog Greenpeace and Aam Admi Party have slammed

Moily's decision on permitting field trial.

Moily, who is also Union Minister for Petroleum and Natural gas, today laid foundation stone

for Rajiv Gandhi Institute of Petroleum Technology (RGIPT) - fire safety engineering and

process safety research centre at Kambalipura, near Hoskote taluk of Bangalore rural district.

No plans to curb farm exports: Centre (FE 6.3.14)

The government on Wednesday said it has no plans to curb farm exports despite fears of an

impending El Nino that could affect the monsoons this year. “Our granaries are still

brimming with stocks,” said a senior official.

"We don't intend to curb farm exports. In fact, the government on Tuesday scrapped the

minimum export price of onion to help farmers get better realisation," said the official. "It's

too early to say whether El Nino will actually affect the monsoon, and, if yes, to what extent.

So we will wait for the forecast by the IMD (Indian Meterological Office)."

The weather office is expected to firm up its first long-range forecast of the monsoon in

April.

India is the world's largest exporter of rice and guar gum and second-largest supplier of

cotton and also ships wheat in large volumes. The country's farm exports are projected to rise

9.8% to $45 billion in 2013-14, accounting for 13.8% of the total exports of $325 billion

targetted for the current fiscal.

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The government is fully prepared to tackle any fluctuation in weather this year and states

have been asked to keep contingency plans ready, another official said.

Grain stocks with state-run agencies hit 41.1 million tonnes as of February 1, compared to a

requirement of 25 million tonnes for various welfare programmes. The projected record

harvest of wheat in 2013-14 is likely to boost the stock levels further, giving relief to

policymakers in case of a monsoon failure.

El Nino is warming of sea-surface temperature levels in the central and east Pacific and

cooling of the West that occurs every four to 12 years. It caused the worst drought in 37 years

in the country in 2009, dragging down grain production to 218.11 million tonnes from 234.47

million tonnes the year before.

Fears of widespread dry spells in many parts of Asia, including India, intensified this year

after Australia’s Bureau of Meteorology last month said that climate models surveyed by it

showed Pacific Ocean temperatures approaching or crossing El Nino thresholds in the austral

winter. A report in the PNAS, the official journal of the US National Academy of Sciences,

also said there was a 75% chance that El Nino could occur in late 2014.

Agriculture minister Sharad Pawar played down El Nino fears, saying the government was

keeping a tight vigil. The June-September monsoon season brings about 70% of annual rains

and is crucial to the summer-sown crops as more than 60% of the country's farmland is rain-

fed. The showers also boost ground water reserves for winter planting.

UP clocks maximum food grain production in India (BS 7.3.14)

Food grain production stands at over 50 mn tonnes

The food grain production in Uttar Pradesh during 2012-13 crop year (July-June) has once

again topped its peers at about 50.84 million tonnes (MT).

During 2009-10, 2010-11 and 2011-12, the state food grain production stood at 43.20 MT,

47.14 MT and 50.29 MT respectively.

This shows that there has been sustained increase in food grain output registered in UP over

the years, for which it has been feted by the Centre.

Higher production has come about primarily due to improving productivity. Against food

grain productivity of 2,448 kg/hectare in 2011-12, the productivity index rose to 2,547

kg/hectare in 2012-13.

Paddy and wheat are the major kharif and rabi crops, that account for the largest food grain

basket in UP.

During 2011-12 and 2012-13, paddy production and productivity stood at (14 MT and 2,358

kg/hectare) and (14.41 MT and 2,459 kg/hectare) respectively.

Similarly, wheat production during the corresponding period figured 30.29 MT and 30.3 MT

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respectively.

Besides, the state has been able to augment coarse grain output and productivity from 0.35

MT and 1,751 kg/hectare in 2011-12 to 0.37 MT and 1,845 kg/hectare in 2012-13.

The agriculture department cites several steps, which helped the state post higher production

viz. paddy sowing by drum-seeder, wheat sowing in rows, soil testing, rational use of

fertilisers, bio-pesticide and timely intervention of farm investment.

The government has been organising farmers’ fairs, roping in private partners in agricultural

activities and proactive dissemination of farm related news.

There are about 22.5 million farmers’ families in UP and agriculture supports 65 per cent of

its working population.

Almost, 50 per cent of the land in UP is used for cultivation and over 70 percent of the

cultivated land is irrigated. The total cultivable area in UP is estimated at 24.17 million

hectares (MH), of which 16.56 MH is under agriculture.

Govt engages farm cos to boost output to meet food security targets (BS 7.3.14)

A grant of Rs 50 crore has been allocated to small farmers' agri business consortium

In order to push production of pulses and oilseeds in the country to ensure adequacy under

the Food Security Bill, the government has started focusing on the farmer producer

organisations for exclusive production of critical crops like pulses and millets.

This will be under technology mission for oilseeds and pulses owing to its inadequacy to

cater to domestic demand. A grant of Rs 50 crore has been allocated to small farmers’ agri

business consortium, (SFAC). SFAC is a society exclusively promoted for mobilizing FPOs.

Over and above the general outlay under the mission to boost the production, this project for

promotion of FPOs is intended to develop value chain of pulses and millets. According to

officials, the project not only intends to boost production but also engage FPOs in marketing

from farm gate to the market to cut down the transaction cost, thus help FPOs to develop the

entire value chain .

To support the FPOs engaged in pulses and millet production, the nodal body SFAC has been

mandated for price intervention activities to buy the produce from the farmers if the ;prices

fall below the minimum support price. This mandate of SFAC is in addition to the

conventional procurement agencies like NAFED, CWC and NCCF etc.

The project implementation is for a period of three years from 2013-14 to 2015-16 for

mobilising 106 FPOs exclusively for developing pulses and millet production.

FPO is company set up by farmer producers of agricultural commodities. These FPOs will

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be promoted by the farmers, run by the farmers and for the benefits of the farmers. The

objective of the FPO is to improve returns to farmers through collective inputs purchase,

collective marketing, and processing, increasing productivity through better inputs, increasing

knowledge of farmers and thus ensuring quality. According to officials, the basic objective of

FPO concept is to link small farmers to technology as well as to the markets in association

with private, corporate or cooperative sector and if necessary, by providing backward and

forward linkages. That is where the need comes to bring in corporate structure to induce

governance and monitoring.

Under the government procurement scheme, NAFED, CWC, SFAC, NCCF are the Central

Nodal Agencies for procurement of oilseeds & pulses under Price Support Scheme (PSS). In

the current year, meanwhile the National Agricultural Cooperative Marketing Federation of

India (NAFED) has started procurement of many oil seed and pulses crops after the market

prices of many of them have crashed below the minimum support price. This is under the

price support scheme of NAFED.

Already 2.33 lakh metric tonne of groundnut has already been procured from Gujarat and

Rajasthan as the market prices are ruling below MSP of RS 4,000 per quintal. The market

prices are ruling in the range of RS 2,955-3,000 per quintal. The prices of gram and tur are

ruling around Rs 2,500-3,000 per quintal and Rs 3,900-4,000 per quintal as against MSP of

Rs 3,000 per quintal and Rs 4,300 per quintal respectively. However market data shows that

prices of tur and gram have gone up to around Rs 6,000 per quintal and Rs 3,500 per quintal

in far flung areas.

Price of sunflower is ruling around Rs 2,800-3,500 per quintal as against the MSP of RS

3,700 per quintal. The procurement is mainly going on in Maharashtra, Gujarat, Rajasthan

and Andhra Pradesh, said sources. Many crops of oilseeds and pulses are ruling below MSP

due to bumper crop and flat demand. Moreover in oilseeds, much of the domestic edible oil

demand is met by cheap imports of soybean refined oil.

Hail and rain damage crops, delay harvest (BS 7.3.14)

Wheat, chickpea and rapeseed crops affected

Hail and heavy rain have damaged rapeseed and chickpea crops as they ripen in India's main

producing areas in the last 10 days, cutting output and pushing back harvests, government

and industry officials said.

The storms have also affected wheat in Madhya Pradesh and Uttar Pradesh, states which

produce high quality wheat.

The damage to rapeseed could mean India imports more rapeseed oil, which is made from

rapeseed. That could push prices higher as India is the world's biggest buyer of edible oils.

The April rapeseed contract rose 6.7% over the last ten days, while rapeseed oil firmed 0.7%.

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India is also the world's largest buyer and consumer of pulses and damage to the crop would

increase buying.

Last month, the government forecast record production of wheat, chickpea and rapeseed. The

Solvent Extractors' Association (SEA) also recently predicted an 11% rise in rapeseed output

in 2013/14.

Isha Trivedi, an analyst at Phillip Commodities India Pvt Ltd., said crop damage made the

rapeseed forecast look unlikely and predicted the rise could be more than halved to 5%.

India produced 6.85 million tonne of rapeseed in 2012/13 and was relying on a bumper crop

in the year, ending October 31, 2014, to dampen imports of edible oils which cost it a record

$11.3 billion last fiscal year.

Rajasthan state is the main producer of rapeseed.

"The rapeseed crop has been affected in Ajmer and Jaipur regions of Rajasthan. The early

sown crop has been affected more than the late sown crop," said Dhiraj Singh, director at the

Directorate of Rapeseed-Mustard Research, adding overall production would still be higher

than last year.

In the 2012/13 marketing year ended October 31, edible oil imports surged to 10.4 million

tonne, compared with 5.6 million tonne five years ago.

OTHER WINTER CROPS

Bhaskar Shinde was expecting to make Rs 500,000 from a bumper crop of chickpeas and red

gram on the 18 acres he farms before hail and rains dashed his hopes.

"The crops were almost mature for harvesting. I could have harvested them, had rainfall

come after two weeks," said Shinde, describing the damage as the worst he had seen in three

decades.

In Madhya Pradesh, rain damage to chickpea and wheat was so extensive that the state

government paid compensation to farmers, Shivraj Singh Chouhan, chief minister of Madhya

Pradesh, said on Twitter.

"Everyone was expecting bumper production of chick peas, but unseasonal rains have spoiled

prospects as the crop was in pod-filling stage," said Nitin Kalantri, a pulses miller based at

Latur in Maharashtra, the second-largest pulses producing state.

Chickpeas are the main pulse consumed in India and the government was expecting a record

output of 9.79 million tonne.

The benchmark April chickpea contract has firmed 8.6% in the last 10 days.

For wheat, the impact will be softened by massive stocks after years of bumper harvests.

India had been expecting another record, at 95.6 million tonne, for 2014.

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"In Madhya Pradesh and Uttar Pradesh crop damage is significant. I think the government

will revise the wheat production number in its next estimate," said a dealer at a global trading

firm, adding that rain would also delay harvesting in central India.

The government is trying to sell wheat overseas through three state-run traders, as the world's

second-biggest producer attempts to cut huge stocks. A number of tenders have failed to

reach the desired price, though Chicago wheat prices have risen to the highest since

December on concerns over disruption in Ukraine's output and cold weather in the United

States.

The potato crop had been damaged in Uttar Pradesh, said an official at the National

Horticulture Research and Development Foundation.

Harvesting of potatoes, tomatoes and onions has started in some areas and the weather

department is forecasting more rain in Maharashtra and Andhra Pradesh which could more

damage.

‘Rise in procurement, MSP have pushed agri growth since 2004-05’ (FE 8.3.14)

A sharp increase in minimum support price (MSP) of agricultural commodities and rise in

grain procurement by government agencies in the post-2004-05 period have pushed up India's

production, leading to stability in food prices, a paper by the National Centre for Agricultural

Economics and Policy Research (NCAP), an arm of the agriculture ministry, said.

“Favourable prices induced farmers to use better seed, apply higher doses of inputs, take

better care of crops and livestock and adopt improved technology and methods of

production,” the paper, titled 'From slowdown to fast track: Indian agriculture since 1995' and

authored by Ramesh Chand, director, NCAP, said.

It also stated that farmers were aided by a liberal supply of institutional credit and irrigation

expansion. It pointed out that after 2004-05, increase in agricultural production was much

higher than increase in domestic demand and this resulted in high growth in agricultural

exports and increase in the share of exports in domestic production.

Agricultural exports volume rose sharply from $6 billion in 2001-02 to $39 billion in 2011-

12, the paper noted. “Food prices in India remained quite stable during the global food

crisis,” the NCAP has noted.

On the growth path of agricultural and allied sectors, the NCAP paper said Indian agriculture

moved on a growth trajectory of 3.1% per annum between 1988-89 and 1996-97, which

plummeted to 1.9% in the next nine years.

However, the sector moved back on long-term growth trajectory and is now approaching a

target of 4% growth rate.

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According to food ministry data. the MSP of common variety of paddy has been hiked from

R560 per quintal to R1,310 per quintal in 2013-14. Similarly, the MSP offered to farmers for

wheat has been increased from R620 per quintal to R1,350 per quintal in the same period.

Official data say that output-wise, annual rice production has increased from 83.1 million

tonne (mt) in 2004-05 to 105 mt in 2013-14. Wheat output has increased from 68.6 mt to 95.6

mt during the same period.

The research paper also states that between 2004-05 and 2011-12, states such as Madhya

Pradesh, Karnataka, Rajasth-an, Jharkhand and Chattisgarh achieved more than 5% annual

growth rate in agriculture and Gujarat, Tamil Nadu, Maharashtra and Andhra Pra-desh

exceeded the national target of 4% annual agricultural growth. “UP (2.3%) and Odisha

(2.6%) are still stuck in low growth trap, while agriculturally progressive Punjab achie-ved

only 1.5% between 2004-05 and 2011-12,” the paper noted.

The government last month said that supported by good farm sector performance, economic

growth in this fiscal is estimated to rise to 4.9%.

Agri commodities turn hot again (BL 9.3.13)

Dry weather could worsen the drought in Australia, a major global supplier of wheat

Year 2013 was a forgettable one for farm commodities, as corn futures in Chicago plunged

39.6 per cent, global prices of coffee, wheat, sugar, soyabean and palm oil fell 23, 22.2, 15.9,

8.3 and 0.9 per cent respectively, in dollar terms.

But since the start of this year coffee has gained 77.8 per cent, corn 15.9, soyabean 12.8,

sugar 9.8, palm oil 8.6 and wheat 8.1 per cent. This recovery can largely be put down to a

single factor: El Nino, which refers to the unusually warm ocean temperatures in the tropical

Pacific off the coasts of Ecuador and Peru.

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A Pacific phenomenon

Such abnormal warming of eastern Pacific Ocean waters leads to increased evaporation and

concentrated cloud-formation activity around South America.

This region, along with the southern part of the US, then receives heavy rains causing

flooding occasionally.

The other end of the tropical Pacific towards Indonesia and Australia is, by contrast, deprived

of any such convective currents. The result is below-average rainfall and drought, whose

effects may also percolate to India.

Since February, many global weather agencies have warned of an “early developing” El Nino

with the appearance of warm ocean currents along the western coasts of South America.

There is no clarity, however, whether and when this warming will turn into a full-fledged El

Nino.

The US Climate Prediction Centre, on Thursday, predicted a 45 per cent chance of El Nino

during June-July-August and 50 per cent over August-September-October.

This is consistent with the projections of most other official forecasters — of El Nino

returning after five years, with its effects more pronounced towards August. For India, that

coincides with the second half of the south-west monsoon season from June to September.

The Indian record

So, does it mean India will have a poor monsoon this time, especially in the latter part of the

season? Well, it’s difficult to say really. The table shows that every drought year in India over

the last three decades – 1982, 1986, 1987, 2002, 2004 and 2009 – was an El Nino year. But

the reverse — every El Nino year being a drought year — doesn’t hold. Take 1994 and 1997,

the first a ‘moderate’ and the second a ‘strong’ El Nino year. In both these years, the country

registered above normal monsoon precipitation. This was more or less the same in 2006 too,

a ‘weak’ El Nino year.

Mixed prospects

While El Nino’s impact on India is debatable, there is less doubt though, over it wreaking

havoc in South-East Asia and Australia. El Nino-induced dry weather could worsen an

already severe drought in Australia, a major global supplier of wheat, beef, sugar and cotton.

It could similarly hurt palm oil production in Indonesia and Malaysia, coffee and cocoa in

Indonesia and Vietnam, and rice in Thailand and Vietnam. But if El Nino’s effects do not

percolate to India as in 1997 or 2006, it could actually prove beneficial to India’s $45-billion

agri-export industry.

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India is, after all, the world’s No. 1 exporter of rice and beef, No. 2 in cotton, and also a

significant shipper of soya meal, sugar and corn. Right now, with India’s major reservoirs

holding enough water from last year’s excellent monsoon and also from the winter rainfall,

there isn’t much to worry.

GM crops: Approval likely soon for field trials (BS 10 .3.14)

At least 13 varieties are slated for GEAC nod after a long while but states have to also agree;

biotech sector waits eagerly

Even as the government prepares to give a final nod to field trials for at least 13 crop varieties

in the next meeting of the Genetic Engineering Appraisal Committee (GEAC), on March 21,

the road ahead for genetically modified (GM) varieties is still bumpy.

What Environment Minister M Veerappa Moily had earlier okayed were the field trials

cleared in the 116th and 117th meeting of GEAC held last year. "In the coming meeting, the

minutes of the old meeting will have to be approved again by GEAC, after which it will be

sent to the minister again for approval. Following this, state government clearances are also

required to go ahead with the field trials," a ministry official said.

In the past, many state governments where the trials have to be conducted did not give the

mandatory No-Objection Certificate to the institutes, firms and companies in question. Bihar,

Madhya Pradesh, Chhattisgarh, West Bengal, Rajasthan, Odisha, Karnataka and Kerala have

earlier opposed any GM trials and are expected to maintain their stand.

"Proper security measures will be taken and state clearances will be mandatory, along with

GEAC clearances," Moily said. He said though a case was on in the Supreme Court on the

issue, there was no embargo on field trials.

The apex court had set up a six-member technical expert panel, which had suggested an

indefinite moratorium on field trials till a proper regulatory mechanism was in place. The

environment and agricultural ministries are set to file an affidavit pleading for field trials of

GM crops.

Officials said of the crops tipped to get a final nod for trials, maize and mustard are in states

which have opposed GM trials; so is rice. In 2012, the Rajasthan government had burnt the

crop after allowing field trials, due to its allegedly harmful effects.

"It is entirely the prerogative of the state government to allow field trial of GM crops or not,

though it might have been okayed by GEAC," said Rajesh Krishnan, convener of Coalition

for GM-Free India. The crops slated for final clearance in the next meeting of GEAC are of

rice, wheat, maize, mustard, potato, brinjal, tomato, groundnut, sorghum, castor and cotton.

A spokesperson for Monsanto, the multinational biotechnology company,said, "The seed

biotechnology industry awaits communication on the date for the GEAC meeting. Agriculture

research is an intensive multi-year process." The functioning of GEAC in a timely manner

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wwould research trials in the coming kharif season, he noted. He said about Rs 10,000 crore

was currently invested in agricultural biotechnology in India.

Companies have to face a three-tier clearance system. In the first stage, any research on GM

crops has to be sent for approval of the Institutional Bio-Safety Committee (IBSC). After

IBSC approves, it is sent to the Regional Committee on Genetic Manipulation (RCGM), also

under the department of biotechnology but an independent authority. In the third and final

stage, after the RCGM approves the trials, these are sent to GEAC for final approval.

Precautions

Officials from the department of agriculture claimed elaborate safety precautions were

followed while conducting field trials. K C Bansal from the National Bureau of Plant

Genetics Research said the field where the trials are conducted are enclosed in barbed wire

and was under 24-hour security surveillance. The gate would be locked and a board is placed,

clearly defining details of the trials, permit number, letter from the department and other

bodies. "When the experiment is over, full precautions are taken; a pit is built along the field,

where the crop is burnt and buried, to ensure there is no spread of toxicity," he said.

During the period when the crop is in the field, a compliance and monitoring team regularly

visits and a register is maintained of people who enter the enclosed area. "The materials used

for field trials like pesticides are also stored in closed enclosures and their record

maintained," Bansal said.

The decision by the ministry to go ahead with the field trials could allow 200 such varieties,

including in rice, wheat, maize, castor and cotton, in the longer run.

Most farmers aware of MGNREGA scheme, but not MSP: Study (ET 11.3.14)

Most farmers in India are aware of MGNREGA scheme but not about the minimum support

price (MSP) for crops fixed by the Centre to avoid distress sale, according to a study by

research body CSDS.

Also, 76 per cent of farmers surveyed prefer to do some other work rather than farming,

while 60 per cent of them want their children to migrate to cities, the Centre for the Study of

Developing Societies (CSDS) said in a survey that covered over 5,000 farmer households in

18 states.

The CSDS study, conducted on behalf of farmers body Bharat Krishak Samaj (BKS), said:

"Approximately, 85 per cent of farmers have heard about MGNREGA. ..Approximately 62

per cent were not aware about the MSP." However, 51 per cent of those who knew about

MGNREGA said that they did not get work under this scheme, while 64 per cent of farmers

who were aware of MSP were not satisfied with the price fixed by the government, it said.

It was in 1966, the government first announced the MSP for wheat to safeguard the interest of

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farmers. Since then, the MSP regime has been expanded to 25 crops.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was enacted

recently in 2005 with the objective of guaranteeing 100 days of work in rural areas. The study

also said that most farmers are unaware of agri-schemes such as Rashtriya Krishi Vikas

Yojana (RKVY), National Food Security Mission, National

Agricutlure Insurance Scheme, Gramin Beej Yojana, Kisan Credit Card and loan

waiver scheme among others.

"Being unware of these schemes, most farmers did not benefit from them.... Farmers did not

benefit for lack of knowledge about the scheme," the study said and added that most farmers

felt only rich farmers got benefit of government schemes and policies related to farming.

The study also said that only 27 per cent of them have heard about the land acquisition law

and most of them felt that they would stand to lose from this law. Also, 83 per cent of farmers

have not heard about foreign direct investment (FDI). Among those who have heard of it, 51

per cent were against allowing FDI in agriculture.

On farmer suicides, the study said about 15 per cent had heard about farmers killing

themselves in their area. "41 per cent respondents report domestic problems as most

important reason for suicide cases, 35 per cent because of credit/loan followed by 14 per cent

because of crop failure."

Contrary to general perception, the study said not many farmers are worried about repayment

of loans. On status of farmers, the study said around 47 per cent of them felt that the overall

condition in the country is bad. Most of them blamed both Centre and state governments for

their problems.

More than 75% farmers want to leave their occupation (BS 11.3.14)

A survey reveals that 62% never heard of MSP

In a grim reminder of the condition of almost 12 crore farmer households in the country, a

survey shows that almost 76% of farmers would prefer to do some other work other than

farming, while 60% wanted their children to migrate and settle in a city.

The survey done by Centre For the Study of Developing Societies (CSDS), Lokniti for Bharat

Krishak Samaj among 5,000 farmer households across 137 districts in 18 states in December

2013, showed almost 47% felt that overall condition of growers in the country is bad.

Titled ‘Report On The State Of Indian Farmer’, the sample for the survey included 20%

Scheduled Castes, 12% Scheduled Tribes, 40% Other Backward Caste and 14% minorities.

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It showed that 40% of farmers felt that their economic condition has improved in the last five

years (2009 to 2014), while 37% said there was no change. Around 42% of total surveyed

farmers were optimistic about the economic condition to improve in the coming years.

Among the issues which concerned farmers most education, health and employment were the

most prominent, while repayment of loans stood as being the least priority.

On political issues, an overwhelming number of farmers said that price rise is the main issue

in 2014 General Elections, while corruption was not high on their priority.

The survey showed that though the UPA government has been publicizing the regular hike in

Minimum Support Price (MSP) since 2004 as one of its biggest achievement, almost 62% of

farmers surveyed were not even aware of the MSP and among those who have heard about

MSP almost 64% were not satisfied with rates.

A staggering 74% of the surveyed farmers said that they do not get any farming related

information from agriculture ministry officials, while just 3% said that they get it on a regular

basis. Around 85% of the surveyed farmers did hear about UPA’s flagship programme, the

Mahatma Gandhi National Rural Employment Guarantee Act, whil0e just 51% got benefit

under it.

Interestingly, just 10% of growers felt that government schemes benefited small and marginal

farmers while an overwhelming 90% felt it helped only big and rich farmers.

Among central government schemes meant for farmers, the survey showed that almost 53%

of farmers had heard of the loan waiver scheme implemented by UPA government in 2008,

while just 10% actually benefitted from the it. On the UPA’s land acquisition law, the survey

showed that 27% of the farmers have heard about it, while 57% said a farmer stands to lose

because of the Law.

A whopping 83% of the farmers have not heard about Foreign Direct Investment (FDI) in

agriculture and of those who have heard about the same almost 51% felt that it should not be

allowed as farmers would stand to lose their bargaining power once FDI is allowed in

agriculture.

Region Satisfied With Household

Economic Condition*

Not Satisfied With Household

Economic Condition*

North India 59 34

East India 35 62

Central India 71 24

South India 48 41

West India 47 36

*In percent

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Heavy rainfall to impact harvest-ready crops (ET 14.3.14)

More rain and snow are forecast in the days ahead as another system of rain-bearing clouds is

expected in a couple of days, raising serious concerns about the impact on crops, which need

the usually dry weather at this time of the year.

"Rains are not required at this time. Any disturbance in weather will adversely affect crop,"

said J. S. Sandhu, agriculture commissioner, department of agriculture and cooperation.

Farm output is affected when crops that are ready to be harvested or about to ripen, get

soaked in excessive rainfall. This is a concern in Madhya Pradesh, Gujarat, Maharashtra and

Rajasthan, where crops such as gram, lentil and mustard are ready for harvesting, while in

Punjab and Haryana, the wheat crop is weeks away from the harvest.

"We are advising farmers not to irrigate land, with more rain expected," Sandhu said.

Weather scientists say the past two months have seen higher frequency and intensity of

western disturbances, which carry clouds from the Mediterranean region to the Himalayas

and trigger rainfall in northern India.

Latest forecasts say heavy rain and snow is expected on March 15-18 across the hill

states of Jammu and Kashmir, Himachal Pradesh and foothills. The weather is unusually

chilly and wet because of global phenomena.

"A warmer Arctic is leading to the westerlies being more intense this year," said Laxman

Singh Rathore, director general, India Meteorological Department (IMD). This was also

leading to the southwards migration of rain toward the Indian region far too south of their

normal position.

The western disturbances have been unusually frequent and intense, scientists say. "Intensity

and periodicity of weather systems originating from the Mediterranean Sea leading to heavy

rains and snow over North West India were mild till end of December. Since then they have

picked up and have been the highest in February," said GP Sharma, chief meteorologist,

Skymet Weather Services.

In February this year the North West India got over 6 systems leading to heavy rains and

snow, against the normal of 4 systems. "One or two systems were very active leading to rain-

snow of more than 50 mm," said Sharma.

Similarly in March has seen two active disturbances, including the latest one on March

11-12 that caused over 100 mm rain at Banihal, Batot, Bhadarwah, Pehalgam and other parts

places of Jammu and Kashmir.

"Usually there are three systems which move across North West India in March, but this year

we are expecting 6 systems," said Sharma. In past 24 hours, tourist destination Pahalgam

received 133 mm rainfall, which broke its earlier record of 115 mm in March 2007. caption.

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As per IMD data, from March 1-13, the country received 114 per cent above normal rainfall

at 23.1 mm. During the same period, north interior Karnataka got 3265 per cent above normal

rainfall at 30.3 mm and Marathwada region got 2482 per cent above normal rainfall at 62

mm. Scientist said that the above normal rainfall over Maharashtra, Karnataka, Madhya

Pradesh could be attributed to the increased periodicity of western disturbances this year.

Frequent passage of systems generated a cyclonic circulation over Gujarat and adjoining

Arabian sea and when there was a confluence of this with the anti-cyclone circulation over

Odisha and Bay of Bengal, it led to heavy unseasonal rains over central and south India" said

Sharma.

India keeps a close watch on El Nino: First monsoon forecast next month (FE 14.3.14)

With global weather forecasting agencies predicting a possible adverse impact of El Nino on

the country's southwestern monsoons, the weather department is keeping a close watch on the

events and would come up with its first prediction on monsoon’s arrival by next month.

“It's too early to predict or assess the impact of El Nino and the IMD will take into

consideration reports by global agencies before making the first prediction on monsoon

arrival," Shailesh Nayak, Secretary, ministry of earth sciences told FE.

IMD would be announcing the date southwestern monsoon's arrival over Kerala next month.

Usually the monsoon hits the Kerala coast by June 1 and then progresses across the country

during its four-month run.

DS Pai, head of long-range monsoon forecast of IMD, said that there are several factors

besides El Nino that can impact the monsoon's progress. “We will take into considerations all

factors, including predictions made by global agencies, before making our first monsoon

prediction next month.”

Pai said while a majority of monsoon deficient years coincide with El Nino events, there are a

number of El Nino years where monsoon rains have been normal. In 2009, the El Nino

impact saw the third highest deficient monsoon . Rainfall deficiency in 2009 for the country

as a whole was -22% of Long Period Average (LPA). LPA is calculated on the basis of the

average annual rainfall (89 cm) recorded between 1951 and 2000. However in 2010, despite

an El Nino, monsoon was normal.

Pai said the first prediction on monsoon arrival would be done after the South Asian Climate

Outlook Forum scheduled for April 22- 23 in Pune. Meteorologists from all South Asian

countries would deliberate on global reports before arriving at a broad consensus on the

monsoon pattern for the year.

Bank of America Merrill Lynch has warned of a rising risk of El Nino and said in case it

kicks in, the RBI will be unable to achieve its glided path for CPI.

The RBI deputy governor Urjit Patel-led committee has set CPI target at 8% by January

2015. "If the rains are normal, CPI inflation will likely stay below the RBI's 8%-in-a-year-

ahead target. In case of an El Nino, this will be very difficult to achieve, as a 5 % swing in

food prices impacts CPI inflation 250 basis points," BofAML said in a report here.

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El Nino, which occurs at irregular intervals of 2-7 years, weakens the Asian monsoon, often

causing drought in north-west and central India.

The report said the Australian weather bureau sees increasing chance of El Nino in coming

months. The US Climate Prediction Centre also sees about a 50% chance of El Nino

developing during the summer or fall.

International climate models surveyed by the Australian weather bureau indicate that

warming of the tropical Pacific is likely in the coming months, with most models showing

temperatures approaching or exceeding El Nino thresholds during the austral winter, the

report said.

BofAML said CPI inflation will likely climb back to 8.4% in March with vegetable prices

going up again in the wake of hailstorms. CPI inflation eased to 8.1% in February from 8.8%

in January and 9.9% in December.

The report expects that RBI may not raise policy rates on April 1 review.

Package for rain-hit farmers of MP, Maharashtra, Karnataka (BS 20.3.14)

The Union government on Wednesday worked out a compensation package for farmers in

Maharashtra, Madhya Pradesh and Karnataka. This followed a high-level meeting to assess

the damage to crops in these states due to the recent bout of rains and hailstorms there.

However, an announcement on the package was withheld because of the model code of

conduct ahead of the coming elections. The package would be sent to the state governments

concerned after a clearance from the Election Commission. Officials said it was expected

Maharashtra would get a relief package of about Rs 1,400 crore.

The Maharashtra Cabinet at a later meeting decided to provide a Rs 4,000-crore special

package for farmers in 165 talukas.

A government official said the decision to waive interest of Rs 268 crore on crop loans was

also taken. Farmers would also be exempted from paying electricity bills, which will work

out to Rs 200 crore. Farmers with at least two hectare would be entitled to the relief package.

Farmers would also get an assistance of Rs 25,000 a hectare.

Referring to the Centre’s package, Agriculture Minister Sharad Pawar told reporters: “An

empowered group of ministers met to take stock of the situation after the recent rains and

hailstorms in some parts of the country and took a view on the matter. But an announcement

on this can only be made after taking approval from the Election Commission.”

He added horticulture, cereal and other crops across about 1,700,000 hectares had been

damaged in 28 districts of Maharashtra, while in Madhya Pradesh, crops on 1,100,000

hectares had been damaged across 51 districts. In Andhra Pradesh, crops across 100,000

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hectares had been damaged.

“There will be no impact on prices and our overall assessment of record food grain

production in 2013-14 will not be impacted much,” Pawar said, adding vegetable prices

weren't likely to increase substantially because of the unseasonal rains.

So far, 23 farmers in the hailstorm- and untimely rain-hit villages of Maharashtra have

reportedly committed suicide---six each from Vidarbha and Nashik, 10 from Aurangabad and

one from Sangli.

Gas price hike to set off farm or food subsidy dilemma (BL 22.3.14)

Also threatens govt's effort to cut the fiscal deficit

Government's plan to double gas prices from April threatens to hit its efforts to cut fiscal

deficit, as higher production costs for the country's most widely used fertiliser force

authorities to raise either farm or food subsidies.

The unwanted side-effect highlights the difficulties the world's second-most populous nation

faces introducing market-oriented reforms needed to kick-start the economy, while keeping

spending in check.

Govt last year approved a hefty rise in gas prices to around $8.40 per million British thermal

units in a bid to boost returns for local producers, spur investment in the industry and ease

acute power shortages.

Gas accounts for nearly 80% of the production cost of urea, a nitrogenous fertiliser that

consumes more than half of the $11 billion India spends each year subsidising farmers for

selling fertilisers at below the cost of production.

"The gas price hike will increase the annual urea production cost by Rs 100 billion," said

Satish Chander, director-general, Fertiliser Association of India (FAI).

Urea prices are set by the government, which has said any increase in the cost of production

would be met through a higher subsidy for manufacturers. A less politically palatable

alternative would be to allow manufacturers to pass on the costs through higher prices.

India consumes about 30 million tonnes a year of urea, with local producers supplying 22

million tonnes and the rest imported, FAI estimates.

Fearing a backlash from the politically influential farm block, the government has already

held urea prices well below those of alternative potash and phosphate-based fertilisers whose

producers have been allowed to raise prices since 2010.

The fertiliser subsidy bill has tripled in the past seven years. The government has allocated Rs

67,970 crore in 2014/15, but Chander says the figures stands well short of what's needed

given the impact of the gas price hike.

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FOOD OR FERTILISER?

In a bid to avoid a potential ratings downgrade, Asia's third-largest economy aims to cut its

fiscal deficit to 4.1% of GDP in 2014/15 by lowering fuel and fertiliser subsidies.

But even allowing the urea price to rise is unlikely to trim the government's subsidy burden,

analysts say.

Instead it will simply shift the onus from the Ministry of Chemicals and Fertilizers to the

Ministry of Consumer Affairs, Food and Public Distribution.

India buys food grains from farmers at a predetermined support price and distributes them

widely at discounted prices in an effort to lower rates of malnutrition.

"The government fixes support prices considering input costs. If the urea price goes up, then

it has to raise the MSP (minimum support price) of food grains," said Harish Galipelli, vice-

president research at Inditrade Derivatives and Commodities.

"The rise in food grain prices will be reflected in the government's food subsidy. It has

promised to provide subsidised food grains to the poor."

Parliament last year backed a scheme to subsidise wheat and rice for two-thirds of India's 1.2

billion people.

Farmers are already protesting the recent price hikes in potash and phosphate-based fertilisers

and are demanding a big rise in prices for food grains, sugar cane and cotton.

This complicates the government's task of raising urea prices, which is also aimed at curbing

excessive usage of the fertiliser that threatens soil fertility.

"The price of every farm product should be raised in sync with rising input costs. You can't

sell fertiliser at higher prices without raising the support price," said Raju Shetty, a farmers'

leader from Maharashtra and a member of Parliament.

The government last raised the urea price substantially in April 2010, but has since deferred

any decision.

"The new government has to take a call on urea prices," said a fertiliser ministry official, who

declined to be named.

"The decision is unpopular. I don't think the new government can take that decision in its first

few months. It may even defer the decision to 2015/16," the official said.

El Nino phenomenon may push up inflation: BoA-ML (ET 22.3.14)

The Indian market is on a roll because of Modi mania, but fears of crop damage because of

the recent hailstorms in Maharashtra and the spectre of drought due to the El Nino

phenomenon could act as party-poopers.

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"The hailstorm is likely to result in an estimated crop failure of about Rs 12,000 crore (0.1%

of the full year GDP) and this could reverse the recent downtrend in retail price inflation,"

said Jyotivardhan Jaipuria, managing director and head of research at Bank of America

Merrill Lynch (BoA-ML), in a report. Every 10% increase in vegetable prices pushes CPI

inflation up by 54 basis points.

But, on a more worrying note, the El Nino phenomenon could hurt the June-September

monsoon prospects and lead to a drought, affecting stocks like Hind Unilever, Hero Motors,

Mahindra & Mahindra and Bajaj Auto, the BoA-ML report said.

Stock investors are known to track the monsoon since lower-than-expected rainfall can stoke

worries about inflation and also hit rural consumption. The BoA-ML report says industrial

recovery will be pushed back further if the RBI delays rate cuts due to rising inflation. "We

expect the RBI to delay rate cuts to early 2015 from end-2014 if El Nino pushes CPI inflation

above its 8% January 2015 target," said the report.

American investment bank Jefferies has also said higher weather risks are providing an

absolute reason to be cautious on consumer stocks in India. "Global meteorological

departments have shown that El Nino risks are rising. Uncertainties around whether the event

actually occurs, its strength and impact on India stay high, but given the average -4.7%

historical agricultural growth during the strong El Nino years, investors should pay close

attention to the developments" said a note by Jefferies.

Year 2009 saw the worst June rains. Additionally, the overall reported monsoon rains were

the worst in 40 years. Despite this, agriculture growth in the year was 0.8% due to strong

rains in September and October.

West spreading El Nino rumours: India Meteorological Department (ET 24.3.14)

Weather scientists from Australia to the US are seeing ominous signs of a 'monster El Nino'

that heightens the risk of a drought in South Asia this year, but India's weather office is

snarling at these forecasters and accusing them of conspiring to rattle the country's

commodities and stock markets.

El Nino, or 'little boy' in Spanish, refers to changes in the direction of winds and the flow of

warm water currents that raise the surface temperature of parts of the Pacific Ocean. It shakes

up global rainfall and storm activity, causing droughts and floods in different parts of the

world. In India, it coincided with droughts in 2002, 2004 and the driest monsoon in four

decades in 2009, which inflated food prices sharply and launched a stubborn bout of inflation

that prompted the central bank to tighten monetary policy and encouraged a clampdown on

farm exports despite bulging stocks.

This year, American scientists say meteorological data point to a repeat of the 'monster El

Nino' that struck in 1997-98. They also say the dreaded phenomenon, which can last a year or

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more, would make 2015 the warmest ever. But the India Meteorological Department, which

has often failed to predict a drought, does not believe the 'little boy' will spoil India's

monsoon party.

"It is in the US and Australian interests that agri commodities and stock market in India come

down. They are spreading rumours. People will start hoarding and might start creating

artificial scarcity of commodities. Don't heed their advice," said Laxman Singh Rathore,

director-general, IMD.

His concerns are understandable as El Nino has not always caused a drought. IMD's monsoon

forecast, expected during elections next month, will set the mood for the vast majority of

Indians since they depend directly or indirectly on farm income although agriculture's share

in GDP has diminished as manufacturing and services clocked faster growth. Some foreign

banks and analysts are already saying that India's agricultural growth may suffer, which could

raise food prices and encourage the Reserve Bank of India to keep interest rates high.

Rathore said it was well known that monsoon was a sensitive issue for India, where a huge

percentage of farmers and the country's economic interests depend on the rainy season as

irrigation facilities are inadequate. "In the past one month, there have been a number of

forecasts and certain agencies have retracted from their forecasts too," he said. But more and

more foreign forecasts are pointing to a gloomy monsoon. Last week, Chinese forecasters

predicted that El Nino would affect rainfall this year. Japan's weather office, the US Climate

Prediction Centre and Australia's Bureau of Meteorology have made similar predictions.

India's private weather forecaster Skymet sees a 60 per cent chance of a drought this year,

and does not share Rathore's perspective on a conspiracy by scientists of the developed

world. Jatin Singh, CEO of Skymet Weather Services, said he doesn't feel there is any plot.

"There is no conspiracy. The correlation between El Nino southern oscillation and Indian

summer monsoon rainfall is well known since the 1980s," he said. Skymet will issue its

monsoon forecast on April 15 while IMD is likely to release its prediction in the second half

of the same month. Singh ruled out any chance of this year's rainfall being excessive.

Economists and analysts feel there is a correlation between the Indian monsoon and agri

markets, particularly certain commodities grown in rain-fed areas.

"Disseminating speculative reports of likely poor spread of rainfall during monsoon may not

be of much political interest, but it could benefit private commercial interests," said Jayanth

R Varma, professor of finance at IIM-Ahmedabad, who is working mainly in the field of

financial markets.

He said volatility could be seen in agri commodity exchanges for crops such as soyabean and

guar, which are weather-dependent. In March, prices of potato, sugar and wheat rallied on the

National Commodity & Derivatives Exchange. "The price of potato has seen a sharp rally of

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over 30 per cent to Rs1,230 a quintal in a month. Similarly, sugar, which was quoting at

2,800 a quintal, is now at Rs3,100 and could touch the previous high of Rs3,600 if the news

of El Nino is confirmed," said Dharmesh Bhatia of Kotak Commodities Pvt Ltd.

IMD defines a drought year as one in which the overall rainfall deficiency is more than 10

per cent of the long period average and if more than 20 per cent of the agricultural area is

affected. "In my estimate, monsoon in 2014 will be somewhere between 2012 (7 per cent

below normal) and 2009 (27 per cent deficit)," said Singh. El Nino affected the monsoon in

both the years. Land preparation and sowing of kharif crops, largely paddy, soyabean, cotton,

pulses (arhar and moong), and coarse cereals such as bajra and jowar picks up with the onset

of monsoon.

Farmers driven to suicide as unseasonal rains, hailstorm ruin crops (BS 24.3.14)

Nearly five dozen farmers in Maharashtra, MP have committed suicide this month over debt

worries, say advocacy groups

Unseasonal rains and hailstorms this month have damaged the winter-sown crops of millions

of Indian farmers, but Rekha Garole lost more than others.

Her 42-year-old husband Santuka killed himself this month after hail devastated the wheat

and chickpea crops that they had been counting on to repay a bank loan of Rs 90,000.

"He committed suicide to escape his debt burden," says Rekha, who met nearly a dozen

political leaders in a week at her mud house in the Nanded district of Maharashtra state but

has yet to receive any financial aid.

Santuka, like other farmers in his village of Golegaon, prayed last year for bountiful rains to

end two years of drought in the region.

Ample rainfall did come, but at the wrong time. In September, cloudbursts damaged soybean

and sorghum crops that were ready to be harvested, forcing farmers like Santuka into debts

that they could not pay due to the latest crop damage.

Millions of small farmers are struggling to survive as erratic weather hits their only source of

income. They are seeking government help to stay afloat until the next harvest, but

bureaucrats are moving slowly to record crop losses.

Anger is mounting among affected farmers tired of hearing empty promises. Many have

given up hope.

Nearly five dozen farmers in Maharashtra and the central state of Madhya Pradesh have

committed suicide this month over debt worries, farmers' advocacy groups say.

This could spell trouble for the ruling Congress party in a five-week general election that

starts on April 7, as the farmers' vote helped it retain power in 2009. Opinion polls suggest

that Congress faces a heavy defeat.

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"It will make the government more unpopular just before the elections," said Jaidev Dole, a

political analyst based in the city of Aurangabad in Maharashtra.

"The farmers affected are unhappy with the government's response, and that can be reflected

in votes. Opposition parties have already started to make this an election issue."

In Madhya Pradesh and Maharashtra, nearly 3 million hectares of crops have been hit, Farm

Minister Sharad Pawar said. Crops have been damaged in the states of Rajasthan and Punjab

and in Karnataka and Andhra Pradesh to a lesser extent.

Orange, grape and mango farmers were the worst hit by the storms, along with wheat,

rapeseed, chickpea and red gram.

The damage could force the government to slash production estimates for key winter-sown

crops like rapeseed, chickpea and wheat, but the immediate worry would be vegetable

supplies.

PRICES RISE AGAIN

After moderating in recent weeks, vegetable prices have started to rise again as supplies have

been disrupted by the rains. Double-digit food inflation contributed to the Congress party's

defeat in key state elections last year.

Opposition parties, mainly the Bharatiya Janata Party (BJP) that is favourite to form the next

government, are already cornering the government over farmer suicides and price rises.

Campaigning in the hail-hit areas, the BJP's candidate for prime minister, Narendra Modi,

said: "Despite India being an agrarian economy, the government's wrong policies are forcing

farmers to commit suicide."

"Farmers have taken loans from banks and private money lenders. With government help of a

few thousand rupees, they can't even repay their debts," said Vijay Jawandhia, a farmers'

leader from Maharashtra.

Any financial help comes too late for Rekha, who has two school-age children: "After a

suicide everyone makes promises," she told Reuters by phone. "But the ones who commit

suicide will never return."

Farmers may be allowed to sell directly to consumers (ET 25.3.14)

The finance ministry is drawing up a plan to facilitate direct selling platforms for fruit and

vegetable farmers, a move aimed at cutting out middlemen and containing food inflation,

which faces the risk of a re-emergence if monsoon falters. The ministry is working out

changes in the Agricultural Produce Marketing Committee (APMC) Act, which governs

marketing of agriculture produce, to allow farmers to sell directly to consumers that will save

high intermediation costs.

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The plan will be presented to the new government that will take office after the elections.

"The idea is to cut cost of intermediation.... The platform would seek to bring about

transparency and cut through middlemen by allowing sale through this platform," a senior

finance ministry official told ET. The blue print is based on a study of Azadpur Mandi in

Delhi, the biggest distribution centre for fruits and vegetables in the world, which despite

scale has high intermediation costs.

The finance ministry estimates that the APMC Act pushes up the cost of vegetables in the

Azadpur Mandi by 12-16 per cent, contributing significantly to the high difference in

wholesale and retail prices of vegetables. A less layered marketing structure for vegetables

has long been argued to bring down inflation in vegetables that was a few months back

running at nearly 20 per cent.

Reserve Bank of India governor Raghuram Rajan has favoured cutting down intermediation

costs. "There is a need to reduce the wedge between what the farmer gets and what is paid by

the household by reducing the role, number and monopoly power of middlemen as well as by

improving logistics," he said last month.

However, the ministry is not in favour of doing away with the APMC Act, which requires

that all farm produce be brought to the desig-nated mandis by the farmers to be sold through

registered intermediaries. It fears that if the law is repealed, unregulated private monopolies

may spring up. Besides, many states may not be willing to go for a drastic revamp.

Agriculture is a state subject and eventually it is up to the states how far they want to go.

The ministry of agriculture had, in 2003, formulated a model APMC Act but it is yet to be

implemented by all states though some have allowed contract farming and direct sourcing

from farmers while others have taken fruits and vegetables out of the ambit of

the law. In states like Delhi, a mandi cess is levied even if corporates are doing direct

sourcing. There are also issues concerning conditions for renewal of licences.

Congress vice-president Rahul Gandhi's call for keeping perishables out of the purview of

APMC Act is yet to be fully implemented by Congress-ruled states. "The most important

point is that farmers should have the choice to sell to mandi or outside mandi and prices

should not be inflated only through middlemen," said Arpita Mukherjee, professor at think

tank ICRIER.

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Industry body CII has pitched for giving freedom to farmers to sell their produce and not

restrict them to mandis besides establishing firm farm linkages and removal of procedural

restrictions such as requirement of multiple licences to trade in each district of a state. The

finance ministry hopes to offer a mandi reforms blueprint to the new government to bring in

changes to cut down intermediation costs.

Maharashtra issues NOC to 28 applications for GM trials (BS 25.3.14)

Most of the 28 strains cleared for trials are for wheat, rice, maize and cotton

The Maharashtra government has issued no-objection certificates to 28 applications for GM

crop trials from seven private companies and the Nagpur-based Central Institute of Cotton

Research.

Most of the 28 strains cleared for trials are for wheat, rice, maize and cotton. Among the GM

crops whose trials Maharashtra has permitted are transgenic rice and wheat.

Each field trial will take place in “confined conditions” on the farm of a state agriculture

university.

The no-objections were issued after a 10-member committee chaired the Atomic Energy

Commission's former chairman Anil Kakodkar gave a case-by-case clearance.

The list of some of the companies and crops include

Rice : Bayer Bio Science, Harayana

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Cotton : Monsanto India

Maize : Dow Agro Sciences India

Maize : Pioneer Overseas Corporation

Maize : Syngenta Bio Sciences, Pune

Wheat : Maharashtra Hybrid Seeds, Mumbai

Brinjal : Ankur Seeds

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AGRI COMMODITY/ FOOD PRICES

February retail inflation slows to 25-month low of 8.1 per cent (ET 12.3.14)

Easing onion and potato prices pulled retail inflation in February to a 25-month low of 8.1

per cent and is likely to increase the clamour for the Reserve Bank to cut interest rates in its

next monetary policy.

Overall inflation in the food basket, including beverages, slowed to 8.57 per cent in February

from 9.9 per cent in the previous month, according to Consumer Price Index (CPI) data

released by the government today.

The rate at which vegetable prices increased eased to 14.04 per cent as against 21.91 per cent

in January.

Prior to the month under review, the lowest CPI was recorded in January 2012 at 7.65 per

cent, which inched up to 8.83 per cent in the following month. Retail inflation was at 8.79 per

cent in January.

Retail or consumer inflation also slowed in protein-rich items such as eggs, fish and meat to

9.69 per cent in February versus 11.69 per cent in January.

The rate of price rise slowed to 9.93 per cent for cereals and related products from 11.42 per

cent in January.

However, the pace of price increases for milk and its products picked up in February to 10.37

per cent from 9.82 per cent in the previous month.

The prices of fruits, condiments and spices also rose faster last month.

The RBI, which has maintained a hawkish interest rate regime to tame inflation, is scheduled

to announce the next monetary policy on April 1. Industry has been demanding a cut in

interest rates to boost economic growth, which has slowed to a decade-low level.

Retail inflation has been easing for three months. The CPI data showed inflation rates for

rural and urban areas were at 8.51 per cent and 7.55 per cent, respectively.

In January, the wholesale price inflation rate fell to an eight-month low. Wholesale inflation

data for February will be out on Friday.

Inflation eases to 9-month low of 4.68% in Feb (ET 15.3.14)

India's wholesale price based inflation slowed to a nine-month low in February mainly due to

a fall in vegetable prices, providing some cheer to the beleaguered UPA

government, which recent surveys suggest faces a drubbing in the upcoming general

elections.

The moderation, however, is unlikely to prompt a rate cut by the Reserve Bank of India at its

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policy meeting on April 1, as core inflation, a measure of demand, has firmed up and retail

inflation continues to be high.

At 4.68 per cent, February's wholesale-price index-based inflation was much below the

previous month's 5.05 per cent and the lowest since May 2013, data released by the

commerce and industry ministry on Friday showed. The inflation rate, one of the biggest

concerns for Indian voters and the Manmohan Singh-led UPA government, has been on the

decline for the last three months.

Data released by the statistics office on Wednesday showed retail inflation had eased to a 25-

month low of 8.1 per cent in February. Indranil Pan, chief economist at Kotak Mahindra

Banks, said in a note that in the absence of a significant drop in core WPI and core CPI, the

RBI is unlikely to change its stance at its monetary policy meeting and could "maintain a

statusquo on rates".

Core inflation—the rate of price increase in non-food and non-fuel items—rose to 3.15 per

cent in February from 3.01 per cent in the previous month. The decline in WPI inflation was

largely due to a sharp fall in vegetables prices, which in turn brought down overall food

inflation— it has a 14.8 per cent weight in the wholesale price index

(WPI)—to a 10-month low of 8.12 per cent in February from 8.8 per cent in the

previous month.

The overall inflation in prices of vegetables dropped to 3.99 per cent, from 16.6 per cent in

January, as onion went into the deflationary zone, a trend that senior ICRA economist Aditi

Nayar said could be ending. "The decline in food inflation largely reflects the process of

correction in vegetable prices, which is now largely complete following the arrival of the new

harvest," Nayar said.

"However, the recent weather-related disruptions are expected to boost food and headline

WPI inflation in March 2014." Food prices could also be impacted by the extent to which the

El Nino weather pattern affects monsoon rains in the country. Experts say that the Reserve

Bank of India is likely to factor in all this and keep interest rates unchanged, even though the

economy is in desperate need of some sort of stimulus. Data for the previous months proved

to be a mixed bag.

While industrial production turned positive in January after a three-month decline, GDP

growth in the October-December quarter came in at 4.7 per cent, a shade below the 4.8 per

cent in the previous quarter. RBI governor Raghuram Rajan has increased interest rates thrice

since taking over in September to 8 per cent, and has clearly indicated that he is targeting

inflation rather than growth.

C Rangarajan, a former RBI governor and chairman of the Prime Minister's Economic

Advisory Council, was of the view that inflation would need to come down more for interest

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rates to decline. "I think retail inflation at 8 per cent is still high. But I believe that if inflation

moves down further, it will give greater room to the monetary authority to cut interest rates,"

he said.

Industry, however, is still hopeful of a rate cut. "This easing of inflation will hopefully create

some space for monetary policy easing by the RBI. This is imperative, as the sentiment of

caution continues to weigh heavy on the minds of investors," said Sidharth Birla, president of

industry lobby group Ficci.

The economy, which expanded 4.6 per cent in the first nine months of the current fiscal, will

need to grow by at least 5.5 per cent in the last quarter to meet the CSO's advance growth

estimate of 4.9 per cent for the full year.

Retail inflation for farm and rural workers eases in February (ET 21.3.14)

Retail inflation for farm workers and rural labourers eased to 8.14 per cent and 8.27 per cent

respectively in February from 9.08 per cent and 9.21 per cent in January mainly due to

decrease in prices of food items.

"Point to point rate of inflation based on the CPI-AL and CPI-RL decreased from 9.08 per

cent and 9.21 per cent in January, 2014 to 8.14 per cent and 8.27 per cent in February, 2014,"

said a press release.

It said the inflation based on food index of Consumer Price Index-Agriculture Labourers

(CPI-AL) and Consumer Price Index-Rural Labourers (CPI-RL) were at 6.85 per cent and

6.99 per cent respectively during February.

The all India CPI-AL and CPI-RL for February, 2014 remained stationary to stand at 757

points and 759 points respectively.

In case of farm workers, it recorded an increase between 2 to 9 points in 11 states and a

decrease between 1 to 9 points in 8 States. The index however, remained stationary in one

state. Haryana with 843 points topped the index table whereas Himachal Pradesh with the

index level of 623 points stood at the bottom.

In case of rural workers, the index recorded an increase between 1 to 7 points in 12 States,

and a decrease between one to 8 points in 8 states. Haryana with 836 points topped the index

table whereas Himachal Pradesh State with the index level of 656 points stood at the bottom.

The indices for farm and rural labourers in respect of Rajasthan registered maximum

increase of 9 points and 7 points respectively.

This was mainly due to increase in prices of wheat, bajra, pulses, gingely oil, milk, ghee,

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vegetables & fruits, sugar, dhoti (cotton mill), plastic shoes and toilet soap.

The index numbers for farm and rural workers in respect of Andhra Pradesh registered

maximum decrease of 9 points and 8 points respectively mainly due to decrease in the prices

of rice, jowar, ragi, groundnut oil, onion, vegetable & fruits, sugar and firewood.

2014 farm output at risk, CPI might spike again (BS 24.3.14)

Hailstorms may cause Rs 12k-cr crop damage, El Niño a bigger worry

India’s hope rally will be at risk if El Niño actually strikes this year. Even if a reformist

government comes to power in May, global weather forecasts seem to suggest India is faced

with the prospect of an erratic rainfall, as a result of the waters of the Pacific Ocean warming

(known as the El Niño effect).

It is very difficult to predict incidence of this event. According to

analysts and economists, in past years, whenever the impact of

this event was severe, agricultural output contracted — triggering

a weak agriculture output and a rise in food prices. The hailstorm

this year has already hit the rabi crop in three states and will

impact food prices, believe experts.

Predicting El Niño and its effects are a little difficult now as

accurate predictions are possible only after summer is midway

through. However, analysts at Jefferies believe: “Delayed

monsoons are becoming increasingly frequent in the recent years

in India and as a result, India’s agriculture growth has not been

negative since 2002.”

It is not India alone that is facing weather risks. Over the past two months, global food prices

have risen, owing to drought in Brazil and dry weather conditions in the southeast Asia.

While these prices have had little impact on food prices in India so far, a weak monsoon

could materially change the prospects if history is any guide, adds Jefferies.

For starters, the hailstorm is expected to adversely hit this year’s gross domestic product

(GDP), too. Bank of America Merrill Lynch’s Jyotivardhan Jaipuria and Indranil Sengupta

say: “The hailstorm could likely result in an estimated crop failure at about Rs 12,000 crore

(0.1 per cent of the full-year the GDP). However, for the quarter, this would be 0.4 per cent

of the GDP (4.8 per cent BofA-ML estimated base case) and two to 2.5 per cent of the agri

growth (our forecast is 3.5 per cent).”

Although India has coped well with El Niño so far, farm output might be hit if the effect is

severe. There have been 16 El Niño occurrences since 1984 and only four have been strong in

the last 50 years. Even if the El Niño isn’t strong, agriculture output is sure to decline. In the

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years when the El Niño effect has been strong, the agriculture output has fallen 4.7 per cent.

This clearly highlights the risk the current year’s El Niño forecasts hold for the country’s

GDP growth.