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Agrinews: January 2013
A compilation of major news items relating to the overall farm sector
and selected commodities covered under the study “Agricultural
Outlook and Situation Analysis Reports”
Prepared by
NATIONAL COUNCIL OF APPLIED ECONOMIC RESEARCH
NEW DELHI
(Period covered 26 th December, 2012 to 25 th January 2013. It conatins the
updates on agricultural policy, production and price situaion and general
agricultural news as reported in the selected news papers during the period).
i

CONTENTS
SECTION TITLE PAGE
I HIGHLIGHTS 1
II AGRICULTURAL POLICY 4
III RICE 13
IV WHEAT 20
V MAIZE/COARSE GRAINS 39
VI PULSES 41
VII EDIBLE OILS AND OILSEEDS 45
VIII MILK 70
IX VEGETABLES/ ONION-POTATO 71
X SUGARCANE/SUGAR 77
XI
XII
XIII
INPUTS
OTHER AGRI COMMODITY/NEWS
AGRICULTURAL COMMODITY/ FOOD PRICES
98
105
122
XIV
AGRICULTURAL COMMODITY FUTURES
Note: Newspapers covered: BL= Business Line, BS = Business Standard, ET=
Economic Times, FE-Financial Express
Note: There were no major reports specifically on jowar and bajra, in this month.
132
iii

I HIGHLIGHTS
AGRICULTURAL POLICY
Government to review import duty structure of edible oils (ET 16/1/2012)
Govt constitutes GoM to review urea pricing policy (BS 23/1/2013)
Govt hikes base price for crude edible oil imports (BL 24/1/2013)
Centre to create of 3, 47,000 MT additional storage facility in Assam (ET 25/1/2013)
RICE
India may lose top slot as rice exporter in 2013 (ET, 06/01/2013)
China may step up rice imports from India: US think-thank (ET11/1/2013)
Rice millers see bullish trend, begin to build stocks (BL 25/1/2013)
WHEAT
Govt raises 2013 local wheat purchase price by 5.1 pc (ET, 26/12/2012)
Bumper wheat harvest may push grain stock to 100 mt (BS, 06/01/2013)
Cold wave brightens wheat output prospects ( BL 9/1/2013)
Bumper wheat crop set to treble exports (BS 15/1/2013)
India reaps reward of bumper wheat crops as world exports shrink (ET 15/1/2013)
PULSES
Pulses catch corporate purses (BS, 26/12/2012)
Assam gets Commendation Award for increase in production and productivity of
pulses (ET, 01/01/2013)
EDIBLE OILS & OILSEEDS
Slowing global exports drag edible oils (BL 14/1/2013)
Govt to review import duty structure of edible oils (BL 16/1/2013)
1

Industry oppose DGFT- APEDA norms for groundnut export (BS/16/1/13)
Oil palm: Answer to India's edible oil problem (ET 18/1/2013)
Edible oils rise on tariff value revision (BL 24/1/2013)
MILK
Milk output likely to rise 4% this fiscal (BL, 31/12/2012)
No service tax on transportation of milk by rail or vessel (BL, 04/01/2013)
VEGETABLES/ ONION-POTATO
New crop arrivals smash potato in West Bengal (BL/14.1.2013)
Onion prices up sharply on transport cost (BS 22/1/2013)
Minimum export price for onion likely (BS 25/1/2013)
SUGARCANE/ SUGAR
Karnataka's sugarcane production likely to fall 10% during the current crop year (BS,
08/01/2013)
Govt likely to hike levy price of sugar by Rs 2/kg for this yr (FE 8/1/2013)
Higher sugar output in South draws eastern buyers (BL 10/1/2013)
Sugar industry seeks hike in import duty (BL 18/1/2013)
Sugar mills body hikes output estimate to 24.3 mt( BL 25/1/2013)
INPUTS
Fertilizer sale declines 15% in H1 of 2013: ICRA (BS 24/1/2013)
Fertiliser industry wants direct transfer of subsidy to farmers (BL 25/1/2013)
OTHER AGRI COMMODITIES/ NEWS
Pawar for greater private sector role in farming (BL, 27/12/2012)
K'taka targets 19% growth in food grain production in 12th plan (BS, 27/12/2012)
Look out for ‘GM’ label on packaged food from Tuesday (BL, 31/12/2012)
Transformation of agriculture should be top priority: PM (ET, 03/01/2013)
2

Chill to bring warmth to farm output, may cool inflation (ET, 04/01/2013)
Govt can't ban field trials of GM crops: Sharad Pawar (ET, 10/01/2013)
Rabi acreage falls to a three-year low at 29.3 lakh hectare (ET 24/1/2013)
Grain output may be close to target despite weather woes (ET 25/1/2013)
AGRICULTURAL COMMODITY PRICES
Mismanagement of food system causing inflation: Abhijit Sen (BL 7/1/203)
Better price realisation seen for maize, onion, groundnut (BL, 08/01/2013)
Cold wave and dense fog triggers a sharp rise in vegetable prices, respite for poultry
sector (ET, 09/01/2013)
Global food prices drop 7% in 2012: UN agency (ET 10/1/2013)
AGRICULTURAL COMMODITY FUTURES
Indian edible oil futures extend gains on import duty hike (ET 18/1/2013)
FMC to implement food safety standards for farm items (BL, 17/1/2013)
3

II AGRICULTURAL POLICY
Farm sector seeks stable export policy, higher R&D outlay at pre-Budget meet (BL,
02/01/2013)
The agriculture sector wants the Government to formulate long-term, stable export policies
for agricultural products, besides incentives and higher outlay to boost research and
development (R&D).
At the pre-Budget meeting with Finance Minister P. Chidambaram on Wednesday, experts
from the sector, representing farmers and private companies, stressed the need for a stable
export policy and regulate, if required, using the tariffs.
The Finance Minister kick-started the pre-Budget discussions by meeting the farm sector
representatives.
“A stable export policy is a must for providing good incentives to farmers. If there is a need
to moderate exports of any commodity, the Government should regulate it using duties rather
than imposing a ban on shipments,” said Ashok Gulati, Chairman, Commission for
Agriculture Costs and Prices (CACP). He was talking to reporters after the meeting.
Gulati, in his presentation, stressed the need to contain subsidies – food and fertilisers. The
food and fertiliser subsidy in FY 2013-14 may touch Rs 2,00,000 crore if the National Food
Security Bill is introduced and wheat and rice are sold at Rs 2 a kg and Rs 3 a kg,
respectively, as promised, and if fertiliser prices were not revised upwards, he said.
Implementation of conditional cash transfer could potentially reduce food subsidy by over Rs
50,000 crore by plugging the leakages, Gulati said.
The CACP estimates that 40 per cent of food distributed through the public distribution
system does not reach the targeted beneficiaries and leaks away in the system.
The CACP also suggested having a viable strategy and long-term commitment to boost
cultivation of oil palm, which can help cut down the rising imports of edible oils.
The experts also stressed the need to hike R&D allocation to various Government research
institutes to boost productivity and develop climate change resilient varieties.
P. Chengal Reddy, Secretary General, Consortium of Indian Farmers Association (CIFA)
said the Government should announce incentives to attract private investments in food
processing, infrastructure, irrigation projects and agro service centres.
The CIFA wants the Government review the terms of reference of CACP in recommending
the minimum support price for ensuring profitable prices to farmers. It also wants the
Government to declare region-wise MSP as cost of production varies from region to region.
The CIFA sought duty exemption on all imported farm equipment and machinery for a
period of five years and extend long-term credit to farmers at 3 per cent interest rate to
purchase farm machinery.
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Y. Sivaji, a former MP, suggested setting up of a CACP in each State so that State
Commissions could fix the minimum support price considering local conditions. Sivaji also
suggested that the Government should consider an indexation system for the MSP as in done
in calculating the dearness allowance according to the cost of living.
Government to review import duty structure of edible oils (ET 16/1/2012)
The Centre is planning to restructure duty on edible oils to protect the interests of domestic
oil industry and oilseeds growers. It may impose an import duty of 5% on crude oil and hike
duty on refined palmolein oil from 7.5% to 12.5%. in a meeting on Tuesday, Union food
ministry has been asked to review custom duties on edible oils. Agriculture ministry may
move a Cabinet proposal in this regard. "Union Agriculture Minister Sharad Pawarand Food
Minister KV Thomas met Finance Minister P Chidambaram to discuss the duty structure on
edible oils and explore the possibilities of raising the duty to discourage imports," said a food
ministry official. The food minister admitted that they met for a quick review on the status of
edible oils, wheat exports and the sale of wheat in open market. "We had a discussion on
these issues. But at present, we can't say anything about what we intend to do," Thomas said.
The Solvent Extractors' Association (SEA), an industry body, has sought the government to
raise the import duty on crude palm oil by 10% and refined palmolein oil from the existing
7.5% to 20% to protect the soya bean and mustard seed farmers who are struggling to get
remunerative prices due to heavy oil imports. The prices of refined palmolein oil have come
down drastically from Rs 58,789 a tonne in December 2011 to Rs 48,000 in December 2012.
The import of edible oil during 2011-12 (Nov to Oct) jumped 19% to 99.8 lakh tonne
compared to 83.7 lakh tonne during the same period previous year. However, the domestic
availability of edible oils during 2011-12 has been 73.4 lakh tonne as against 79.2 lakh tonne
in the previous year.
"Growing demand of edible oils is being met by additional imports rather than from domestic
sources of supply. To arrest this trend, it is essential that the government should encourage
production of oil seeds and put a reasonable duty to discourage cheap imports," said BV
Mehta, executive director, SEA. The Commission for Agricultural Costs and Prices (CACP),
a government agency that advises on agri-prices, too believes that imported edible oils should
be taxed appropriately for developing oil palm in the country. In a report, it has
recommended 10% duty on the import of oilseeds, 12.5% on crude oil and 15% on refined
oil. "There has to be appropriate duty on edible oil imports to develop domestic markets.
Cheaper imports will distort prices and farmers will not be able to recover prices," said
Ashok Gulati, chairman of CACP.
According to industry sources, steep fall in crude palm prices in global market has badly
affected the farmers involved in oil palm cultivation. Farmers have started uprooting the oil
palm trees in Tamil Nadu.
5

Parliamentary panel for Food Bill wheat guarantee at Rs 2, rice at Rs 3 to all
beneficiaries (FE 18/1/2012)
A Parliamentary panel today suggested scrapping separate rates and quantity of foodgrains
sold to poor and general public and said the UPA's ambitious Food Bill should guarantee 5
kg of wheat and rice to all beneficiaries at a uniform price of Rs 2 and Rs 3 per kg,
respectively.
At present, below poverty line (BPL) families effectively get 7 kgs of wheat and rice at Rs
4.15 and Rs 5.65 per kg per month, respectively.
In the Food Security Bill, the government had proposed to change this by giving 7 kg of
wheat and rice to a person at Rs 2 and Rs 3 per kg. Non-BPL families, as per the Bill, were to
get 3 kg of foodgrain at half of the government fixed minimum support price which translates
into about Rs 7 per kg for wheat and Rs 10 kg for rice.
Parliamentary Standing Committee, headed by Congress leader Vilas Muttemwar, in its
report submitted to Lok Sabha Speaker Meira Kumar, suggested drastic changes in the Bill
by seeking that all entitled beneficiaries be provided 5 kg of wheat and rice per month at a
uniform rate of Rs 2 and Rs 3.
The recommendations of the House Panel are generally not binding on the government. The
government may however decide to accept the changes proposed as these suggestions match
its own re-thinking on implementation of the ambitious scheme.
If accepted, the recommendations will benefit the general population in both price and
quantity, while BPL member will get lesser quota than what was proposed in the original
Bill.
The Food Security Bill aims to benefit 67 per cent of the nation's population.
Speaking to media after presenting the report, Muttemwar said the panel had suggested
coverage of 75 per cent of rural population and 50 per cent of urban as proposed in the Bill.
The bill, a pet project of UPA Chairperson Sonia Gandhi, was introduced in December 2011
and was referred to the Standing Committee for examination in January 2012.
The report of the panel, which comprises 31 members cutting across party lines, had only one
dissenting note from CPM member T N Seema.
On other recommendation, Muttemwar said: "We have asked the government to give
additional 5 kg of foodgrains per month to women during pregnancy and till two years after
child birth". The panel has asked the government to modernise PDS and computerise supply
chain.
"We have suggested that there should be single category of beneficiary with uniform
entitlement of 5 kg per person per month at uniform subsidised price," Muttemwar said.
"There should be no general and priority households categories, only inclusion and
exclusion. This suggestion has been made to make food bill sustainable," he added.
6

The panel was of the view that "such categorisation is very complicated and impractical" and
it would have been difficult to implement, he said.
Asked about lowering the quantity from 7 kg to 5 kg, he said: "The Committee found that
entitlement of 7 kg or 11 kg would not be feasible considering the current production and
procurement trends."
The requirement of foodgrains and other welfare scheme would be 56.8 million tonnes and
subsidy would be Rs 1.12 lakh crore, he said, adding that the coverage should be reviewed
after 10 years and rates after 5 years.
On cash transfer of food subsidy, Muttemwar said the committee felt that cash transfer in lieu
of foodgrains entitlements at this juncture may not be desirable.
It has recommended that banking infrastructure and accessibility to banking facility should
be made available throughout India before introducing cash transfer.
Considering the demand from States for universal coverage, the Committee recommended
that they should be given the flexibility to extend the coverage beyond this bill to cover more
population out of their own resources.
"simple and fair way of setting state-wise exclusion ratio should be prescribed in a
transparent manner so as to retain the existing coverage of population".
Stating that allocation to some states may fall from current level, the panel has suggested that
the Centre should protect states' quota through executive orders.
On the issue of sharing of expenditure between the Centre and the states, the committee has
recommended that the states can be divided into three categories -- A, B and C -- based on
their financial performance.
The Centre may provide financial assistance to the extent of 50 per cent to Category B and
75 per cent to Category C for one time capital expenditure to be incurred on creation of
infrastructure, constitution of state food commission, upkeep and creation of storage space,
etc, it added.
The Food Ministry should consult the Finance Commission in relation to the additional
expenditure required to be borne by the state governments so that they can allocate sufficient
funds in their respective budgets for the implementation of the National Food Security Bill,
2011.
The panel also suggested that Ministry of Railways should initiate urgent steps to improve
basic infrastructural facilities at those railheads, which lack facilities such as proper lighting,
covered sheds, approach roads and proper platforms.
7

The committee was also of the view that people living in villages have no access to higher
authorities at the district level and therefore recommended that the Bill should have
provisions for grievance redressal at block/village panchayat level.
Budget may lower provision for fuel, fertiliser subsidies (BL 21/1/2013)
The Finance Minister seems to be betting that falling crude oil prices abroad and rising diesel
prices at home will together keep the budgeted amount for fuel and fertiliser subsidies in the
next fiscal lower than that provided for in Budget 2012-13.
The 2013-14 Budgets may provide lower subsidies for fuel and fertiliser, informed sources
told Business Line.
This is despite the expectation that the revised estimate for expenditure under this head this
fiscal will be much higher than the Budget number. The Budget is to be presented on
February 28.Announcing the roadmap for fiscal consolidation, the Finance Ministry proposed
capping the fiscal deficit at 4.8 per cent of GDP for 2013-14.
Earlier, the then Finance Minister Pranab Mukherkee, while announcing the Budget, had
said: “Over the next three years, it (expenditure on subsidies) would be further brought down
to 1.75 per cent of GDP. Such a step is needed to improve the quality of public spending.”
According to the Budget estimate, expenditure on central subsidies for 2012-13 is 1.9 per
cent of GDP.
FUEL NOT A PROBLEM
A senior government official explained that lowering the fuel subsidy could be easy.
As the Government has authorised oil companies to adjust diesel prices upwards
incrementally over a period and sell diesel at market price to bulk buyers, this will save some
money.
Although raising the cap on subsidised cylinders will be a drain on funds, that extra burden
could be met from a part of the savings on diesel. “So, net-net, there is a lower fuel subsidy,”
the official added.
8

FERTILISERS TOUGH
However, the task will not be as simple for fertilisers, another senior Government official
admitted, adding that the Fertiliser Ministry’s demand for a special banking arrangement of
Rs 25,000 crore to settle subsidy dues for 2012-13 may create a fresh liability next fiscal.
Since borrowings from banks are to be made against fresh receivables from the Government,
it has to be seen whether the entire liability is provided for in the next Budget or amortised
over the years, the official said.
One option could be providing the money through supplementary demand for grants to be
brought at the time of the Budget.
“Until and unless there is scope through non-tax revenues, providing the entire money
through revised estimates can easily blow the chance of keeping fiscal deficit under 5.3 per
cent,” he said.
Govt constitutes GoM to review urea pricing policy (BS 23/1/2013)
Facing a mounting subsidy burden and imbalanced use of fertilisers, government has
constituted a Group of Ministers (GoM), which is likely to be headed by Agriculture Minister
Sharad Pawar to look into urea pricing.
Apart from Pawar, the GoM will include Finance Minister P Chidambaram, Fertiliser
Minister M K Alagiri and Oil Minister M Veerappa Moily.
“The government has formed a GoM, which is most likely to be headed by Sharad Pawar and
it will look into the modified New Pricing Scheme (NPS) III for urea as well as consider
earlier proposals for de-regulating the sector,” a senior Fertiliser Ministry official said.
Urea is the only fertiliser that remains under full price control. Its current retail price is Rs
5,360 a tonne. The proposal to hike urea prices was made to redress imbalanced use of soil
nutrients and reduce government’s subsidy burden.
Another senior official in the ministry said the department of fertilisers is not in favour of
raising the prices of the key nitrogenous crop nutrient as the farmers are already facing high
prices of phosphates (P) and potassium (K) fertilisers.
“After the Cabinet Committee of Economic Affairs’ (CCEA) decision in June 2012 to send
the proposal back to the GoM on urea prices to be reviewed again, the Ministry had some
three months back sent its revised proposal to Prime Minister’s Office (PMO) and it has been
with them since then,” the official said.
PMO acted on the proposal last week and asked a GoM to be formed to reconsider the urea
pricing policy.
9

The constitution of the GOM comes in the backdrop of stiff resistance by Fertiliser Ministry
in raising urea prices and bringing the sector under the nutrient based policy (NBS) like P&K
fertilisers.
In June last year, CCEA had deferred the ministry’s proposal to increase the retail prices of
urea by 10 per cent.
It had sent the proposal back for review to the then GoM, which was headed by then Finance
Minister Pranab Mukherjee.
Earlier, the government had plans to decontrol the urea sector by bringing it under the
nutrient based subsidy (NBS) scheme. A committee headed by Planning Commission
member Saumitra Chaudhary had also suggested freeing of the sector.
However, the proposal hit a road block as the Fertiliser Ministry, among others, opposed it in
view of rise in retail prices of P&K fertilisers after they were decontrolled in April 2010.
Govt hikes base price for crude edible oil imports (BL 24/1/2013)
The Government has almost doubled the base price or tariff value for import of crude edible
oils linking it to global prices of the commodity. However, there is no change in the base
price for refined oil imports.
The base price for crude palm oil (CPO) has been hiked to $802 a tonne from the earlier
$447. For refined, bleached and de-odourised (RBD) palm oil, the base price now stands at
$853 against the earlier $476.
For crude palmolein, the base price has been set at $860 from $481 earlier , while for crude
soyabean oil the base price has been more than doubled to $1,190 a tonne from the earlier
$580 a tonne.
More imports feared
The latest tariff revision follows the recent levy of 2.5 per cent import duty on crude edible
oils to protect domestic oilseed growers from cheap imports from Malaysia and Indonesia.
The refined oils attract an import duty of 7.5 per cent.
The edible oil industry fears that the latest hike in tariff value would result in more import of
refined oil affecting the domestic refiners.
“The hike in base import price for crude edible oils will reduce the price difference between
crude and refined palm oils to around 5 per cent from the earlier 7.5 per cent,” said B.V.
Mehta, Executive Director, Solvent Extractors Association of India (SEAI).
The reduction in price difference will prompt importers to bring in more of refined oils and
would indirectly encourage value addition in the producing countries.
10

“It will be detrimental to the local refiners and their capacity utilisation will be hit,” Mehta
said.
India is the largest edible oil importer and palm oil account for about 80 per cent such
imports.
Edible oil imports have been on the rise on growing domestic consumption.
For the edible oil year ending October 2012, India’s imports stood at almost 10 million
tonnes.
The edible oil imports were up 35 per cent in December 2012 at 9 lakh tonnes over
corresponding period last year’s 6.69 lakh tonnes.
Centre to create of 3, 47,000 MT additional storage facility in Assam (ET 25/1/2013)
For stocking food grains the government of India has decided to increase the storage
capacity, the Centre will construct 11 new food grains go downs at different locations in the
state of Assam to strengthen Public Distribution System.
Location wise details of capacity to be created are as follows:
NAME OF LOCATION
1. Changsari Ph. I & II (50,000 MT in each phase) 1,00,000
2. Nowgaon Ph. I & II (with siding)
(25,000 MT in each phase)
CAPACITY IN MT
50,000
3. Dibrugarh (with siding) 25,000
4. Barpeta Road ( with siding) 25,000
5. Karimganj 5,000
6. Fakiragram 5,000
7. Tezpur Bindukuri/(with siding)\ 25,000
8. Salchapara (with siding) 25,000
9. Kokrajhar (with siding) 30,000
10. Bongoigaon (with siding) 25,000
11. Junai (with siding) 25,000
12. Hojai 2,500 (within existing
complex)
13. New Lakhimpur 2,500 (within existing
complex)
14. Jogigopa 2,000 (within existing
complex)
Total 3,47,000
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These godown to be constructed or expanded by the Food Corporation of India ( FCI), will
add food grain storage capacity of 3,47,000 MT in the state of Assam. Besides this additional
storage capacity will also be crated at three existing locations in the state.
12

III RICE
India may lose top slot as rice exporter in 2013 (ET, 06/01/2013)
India may lose global leadership in the rice market in 2013 as shipments are likely to slide by
30 per cent to 7 million tonnes due to weak prices and surplus grain BSE 4.86 % in Thailand,
according to government advisory body CACP.
India had emerged as the world's largest rice exporter in 2012 beating its Asian counterpart
Thailand with shipment of around 10 million tonnes. The country was at the third slot in
2011, it said.
"I feel India should not be exporting more than 7 million tonnes this year," Commission for
Agriculture Costs and Prices (CACP) Chairman Ashok Gulati told PTI.
Rice shipments from the country could slowdown because of shrinking export profit margin,
he said.
"Our margins would take a hit with rise in the minimum support price of paddy and if global
prices weaken due to aggressive exports from Thailand and Vietnam," Gulati said.
The world rice market is 35 million tonnes. Shipments from Thailand are expected to rise as
the country has surplus stock of 12 million tonnes of the grain, he added.
On wheat, the CACP chief said India is expected to double exports to 7-8 million tonnes in
2013, as against an estimated 4 million tonnes last year.
"Wheat exports were 2.9 million tonnes during January- September of 2012. Expecting
another 1 million tonnes export to undertake during fag end of last year, taking total wheat
export to 4 million tonnes," Gulati said.
Sufficient domestic supply and better global prices would prompt private players to
aggressively export wheat this year, while more stocks from central pool can be shipped if
the government acts quickly, he said.
In September, government lifted the ban on rice and wheat exports after it was convinced that
the central pool has sufficient stocks to meet the demand of PDS and the proposed food
security bill.
India has sufficient rice and wheat stocks due to bumper output. Last year, their output was at
record 104.32 million tonnes and 93.90 million tonnes, respectively.
13

Hybrid seeds will help raise rice productivity: Study (FE, 09/01/2013)
Rice output in India can be raised at least 15-20 per cent through increased use of hybrid
seeds, a Rabobank study said. The use of technologically advanced seeds is currently much
lower in the production of rice than in other crops.
Of the total annual rice output in India — around 99 million tonnes, according to US
Department of Agriculture estimates for the 2012-13 season — only three per cent is
produced through hybrid seeds. The remaining quantity comes through breeding of
conventional seeds.
Since the genetically modified Bacillus thuringiensis rice is not allowed for
commercialisation in India, scientists and technocrats would have to focus only on improved
variety of hybrid seeds to raise productivity. “The primary focus for rice research should be
on developing hybrids with improved productivity and acceptable cooking quality
requirements. Hybrid rice has the potential to raise production between 15-20 per cent,” the
study said.
The existing guidelines mandate any hybrid seed to be able to deliver at least 10 per cent
higher output than the normal conventional seeds in that category. Some of the circulating
hybrid rice seeds, however, deliver over 10 per cent of additional output in favourable
climatic conditions.
Comparing India’s presence in hybrid rice with China, the study said the world’s largest
producer had made great strides in production by undertaking hybrid cultivation in a major
way. Almost half of China’s total area under rice is covered by hybrid varieties, and a similar
approach could be taken in India. The Indian government is already focusing on hybrid
cultivation in the eastern states and needs to extend this practice to the rest of the countryit
said.
Currently, hybrids are limited to the northern and eastern parts of India due to the nature of
the grain, not preferred in many parts of the country. To expand the market, companies need
to invest in research to develop hybrids suitable for western and southern India. Some of the
‘must have’ factors for entering and expanding India’s presence in hybrid paddy are high
yield advantage over other varieties, good genetic purity, suitability for a wider geographical
area and resistance to biotic and abiotic stresses.
The initial research for vegetables and oilseeds has shown excellent results in fruit and
vegetables such as okra, bottle gourd, watermelon, musk melons, tomatoes, etc. There could
be immense scope for developing hybrids for some novelty vegetables, such as cherry
tomatoes, baby corn, lettuce and asparagus.
Therefore, private companies should have access to advanced hybrids or else they will need
to focus their research on developing hybrids with tolerance to viral infections. The same is
true for oilseeds, and continuous effort towards productivity/quality improvement is needed
for developing superior quality hybrids in the future.
14

Large seed producing companies, including Bayer Crop Science, Dow Agro Sciences,
Pioneer, Monsanto and Syngenta are currently active in both upstream technology and
downstream distribution activities in the Indian seed market. These companies have strong
research base with high spends on research and development operations for new traits
development, and a good germplasm base of their own.
The study suggests that multi-national corporations in India should continue to focus on
acquiring domestic companies with a good local germplasm base and good distribution
strength in the seeds space, but they should also be on the lookout for agrochemical
companies strong in developing new chemistries.
China may step up rice imports from India: US think-thank (ET11/1/2013)
"China's total rice import was 2-3 million tonnes from Vietnam and India last year. I can't
say how much rice has been imported from India but definetly some quantity has been
imported for the first time after a gap of many years," US- based International Food Policy
Research Institute (IFPRI) Director General Shenggen Fan said at an event here.
China may enhance rice import from India in coming years in the wake of rise in cost of farm
production, an expert said today.
"China's total rice import was 2-3 million tonnes fromVietnam and India last year. I can't say
how much rice has been imported from India but definetly some quantity has been imported
for the first time after a gap of many years," US- based International Food Policy Research
Institute (IFPRI) Director General Shenggen Fan said at an event here.
India emerged as the world's largest rice exporter in 2012 beating its Asian counterpart
Thailand with shipment of around 10 million tonnes.
"It is just a beginning and China's rice import from India could enhance in the coming years
with cost of labour, water and land increasing. Also, it is cheaper to import foodgrains from
India instead of providing subsidies to farmers," he said.
As far as wheat is concerned, the country is buying largely from the US, Canada and
Australia and not from India. "However, there is scope for import as India has a
massive stocks of rice and wheat," he said on the sidelines of a function here.
India has sufficient rice and wheat stocks due to bumper production. Last year, rice and
wheat output was at record 104.32 million tonnes and 93.90 million tonnes, respectively.
On poverty level in Asian countries like India and China, Fan said, "The region as a whole is
not on track in meeting the millennium development goal (MDG) of cutting the rate of
undernourishment by half between 1990 and 2015."
15

Only in the southeastern Asia, the trend is on the MDG target, he said, adding that food and
nutrition insecurity continues to be an important challenge in Asia.
"India accounts for some 217 million or a quarter of all undernourished people globally. As a
result, India is likely to miss the MDG target," he said.
Innovations in agri-technologies, institutions and policy are to be improved to address the
challenges of food and nutritional insecurity in Asia, he added.
Emphasizing that investment in agri-research have substantially reduced rural poverty by
stimulating farm growth and reducing food prices, Fan said: "The research finding shows that
for every rupee invested in agri-research in India, Rs 13.5 is returned.
"Therefore, Indian government should increase investment in agriculture, rural infrastructure
and education as these have high payoffs in terms of raising smallholder farmers'
productivity and incomes," he added.
Doubling investment in agriculture research and output maximizing scenario results in 261
million people moving out of poverty globally by 2025, IFPRI observed.
Thailand continues rice business as unusual: Clyde Russell (FE 15/1/2013)
Thailand starts the New Year having surrendered its crown as the world's top rice exporter,
and saddled with an ever-growing stockpile of the grain as the costs of its subsidy scheme
mount.
However, one thing appears increasingly certain about the programme to pay farmers abovemarket
prices for their rice: it will continue as long as it secures votes for Prime Minister
Yingluck Shinawatra and government coffers hold out. Thailand is estimated to have
exported about 6.8 million tonnes of rice in 2012, down about 35 percent from the prior year,
as the costs of the intervention scheme made Thai prices
uncompetitive.
This figure is based on forecasts by traders as the government removed data from its website
last October and officials will no longer divulge data. This is classic head-in-the-sand
behaviour, but Thailand's rice problems won't disappear just because the government tries to
conceal what is happening.
India is the new number one rice exporter, taking the title for the first time since 1983, with
exports likely to be about 8.5 million tonnes in the fiscal year to the end of March 2013.
16

In second spot is Vietnam with 2012 exports of about 7.7 million tonnes. It is no surprise that
Thailand's rice exports slumped, since its prices are about 37 percent above those of Vietnam
and India.
Thailand now has more than 12 million tonnes of stockpiled rice, about a fifth more than the
most it has ever exported in a year. The authorities are maintaining they will sell 7 million
tonnes in government-to-government deals in 2013, but to say the market is sceptical would
be putting it mildly.
Commerce Minister Boonsong Teriyapirom claimed in September that Bangkok had
contracts to sell 7.3 million tonnes in 2012 to countries including Indonesia and the
Philippines.
The problem was that those countries denied any deals had been signed and traders didn't see
any cargoes leaving Thai ports. The government did sign a memorandum of understanding
with China to allowing rice exports to Beijing, but so far there is no sign of any additional
cargoes.
In fact, quite the opposite is true, with Thai rice exports to China falling 52 percent in the
first 11 months of 2012 from the prior year, according to Chinese customs data.
In contrast, Vietnam's exports to China were up 568 percent, and the Southeast Asia nation's
total of 1.495 million tonnes was almost three-quarters of China's total imports of 2.129
million tonnes in the first 11 months of 2012.
The Chinese figures show the real problem for Thailand, namely that its share of exports is
being taken away by competitors and the overall rice market has adapted remarkably well to
lower supplies from the southeast Asian nation.
CHINA ONE OF THE FEW IMPORTERS
China has been importing considerably more rice than normal, with total inbound shipments
up 311 percent in the first 11 months of 2012 from the prior year. This is probably because
domestic prices are higher than current import prices, meaning imports may remain elevated
as Asian rice prices remain subdued thanks to plentiful supply.
But China may be one of the few buyers importing more this year.Indonesia, which normally
buys between 1 million and 2 million tonnes a year, currently has more than its target of 2
million tonnes in stockpiles and is forecasting a domestic crop
big enough to meet demand.
The Philippines may also import less in 2013 on rising domestic output, and with India likely
to have more available for export, the likelihood is that too many cargoes will be chasing too
few buyers. This means that if the Thai government is serious about selling down its record
stockpile, it will have to accept lower prices. Of course, selling at lower prices crystallises the
17

losses on the programme, which was budgeted at 80 billion baht ($2.64 billion) for the fiscal
and crop year that started October 2011.
Currently the government pays 15,000 baht a tonne for paddy, which works out to about
$742 a tonne for milled rice, a premium of about 33 percent to the current price for Thai rice,
and 81 percent above the cost of Vietnamese rice.
Assuming the government could only move large quantities of rice at the lower, Vietnamese
price, each tonne would yield a loss of about $330, meaning selling even the targeted 7
million tonnes would result in a deficit of $2.3 billion.
But money isn't the real issue here, it's votes. And so long as the Thai government doesn't go
bankrupt, it will continue to pay out the subsidies and build stockpiles.And so long as the
global rice market remains in surplus, the loss of several million tonnes a year of Thai
exports won't really make that much difference. (Clyde Russell is a Reuters market analyst.
The views Expressed are his own.)
Rice millers see bullish trend, begin to build stocks (BL 25/1/2013)
Karnal, Jan 24: Low availability of stocks coupled with the expectations of good demand in
upcoming weeks pushed aromatic and non-basmati rice prices up on Thursday.
Rice millers are expecting that rice prices may go up further and, hence, they are building
inventories, said Amit Chandna, proprietor of Hanuman Rice Trading Company.
Similarly, traders are also quoting their stocks on higher levels.
Though market sentiments are positive, rally was not expected this week, he added.
Demand for brokens is also good in the domestic market. Traders expect that market may
witness some good levels in February, said Amit Chandna.
In the physical market, Pusa-1121 (steam) went up by Rs 300 and sold at Rs 7,400 a quintal
while Pusa-1121 (sela) improved by Rs 275and quoted at Rs 6,400.Price of pure basmati
(raw) increased by Rs 400 and quoted at Rs 8,500. Duplicate basmati (steam) traded Rs 300
up at Rs 6,000-6,100.Similarly, non-basmati rice rallied on low stocks.
Sharbati (steam) improved by Rs 500 at Rs 4,800-4,900 while Sharbati (sela) went up by Rs
300 at Rs 4,600.
PR-11 (sela) increased by Rs 150 at Rs 2,700-2,800 while PR-11 (raw) up Rs 125 at Rs
2,700-2,725. Permal (raw) improved by Rs 100 at Rs 2,300-2,400 while Permal (sela) was Rs
150 up at Rs 2,250-2,400.For the brokens of pusa-1121, Dubar quoted at Rs 2,800, Tibar Rs
4,000 while Mongra was at Rs 2,400.
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Paddy Arrivals
About 1,000 bags of PR variety arrived and went for Rs 1,250. Three thousand bags of
Sharbati arrived and quoted at Rs 2,100. One thousand bags of DB went for Rs 2,900-2950.
About 5,000 bags of Pusa-1121 arrived and quoted at Rs 3,500-3,550.
19

IV WHEAT
Govt raises 2013 local wheat purchase price by 5.1 pc (ET, 26/12/2012)
India has raised the purchase price of wheat payable to farmers next year by 65 rupees to
1,350 rupees ($24.56) per 100 kg, Finance Minister P. Chidambaram said on Wednesday.
India, the world's second-biggest producer of the grain, paid a minimum purchase price of
1,285 rupees per 100 kg in 2012.
India sets a price to buy grains from local farmers to protect them from distressed sales, help
maintain stocks for emergencies and run various welfare programmes.
The government has also decided to allow an extra 2.5 million tonnes of the grain for
overseas sale, continuing with the export window for the second year in a row.
India allowed 2 million tonnes of wheat for overseas sales in 2012 from government
warehouses as part of a strategy to cut huge stocks built due to successive bumper harvests.
Rise in wheat MSP pushes Food Ministry's economic cost by 5 pc (ET, 02/01/2013)
The Food Ministry's economic cost of wheat -- the amount incurred in procuring and storing
the grain-- is set to rise by 5 per cent to Rs 19,147 per tonne with the increase in the
minimum support price (MSP) of the grain (BSE 2.04 %) an official said.
Last month, the government had raised the MSP of wheat by Rs 65 to Rs 1,350 per quintal
for the 2013-14 marketing year (April-March).
"The hike in wheat MSP will also lead to a rise in the economic cost of procuring and storing
the grain. It will now rise to Rs 19,147 per tonne in 2013-14 marketing year from Rs 18,225
per tonne in the 2012-13 marketing year," a senior Food Ministry official said.
The government had procured 38.15 million tonnes of wheat in 2012-13 rabi marketing year,
which was 10 million tonnes more than the procurement made in the 2011-12 marketing
year.
"With an higher MSP, conducive weather and progress in sowing, the procurement of wheat
is expected to rise. Already rice procurement is expected to touch 40.13 million tonnes in
2012-13 marketing season (October-September) and this will lead to a rise in the food
subsidy bill," the official added.
Food Ministry has already sought an additional Rs 14,300 crore during this fiscal for rice
procurement in the 2012-13 marketing season.
Another Food Ministry official said with the rise in MSP and other incidental costs involved
20

in procurement, the economic cost of wheat and rice procured by public agencies have been
increasing.
"As the Central Issue Price (CIP) remains unchanged, the gap between the economic cost and
CIP, which is borne by the Centre, as food subsidy has been rising," the official added.
CIP is the rate at which the Central government issues food grains for the public distribution
system (PDS) to states and union territories.
The Centre incurred an expenditure of Rs 72,370 crore on food subsidy in 2011-12 fiscal and
in the current financial year, out of the total allocation of Rs 74,552 crore it has spent Rs
61,259 crore till December 15, 2012
Wheat planting picks up; may exceed last year’s acreage (BL, 04/01/2013)
Planting of rabi crops, such as wheat and mustard, gained momentum amidst the drop in
temperatures across North India.
Wheat, a key winter crop, was planted in 286.38 lakh hectares, as on January 4, according to
Agriculture Ministry data. The wheat acreage is about 2 per cent higher than the
corresponding period last year. Farmers in Madhya Pradesh, Rajasthan, Bihar and Uttar
Pradesh have planted more wheat compared with last year.
The recent announcement of minimum support price (MSP) at Rs 1,350 a quintal has
provided a fillip to wheat planting. The Government has set a wheat production target of 86
million tonnes in the current rabi season. Last year, wheat was planted in 290 lakh ha and the
country had a record harvest of 93.9 million tonnes. Wheat planting goes on till end-January.
With a couple of more weeks to go, acreage could possibly exceed last year’s acreage.
The area under rabi oilseeds has also seen a marginal increase at 80.99 lakh ha against 79.41
lakh ha last year. The acreage under rapeseed mustard stood at 66.18 lakh ha, up from last
year’s 64.35 lakh ha. The Government is targeting an area of 71.41 lakh ha under mustard in
the current rabi season. States such as Rajasthan, Gujarat, Uttar Pradesh and Bihar have
reported higher acreage under mustard.
Groundnut acreage has also seen a marginal rise at 4.84 lakh ha against the corresponding
last year’s 4.15 lakh ha. States such as Andhra Pradesh and Odisha have reported an increase
21

in acreage. The area under sunflower has also risen at 4.38 lakh ha against 3.76 lakh ha last
year.
The total area under pulses is marginally lower at 136.05 lakh ha against 136.65 lakh ha last
year. However, farmers in Madhya Pradesh, Maharashtra and Karnataka have planted more
area under gram, a key winter crop. The area under gram stood at 89.40 lakh ha against 86.37
lakh ha in corresponding last year. However, the acreage under urad dropped marginally.
The area under coarse cereals such as maize and barley has also seen a rise, while the rabi
rice acreage has dropped marginally.
FCI may invite bids in March to set up wheat silos (BS, 04/01/2013)
Taking a stride towards the creation of silos for the scientific storage of wheat under the
approved capacity of 2 million tonne, the Food Corporation of India may invite the bids from
the private players in March 2013.
“Technical specifications and standards have been finalised. The RFQ (Request for
Qualification) and the RFP (Request for Proposal) would be floated in March,” a source in
the FCI told Business Standard.
“There has been a plethora of enquiries from private players for investment opportunities in
this model. That is a big encouragement for us. The two-million tonne project will be a big
leap towards modern storage,” the source added.
The government of India will provide 20 per cent viable gap funding (VGF) if the land is
provided by the state government or agency. If the state government fails to provide the land,
the silo would be constructed on the build, operate, own, transfer (BooT) model.
A minimum of 9-10 acres of land is required for a silo of 50,000 tonne capacity. This land
requirement includes 1.5 acre for railway siding.
Out of the ten states shortlisted for creating silo capacity, Assam is the front runner having
the required land. Maharashtra has acquired some land and is in the process of more
acquisitions. Uttar Pradesh has demanded more time while Haryana has refused to arrange
any land.
The remaining states are yet to submit their preparations for land.
Punjab and Haryana fall under the category of ‘producing states’.
The states of West Bengal, Assam, Maharashtra, Gujarat and Kerala are ‘consuming states’.
Three states (Uttar Pradesh, Madhya Pradesh and Bihar) fit the category of both producer and
consumer states.
If things fall in line, the construction of silos should be in full swing in the year 2013-14 and
should be in place by 2014-15.
22

The creation of silos rests on an integrated model where bulk procurement, bulk storageand
movement saves the intermediate cost and ensures minimum pilferage.
The silos are a part of a joint project by the Ministry of Food and the FCI to create an
additional storage capacity of over 15 million tonnes.
At present, the government of India has a storage space of close to 64 million tonnes.
Bumper wheat harvest may push grain stock to 100 mt (BS, 06/01/2013)
As the country prepares to harvest another bumper wheat crop in 2013-14 crop season that
starts from April, experts fear that another record harvest might push up foodgrain stocks to
100 million tonnes (mt) by June 1 as rice purchases are also expected to be a record.
The situation can be salvaged to a certain extent if the government manages to clear 10-15 mt
of inventories either by way of exports or through domestic sale in the coming financial year.
Grain stock as on December 2012 was estimated to be around 68.3 mt, more than the double
the required the quantity.
“This would clearly show the huge imbalance in our production basket, as also in our policies
that favour wheat and rice over other crops and would be like a crisis, and will have to be
tackled sooner than later,” eminent agriculture economist and chairman of Commission for
Agriculture Costs and Prices (CACP) Ashok Gulati told Business Standard.
GRAIN BASKET
Rabi sowing till January 4 (in million hectares)
Crops 2011-12 2012-13 % Change
Wheat 28.18 28.63 1.59
Coarse cereals 5.63 5.91 4.97
Pulses 13.66 13.60 -0.43
Gram 8.63 8.94 3.59
Oilseeds 7.94 8.09 1.88
Total Rabi 56.01 56.70 1.23
Source: Department of Agriculture
Officials said wheat production in 2013-14 season that starts from April 1, is expected to be
between 85 and 90 mt as sowing till Friday is around 458,000 hectares more than last year.
This year, the country harvested a record 94 mt of wheat compelling state agencies to procure
an all-time high 38 mt, a staggering 10 mt more than 2011-12.
A situation similar to this year is also expected in 2013-14. Already, in rice state agencies
have procured 1.2 mt more till yesterday as compared to the same period last year. By the
close of the season, government plans to procure almost 40 mt of rice from farmers this year,
5 mt more than 2011-12.
23

Wheat and rice procurement seasons are different. Rice procurement starts from October
every year, while wheat begins from April.
However, all this will not come at a low price. Infact, with government increasing the
minimum support price (MSP) of wheat for 2013-14 season by Rs 65 per quintal, the food
subsidy burden will straight away rise by Rs 2,275 crore.
In 2012-13 Union Budget, the food subsidy has been pegged at Rs 75,000 crore.
“With increase in MSP by Rs 65 a quintal, procurement cost of FCI will surely go up, and
depending upon how much is procured and for how long it is stored and at price it is
distributed under PDS, the subsidy Bill will get inflated. Presuming that FCI will procure at
least 35 mt of wheat (last year it procured 38 mt), and if all other costs remain the same, the
subsidy bill will go up by minimum Rs 2,275 crore,” Gulati said.
The burden will also be no less on consumers as wheat prices along with that of wheat flour
will further move up. “Retail prices of wheat will go up further unless larger leakages from
PDS flood the market at lower prices,” Gulati said.
The direct fallout of over-emphasis on grains, which the CACP sought to correct by
recommending freezing the MSP of wheat for 2013-14 season is that import of edible oils
and pulses is expected to cross Rs 65,000 crore in 2012-13 financial year, a steep jump of
almost 16 per cent from the previous year.
But, a bumper harvest does not necessarily mean that the farmers are getting benefit from
producing more. A recent field visit by senior officials from the department of agriculture
found that rice prices in eastern India has plummeted to almost Rs 800-1,050 a quintal, as
against the Centre determined MSP of Rs 1,250 a quintal in the absence of suitable state
intervention mechanism.
Official data showed that this year (2012-13) rice procurement in the three major eastern
states of Bihar, West Bengal and Odisha has been less than one-fourth of last year.
“This clearly shows that something is serious wrong with the policy as farmers are producing
more, but in many area they are not getting adequate returns for their labour,” another expert
said.
24

M.P. wheat area up 35% on bonus, better buying system (BL, 08/01/2013)
The strategy of announcing a bonus over the Centre’s minimum support price (MSP) and
strengthening of the procurement system has helped Madhya Pradesh expand wheat area over
the past few years.
The wheat area in the State has grown by 35 per cent in the past six years and is set to cross
50 lakh hectares in current rabi season.
“Wheat area has been increasing steadily. We have already crossed the targeted area of 49.55
lakh ha last week,” said M.M. Upadhyay, Agriculture Production Commissioner, Madhya
Pradesh.
So far, farmers have planted wheat on 49.64 lakh hectares (lh), surpassing last year’s 49.01
lh.
Sowing is almost complete but the numbers are still coming in.
Besides the bonus, the State Government’s move to bring in additional land under cultivation
by making fallow land productive and the expansion of irrigation through various schemes
has also contributed to the wheat area, Upadhyay said.
Madhya Pradesh started offering bonus of Rs 100 a quintal over the Centre’s MSP to wheat
growers since 2007-08 to encourage more production.
There are expectations that the MP Government will announce a bonus this year, too,
considering that it is an election year.
For the rabi marketing season 2013-14, the Centre has announced a MSP of Rs 1,350 a
quintal, about Rs 65 more than last year.
Acreage jumps
The area under wheat has grown from 37 lh in 2007-08 to 49 lh in 2011-12, while production
shot up from six million tonnes to 10.5 million tonnes during the period.
MP has emerged as a major procurer of wheat recent years, almost matching the traditional
States of Punjab and Haryana.
25

“Procurement has picked up substantially over the past five years and there has been a
substantial increase in volumes and scale of operations in the past two years. The price
support announced by the State through a bonus has made a difference to the growers,” said
Mekhala Krishnamurthy, a social anthropologist, who has studied the procurement system in
Harda district of MP.
Last year, the Government procured 85 per cent of the wheat produced in the State against
0.8 per cent in 2006-07.
Wheat procurement stood at a record high of 8.5 million tonnes in 2011-12 against 4.90
million tonnes in the previous year.
Biting cold brings spectre of Global Warming closer, farmers worried but wheat crop
safe (ET, 08/01/2013)
Icy Siberian winds have chilled northern India and will intensify in the days ahead, making
the winter even more severe, and highlighting the uncanny rise in extreme weather patterns
such as droughts, hot spells and torrential downpours like the one that swamped Mumbai in
2005.
For companies selling beverages, winter-wear and heaters, business is booming with sales
rising up to 40% in one of the coldest Indian winters in decades, but farmers are getting
anxious about the impact on vegetables, pulses and oilseeds although the wheat crop is
secure. The weather office says there is no quick relief in the offing.
"There's no respite from the bone-chilling cold. A high-pressure system created over Siberia
is pushing cold waves to India. The system doesn't phase out and persists at least for a couple
of weeks once it is created," said Laxman Singh Rathore, director-general, India
Meteorological Department.
The winter will, in fact, become even more biting as the weather office predicts colder nights
with wind speed increasing from Tuesday. This should moderate the fog and bring sunshine
during the day, but piercing gusts will make life more difficult for people.
"The higher wind speed will raise the intensity of cold. Despite sunny days, the chill will be
felt more. Nights will be cooler even if the temperature doesn't dip much," Rathore said.
Experts say the freezing winter is part of a series of extreme weather phenomena such as
erratic monsoon rains, floods in Rajasthan, low rainfall in the usually wet northeastern India,
extreme heat waves and short but heavy bursts of snow or rain that have ravaged different
parts of the world although no single event can be seen as evidence for climate change.
"We have looked at the occurrence of extreme events and disasters. We have come up with
the findings that heat waves are on the increase, and extreme precipitation events are
increasing all over the world.
26

Precipitation in the form of heavy rain and snow could worsen the winter," said RK Pachauri,
chairman of the Intergovernmental Panel on Climate Change. Pachauri said the frequency of
extreme weather events is bound to rise if no action is taken against greenhouse gas
emissions. "Any single event or occurrence in the weather cannot be attributed to climate
change.
Govt. holds on to huge wheat stocks, three times the requirement (FE 8/1/2013)
Just three months prior to the commencement of the wheat procurement drive for 2013-2014
seasons, the government has wheat stocks which are more than three times the strategic
reserve and buffer stocks norms.
At the start of this month, the Food Corporation of India (FCI) and state government owned
agencies had wheat stocks of more than 34 million tonne, while the requirement is only about
10 million tonne.
This implies that if a chunk of wheat stocks are not liquidated in the private market or
exported during next few months, the government is expected to face acute storage crunch
when purchase operations starts from April 1.
The key wheat growing states of Punjab and Haryana have wheat stocks of 12.1 and 8.3
million tonne respectively. Similarly Rajasthan and Uttar Pradesh have grain stocks of 2.3
and 2.5 million tonne respectively.
“We need to create space for new wheat crop during next three months,” a FCI official told
FE.
As per the latest data, the government food grains stocks (consisting of mostly wheat and
rice) at the start of the month is reported at more than 66 million tonne against the norms of
only 25 million tonne. The rice stocks is at present reported at 32.2 million tonne.
Current food stocks is also at the alarming level as FCI and other agencies have storage
capacities to keep food grains to the tune of 61 million tonne. This includes 18 mt of cover
and plinth capacity that can’t keep the grains intact for more than a few weeks.
Meanwhile, the Commission for Agricultural Costs and Prices (CACP) has suggested that the
government should push for wheat exports of a record 10 million tonne from its huge stocks
during next fiscal.
“A 10-million-tonne wheat export can be achieved in the 2013-14 fiscal, if the government
acts aggressively and quickly,” CACP chairman Ashok Gulati recently stated.
India, the second-biggest wheat producer in the world, has allowed wheat exports of 4.5
million tonne from government reserves during current fiscal.
After FCI winded up wheat purchase operations for the current year at a record of around 39
mt in June last year, there had been shortage of wheat in the private market as government
has lifted more than 39% of the total production in excess of 93 million tonne.
Around two million tonne of grain are distributed monthly in different states under the
Targeted Public Distribution System (TPDS). Besides, FCI keeps requisite amount of food
27

grains for strategic reserve and buffer stocks norms and some amount of foodgrains is
allocated to armed forces.
Mainly because of bumper grain output during the last few years, the government has been
keeping more grain than required under the strategic reserve and buffer stocks norms. Due to
opened policy of procurement, FCI has been lifting grain from all the farmers leading to huge
grain stocks.
Cold wave brightens wheat output prospects ( BL 9/1/2013)
The prevailing cold wave in North India will help wheat crop, raising the prospects of yet
another bumper harvest this year.
The planting of wheat is almost over and the acreage is set to exceed last year’s 290 lakh
hectares (lh). Encouraged by a Rs 65 a quintal hike in minimum support price at Rs 1,350,
farmers in major wheat growing areas of Punjab, Haryana Madhya Pradesh and Uttar
Pradesh have planted more wheat this year, even though the acreage dropped in Maharashtra
over the last year.
“The cold condition is helping wheat crop, which is in the tillering stage. The tillering is
good and there are high number of effective tillers, that yield more grains,” said Indu
Sharma, Director of the Karnal-based Directorate of Wheat Research.
“If there is no drastic variation in temperatures during the grain formation stages, we could
possibly see yet another good harvest,” Sharma said.
Last year, India produced an all-time high of 93.9 million tonnes (mt) of wheat. For the
current year, the Government has set a production target of 86 mt. As on January 4, wheat
was planted on 286.38 lh, about 2 per cent more than the corresponding last year.
STORAGE ISSUE
However, a good wheat harvest may create further storage issues for the Government, which
is sitting on a huge stockpile. Foodgrain stocks in the Central Pool in the beginning of the
year stood at 66.6 mt, more than thrice the buffer requirement of 20 mt. According to Food
Corporation of India data, wheat stocks stood at 34.38 mt on January 1, while rice stocks
were 32.22 mt.
28

The buffer requirement for wheat stocks, as of January 1, was 8.2 mt, while that for rice it
was at 11.80 mt. The strategic reserve requirement for rice is two million tonnes and for
wheat it is three mt. Central pool stocks were more than twice after meeting the buffer and
strategic reserve requirement.
Meanwhile, rice procurement in the ongoing kharif marketing season 2012-13, starting
October, saw a 7 per cent increase at 18.8 mt as of January 8, over last year’s 17.55 mt.
Govt to sell wheat cheap in a bid to empty its silos (ET, 10/01/2013)
Flour millers and biscuit makers are set to gain with the government planning to lower wheat
prices sold under the open market sales scheme (OMSS). It's now the government's turn to
hold distress sales as it faces storage space crunch ahead of the new harvest season.
"We had allocated 6.5 million tonne for OMSS, of which the government could find buyers
for hardly 3 million tonne. We are working out proposals to lure buyers by cutting down the
prices," said a food ministry official.
The government now sells wheat in the open market at a price which covers the minimum
support price (MSP) of Rs 1,285 a quintal and state levies in addition to freight charges.
The prices vary between Rs 1,404 and Rs 1,550 a quintal across states. The government has
categorised Uttar Pradesh, Madhya Pradesh, Haryana and Punjab as the producing states and
others as consuming states. Freight charges will be applicable for consuming states.
Millers, however, are not impressed with the likely move of the government. "Even lower
prices will not find buyers as there is no demand right now. The government should have a
clear-cut procurement and selling policies so that traders and bulk purchasers can plan their
move. These stop-gap measures will only confuse the market," said Naresh Ghai, president,
Punjab Roller Flour Mill Association. According to a source, the ministry is considering two
options for the fast clearance of the stock. "It may cut down prices to Rs 1,170 a quintal plus
freight, absorbing the state levies. Alternatively, it may fix the MSP as the base price plus
freight charges freeing away the state levies," the source said.
The government bears Rs 1,910 a quintal for procurement and the decision to sell wheat well
below the procurement cost will further bloat the food subsidy bill, which has already
crossed Rs 85,000 crore.
"We expect to have yet another bumper crop this season. We need to create storage space for
the harvest to prevent any damage to fresh grains. With this offloading, the availability of
grains in the market will bring down wheat flour prices easing inflationary pressures," the
official said.
The government is sitting on a pile of wheat stock of around 34 million tonne.
29

"The condition is alarming as the government is likely to procure around 40 million tonne of
wheat this season when one looks at the promising crop prospects. Last year, it had
purchased a record 39 million tonne," another official said.
At present, the government has a storage capacity of around 75 million tonne, including 18
million tonne of cover and plinth capacity that can't keep the grains intact for more than a
few weeks.
India wastes 21 million tonnes of wheat every year: Report (ET, 10/01/2013)
India stands out for its glaring lack of infrastructure and food storage facilities, in a new
study that says 21 million tonnes of wheat -- equivalent to the entire production of Australia -
- goes waste in the country.
The report by the Institution of Mechanical Engineers ( IME) on global food wastage found
that as much as 50 per cent of all food produced around the world never reaches a human
mouth.
"Considerably greater levels of tonnage loss exist in larger developing nations, such as India
for example, where about 21 million tonnes of wheat annually perishes due to inadequate
storage and distribution, equivalent to the entire production of Australia," said the 'Global
Food Waste Not Want Not' report, released here today.
"In neighbouring Pakistan, losses amount to about 16 per cent of production, or 3.2 million
tonnes annually, where inadequate storage infrastructure leads to widespread rodent
infestation problems," it said.
Overall, wastage rates in vegetables and fruit are even higher than for grains.
At least 40 per cent of all fruit and vegetable is lost in India between the grower and
consumer due to lack of refrigerated transport, poor roads, inclement weather and corruption.
According to the latest survey, wastage tends to move up the distribution chain as the
standard of development improves and regional and national transport, storage and
distribution facilities fail to match the improvements made at the farm level.
This is a particular issue in India, which requires massive investments in the food logistics
chain.
"Controlling and reducing the level of wastage is frequently beyond the capability of the
individual farmer, distributor or consumer, since it depends on market philosophies, security
of power supply, quality of roads and the presence or absence of transport hubs.
30

"These are all related more to societal, political and economic norms, as well as engineered
infrastructure, rather than to agriculture," the authors of the report said, calling on
governments in the developing world to introduce better technology and food storage
facilities.
The Indian government has maintained that the recent reforms in the retail sector approved
by Parliament, allowing 51 per cent foreign direct investment (FDI) in multi-brand retail and
100 per cent FDI in the single-brand segment, will lead to increased investments in
infrastructure and improve the logistics chain.
Bumper wheat crop set to treble exports (BS 15/1/2013)
India is poised to triple wheat exports this year to a higher-than-expected, record 6 million
tonnes, helping plug a shortfall in lower-quality grain supplies and keep a lid on global
prices.
Five years of bumper harvests have created unruly, large stockpiles of wheat in India at a
time when Australia and Russia, the world's second and third largest exporters, face
shrinking production due to adverse weather.
The amount India is set to export is paltry in a global trade of nearly 140 million tonnes, but
it will fulfil the needs of the biggest buyers of lower-quality wheat in West Asia and Africa
as global supplies ease.
"The magnitude of Indian exports is not going to be enough to change the global trade
balance but certainly what it means is that it frees up availability of lower quality wheat,"
said Sudakshina Unnikrishnan, commodities analyst at Barclays Capital in London.
"We don't have those massive amounts of lower quality wheat that we had last year," she told
Reuters. In 2012, Indian wheat exports stood at 2 million tonnes.
Larger exports from India will help cap a rally in the benchmark Chicago wheat market
which jumped 1.4 percent on Friday after the U.S. Department of Agriculture pegged U.S.
inventories at a four-year low of 716 million bushels at the end of the crop marketing year.
The United States is the world's biggest wheat exporter.
Global wheat supplies are likely to tighten further with the United States declaring much of
the central and southern wheat belt a disaster area last week due to persistent drought.
Farmers face dismal prospects for the spring and summer due to the drought and lower-thanexpected
plantings, analysts say.
Wheat ended 2012 as the best performing commodity, gaining 19.2 percent among the 19
commodities in the Thomson Reuters-Jefferies CRB index as the market was buoyed by
lower production in Australia and the Black Sea region.
31

India's record crop coincides with a decline in shipments from its main rivals for lowerquality
wheat. Prices are also at least $20 cheaper per tonne than similar Australian grain.
Australia produced a record crop at the end of 2011 but untimely rains reduced the quality. A
year later, wheat production fell by more than a quarter due to dry weather and drought is
also expected to halve Russia's wheat exports this year to 10.5 million tonnes.
BURDENSOME STOCKS
India, the world's second-biggest wheat producer, usually consumes most of its crop, but a
government intervention scheme and favourable weather have boosted production, and
surpluses.
Last year, wheat production rose to an all-time high of 93.90 million tonnes while
consumption stayed the same at around 76 million tonnes a year.
This year, the crop is expected to be even bigger, creating yet another headache for the stateprocurement
agency, the Food Corp. of India, which has resorted to storing wheat in open
fields under tarpaulin as silo space has run out.
The government, grappling with wheat stocks of 34.4 million tonnes, or four-times bigger
than the official target, also needs to make way for the record 40 million tonnes of wheat it is
expected to buy from local farmers. Those purchases will start arriving in less than two
months.
"The cold wave in north India has been a boon for wheat and in all probability we will have a
better crop than last year," Indu Sharma, chief of the state-run Directorate of Wheat
Research, told Reuters.
"We'll have to keep an eye on February and March weather but the planting got off on a good
note in October when rains led to higher soil moisture. The crop conditions have only been
improving since then."
Traders sold an above-average 200,000-250,000 tonnes of wheat in December, indicating
rising demand. Indian wheat is quoted at around $340-$345 a tonne, including cost and
freight into the Middle East, and at a discount to Australian supplies.
The USDA, in its global supplies report, raised on Friday its estimate for Indian exports to 8
million tonnes in the year to June 2013 from 7.5 million tonnes. Traders, however, say port
congestion and a shortage of railway carriages will limit exports at around the 6 million
tonne mark.
32

"They have the stocks and they can do much more than 6 million tonnes," said a Singaporebased
trader whose company is currently doing brisk business in Indian wheat. "But there are
constraints on the logistics front."
Wheat and cotton in India buck the global trend (BS 13/1/2013)
In a rare occasion, wheat and cotton prices in India have bucked the global trend in the last
three months due to a rapid change in fundamentals post monsoon.Wheat price on the
London-based benchmark Liffe exchange recorded a gain of 3.9 per cent at $331.8 a tonne,
compared with 1.8 per cent decline at $286.8 a tonne (Rs 16,340 a tonne) on the National
Commodity Derivatives Exchange (NCDEX). On the benchmark Nybot, cotton price
witnessed a gain of 4.3 per cent at $1,657.2 a tonne against a 1.6 per cent decline in the
commodity on India's NCDEX. The Kapas contract closed on NCDEX on Saturday at Rs
1,533 a quintal translating thereby Rs 2,606 a bale. “Wheat price in India remained under
pressure because of record high inventory in FCI (Food Corporation of India) godowns.
Also, the prospects of rabi crop is also fairly good. In contrast, the worst drought in North
American states and Russia lowered the crop output forecast for this season resulting in price
going up overseas,” said Harish Galipelli, commodities head with JRG Securities Ltd.
FCI has reported a 35 million tonnes (mt) inventory as on January 1, 2013. Over and above
around 88 mt of output is forecast for the current rabi season totalling thereby, a supply of
123 mt. Against that the annual consumption is forecast at 84 mt. Since the government has
put a restriction on exports, handling such a massive stockpile is going to remain a major
challenge for India.
In contrast, however, the drought in North Africa, the US and sormer Soviet republics is
expected to lower wheat crop. The US Department of Agriculture estimated global wheat
output to decline 5.9 per cent to 655.11 mt in the year ending May 31.
33

A recent study by the Food and Agriculture Organisation (FAO) of the UN said: “Early
indications for the winter wheat crops already planted in the northern hemisphere, to be
harvested in 2013, are mixed. Farmers understandably responded to the incentive of high
prices by increasing their winter wheat plantings. However, conditions remain adversely dry
for emergence and crop establishment before dormancy in important producing regions of the
US and the Russian Federation.”
According to Vedika Narvekar, senior research analyst with Angel Commodities Broking:
"Wheat prices in the international markets have plunged significantly in the last two months,
however, Indian prices were sustaining at higher level on attractive overseas demand.
However, in the past two weeks, domestic wheat prices have come under downside pressure
as the existing cold wave condition in North India is conducive for the wheat crop. Also, the
area under wheat cultivation has breached last year’s level which may result into another
bumper crop year for wheat in India. This may further add to the already overflowing wheat
granaries, where stocks are almost three times the strategic reserve and buffer stocks norm."
The case is somewhat similar with cotton. The Cotton Advisory Board under the textile
ministry forecast 3.45 million bales (1 bale = 170 kg) of closing stocks this year as against
2.85 million bales last year. Also, electricity supply in major textile producing states
including Tamil Nadu, Andhra Pradesh and Maharashtra has hampered mills' production
capacity resulting in lower demand of cotton in India.
During the last three months, however, cotton prices remained comparatively higher globally
on account of an estimated revival in demand from China, Bangladesh and Taiwan in
addition to other markets in developed countries. The revival in global economies with 3.4
per cent growth this year as against 3.1 per cent last year is gradually pushing textile industry
back on track.
Cotton prices in the international markets have been able to sustain above 70 cents per pound
mark since last three months and have risen almost 4.3 percent in the last one month.
34

Notwithstanding the firmness in the international markets, domestic cotton prices have seen a
divergent performance, with their prices on the downturn, largely on the back of poor
demand by the millers, especially in Southern India. Millers in these areas are operating short
of their capacity on the back of power shortages. Further, expected lower exports this season
is also making cotton unattractive, Narvekar added.
India reaps reward of bumper wheat crops as world exports shrink (ET 15/1/2013)
The amount India is set to export is paltry in a global trade of nearly 140 million tonnes, but
it will fulfil the needs of the biggest buyers of lower-quality wheat in the Middle East and
Africa as global supplies ease.
India is poised to triple wheat exports this year to a higher-than-expected, record 6 million
tonnes, helping plug a shortfall in lower-quality supplies and keep a lid on global prices.
Five years of bumper harvests have created unruly, large stockpiles of wheat in India at a
time whenAustralia and Russia, the world's second and third largest exporters, face shrinking
production due to adverse weather.
The amount India is set to export is paltry in a global trade of nearly 140 million tonnes, but
it will fulfil the needs of the biggest buyers of lower-quality wheat inthe Middle East
and Africa as global supplies ease.
"The magnitude of Indian exports is not going to be enough to change the global trade
balance but certainly what it means is that it frees up availability of lower quality wheat,"
said Sudakshina Unnikrishnan, commodities analyst at Barclays Capital in London.
"We don't have those massive amounts of lower quality wheat that we had last year," she told
Reuters. In 2012, Indian wheat exports stood at 2 million tonnes.
Larger exports from India will help cap a rally in the benchmark Chicago wheat market
which jumped 1.4 per cent on Friday after the US Department of Agriculture pegged US
inventories at a four-year low of 716 million bushels at the end of the crop marketing year.
The United States is the world's biggest wheat exporter.
Global wheat supplies are likely to tighten further with the United States declaring much of
the central and southern wheat belt a disaster area last week due to persistent drought.
Farmers face dismal prospects for the spring and summer due to the drought and lower-thanexpected
plantings, analysts say.
Wheat ended 2012 as the best performing commodity, gaining 19.2 per cent among the 19
commodities in the Thomson Reuters-Jefferies CRB index as the market was buoyed by
lower production in Australia and theBlack Sea region.
India's record crop coincides with a decline in shipments from its main rivals for lowerquality
wheat. Prices are also at least $20 cheaper per tonne than similar Australian grain.
35

Australia produced a record crop at the end of 2011 but untimely rains reduced the quality. A
year later, wheat production fell by more than a quarter due to dry weather and drought is
also expected to halve Russia's wheat exports this year to 10.5 million tonnes.
Wheat soars 3% on wedding season demand (BS 16/1/2013)
Wheat prices shot up Rs 44, or 3.01 per cent to Rs 1,504 per quintal in futures trade today as
speculators enlarged positions on the back of pick-up in local demand for the wedding season
amid expectations of higher exports.
At National Commodity and Derivatives Exchange, wheat for delivery in February spurted
by Rs 44, or 3.01 per cent, to Rs 1,504 per quintal, with an open interest of 9,930 lots.
March wheat traded higher by Rs 38, or 2.69 per cent, to Rs 1,450 per quintal, with a
business turnover of 3,480 lots.
Marketmen said speculators enlarged positions on increased demand at spot markets for the
ongoing wedding season amid hopes of rise in exports of grain by the government, leading to
the rise in wheat futures.
Meanwhile, concerned over surplus wheat stocks, the government's advisory body CACP has
suggested the Centre "aggressively" push exports of 10 million tonnes of wheat from the FCI
godowns during the 2013-14 fiscal.
Food Corp’s stocks keep wheat on leash (BL 19/1/2013)
With not much trading taking place in the market, dara wheat and flour prices remained
unaltered on Friday.
Radhey Sham, a trade expert, told Business Line that the situation of the market was
anticipated because the Food Corporation of India’s stocks were keeping wheat prices stable.
Dara wheat prices are likely to rule firm around current for the next few days following a
steady demand and supply in the province, he added.
In the physical market, after witnessing a fall earlier this week, dara wheat remained
unaltered and sold at Rs 1,510-1,515 a quintal. Around 400 quintals of dara variety arrived
from Uttar Pradesh and the stocks were directly offloaded at the mills.
Mill delivery was at Rs 1,510 while delivery at the chakki was Rs 1,515.
Wheat futures witnessed a mixed trend on Friday.
On the National Commodity and Derivatives Exchange, wheat for January contracts went
down by Rs 30 and traded at Rs 1,540; it had touched a high at Rs 1,570 earlier in the day;
February contracts increased by Rs 6 to Rs 1,502; wheat spot prices on the exchange
improved by Rs 15 and traded at Rs 1,500. Steady demand kept flour price stable and quoted
at Rs 1,710.Though other rabi crops such as sugarcane, maize, potatoes and oilseeds are
36

lucrative, their prices are inconsistent. Last year, Jagtar Singh Mehma of Bhatinda in Punjab
recorded a loss of about Rs 20 lakh, owing to a fall in potato prices. “This year is good for
potato growers but we cannot predict what would happen next year,” he said.
Sugarcane, another low-cost crop in terms of labour and irrigation, is also failing to draw
farmers due to the huge payments due from sugar mills every year. Ujjwal Singh, a farmer
from Sangrur, said maize was a lucrative crop but its price was unregulated. For farmers
growing oilseeds, middlemen take a chunk of the returns.
Wheat seen up on export demand (ET 23/1/2013)
However, the key February contract on NCDEX fell on Tuesday on profit-taking after rising
over 5 per cent.
Wheat futures in India, the world's second-largest producer, are likely to rise this week on an
expected rise in export demand, following a recent surge in overseas prices and on lower
supplies due to lean season.
However, the key February contract on the National Commodity and Derivatives Exchange
( NCDEX) fell on Tuesday on profit-taking after rising over 5 per cent in the previous seven
sessions.
37

"Strong demand from exporters could keep prices firm this week as supplies in spot markets
are low due to lean season, and it would take more than two months for the new season crop
to reach market," said Pradeep Aggarwal, a trader based in Ludhiana, Punjab.
India grows one wheat crop, which is planted in November-December and harvested in
April-May.
Wheat shipments from India are likely to rise as dry weather in the United States and drought
in the Black Sea region have pushed benchmark global wheat prices up more than 6 percent
in the previous seven sessions, boosting demand for the Indian produce particularly in
Southeast Asian countries, traders said.
At 0937 GMT, in Chicago, the key March contract on CBOT was trading up 0.7 percent at
$7.96-3/4 per bushel.
Most traded February contract on the National Commodity and Derivatives Exchange was
trading down 1.04 per cent at 1,517 rupees (around $7.2 per bushel) per 100 kg.
Indian wheat is being offered at about $325-$330 per tonne CIF (cost, insurance and freight)
in Southeast Asian countries, while Australian wheat is available for $350 per tonne.
Wheat shipments from India usually fetch lower prices due to quality concerns such as pest
infestation and other bacterial infections, which can spoil some of the produce.
Last week, two state-run trading companies - unlisted PEC Ltd and MMTC got the highest
bids at $314 a tonne and $309 a tonne, respectively, in their latest export tenders.
38

V Maize/ Coarse Grains
Better price realisation seen for maize, onion, groundnut (BL 9/1/2013)
There is some good news for maize, groundnut and small onion growers in Tamil Nadu.
Agriculture experts foresee better price realisation from these crops at harvest in April-May,
compared with the prevailing rates.
Advising farmers to sow these crops during the ensuing season (Thai Pattam), experts at the
Domestic and Export Market Intelligence Cell (DEMIC) functioning at the Tamil Nadu
Agricultural University, state that the price of maize could touch a level of Rs 1,450 a quintal
during April-June 2013 as compared with Rs 1,350-1,400 a quintal at present.
The expert said, “even though maize is cultivated all through the year, farmers with irrigation
facilities only would be able to raise the crop during Thai Pattam. The produce will be ready
for harvest during April-May. Since there is continuous demand from the poultry industry
and good prospects for export as well, the price of maize could rule high. To get better
returns farmers should sow varieties/hybrids with bold grains. In 100 gm of maize grain, if
the number of grains is less than 350, the farmer can expect higher price.”
Reverting to groundnut, the expert said that the dried pod could fetch Rs 48-50 a kg during
April-May. Groundnut incidentally is used in confectionary in Erode district. The price,
therefore, is higher than in other districts.
Small onion is cultivated all through the year and is one of the profitable vegetables. The
prevailing market price is around Rs 30/kg. The farm price of the small onion is expected to
hover around Rs 22-25 a kg in April-June, the expert said, after conducting market surveys
and analysing price trends.
Maize prices soar, put starch makers in a spot (BS 25/1/2013)
The unprecedented surge in maize prices has put starch manufacturers in a quandary. Bulk
buyers are negotiating annual purchase contracts for starch and its by-products (glucose and
dextrose) at Rs 22-24 a kg. Starch manufacturers say they are incurring heavy losses, as
prices below Rs 26 a kg aren’t viable for them.
The failure of the maize crop in Maharashtra, Karnataka and Madhya Pradesh due to scanty
rainfall has raised corn prices to Rs 1,500-1,600 a quintal (for different varieties). Last year,
prices stood at Rs 1,000-1,100 a quintal. High prices of corn in the US market are also
exerting pressure on domestic prices, as Indian exporters are finding it lucrative to export
corn. Corn prices in the US stand at about Rs 1,900 a quintal, a viable proposition for
exporters.
“A sudden jump of 40 per cent in maize prices has put starch manufacturers in a tight spot,”
said Vishal Majithia, president of All India Starch Manufacturers’ Association and managing
director of Sahyadri Starch & Industries. He added to save the domestic industry, the
39

government should immediately put curbs on the export of maize. Those engaged in the
poultry, liquor and feedstock businesses were hit severely, as maize accounted for substantial
input costs in these industries, he said.
The arrival of the new crop in March/April might lead to a drop in maize prices, he said,
adding, “We cannot run our factories on low capacities. So, a few of the factories have been
shut.”
K K Sardana, joint managing director of Surjit Starch & Chemicals, says, “The industry is in
a catch-22 situation. We cannot pass on the revised price to consumers, as the market is
competitive. Despite the uncertainty in maize prices, starch manufacturers are signing annual
contracts with buyers in the organised sector (pharmaceuticals, paper, liquor and food) that
purchase the bulk of starch by-products. But we aren’t even able to recover our costs. The
industry is bleeding. Only suitable weather for the next crop, which would result in higher
productivity, can save the industry.”
In warm climate zones, maize may have three crop cycles. Also, the crop’s irrigation
demands are low. Despite these factors, the unregulated market for procuring maize and the
lack of motivation for farmers have created hurdles in cultivating maize in a more organised
manner, said Sardana.
40

VI PULSES
Sluggish off take pounds pulses (BL, 26/12/2012)
Sluggish demand in pulses has dragged tur prices in the past two days by Rs 100 a quintal.
On Wednesday tur (Maharashtra) declined to Rs 3,850 a quintal amid slack demand though
tur (Madhya Pradesh) was steady at Rs 3,400-3,500. With prospect of domestic tur crop
appearing not so very promising, dependency on imported tur is likely to increase in the
coming days. In that case, tur is likely to turn bullish though arrival of new crop from
Madhya Pradesh is expected to hit local mandis in the second week of January.
Slack demand has also dragged tur dal in the past one week by Rs 100 a quintal with tur dal
(full) in local mandis being quoted at Rs 5,700-5,800 , tur dal (sawa no) at Rs 5,500-5,600,
while tur marka ruled at Rs 6,800.
Sluggish trend also continued in moong and urad on weak demand from the millers. Moong
(bold) on Wednesday declined to Rs 5,000-5,200 a quintal (down Rs 100), while moong
(medium) ruled at Rs 4,400-4,500. Moong dal (medium) was at Rs 6,600-6,700, moong dal
(bold) at Rs 7,000-7,200, while moong mongar ruled at Rs 7,200.
Urad also declined on Wednesday on weak demand with urad (bold) being quoted at Rs
3,450-3,500, while urad (medium) ruled at Rs 3,100. Urad dal (medium) was Rs 4,100-4,150,
urad dal (best) at Rs 4,700-4,800, while urad mongar ruled at Rs 5,700-6,000 a quintal.
Pulses catch corporate purses (BS, 26/12/2012)
A virgin market so far, branded pulses are quickly catching the fancy of corporate bigwigs
It is evident from the increasing number of diversified companies getting into the retailing of
these. The latest entrant, Adani Wilmar, a subsidiary of the Adani Enterprises conglomerate,
has set its eyes on a variety of branded pulses including dals. The company has already lined
up investments for processing mills.
"We see a big future in branding of all commodities. We anticipate a similar conversion from
purchase of loose un-branded pulses to the branded form. We have started with toll mill
operations and have plans to invest more than Rs 100 crore in our own milling units in the
near future," said a spokesperson of Adani Wilmar.
Currently, India's pulses consumption is estimated at 17.5 million tonnes yearly, while
domestic production has stagnated at 14-15 mt. But only one per cent is sold under branded
consumer packs; the bulk, including urad, tur, moong and chana are sold in a loose format.
Moong, masoor, arhar, urad, chana and rajma comprise 80 per cent of the pulses market.
Adani Wilmar wants all these (whole and split variants) in its portfolio, eventually.
41

Tata Chemicals had launched branded pulses in December 2010 under an 'i-Shakti Dals'
brand name. The company is taking a step forward, to take on the competition. "Post an
overwhelming response (to Tata I-Shakti Unpolished Dals) from customers, we are exploring
direct-to-home delivery options or 'Dal-on-Call' for customers. We are starting this in
Mumbai. We are expecting healthy growth in our branded pulses sales over the next two to
three years," said Ashvini Hiran, chief operations officer, consumer products.
Considering the small size of the branded pulses market, regional players have command
over national ones. However, companies with a larger retail network and strong supply chain
are making efforts for a national presence. While Mukesh Ambani’s Reliance Retail, and the
Future Group's Food Bazaar do in-house branding of pulses and sell through own retail
chains, Tata Chemicals, Adani Wilmar and Lakshmi Overseas Industries sell their brands
through the modern format of organised retailing.
The recent approval to foreign direct investment (FDI) in multi-brand retailing could boost
the segment. "We think it would bring in a positive change in retailing of all commodities,
specially pulses. Customers would have more options to choose from and the overall
category would grow, with more companies/brands coming in," said the Adani Wilmar
official.
Experts in the sector believe the branding of pulses would bring value addition in the
commodity. "If companies are entering branded pulses, we can expect value addition and
innovation in the products, as we've seen in spices and beverages like tea, coffee etc," said an
industry source in this city.
Assam gets Commendation Award for increase in production and productivity of pulses
(ET, 01/01/2013)
Assam has bagged Commendation Award under Krishi Karman Award 2011-12 in
recognition of the increase in production and productivity of pulses recorded by the State in
2011-12.
Congratulating the State's Agriculture Minister Nilamoni Sen Deka by a letter, the Union
Minister for Agriculture and Food Processing Industries Sharad Pawar stated that this award
has been achieved by the State for the efforts of the Minister and the officials of the
Agriculture Department in supporting farmers with technologies and services that has
enabled the State to achieve this milestone.
The Union Minister also informed that the President of India will present the Commendation
Awards on January 15, 2013 in New Delhi.
The Krishi Karman Awards were instituted in 2010-11 to acknowledge the best performing
States in production of rice, wheat, coarse cereals, pulses and total food grains.
Deka congratulated the farmers of the State for to their tireless efforts and relentless services.
42

Higher support price boosts sowing in chana; area under wheat up (BL 12 /1/2013)
Rabi acreage under pulses has increased, as farmers in Madhya Pradesh and Maharashtra
have planted more area under gram or chana. The acreage under chana is up 5 per cent at
91.68 lakh hectares (lh) against 86.99 lh in corresponding period last year.
COVERAGE OF PULSES
The rise in chana prices, coupled with a hike in minimum support price (MSP), has helped
expand the acreage under the crop by about 4.7 lh. The Centre has hiked the MSP by 14 per
cent to Rs 3,200 a quintal for chana and urad as part of its strategy to encourage farmers
grow more of pulses to reduce dependence on imports. Even States such as Karnataka,
Andhra Pradesh and Chhattisgarh have seen an increase in the area under chana, while
Rajasthan and Uttar Pradesh have seen a drop.
However, urad acreage has dropped by about a fifth to 6.6 lh (8.3 lh). The decline in urad
acreage is mainly on account of lower planting in Tamil Nadu and Andhra Pradesh. The
acreage under moong has seen a marginal increase at 4.57 lh on higher planting in Odisha.
OILSEEDS
The acreage under oilseeds is higher by 2.54 lh at 84.16 lh, mainly led by higher planting of
rapeseed/mustard and groundnut. Rapeseed acreage touched almost 67 lh on higher planting
in Rajasthan and Uttar Pradesh. The crop condition is reported normal, despite the prevailing
cold wave in the northern States.
The cold wave seems to be aiding sowing of wheat that has been planted on 291.27 lh,
marginally down from corresponding last year’s 292.90 lh. In Madhya Pradesh, the wheat
acreage has touched 50 lh, while in Uttar Pradesh it is inching closer to 100 lh. In Punjab and
Haryana, the acreage has remained constant at 35 lh and 25 lh, respectively.
43

Coarse cereals, such as sorghum and maize, have seen a rise in acreage at 38.56 lh and 13.03
lh, respectively. Coarse cereals have seen higher acreage in Andhra Pradesh, Karnataka and
Rajasthan, while Maharashtra and Tamil Nadu have seen a drop in area.
44

VII EDIBLE OILS & OILSEEDS
Mustard oil bearish as other oils turn cheap (BL, 27/12/2012)
Indore: Mustard oil in Indore and other mandis of Madhya Pradesh and Rajasthan has been
ruling steady on subdued buying support. In Indore mandis, mustard oil on Thursday ruled at
Rs 762 for 10 kg (Rs 6 higher from last week), while it ruled at Rs 770 in Moorena (up Rs
10) and Rs 755 in Neemuch mandi (up Rs 5). In Rajasthan’s Kota it was quoted at Rs 770
(up Rs 10), while it was Rs 768 in Ganga Nagar (Rs 3 higher from last week). In Jaipur,
mustard oil ruled at Rs 780 (Rs 5 up from last week). Similarly in Gujarat, mustard is ruling
Rs 5 higher (from its price last week) at Rs 760 for 10 kg.
Demand continues to be sluggish primarily due to relatively lower prices of soya, cotton and
palm oil in local mandis. However, given favourable crop report in mustard and hopes of
higher crop output as compared with the last year, long rally in mustard oil appear unlikely,
said a broker Vinod Choudhary.
Mustard seeds in Indore mandis ruled higher at Rs 4,600 a quintal on weak arrival and
improved buying support, while raida ruled flat at Rs 3,700-3,800. On the other hand, plant
deliveries in mustard for Jaipur line declined to Rs 4,220-50 (Rs 4,350-70) on weak demand
from millers.
Mustard seeds also traded lower on weak buying support with its January and April contracts
on the NCDEX closing at Rs 4,155 and Rs 3,574 . Arrival of mustard seeds was recorded at
80,000 bags with 5,000 bags being offloaded in Madhya Pradesh; 7,000 bags in Uttar
Pradesh; 45,000 bags in Rajasthan; 10,000 bags in Punjab and Haryana; 4,000 bags in
Gujarat and remaining 9,000 bags elsewhere in the country.
Rake shortage hits soyameal shipments (BL, 28/12/2012)
Diversion of rakes to move foodgrains such as wheat and rice is hitting soya meal shipments.
“Poor availability of rakes for exports is delaying our shipments,” said Rajesh Agarwal,
spokesperson for Soyabean Processors Association of India (SOPA), which has made a
representation to the Railways seeking additional rakes.
“The soya processing industry in Madhya Pradesh is getting one or two rakes a day against a
requirement of 4-5 rakes a day,” Agarwal said. The situation is a little better in Maharashtra,
where there is no pressure to ship wheat, Agarwal said.
When asked, railway officials said “There might be some isolated cases.” They, however,
said the demand for rakes to transport fertiliser and foodgrains had significantly gone up in
recent months. This is reflected in the 31 per cent increase in loading of foodgrains by the
Railways during November at 3.80 million tonnes over the corresponding period last year.
Though the soyameal industry is not witnessing robust demand at present due to high prices,
there is some need-based buying from several countries, Agarwal said.
45

The soyabean crushing industry is operating at almost half its capacity due to poor
availability of beans. India exported about 4.2 mt soyameal in 2011-12. In the current
financial year till November, soyameal exports stood at 1.38 mt, down 21 per cent over
previous year’s 1.75 mt, according to data compiled by the Solvent Extractors Association of
India.
Exporters said priority was being accorded for movement of cereals such as wheat and rice
compared with other agri-commodity such as soyameal. The Government on Wednesday,
approved an additional wheat export of 2.5 mt from the Central Pool stocks, a move that
would help ease storage crunch at the Food Corporation of India godowns ahead of new crop
arrivals in April. India, which produced a record 93.9 mt of wheat last year, is targeting an
output of 86 mt in the current year.
China’s new quality norms unsettles palm oil trade (BL, 30/12/2012)
A couple of tough trade-related measures including border control measures taken by China
recently have unnerved the global vegetable oil and oilseeds trade and industry.
Benchmark soyabean prices had stayed firm over the last few months (highest $17 a bushel
in September) on a combination of supportive factors including tight supplies, strong US
export sales and crush data (the highest in three years). Concerns over wet weather and
lagging pace of plantings in Argentina were also supportive.
However, after rising to a six-week high by mid-December, prices have come under pressure
on news of China cancelling export sales of US soyabean amounting to about 840,000 tonnes
recently.
Tougher Import norms
Of greater impact potentially is the report that China has decided to impose tough new
regulations for import of vegetable oil with effect from January 1.
According to trade reports, the new regulation would include documentation relating to the
vessel’s last three cargoes, in addition to the normal safety specifications including health
parameters, agricultural chemical residues, contaminants and so on.
Some of the quality specifications have been tightened.
Until now, vegetable oil import consignments that did not meet Chinese standards were
allowed to be discharged under supervision for further refining.
However, a week from now, new food safety measures will come into force for vegetable oil
shipments that arrive in China’s ports.
This means cargoes that do not meet the national standards run the risk of a rejection at the
port.
China is among the world’s largest importers and consumers of vegetable oil.
46

It is believed that Malaysian Palm Oil Board’s request for an extension of six months for
implementation of the new regulations has not been acceded to.
Trade intermediaries pointed out that since 2009 almost 95 per cent of Malaysia’s palm oil
shipments to China have faced smooth clearance.
Well-stocked
China is said to be holding huge stocks of vegetable oils, particularly palm oil at the ports.
According to R. Ramamoorthy of AR International, an international trade intermediary, in
the last two weeks, China’s inventory has expanded by 10 per cent and current coastal stocks
of refined palmolein are estimated to have crossed one million tonnes.
At the same time, China has sufficient internal stocks to meet its immediate requirement. A
slowdown in shipments to China is sure to exert downward pressure on palm oil prices which
are struggling to find upward traction at around Ringgit Malaysia 2,300 a tonne.
Worse, there is widespread apprehension in Malaysian government and industry circles that
other major importers may follow the Chinese footsteps and tighten import norms.
Lower soyabean arrivals hit processing firms (BL, 01/01/2013)
Poor market arrival despite a good harvest has forced soyabean processing companies, such
as Adani Wilmar and Gujarat Ambuja Exports, to operate at lower capacity.
“Market arrivals were lower by about 25-30 per cent till December. This has slowed down
crushing operations of almost all processing companies,” said Rajesh Agarwal, Spokesperson
for Soyabean Processors Association of India (SOPA).
Besides, the lower end product price is weighing down the capacity utilisation in the
industry.
Anticipating a better price, soyabean growers are holding back their produce – a move that
has reflected in lower market arrivals.
Total market arrivals till December-end were in the range of 40-45 lakh tonnes, against 55-60
lakh tonnes in the corresponding year ago, Agarwal said.
SOPA has forecast an output of around 127 lakh tonnes on higher acreage and better yields.
Soyabean prices had more than doubled to touch a record of Rs 4,900 a quintal in mid-July
during the kharif planting season.
Tight global supplies due to a drought in the US, Brazil and Argentina prompted the rally in
prices.
47

However, soyabean prices crashed in recent months on record harvest and are currently
ruling at around Rs 3,200.
Besides, a global glut in the crude palm oil has exerted pressure on soyabean prices.
The lower market arrival has hit not only large players but small and mid-sized companies,
too, which are operating at a lower capacity, Agarwal said. Multinationals such as Cargill
and Bungee have taken fewer crushing plants on lease this year.
The total installed annual soya crushing capacity is estimated at 225 lakh tonnes, while the
domestic crop is pegged at 127 lakh tonnes.
The industry crushed some 25 lakh tonnes in the October-December period, about 25 per
cent lower than the corresponding last year, Agarwal said.
Soyabean prices were expected to remain range-bound due to emerging crop in South
America
Soyameal exports slide 34% in Dec (BL, 05/01/2013)
Soyameal exports fell by 34 per cent last month to 5,10,698 tonnes, according to industry
data released on Saturday.
The country had exported 7,78,382 tonnes in December 2011, Soyabean Processors
Association of India (SOPA) said in a statement.
During the first three months of the current oil year, exports declined by 27 per cent to
10,78,852 tonnes as against 14,69,220 tonnes in the year—ago period. The oil year runs from
October to September.
Soybean, soyoil edge higher; rapeseed down (ET 5/1/2013)
Soybean and soyoil futures rose slightly on Friday, helped by lower local supplies amid
hopes of better export demand for the meal due to a weak rupee, while rapeseed edged
lower.
The most-active soybean for February delivery on the National Commodity and Derivatives
Exchange (NCDEX) was 0.35 percent higher at Rs 3,268.50 per 100 kg, while soyoil for
February delivery was 0.57 percent higher at Rs 694.15 rupees per 10 kgs.
"Fundamentals are still bearish due to subdued local demand from feed industry," said
Ambika T.B., an analyst with Karvy Comtrade, adding selling is advised at 3,292/3,300,
targeting Rs 3,180.
48

Rapeseed for January delivery on the NCDEX was 0.61 percent lower at Rs 4,215 per 100
kgs.
At the Indore spot market in Madhya Pradesh, soyoil was higher Rs 2.60 at Rs 713.35 per 10
kg, while soybean was up Rs 4 to Rs 3,283 per 100 kg. At Sri Ganganagar in Rajasthan,
rapeseed climbed by Rs 20 to Rs 4,250.
India's palm oil imports in January are likely to rise to a record high as Malaysia, the world's
No. 2 palm oil producer, allowed duty free exports, a senior industry official said on
December 20. India meets more than half of its edible oil requirement through imports,
which largely constitute palm oil.
Oilmeal exports down on poor demand (BS, 09/01/2013)
India’s oilmeal exports fell 26 per cent in the first nine months of the current financial year
on reduced demand due to the ongoing economic uncertainty in overseas markets.
Data compiled by the apex trade body, the Solvent Extractors’ Association (SEA) showed
that oilmeal exports nosedived to 2.9 million tonnes for the period between April –
December, 2012 compared to 3.9 million tonnes in the corresponding period last year.
In December however, the decline was sharper than that in the preceding months of the year.
Overall shipment of oilmeal in December plunged by 43 per cent — 0.54 million tonnes
compared to 0.95 million tonnes in the same month last year.
The ongoing global economic uncertainty has pulled down worldwide demand resulting in
lower exports from India so far this year, said an analyst.
POOR OFFTAKE
Month-wise oilmeal exports (in tonnes)
Month 2011 2012 % change
April 537,937 400,589 -25.53
May 328,607 354,738 7.95
June 254,412 305,934 20.25
July 281,879 277,419 -1.58
August 291,466 120,395 -58.69
September 402,500 143,990 -64.23
October 354,698 121,919 -65.63
November 530,456 641,285 20.89
December 953,526 544,946 -42.85
Total 3,935,481 2,911,215 -26.03
Source: Solvent Extractors’ Association
49

Oilmeal import by South Korea from India during April - December, 2012 was reported at
636,331 tonnes compared to 553,795 tonnes last year consisting of 97,428 tonnes of soybean
meal, 250,594 tonnes of castor meal and 288,309 tonnes of rapeseed meal.
Vietnam, another major market, imported of 386,072 tonnes compared to 700,472 tonnes last
year consisting of 180,269 tonnes of soybean meal, 27,889 tonnes of rapeseed meal, 1,412
tonnes of groundnut meal, 502 tonnes of castor meal and entire quantity of 176,000 tonnes of
rice bran extraction.
India’s exports to Japan recorded at 363,226 tonnes in the first nine months of the current
fiscal compared to 938,317 tonnes of last year consisting of 362,534 tonnes of soybean meal,
593 tonnes of rapeseed meal and 99 tonnes of castor meal.
Thailand imported 231,199 tons compared to 301,988 tonnes, consisting 169,397 tonnes of
soybean meal, 61,713 tonnes of rapeseed meal and 89 tonnes of castor meal. Indonesia
imported 146,016 tonnes compared to 207,626 tonnes consisting of 91,522 tonnes of
rapeseed meal and 54,494 tonnes of soybean meal. Iran imported of 493,669 tonnes
compared to 175,962 tonnes, consisting of 477,669 tonnes of soybean meal, and 16,000
tonnes of rapeseed meal. Europe and others have imported 311,069 tonnes compared to
170,863 tonnes during the last year.
Groundnut oil static as Govt curbs nut exports (BL 9/1/2013)
Groundnut oil and cottonseed oil were traded unchanged on the back of weak demand in
retail. According to traders and millers after DGFT’s notification, export of groundnut was
almost on hold and availability of groundnut has increased for crushing which may pressurise
the price.
A trader said prices could drop in the coming days. At Rajkot, groundnut oil loose was traded
on Rs 1,270-1,275 for 10 kg and new tin for 15 kg of groundnut oil stood at Rs 2,180-
2,185. Teliya tinprice was quoted Rs 1,947-1,948 for 15 kg. About 30-40 tonnes groundnut
oil were traded in Saurashtra.
Cotton oil also traded unchanged due to normal demand in retail market. Cotton oil wash
traded steady on Rs 590-593 for 10 kg and cotton oil new tin price was quoted at Rs 1,055-
1,065 for 15 kg. About 250-300 tonnes cotton oil were traded here.
According to edible oil traders, re-packers were unwilling to make fresh deals due to weak
retail demand.
Moreover, the DGFT has restricted export of groundnut without APEDA registration.
Because of this notification, groundnut export is on hold and it increased the availability of
groundnut for the millers.
50

Edible oil stockists build inventories at lower rate (BL 10/1/2013)
Edible oils prices ruled marginally weak but a smart recovery was witnessed in the overall
volume as stockists came forward with fresh orders tracking firm futures markets. About
2,300-2,500 tonnes of edible oils – mostly palm group of oils - were traded on Wednesday.
A sharp cuts of Rs 9 for palmolein by a leading refinery pulled down prices.
Groundnut oil dropped by Rs 5 and rapeseed oil declined by Rs 3 on better rabi crop
prospects.
Soyabean and sunflower oils were unchanged. Cotton refined oil was up by Rs 3. The
sentiment was cautious ahead of key industry data of Malaysia and the US, said a leading
broker.
Shailesh Kataria of Riddhi Broker said: “A firm trend was witnessed in futures markets
ahead of production, exports and stocks data from Malaysia for palm oil and the US for
soyabean.“On expectation of positive data and sharp price reduction by a local refinery, local
traders put fresh orders which lead to higher volumes”.
Sources said Liberty sold 600-700 tonnes palmolein at Rs 511-513 and 100-150 tonnes super
palmolein at Rs 565. Ruchi sold about 900-1,000 tonnes palmolein at Rs 505 ex JNPT and
sunflower oil 90-100 tonnes at Rs 785. Resellers off loaded 400-500 tonnes palmolein in the
range of Rs 503-507.
Some quantity of soya oil and cotton oil also changed hand.
In Saurashtra – Rajkot, groundnut oil dropped to Rs 1,960 (Rs 1,960) for telia tin and Rs
1,275 (Rs 1,280) for loose (10 kg).
Towards the end of the day, Liberty was quoting palmolein at Rs 511-513 for Jan and Rs
530-532 for February. Super palmolein Rs 565, soya refined oil Rs 685 and sunflower
refined oil Rs 800. Ruchi quoted palmolein at Rs 517 for Jan and Rs 525 for Feb 1-25,
soyabean refined oil Rs 680 and sunflower refined oil Rs 785 for Jan. Allana’s rates for
palmolein was Rs 515 and super palmolein Rs 565.
On the National Commodities and Derivatives Exchange, soyabean refined oil’s February
futures were up Rs 699.00 (Rs 691.35), March was Rs 685.80 (Rs 681.30) and April was Rs
681.10 (Rs 679.20). Malaysia’s crude palm oil’s February contracts closed higher at MYR
2,366 (MYR 2,338), March at MYR2, 412 (MYR2, 390) and April was MYR2, 442 (MYR
2,430) a tone.
The Bombay Commodity Exchange spot rates (Rs/10 kg) were: Groundnut oil 1,275 (1,280);
soya refined oil 685 (685); sunflower exp. ref. 720 (720); sunflower ref. 790 (790); rapeseed
ref. oil 812 (815); rapeseed expeller ref. 782 (785) cottonseed ref. oil 615 (612) and
palmolein 505 (506).
51

Weekly market report: Edible oils slip on sluggish demand, weak global cues (FE
13/1/2013)
Edible oil prices slipped on the wholesale oils and oilseeds market during the past week on
sluggish demand, against adequate stocks position and a weak global trend.
Linseed oil in the non-edible section, traded lower on reduced industrial offtake.
Sentiment in edible oils turned bearish as traders trimmed their positions, driven by sluggish
demand against adequate stocks position, traders said.
Palm oil posted its biggest weekly fall since November last year. Record reserves and
declining exports in Malaysia, the second-largest producer, prompted analysts to push back
forecasts for a price rebound during the low-output season which influenced the sentiment,
traders added.
Meanwhile, palm oil fell by 4.1 per cent this week, the lowest since November 9 last year, on
the Malaysian Derivatives Exchange.
In the national capital, groundnut mill delivery (Gujarat) and mustard expeller (Dadri) oils
declined by Rs 50 each to Rs 12,250 and Rs 8,200 per quintal, respectively on sluggish
demand from retailers.
Taking negative cues from overseas markets, palmolein (RBD) and palmolein (Kandla) oils
fell by Rs 160 each to Rs 7,340 and Rs 6,840 per quintal, respectively.
Soyabean refined mill delivery (Indore) and soyabean degum (Kandla) oils followed suit and
lost Rs 50 each at Rs 7,400 and Rs 6,950 per quintal, respectively.
Meanwhile, sesame and cottonseed mill delivery (Haryana) oils moved in a narrow range in
limited deals and ended steady at Rs 10,150 and Rs 7,100 per quintal, respectively.
In the non-edible section, linseed oil lacked necessary buying support from paint's industries
and shed Rs 50 at Rs 6,100 per quintal.
Grains: Firm conditions prevailed on the wholesale grains market during the week as rice
basmati and a few other bold grains strengthened on sustained buying by stockists against
limited arrivals from producing region.
However, wheat moved down on reduced offtake against sufficient supplies and expectations
of bumper crop.
Marketmen said sustained buying by stockists against restricted arrivals from producing
regions strengthened basmati rice and a few other bold grain prices.
Reduced offtake by flour mills and stockists against adequate stocks availability kept
pressure on wheat, traders said.
52

Meanwhile, government plans to cut price of wheat for bulk consumers, inorder to check
rising prices.
In the national capital, rice basmati Pusa-1121 remained in demand and advanced to Rs
6,500-7,100 from previous Rs 6,300-7,000 per quintal.
Other bold grains like maize and barley rose by Rs 20 each to Rs 1,500-1,530 and Rs 1,430-
1,440, respectively, while bajra inched up by Rs 5 to Rs 1,365-1,370 per quintal.
On the other hand, wheat dara (for mills) remained steady for major part of the week, shed
Rs 5 to Rs 1,555-1,560 per quintal. Atta chakki delivery held steady at Rs 1,565-1,570 per 90
kg.
Pulses: The wholesale pulses market ended on a firm note during the past week, as select
pulses led by rajmah moved up.
Traders said increased buying by stockists after pick up in demand from retailers amid lower
arrivals from producing region led to rise in select wholesale pulses.
In the national capital, rajmah chitra attracted brisk buying support from retailers and ended
higher at Rs 7,100- 8,100 from previous level of Rs 6,900-7,700 per quintal.
Gram edged up to Rs 4,000-4,500 against last close of Rs 3,650-4,500, while dal local and
best quality gained Rs 50 each at Rs 4,600-4,700 and Rs 4,900-5,000 per quintal,
respectively.
Kabli gram small remained steady for major part of the week, found fag-end buying from
retailers and rose by Rs 100 to Rs 4,100-6,600 per quintal.
However, moth and lobia moved in a narrow range on alternate bouts of buying and selling
and settled steady at Rs 3,600-4,200 and Rs 3,300-4,400 per quintal, respectively.
Sugar: The wholesale sugar market remained weak in the national capital during the past
week under review as prices declined on surplus stocks position, against restricted buying,
registering losses up to Rs 70 per quintal.
Marketmen said Higher-then-expected quarterly free sale sugar quota and increased supplies
from mills against fall in demand following off marriage season mainly put weight on
sweetener prices.
They said reduced offtake by stockist and bulk consumers such as ice-cream and softdrink
makers too influenced the trading sentiment.
Sugar ready M-30 and S-30 prices slipped from Rs 3,270-3,470 and Rs 3,245-3,445 to settle
at Rs 3,280-3,440 and Rs 3,260-3,420 per quintal respectively, showing a loss of Rs 30 per
quintal.
53

Similarly, sugar mill delivery M-30 and S-30 prices softened from the last week's closing
levels of Rs 3,140-3,325 and Rs 3,125-3,300 to close at Rs 3,160-3,300 and Rs 3,140-3,280,
persisting a net loss of Rs 25 per quintal to upper end.
Among millgate including duty section, prices fell due to selling pressure and prices of sugar
Nazibabad and Anupshar lost Rs 70 each to Rs 3,160 and Rs 3,150 per quintal. Sugar from
Morna and Baghpat dipped by Rs 60 each to Rs 3,175 and
Rs 3,185 per quintal.
Sugar ramala moved down by Rs 50 at Rs 3,175 while chandpur lost Rs 40 at Rs 3230 per
quintal.
Mills delivery sugar of Asmoli dropped by Rs 20 at Rs 3,370 per quintal and Kinnoni by Rs
15 at Rs 3,415 per quintal.
Jaggery: Steady trend developed in the wholesale jaggery market in the national capital
during the past week under review as gur prices ruled flat throughout the week.
Marketmen said apart from good winter season demand, prices of gur chakku remained under
pressure in Muzaffarnagar on increased supply from manufacturing areas.
In the national capital, gur pedi and dhayya prices continued to be asked on last week's
closing levels at Rs 2,900-3,000 and Rs 3,000-3,100 per quintal on sporadic buying support.
Gur chakku and shakkar prices also ruled flat on small buying at Rs 2,700-2,750 and Rs
3,200-3,300 per quintal.
However, in Muradnagar gur pedi and dhaya remained steady at Rs 2,550-2,600 and Rs
2,600-2,650 per quintal on regular arrivals.
In Muzaffarnagar, gur raskat and Khurpa held unchanged at Rs 2,300-2,350 and Rs 2500-
2550 per quintal, while gur chakku declined by Rs 50 to Rs 2,500-2,650 per quintal on fresh
supply.
Slowing global exports drag edible oils (BL 14/1/2013)
Sentiments in the edible oils market were steady on Monday due to lower demand. The
volume was need based. Domestic soya oil futures edge up by Rs 3-5 on speculative buying
by bull operators.
In spot, palmolien and cotton refined oil were up by Rs 3 and Rs 2 each for 10 kg. All other
oils remained unchanged.
Market witnessed cautious activities due to holiday mood of “Makar Sankanti – kite
festival”.
Higher stocks and slowing exports from Malaysia and Indonesia weighed on investor
sentiment. In the local market, cautious mood continued throughout the day and activities
remained very thin and isolated. Merely 80-100 tonnes of palmolein were resale traded at Rs
498 ex-JNPT. Ruchi sold about 250-300 tonnes of soyabean refined oil Rs 690.
54

In Saurashtra – Rajkot, groundnut oil was Rs 1,950 (Rs 1,955) for telia tin and Rs 1,275 (Rs
1,275) for loose (10 kg). Towards the end of the day Liberty was quoting palmolein at Rs
514-516 for Jan and Rs 522-524 for February. Super palmolein Rs 562, soya refined oil Rs
697 and sunflower refined oil Rs 790. Ruchi quoted palmolein at Rs 512 for Jan and Rs 522
for Feb 1-25, soyabean refined oil at Rs 690 till Feb 10. and sunflower refined oil Rs 785 up
to Feb 10. Allana’s rates for palmolein were Rs 508 and super palmolein Rs 560. Resellers
were offering palmolein at Rs 498 ex JNPT.
On the National Commodities and Derivatives Exchange, soyabean refined oil’s February
futures was up Rs 706.55 (Rs700.90), March was Rs 685.90 (Rs 682.30) and April was Rs
678.00 (Rs 674.95).
Malaysia’s crude palm oil’s February contracts settled at MYR 2,342 (MYR 2,333), March at
MYR 2,370 (MYR 2,368) and April drop to MYR 2,393 (MYR 2,396) a tonne.
The Bombay Commodity Exchange spot rates (Rs/10 kg): Groundnut oil 1,265 (1,265);
soya refined oil 690 (690); sunflower exp. ref. 710 (710); sunflower ref. 785 (785); rapeseed
ref. oil 810 (810); rapeseed expeller ref. 780 (780); cottonseed ref. oil 620 (618) and
palmolein 500 (497).
Winter demand warms up refined soya oil (BL 15/1/2013)
Weak buying support at higher rate kept soya oil on leash, though soya refined gained
marginally on scattered demand. Decline in demand for cotton and palm oils due to cold
weather condition, marginally lifted demand in soya refined which on Monday ruled at Rs
700-705 for 10 kg ( Rs 695-98).
Soya solvent ruled flat at Rs 664-68. The National Board of Trade here witnessed a second
cut of the month at Rs 736.20.
On the NCDEX, however, soya oil traded higher on strong global cues and improved buying
support with its January and February contracts closing at Rs 732.10 (up Rs 3.70) and Rs
705.50 for 10 kg (up Rs 4.15).
With local mandis remaining closed on account of ‘Makar Sankranti’, soya seeds in private
trading ruled marginally higher at Rs 3,200-3,250 amid neglible arrival.
There was a decline in demand in soyameal that is ruling at Rs 26,000-26,500, while at the
port, it was quoted at Rs 28,000.
Plant deliveries in soyabean on Monday were quoted at Rs 3,225-50 up Rs 50 from last
week.
On the NCDEX, soyabean traded higher on improved buying support with its January and
February contracts closing at Rs 3,192 (up Rs 65.50) and Rs 3,165.50 (up Rs 20).
55

Govt may impose 5 pc import duty on crude edible oil (FE/16/1/2013)
The government may impose 5 per cent import duty on crude edible oil and hike custom duty
on refined cooking oil to protect the interests of farmers and processing industry, sources
said.
The proposal may come up before the Cabinet Committee on Economic Affairs (CCEA) this
week, they added.
At present, there is zero duty on crude edible oil and 7.5 per cent on refined edible oils. India
imports over 50 per cent of its domestic demand. In 2011-12 oil year, the country imported a
record 10.19 million tonnes of vegetable oils.
Finance Minister P Chidambaram, Agriculture Minister Sharad Pawar and Food Minister K
V Thomas today met to review edible oil imports into the country.
"I met Finance Minister and Agriculture Minister and briefed them about edible oil imports,
wheat exports and OMSS," Thomas told reporters after the meeting here, but he declined to
share further details.
Sources, however, said that there was an understanding in the meeting to increase the import
duty on crude edible oil to protect palm oil growers in Andhra Pradesh.
The Agriculture Ministry wanted to hike import duty on crude oil to 7.5 per cent from zero
per cent, while on refined oil, it sought to double the duty to 15 per cent. However, the
Finance Ministry felt this would lead to rise in retail prices and food inflation.
"A middle path is likely to be adopted. A Cabinet note will be prepared by the Agriculture
Ministry. The note may propose 5 per cent duty on crude edible oil," a source said.
Import duty on refined edible oils would also be hiked, but it would be lower than 15 per
cent, sources said.
The government is considering to increase duty on edible oil to curb cheaper imports from
Malaysia, sources said.
Besides edible oils, the meeting also discussed sale of wheat to bulk consumers such as flour
millers and biscuit makers under OMSS.
The Food Ministry is preparing a proposal to cut wheat prices under the scheme to boost
sales, sources said.
On wheat exports, the government may consider allowing further shipments from its stocks.
Already, the Centre has allowed 4.5 million tonnes of wheat from FCI godowns to clear
surplus stock and ease storage crunch.
56

Govt to review import duty structure of edible oils (BL 16/1/2013)
Amid rising imports of vegetable oils, the Food Ministry will review the Customs duty on
edible oils and prepare a Cabinet note in this regard.
Finance Minister P. Chidambaram, Agriculture Minister Sharad Pawar and Food Minister
K.V. Thomas today met to review edible oil imports, status of wheat exports and sale of
wheat under the open market sale scheme.
“I met Finance Minister and Agriculture Minister and briefed them about edible oil imports,
wheat exports and OMSS,” Food Minister told reporters after the meeting here, but declined
to share further details.
However, according to sources, the Food Ministry has been asked to review the duty
structure on edible oils, both crude and refined, and then send a Cabinet note in this regard.
The Ministry would then formulate a duty structure, keeping in view the interest of both
consumers and farmers.
At present, there is zero duty on crude edible oil and 7.5 per cent on refined edible oil. India
imported a record 10.19 million tonnes of vegetable oils in 2011-12. Last month, the imports
were up by 35 per cent to over 9 lakh tonnes.
Sources said that the Agriculture Ministry is in favour of hiking the import duty on edible
oils, as higher import of edible oils has affected the farmers and oilseed processing units.
However, the Finance and Food Ministries are against it as they fear that raising the Custom
duty would lead to a rise in the retail prices of cooking oil.
The Ministers also discussed ways to reduce the country’s import dependence on edible oils.
Currently, India imports more than half of its domestic requirement.
Besides edible oils, they also discussed the sale of wheat to bulk consumers such as flour
millers and biscuit makers under OMSS. The Food Ministry is preparing a proposal to cut
wheat prices under the scheme to boost sales.
On wheat exports, the Government may consider allowing further shipments from its stocks.
Already, the Centre has allowed 4.5 million tonnes of wheat from FCI godowns to clear the
surplus stock and ease storage crunch.
Edible oils gain on global cues (BL 16/1/2013)
Edible oils prices increased in the domestic market on Tuesday tracking positive reports from
producing centres and firm futures markets.
In Mumbai, groundnut oil rose by Rs 10, soyabean and sunflower oils by Rs 5 each.
Palmolein inched up by Rs 2 for 10 kg.
57

In direct trade, Liberty sold about 250-300 tonnes of super palmolein at Rs 562, said a
leading broker. In Saurashtra – Rajkot, improved demand from groundnut oil shot up by Rs
25 to Rs 1,975 (Rs 1,950) for telia tin and by Rs 15 to Rs 1,290 (Rs 1,275) for loose (10 kg).
Liberty quoted palmolein at Rs 517-519 for Jan and Rs 527-529 for Feb. Super palmolein Rs
562; soya refined oil Rs 700; sunflower refined oil Rs 790; Ruchi palmolein Rs 515 for Jan
and Rs 525 for Feb 1-25; soyabean refined oil at Rs 695 till Feb 10 and Rs 698 for Feb 10-
20; sunflower refined oil Rs 785; Allana’s rates were Rs 512 and super palmolein Rs 562.
On the National Commodities and Derivatives Exchange, soyabean refined oil’s February
futures closed higher at Rs 709.20 (Rs 706.15); March was up at Rs 688.25 (Rs 685.75);
April Rs 677.80 (Rs 677.25). Malaysia’s crude palm oil’s Feb contracts settled higher at
MYR 2,375 (MYR 2,340), March MYR 2,398 (MYR 2,372) and April MYR2,415 (MYR
2,395) a tonne.
The Bombay Commodity Exchange spot rates (Rs/10 kg): Groundnut oil 1,275 (1,265);
soya refined oil 695 (690); sunflower exp. ref. 715 (710); sunflower ref. 790 (785); rapeseed
ref. oil 808 (810); rapeseed expeller ref. 778 (780); cottonseed ref. oil 620 (620) and
palmolein 502 (500).
Vikram Global Commodities, Chennai quoted 571 for 10 kg for Malaysian super
palmolein.
Industry oppose DGFT- APEDA norms for groundnut export (BS/16/1/13)
Shelling units of groundnut have opposed the director general of foreign trade (DGFT)'s new
registration rules for groundnut export in non European Union (EU) countries. The units also
refused to be a compulsory member of Indian Oilseed and Produce Export Promotion
Council (IOPEPC). As per DGFT notification dated January 3, 2013, exports of groundnut
have been subjected to registration with Agricultural and Processed Food Products Export
Development Authority (APEDA) along with controlled Aflatoxin level certificate issued by
APEDA recognized laboratories. Post the notification, Indian Oilseed and Produce Export
Promotion Council (IOPEPC) officials met the commerce ministry and DGFT officials at
Delhi last Monday. As a result of the meeting, the government has allowed groundnut export
that are already on port for shipment till January 4, 2013 in a bid to simplify the process.
However, Rajesh Bheda, Chairman, IOPEPC, informed that APEDA has issued trade notice
on January 9, 2013 which delineates the procedure to be followed for exports of groundnut
and groundnut products (GGP) mentioning that exports will be allowed only from IOPEPC
recognized units and warehouses.
During the meeting with shelling units and traders of groundnut, the industry has opposed
strongly against new rules. "The IOPEPC should have discussed with us before going to the
government. The rules that government impose are not viable for shelling units and traders
58

and should rather be only for exporters," said Kalpesh Hindocha of Smiit International trade
brokers from Junagadh.
Bheda mentioned that exports of GGP to countries other than Russia and EU also require the
registration of shelling units wherein the objective is to bring in system of traceability of
export consignments up to the level of unit which in turn keeps records of procurement from
their suppliers.
Moreover, as per new rules registered units must have to follow CODEX rules for aflatoxin
and moisture limitation rules to export. This is required in view of the fact that more and
more countries are imposing stringent quality norms on imports of groundnuts. The
government received multiple complaints from many importing countries and was asked to
adhere to the commitment made under sanitary and phyto-sanitary (SPS) agreement of WTO.
Rajkot based peanuts shelling unit owner and past president of Saurashtra oil Mills
Association (SOMA) Mukund Shah said, "When export of groundnut has increased in past
two years then why these new rules are being imposed? It will abolish the industry's
business."
Government has fixed Rs 25,000 registration fees for two year wherein exporters have to
show this registration detail in their export agreement. "The fees collected from registrations
will be used for upgradation of groundnut shelling units," said Bheda.
There are around 5000 shelling units in Saurashtra region, mostly are located in Rajkot and
Junagadh areas. On Sunday shelling units and peanuts traders had called a meeting to protest
against new rules at Kedshod taluka of Junagadh district.
Mustard seed rises on local demand (BS 16/1/2013)
Mustardseed prices hardened by Rs 37 to Rs 3,619 per quintal in futures trading today,
following a firm trend in the spot markets.
Besides, fall in arrivals and pick up in demand in physical markets mainly led the rise here in
mustardseed futures prices, traders said.
At the National Commodity and Derivatives Exchange counter, castorseed prices for delivery
in far-month July rose by Rs 37, 1.03 per cent to Rs 3,619 per quintal, with an open interest
of 140 lots.
The most-active April contract gained Rs 27, or 0.78 per cent, to Rs 3,484 per quintal, having
an open interest of 54,460 lots, while January delivery prices moved up by Rs 28, or 0.66 per
cent to Rs 4,244 per quintal, clocking a business turnover of 27,200 lots.
59

Fresh purchases heat up groundnut oil (BL 16/1/2013)
Groundnut oil and cotton oil moved up on Tuesday following fresh buying by repackers and
manufacturers of branded oils.
However, the retail demand was below normal.
According to market sources, prices of both edible oils may gain in the coming days as
supply is weak due to shortage of raw material for crushing.
In Rajkot, groundnut oil new tin for 15 kg traded higher by Rs 5 at Rs 2,185-2,190.
Groundnut oil loose increased by Rs 10 to Rs 1,290-1,295 for 10 kg and telia tin was quoted
higher by Rs 15 at Rs 1,977-1,978 for 15 kg.
About 40-50 tonnes groundnut oil were traded in mills.
An Ahmedabad-based repacker bought around 20 tonnes oil from Upleta at Rs 1,300 for 10
kg.
Cotton oil wash moved up by Rs 5 to Rs 600-603 for 10 kg and new tin gained Rs 5 to Rs
1,065-1,070 for 15 kg.
About 350-400 tonnes cotton oil was traded.
A Rajkot miller said that arrivals of groundnut have been poor so far this year and groundnut
production is estimated lower.
“Trading is at a low key as traders and shelling units are protesting against new export rules,”
he said.
Groundnut arrivals stood at 2,500 bags in Rajkot, 2,000 bags in Gondal and 650 bags in
Jamnagar.
Edible oils trade agog with talk of import duty hike (BL/17/1/13)
Edible oils market witnessed higher volumes on Wednesday as stockists covered about
1,700-1,800 tonnes of imported oils on speculation that the Government may raise import
duty on edible oils.
Palmolein and cotton oil rose by Rs 3-4 respectively. Despite higher volumes, other oils
remained unchanged. The sentiment was firm in the physical market, tracking higher closing
of Malaysian palm oil futures. Domestic soya oil futures also extended gains.
60

Shailesh Kataria of Riddhi Brokers told Business Line that on expectation of increase in
import duty on edible oils by the Government local stockists came up with fresh orders.
Malaysia recently lowered the export duty to zero level and Indonesia is expected to follow
suit. This has lead to higher imports of edible oils in last two months in India. To protect the
local oil industry, the Centre may raise the import duty”.
Ruchi sold about 650-700 tonnes of palmolein at Rs 507-509 and 250-300 tonnes of
soyabean refined oil at Rs 695-698. Liberty sold 350-400 tonnes of super palmolein at Rs
560-562.
Resellers offloaded about 250-300 tonnes palmolein at Rs 502-503 ex JNPT. Some quantity
of cotton oil was also traded, said sources.
In Saurashtra – Rajkot, improve demand from brand makers groundnut oils extended gains
further by Rs 25 to Rs 2,000 (Rs 1,975) for telia tin and by Rs 10 to Rs 1,300 (Rs 1,290) for
loose (10 kg).
Liberty was quoting palmolein at Rs 517-519 for Jan and Rs 527-529 for February; super
palmolein Rs 562; soya refined oil Rs 700 and sunflower refined oil Rs 790.
Ruchi quoted palmolein at Rs 510 ex JNPT; Rs 515 for Jan; Rs 525 for Feb 1-25; soyabean
refined oil at Rs 698 till Feb 10 and Rs 701 for Feb 10-20 and sunflower refined oil at Rs
785. Allana’s rates for palmolein was Rs 512 and super palmolein Rs 562. Resellers were
offering palmolein at Rs 505 ex JNPT.
On the National Commodities and Derivatives Exchange, soyabean refined oil’s February
futures closed higher Rs 715 (Rs 710.15); March up at Rs 696 (Rs 689.60) and April Rs
687.25 (Rs 680.40).
Malaysia’s crude palm oil’s February contracts settled higher at MYR 2,387 (MYR 2,375),
March at MYR 2,415 (MYR 2,398) and April MYR 2,430 (MYR 2,415) a tonne.
The Bombay Commodity Exchange spot rates (Rs/10 kg) were : Groundnut oil 1,275
(1,275); soya refined oil 695 (695); sunflower exp. ref. 715 (715); sunflower ref. 790 (790);
rapeseed ref. oil 808 (808); rapeseed expeller ref. 778 (778); cottonseed ref. oil 624 (620) and
palmolein 505 (502).
Vikram Global Commodities has quoted Rs 572 for 10 kg Malaysian super palmolein.
Oil palm: Answer to India's edible oil problem (ET 18/1/2013)
Indians love their food when it is deep fried in oil, be it their favorite samosa, vada, jalebi or
gulabjamun. But the source of this oil is seldom known. Probability is more than half that
these are being fried in imported oils. In this context, it may be worth noting that, based on
data collated from The Solvent Extractors' Association of India, during November 2011 to
61

October 2012 (oil year), India imported 10 million tonnes (mt) of edible oils costing 56,295
crore. This is the highest amount ever imported by India and comprises about half of India's
total consumption of edible oils. The cost of these imports has gone up by almost 380% in
the last six years, up from 14,709 crore in 2006-07 (see Graph; data collated from Ministry of
Commerce shows even faster increase). This has contributed to widening the current account
deficit, and today, it exceeds all agri-imports of India by a wide margin. The projections of
demand and supply of agri-products also show that the biggest challenge of Indian
agriculture will be in producing enough edible oils at globally competitive rates to meet its
rising demand.
If one were to produce this 10 mt of additional oil through existing oilseeds crop complex,
one needs about 30 million hectares (m ha) of additional area under oilseeds at current levels
of productivity. Can one afford to divert this much area from any other crops, say from
foodgrains, which occupy more than 60% of India's gross cropped area (GCA), without
sacrificing our food security?
The obvious answer is 'No'. That means to increase domestic production of edible oils, either
we have to increase the productivity of existing oilseeds, and/or find a suitable oil crop,
which can give high oil content on per hectare basis, and expand its cultivation, and also
bring about greater efficiency in processing of seeds into oil.
Currently, oilseeds occupy about 27 m ha of GCA, with soyabean at 10 m ha, and mustard
and groundnut each occupying roughly 6-7 m ha, and the remaining 3-4 m ha goes to all
other oilseeds. But soyabean is more a protein (meal) crop than an oil crop as the beans
contain only 17-18% oil, while groundnut has 40% oil-to-kernel ratio (and 28% to pod ratio),
and traditional mustard contains about 33% oil. The productivity of each of these dominant
oilseeds crops hovers between 1-1.3 tonnes/ha, although soyabean is basically rainfed, while
groundnut has 20% and mustard about 75% irrigation cover. But in terms of oil content on
per ha basis, soyabean gives 234 kg, groundnut 364 kg, and mustard 430 kg. The good news,
however, is that some private companies (e.g. Pioneer) have developed hybrids in mustard,
which cannot only give yields up to 2.6 tonne/ha, but also raise its oil content from the
current 33% to 44%. This makes mustard the most promising seasonal crop to
augment edible oil supplies. Accordingly, CACP recommended 50% increase in MSP over
the last two years bringing them to import parity levels. This sets mustard prices in relation to
other rabi crops right, and if one can reduce the marketing risk of farmers, this should
incentivise them to adopt better hybrids, augmenting productivity and area under mustard.
De-reserving processing of mustard (and groundnut) from small scale reservation will also
help augment the recovery of oil through more modernised plants. However, all this still
cannot bridge the wide gap in domestic demand and supply of edible oils.
62

The ultimate answer to India's edible oil problem lies in oil palm, as it is the only plant that
can give 4 tonnes of oil/ha basis. Oil palm has a gestation period of four to six years, starts
yielding some fruit in the fourth year and attains full maturity in the sixth year, and thereafter
it gives fruit for the next 27 years. Can India grow oil palm in a globally competitive
environment? CACP looked into this in a report submitted to the government, and found that
India can compete with Indonesia and Malaysia so long as palm oil prices do not drop below
$800/tonne. The projections do show that palm oil prices are likely to remain above
$800/tonne, as any drop below that cut-off point promotes its usage in bio-diesel and pushes
up its price. Dr Rathinam and his colleagues in the Directorate ofOil Palm Research have
come out with a report which suggests that oil palm can be grown in this country on about 2
million ha. Tapping this potential requires bold, and out-of-box thinking with long-term
commitment.
There seem two ways to tap this potential. One, declare this crop as a plantation crop, on the
lines of tea and coffee, and let corporate entities enter this area to grow oil palm. For this to
happen, states will have to change land lease laws enabling long-term lease by farmers to
corporate entities without fear of losing their land. Two, let the farming households develop
this crop, but they will need support especially in the first three years. CACP's report on oil
palm suggests opening both these options, and also suggests a pricing formula, to make it
happen on a sustainable basis.
The current calculations suggest that if India is ready to invest roughly 4,000 crore per year
for the next five years as compensation to farmers for the opportunity cost of their lands for
the first three to four years, as also to support drip irrigation investments in oil palm
plantations, it has high probability to take off at a large scale. Tapping 2 m ha of oil palm
area can give about 8 mt of oil per year for the next 27 years, saving a cumulativeimport
bill of more than 12 lakh crore. This surely is a large enough sum for policymakers to think
seriously and bite the bullet, as also reduce the vulnerability of our samosas getting fried in
imported oils!( The author is chairman of the Commission For Agricultural Costs and
Prices. Views are personal)
63

Global cues, speculators lift soya oil (BL 22/1/2013)
Even as demand in soya oil continues to be weak at higher rate, strong global cues and
speculators lifted soya oil in Indore mandis by Rs 15-20 in the past one week. Soya refined
on Monday ruled at Rs 715-20 for 10 kg (Rs 710-12). Similarly soya solvent rose to Rs 683-
87 (Rs 678-82) on scattered buying support and strong global cues.
Despite decline in demand at the higher rate, soya oil continues to rule higher, primarily due
to strong foreign market and speculators’ involvement.
In futures also soya oil traded higher on strong foreign with soya refined February contract
on the NBOT closing at Rs 730.50.
Similarly on the NCDEX, soya oil’s February and March contracts closed higher at Rs
728.60 (up Rs 4.95) and Rs 705.20 (up Rs 4.55).
On the other hand, soyabean also traded higher at Rs 3,180-3,270 a quintal (up Rs 20) amid
weak arrival with about 1.10 lakh tonnes of soyabean being offloaded in mandis across
Madhya Pradesh.
Notwithstanding bumper crop of soyabean this year which is expected to be around 126 lakh
tonnes against 116 lakh tonnes last year, soyabean is ruling higher, with stockists engaged in
building inventories. According to a report, out of 55 lakh tonnes of soyabean which have
been offloaded in various mandis across the country, about 20-22 lakh tons are lying with the
stockists.
Soybean plant deliveries on Monday were quoted at Rs 32,70-3,300 (up Rs 20-50) from last
week. Soyabean futures also traded higher on strong foreign and improved buying support
with its February and March contracts on the NCEDX closing at Rs 3,278 a quintal (up Rs
40); Rs 3,220 (up Rs 54.50) respectively.
Soya DOC is also ruling sluggish on weak export and domestic demand. In the domestic
market, soya DOC ruled at Rs 26,500-800 a quintal, while on the port, it was quoted at Rs
28,500 a quintal.
Oilseed exporters seek more time to register with Apeda (BL 23/1/2013)
The Indian Oilseeds and Produce Export Promotion Council (IOPEPC) has sought more time
for groundnut shelling units to comply with the new Directorate General of Foreign Trade
(DGFT) notification making it compulsory for export units to register with Agricultural and
Processed Food Products Export Development Authority (Apeda).
There has been a lot of concern among the groundnut processors following the DGFT
notification, according to IOPEPC.
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Upon announcement of trade notification, office-bearers of the council made a representation
at various levels in Commerce Ministry for simplifying the new guidelines. One immediate
serious issue was stoppage of export of groundnut which was stuffed in containers lying in
the ports. The council has been successful in resolving this issue to a large extent.
IOPEPC held a meeting recently to inform the trade about the new requirement and also hear
the difficulties that would be faced by the trade. Consequently on January 15, the council
held a meeting with Apeda officials to seek 12-24 months for export units to register and
comply with Apeda regulations.
While informing the trade that they have been give more than two years to register and
adhere with new norms, Apeda assured to look into the issues sympathetically, said a council
member who was present at the meeting.
Currently there are about 45 groundnut shelling units that are complying with Apeda.
However, there are scores of small and medium units that are yet to register with those
norms. These units, which cater largely to domestic markets, also tap the export markets
occasionally when there is a buoyant demand, he said.
Soybeans hit 3-week high, soyoil down (ET 23/1/2013)
Soybean futures rose in tandem with the overseas markets on Wednesday, extending gains
for a fourth session to hit their highest level in three weeks amid low supplies in the domestic
market. Soyoil edged lower.
US soybean futures rose 1.6 per cent on Tuesday, and touched a one-month high, as traders
cited news China bought optional-origin soybeans, talk that it may be looking for more, and
concern about Brazil's ability to move its expected record-large soybean crop to port.
The actively traded soybean contract on the National Commodity and Derivatives Exchange
(NCDEX) for February delivery was 0.21 per cent higher at Rs 3,296 per 100 kg, after hitting
a high of Rs 3,308, a level last seen on Jan. 2.
"CBOT has moved up in the last couple of days, which is moving domestic prices," said
Chowda Reddy, a senior analyst with JRG Wealth Management.
Soybean may trade in the range of Rs 3,280-3,340, Reddy added.
There is a lack of supply in the spot market amid steady demand as farmers are unwilling to
sell their produce and are waiting for higher prices, said Reddy.
The actively traded soyoil contract for February delivery on the NCDEX was 0.44 per cent
lower at Rs 730.45 per 10 kg. The rapeseed contract for April was 0.74 per cent higher at Rs
3,557 per 100 kg.
At the Indore spot market in Madhya Pradesh, soyoil was Rs 0.60 lower at Rs 756.15 per 10
kg, whilesoybeans were Rs 11 higher at Rs 3,302 per 100 kg. At Sri Ganganagar in
Rajasthan, rapeseed was Rs 20 higher at 4,260 rupees.
65

Edible oils rise on tariff value revision (BL 24/1/2013)
Edible oils prices increased on Thursday as the Centre issued a revised notification for tariff
value of imported crude edible oils linked with prevailing international market prices. Local
refineries have increased their rates for imported edible oils considering higher import cost
said traders. The Malaysian palm oil futures market was closed. Domestic futures markets
witnessed firm trend. In Mumbai, barring palmolein, which rose by Re 1, all the other edible
oils declined till noon on lack of demand.
Groundnut and sunflower expeller oils dropped by Rs 5 each. Cotton refined oil made a loss
of Rs 8 and soyabean refined oil declined by Re 1.
In spot market, volumes were thin and isolated on buyer resistance. During the day, about
450-500 tonnes of palmolein were sold by Adani at Rs 502-505 for January. About 50-60
tonnes were resale traded at Rs 505-507 ex-JNPT in ready, said sources.
Towards the end of the day Liberty was quoting palmolein at Rs 520-522 for February. Super
palmolein Rs 565 for Feb, Soya refined oil Rs 730 for Feb 20.
Ruchi quoted palmolein at Rs 521 for Feb 26, soyabean refined oil at Rs 721 for Feb 10, and
sunflower refined oil Rs 800 for Feb 26. Allana’s rates for palmolein were Rs 520 and super
palmolein Rs 565 for Feb 10.
In Saurashtra – Rajkot, groundnut oil dropped by Rs 25 to Rs 2,010 (Rs 2,035) for telia tin
and by Rs 25 to Rs 1,300 (Rs 1,325) for loose (10 kg).
On the National Commodities and Derivatives Exchange, soyabean refined oil’s February
futures inched up by Rs 4.35 to Rs 729.60 (Rs 725.25), March up by Rs 2.25 to Rs 710.60
(Rs 708.35) and April was Rs 698.60 (Rs 698.60).
The Bombay Commodity Exchange spot rates (Rs/10 kg): Groundnut oil 1,290 (1,295),
soya refined oil 705 (706), sunflower exp. ref. 715 (720), sunflower ref. 795 (795), rapeseed
ref. oil 820 (820), rapeseed expeller ref. 790 (790) cottonseed ref. oil 625 (633) and
palmolein 507 (506).
Despite lower demand, mustard oil rules firm (BL 25/1/2013)
Despite weak demand, mustard oil continues to rule higher in mandis across Madhya
Pradesh, Rajasthan and Gujarat.
Mustard oil is ruling at Rs 770 for 10 kg in Indore mandis. Similarly it is ruling Rs 10 up
each in Neemuch and Moorena at Rs 765 and Rs 775 respectively.
According to traders, even as demand in mustard oil has shrinked alarmingly at a higher rate,
prices are refusing to die down, primarily due to slack arrival as most the crushing mills are
presently lying closed ahead of the new harvesting season.
66

Added to this comparatively higher rate of mustard seeds which is still hovering at Rs 4,400-
4,600 a quintal and weak demand in mustard and raida ‘khali’ (DOC), have also contributed
to rise in mustard oil prices.
On the other hand, mustard seeds are ruling stable in Indore mandis at Rs 4,400-4,600, while
raida is ruling at Rs 3,500-3,600.
Plant deliveries in mustard for Jaipur line on Thursday were also quoted lower at Rs 4,100-
4,130 (down Rs 75).
Mustard seeds futures on the NCDEX for April and May were quoted lower at Rs 3,474
(down Rs 20) and Rs 3,523 (down Rs 18) on weak buying support.
Profit-booking by traders weakens edible oils (BL/25/1/2013)
Edible oils market witnessed a weak trend tracking bearish Malaysian palm oil futures which
fell on Friday, snapping four straight sessions of gains, as weak exports and a move by India
to raise its base import price of crude palm oil and soya degum prompted traders to book
profits.
All other edible oils ruled steady barring cotton refined oil which declined by Re 1.
Volume was isolated. Due to three days holiday mood, traders kept away.
Resellers were offering palmolein at Rs 505-507. India’s move to raise the base import price
of crude palm oil by nearly 80 per cent also stoked concerns it could neutralise export duty
cuts by major producers Indonesia and Malaysia.
The major concern is still on Malaysia’s inventory, which may reach another record high of
2.66 million tonnes by end-January.
This should limit price upside. In spot market, volume was thin and isolated on buyer
resistance. During the day, hardly 90-100 tonnes of palmolein were resale traded in ready.
Towards the end of the day, Liberty was quoting palmolein at Rs 518-520 for February.
Super palmolein quoted Rs 563 for Feb, soya refined oil Rs 730 for Feb and sunflower
refined oil Rs 800.
Ruchi quoted palmolein at Rs 521 for Feb 26 ex-Patalganga. Ex JNPT rates were Rs 513 for
Feb 5-26; soyabean refined oil at Rs 721 for Feb 26; and sunflower refined oil Rs 800 for Feb
26.
Allana’s rates for palmolein were Rs 515 and super palmolein Rs 560 for Feb 10. In
Saurashtra – Rajkot, groundnut oil dropped further by Rs 25 to Rs 1,985 (Rs 2,010) for telia
tin and by Rs 15 to Rs 1,285 (Rs 1,300) for loose (10 kg).
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Negative outlook for edible oil, cotton for 2013: India Ratings (BS 25/1/2013)
With increased margins pressures exerted by the global inventory build-up of agricultural
commodities, India Ratings today maintained its negative outlook for the Indian edible oil
and cotton sectors for 2013.
The outlook for the edible oils and cotton sectors could be revised to stable in the event of a
revival of global consumption demand would reduce the current global inventory glut
causing the prices of such agricultural commodities to recover. However, this is unlikely to
happen in the next 12 months.
According to the report, favourable weather conditions caused palm oil production to
significantly outstrip muted global demand in the 2011-2012 palm season (November-
October). As a result, inventory surged, with the current global stock as a proportion of usage
estimated to be at a six-year high. Meanwhile global palm oil prices have fallen in the range
of 25%-28% ($ terms) over the last 12 months. And Indian prices mirrored a similar trend
with a lag.
The existing palm oil refiners are likely to focus more on trading operations at the expense of
refining operations. But an increase in focus on palm oil trading, which is a low-margin
business, may result in margin pressures.
India Ratings expects domestic cotton prices to stabilise at the current low levels or decline
by 5-10 %.The current global cotton inventory is at a multi-decade high, with stocks to usage
ratio estimated to be at 71% (source: USDA). China’s role in this will be crucial as around
50% of this global inventory is in China. The way the Chinese policy makers decide to
handle the close to 9mt cotton inventory is the single largest event risk in the world cotton
market.
The credit profile of major cotton traders would be driven by their ability to handle
inventory. To the extent traders keep their inventory days low by entering into back-to-back
contracts with producers and consumers, they would remain less affected by any significant
downside in cotton prices. However, margin pressures are likely to continue for such players.
Soybean, rapeseed down on profit-taking, global cues (ET 25/1/2013)
Indian soybean and rapeseed futures fell on Thursday on profit-taking, driven by losses in
overseas markets, though a weak rupee limited the downside.
Soyoil futures nudged higher, supported by an upward revision in the base import price of
crude palm oil.
US soybean futures lost more ground, falling to a near one-week low on forecasts of rains in
Argentina's crop belt.
The rupee eased on Thursday. A weak rupee makes edible oil imports expensive and at the
same time raises returns of oil mills.
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"In overseas markets soybean is under pressure due to forecasts of rainfall in Argentina," said
Prerna Sharma, an analyst at Emkay Commotrade Ltd.
"Soyoil prices are rising due to palm oil. The rise is supporting soybean. Oil mills are also
expecting a pick-up in soymeal exports in the coming weeks."
The actively traded soyoil contract for February delivery n the National Commodity and
Derivatives Exchange was 0.16 per cent higher at 726.4 rupees per 10 kg at 0747 GMT.
The most-active soybean contract for February delivery was 0.98 per cent down at 3,239
rupees per 100 kg, while rapeseed contract for April fell 0.57 per cent to 3,474 rupees per
100 kg.
At the Indore spot market in Madhya Pradesh, soyoil eased by 1 rupee to 754.55 rupees per
10 kg, while soybeans climbed 28 rupees to 3,329 rupees per 100 kg. At Sri Ganganagar in
Rajasthan, rapeseed dropped by 198 rupees to 4,118 rupees.
India raised the base import price of crude palm oil by nearly 80 per cent to $802 per tonne,
the government said on Thursday, as part of efforts to curb overseas purchases and protect
domestic oilseed farmers.
India has slapped a 2.5 per cent import duty on crude edible oils, a move taken to stem
overseas purchases by the world's top vegetable oil buyer.
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VIII
MILK
Milk output likely to rise 4% this fiscal (BL, 31/12/2012)
Milk production is expected to grow by over four per cent to cross 133.7 million tonnes (mt)
in the current fiscal, an official statement said.
“India continues to be the largest producer of milk in the world. The estimate of milk
production in 2011-12 is 127.9 mt and is likely to reach 133.7 mt this year,” the statement
said.
Besides milk, the production of meat and eggs are also set to rise in the current year, leading
to better availability of these highly nutritious products, it said.
Meat production is expected to reach 5.9 mt in the current year, a growth of seven per cent
over previous year’s 5.51 mt.
The production of eggs is likely to climb to 72.5 billion in the current year from 66.45 billion
last year, the statement said. The production of various animal products has shown a steady
increase over the years, the statement said.
Animals are important for the economy from employment and income-security point of view.
In India, farmers of marginal, small and semi-medium operational holdings with area of less
than four hectares, own 87.7 per cent of the livestock.
“It has been found that small and marginal farmers with livestock are better able to withstand
the impact of drought,” it added.
No service tax on transportation of milk by rail or vessel (BL, 04/01/2013)
The Finance Ministry has clarified that transportation of milk by rail or a vessel will not
attract service tax. This clarification has come in the wake of queries received from the
Railways as to whether the service of transportation of milk is covered by an exemption
notification issued in June 2012.
The expression ‘foodstuff’ specified in the exemption notification would cover ‘milk’ and
hence no service tax will be applicable on transportation of milk by rail/vessel, the CBEC has
said.
The CBEC notification — called mega exemption notification – issued in June 2012
specifically provides service tax exemption on transportation by rail/vessel of foodstuffs
including flour, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding
alcoholic beverages.
70

IX VEGETABLES/ ONION-POTATO
Potato gains at the cost of boro paddy in West Bengal (BL, 04/01/2013)
The area under potato in West Bengal, the second-largest producer of the vegetable in the
country, has increased 4-5 per cent rise this season (October-March), courtesy a dip in boro
paddy acreage.
The increased sowing also seems to have been spurred by the remunerative prices for potato
crop last season, sources said.
Incidentally, sowing of the crop was delayed by over a fortnight this year on account of
unfavourable weather conditions.
Sowing in the State, which, usually starts end-October, this time around began only in the
third week of November this year.
Potato sowing usually gets completed by December 15.
According to Ram Pada Pal, President, West Bengal Cold Storage Association, the
cultivation of boro paddy was hit due to lower than expected rains and scanty availability of
irrigation water this year.
This encouraged farmers to go for increased potato cultivation this year.
Potato is usually sown on nearly four lakh hectares of land in West Bengal. “There has been
about five per cent increase in sowing by farmers due to a drop in boro cultivation this year,”
Pal told Business Line.
West Bengal accounts for one-fourth of potato output in the country with Uttar Pradesh, the
top producer, making up 35 per cent.
Potato production in the State had dropped to about 85 lakh tonnes in 2011-12, against 95 lt
in 2010-11. This in turn helped firm up the wholesale prices of the tuber during the whole of
last year.
Wholesale price of the tuber (Jyoti variety) fetched anywhere between Rs 950-1,250 a quintal
during various times of 2012.
Production
Though it would be difficult to estimate the production of the tuber, however, if weather
conditions were favourable, the production could be slightly higher than last year, said
Sukumar Samanta, a potato trader in Singur-Ratanpur area.
Harvesting of potatoes gathers steam by the end of January or early February and is complete
by March 15.
As it looks now, the weather conditions are not too favourable as there are some untimely
rains and also winter has not been too severe, which are some conditions required for a good
71

crop. In case this kind of weather persists then it can affect the quality and quantity of
production,” Samanta said.
Prices
Meanwhile, a good sowing has helped soften prices to some extent. Wholesale price of the
tuber (Jyoti variety), was ruling around Rs 750-800 a quintal, down from Rs 950-1,000 a
quintal in late December.
New crop arrivals smash potato in West Bengal (BL/14.1.2013)
Wholesale potato prices in West Bengal softened by nearly 15 per cent this week, due to
arrival of new crop.
Though prices are still ruling nearly 20 per cent higher than the last season, trading lobby is
apprehensive of a further meltdown of prices in February due to bright production outlook.
Wholesale price of the tuber was ruling around Rs 600-650 a quintal on January 12 against
Rs 700-750 in the first week of January.
PRICES FIRM
According to Patit Paban De, Member, West Bengal Cold Storage Association, the early
varieties of potatoes – Pokhraj and S6 – have started coming into the market.
Harvesting of potatoes which begins around end-December, gains steam by the end of
January or early February and is complete by March 15.
“The arrival of new crop usually brings down prices in the market. However, when compared
to last year, prices are ruling firm this season,” De told Business Line.
The wholesale price of the tuber was hovering around Rs 500-550 around the second week of
January in 2012, he said.
INPUT COSTS
According to potato farmers, cost of cultivation, which includes fertiliser, seeds and labour
costs, have gone up by nearly 50 per cent.
The average cost of growing potato on an acre of land, which was close to Rs 31,000-33,000
last year, has increased to Rs 46,000-47,000 an acre this year.
A farmer can typically grow close to 250 quintals of potatoes on one acre of land, sources
said.
72

PRODUCTION
Though prices have remained firm so far, however, it would be difficult to predict how the
prices would behave in the peak harvesting season beginning end January to February, De
said.
Potato sowing in the State is 4-5 per cent higher this year. Though it is difficult to estimate
the exact production of the crop, however, initial estimates suggest that the State might end
up producing 20 per cent higher crop this season against 85 lakh tonne in 2011-12.
“Going by the consumption pattern across the country, if the production exceeds 90 lakh
tonne then it will be difficult to hold the market and there could be a tendency for prices to
crash,” De pointed out.
However, the prices will depend on the quantum of production in other States and demand
situation, he added.
Vegetable prices ease off as mercury rises in the north (ET 15/1/2013)
As mercury rises in north India, the prices of vegetables slowly come down in markets. The
arrivals have improved now as truck movement has been restored after dense fog disrupting
vegetable transportation in the last few weeks. Traders and vegetable growers say that there
will be a decline in prices by 10 per cent to 15 per cent within the next one week. "The
arrivals at the Azadpur mandi have improved over the last few days as the weather became
warmer. Green vegetables have started coming from the adjoining areas of Delhi. Potatoes
are arriving from Uttar Pradesh and Punjab and onions are coming
fromRajasthan, Gujarat and Nashik. This has resulted in a price fall in the last two days and
we are hopeful that there will be a further decline as weather improves," saidRaj Kumar,
secretary of Azadpur mandi. In Delhi, temperature has soared to 8 degrees Celsius from 1.9
degree Celsius a week ago. Temperature is also showing an upward trend in Punjab.
According to Indian Meteorological Department (IMD), minimum temperature
in Amritsar and Ludhiana has been reported at 10.4 degrees Celsius and 8.8 degrees Celsius,
respectively. IMD forecast says this trend will continue in the next few days. "In the last two
days, truck movement to Delhi has improved. Approximately, 25,000 trucks carrying
vegetables enter Delhi regularly. Now, nearly 80 per cent of the trucks are entering Delhi as
the dense fog has reduced," said Arjminder Pal, member, All India Motor
Transport Congress. The prices of tomato in Delhi markets are hovering around Rs 16-22
per kg and brinjal is costing Rs 25 per kg. Price of peas is around Rs 20 per kg and
cauliflower is commanding a price of Rs 20 per kg. "There has been a 5 per cent drop in
prices in the last two to three days. Within next one week, there will be a further reduction in
prices," said Rajendra Kumar, owner of Purwanchal Trading Company in Delhi. In Uttar
Pradesh, where the cold wave is still in full strength, the prices have declined by 5 per cent in
the last two days. "We are hoping that the chill will come down in the coming days so that
the arrivals will improve. The prices will start declining in the next ten days," said Rajesh
Sharma, a vegetable trader in Lal Talab mandi in Bulandshahr. Vegetable traders from Patna
also shared the same sentiment. Aman Singh, a vegetable trader from Ludhiana, added that
73

the prices have started falling as vegetable production is improving with the rising
temperature. "The cold wave in north India has affected vegetable production as flowering
of fruits and vegetables got affected. The prices will decline as the weather becomes warmer
in the coming days," said Shriram Gadhave, president, All India Vegetable Growers
Association.
Onion prices up sharply on transport cost (BS 22/1/2013)
Faced with the possibility of onion prices rising further, the Ministry of Agriculture has
convened meetings of various stakeholders tomorrow.
In two weeks, onion prices have risen 25 per cent to trade between Rs 1,600 and Rs 1,700 a
quintal at the benchmark Lasalgaon market (Nashik). Prices for retail consumers in Mumbai
stood at Rs 23-24 a kg. In New Delhi, retail prices are higher, owing to high transportation
costs.
According to a study by the Small Farmers Agriculture Business Consortium, between
January 5 and 10, the average price in Lasalgaon was Rs 1,245 a quintal, a rise of 246 per
cent compared with Rs 360 a quintal in the corresponding period last year. During the same
period, the average price of onion in Pimpalgaon rose 229 per cent to Rs 1,265 a quintal,
against Rs 385 a quintal in the year-ago period.
“There are two meetings lined up with the ministry of agriculture tomorrow. The first would
assess the crop situation in the season’s first advanced estimates — the area under onion and
other vegetable crops. The second would discuss the situation in the onion market, including
the supply situation and prices. It would also discuss measures to keep onion prices under
check,” said R P Gupta, director, National Horticulture Research & Development
Foundation, Nashik.
As this year’s supply has been the same as last year’s, the abnormal increase in onion prices
raises questions on the role of arhatiyas (commission agents).
While Gupta rejected the possibility of a decline in production this year, the National Council
of Applied Economic Research has estimated a 20 per cent fall in onion output for 2012-13,
amid expectations of robust demand from domestic, as well as foreign markets. Traders
estimate a production decline of 35 per cent and 25 per cent in Maharashtra and Karnataka,
respectively.
74

ON THE RISE
Average onion price between January 5-10
(Rs/qtl)
Market 2012 2013 Change (%)
Delhi 550 1110 101.82
Bangalore 750 1300 73.33
Lasalgaon 360 1245 245.83
Pimpalgaon 385 1265 228.57
Mumbai 500 1296 159.20
Hyderabad 600 1475 145.83
Jaipur 555 1050 89.19
Indore 400 900 125.00
Chennai 800 1717 114.63
Source : National Horticulture Board
The National Horticulture Board (NHB) estimates overall onion production in 2011-12 stood
at 16.34 million tonnes (mt).
“The agriculture ministry has convened the meeting to assess the situation on the ground.
There is no possibility of a ban on exports, as apprehended by traders,” said Virendra Singh,
chairman, National Cooperative Consumers’ Federation of India, under the Ministry of
Consumer Affairs, Food & Distribution.
An assessment by NHB showed export demand this year was robust. Bangladesh faces a
shortage of onions, as the crop produced in that country was already consumed, and a new
harvest had just started. Demand in Bangladesh stands at 1.8-2 mt, while production is about
1.5 mt. Earlier, it was expected Pakistan would export 2,00,000-2,50,000 tonnes of onion this
season. But deteriorating crop quality hampered exports; as a result, many orders came
India’s way.
Ashok Valunj, director of Agricultural Produce Marketing Committee (Vashi), said the
quality of the new crop this season was poor, with a shelf life of 10-15 days (good-quality
crop can be stored for about a year).
75

Sanjay Sanap, owner of Shivkrupad Traders, a Nashik-based onion trader, hopes with new
crop arrivals from Gujarat and Rajasthan, the situation would normalise in a month.
Minimum export price for onion likely (BS 25/1/2013)
The government is all set to levy MEP at $700 a tonne to discourage exports from India. This
is because of shortage of good quality onion in the recently ended kharif season and the
ongoing rabi harvesting season, which hiked its prices by up to 250 per cent in the week
between January 5-10, 2013 compared to the same period last year.
The government had abolished the MEP on onion in May 2012, thereby, allowing traders to
take advantage of rising prices in the global markets.
But traders are not happy with the likely move. Currently, Indian exporters are executing
orders from Middle Eastern importers at $420 a tonne. At $700, therefore, Indian orders
which already have been low, would be shifted to countries like Pakistan, said a trader.
“Onion exported from Pakistan is cheaper by $30-40 a tonne than India. An MEP levy of
$700 would further deteriorate export opportunities,” said Ashok Walunj, director of
Agricultural Produce Marketing Committee (APMC), Vashi.
Meanwhile, R P Gupta, director of National Horticulture Research and Development
Federation (NHRDF) predicts normal supply of onions in the country this year with an output
estimate of 17.4 million tonnes — unchanged from last year.
Blaming traders for artificial price rise, Gupta said that around 10 per cent decline in acreage
would be compensated with higher recovery.
First advanced estimates, however, forecast India’s onion output between 16.4 and 16.6
million tonnes which is likely to be revised upwards in the second crop assessment next
month.
76

X SUGARCANE/ SUGAR
UP sugar mills find it difficult to clear farmers’ dues (ET, 27/12/2012)
Cane arrears in Uttar Padesh have started mounting with sugar millers finding it hard to clear
payments to farmers in view of growing losses.
Millers had earlier feared a delay in payment to be made to farmers because of a steep hike in
cane price and falling sugar prices. They now find their fears coming true with only 35% of
the total payment due to farmers being made till now.
The 121 operational sugar mills in UP purchased 1,787 lakh quintal of cane producing 154.9
lakh quintal of sugar till Monday. While the total payment due to farmers by co-operative
mills till Monday was Rs 184.19 crore and by private mills was Rs 2,188 crore, the payments
actually made were only Rs 180.79 crore and Rs 770.31 crore respectively.
While 23 co-operative mills have cleared 98% of payments due to farmers, private millers
have only paid 35.20% of the total payment due to farmers. In the similar period last year,
private millers had made 84.13% of their payments while co-operative mills had no
outstanding at all.
The Akhilesh Yadav government's decision earlier this month to raise the price of cane to Rs
40 per quintal to fix the state advised price (SAP) at Rs 280 per quintal has hit the sugar
sector hard. This was despite the sugar industry pleading for a hike freeze this season in view
of the rather dull global scenario.
Industry players had informed the government of likely payment defaults in case of a steep
hike which is now reflected in the private sector's cane arrears standing at an alarming 65%
of the total dues.
Shyamlal Gupta, secretary, UP Sugar Mills Association, said that UP is likely to have a
bumper production of 78 lakh tonne of sugar this season but the steady fall in sugar prices
have made it a bitter season for millers.
"Sugar prices have been falling in the last few months. In the last ten days alone, sugar prices
have gone down by Rs 70 to aboutRs 3,270 per quintal right now. While the production cost
of sugar for UP millers is Rs 3,600 per quintal, the sale price is much lower at Rs 3,270 per
quintal.
Sugar units in UP are running losses due to the drastic hike in SAP. We estimate that private
sugar mill companies in UP will close the season with cumulative losses of about Rs 3,200
crore due to the given scenario. The amount could be higher if sugar prices in the open
market continue to fall," said Gupta.
77

October-December sugar output up 2.5 per cent year on year (ET, 02/01/2013)
India's sugar output rose 2.5 per cent to 7.96 million tonnes in the first three months of the
season beginning October, a leading industry body said on Wednesday.
Sugar mills in India, the world's top consumer of the sweetener, is expected to churn out 24
million tonnes in 2012/13, down from 26 million tonnes in the previous year, but higher than
about 22 million tonnes of local consumption.
On October 1, 2012, when the current season began, carryover stocks from the previous
season were at about 6.5 million tonnes.
Surplus output will help India export sugar for the third straight year.
Output between October 1 and December 31 in the biggest sugar producing state of
Maharashtra was at 2.91 million tonnes, followed by 1.91 million tonnes in Uttar Pradesh
state, the Indian Sugar Mills Association said in statement.
Sugar mills rue closure of distilleries (BS, 02/01/2013)
Already reeling under mounting sugarcane arrears, the sugar millers from Uttar Pradesh are
ruing the closure of several distilleries in the state, in the wake of the upcoming Kumbh Mela
in Allahabad.
The millers are jittery that the lifting of molasses from sugar factories would be adversely
affected following the closure and lead to the overflow of the storage tanks.
The state excise department had recently ordered the closure of a number of distilleries due
to the Kumbh Mela, which could continue until March.
The UP Sugar Mills Association had already written to the state government top brass,
seeking immediate corrective measures in the larger interests of the farmers and the millers.
In its letter, Association secretary S L Gupta has maintained the closure of distilleries would
adversely affect the lifting of molasses from factories and may be completely stopped in
some cases. This would be detrimental at a time when the sugarcane crushing season was in
full swing and factories were working to full capacity.
The mills fear if the molasses were not lifted, it would lead to overflow of the storage tanks
and might even halt sugarcane in some cases, which would be against the interest of farmers.
Besides, the distilleries would also suffer financial losses and workmen would be idle, the
Association letter reads.
Meanwhile, the mills have urged the government to review its decision and allow the
distilleries to function, especially units which had installed effluent treatment plants or were
making bio-compost out of effluent.
78

The free sale of molasses should be allowed during the closure and its interstate movement
be permitted to avoid overflow conditions.
Declining sugar prices hit industry hard (BS, 03/01/2013)
Even as high inflation has drawn the attention of policymakers, declining prices of sugar,
owing to excess supply, have hit the industry.
Sugar prices in most parts of the country, primarily north India, are now lower than
production costs. According to sugar industry representatives, the ex-mill sale price of sugar
stands at about Rs 33 a kg in the North, against the cost of production of Rs 34-36. In
Maharashtra and Karnataka, at Rs 31 a kg, the price is just higher than the production cost of
Rs 30 a kg.
To address this, millers have urged the Union government to allow them to sell sugar under
the allocated non-levy sugar (sugar meant for sale in the open market) quota till May.
Currently, they are allowed to sell the sugar until March.
In a letter to Food Minister K V Thomas, the Indian Sugar Mills Association (Isma) has
urged the government just as it had allowed mills to sell non-levy sugar for October and
November till December, a similar exercise should be carried out for sugar allocated for sale
in December-March.
“In the last three years, on an average, the government released 9.04 million tonnes (mt) of
sugar in the first six months of the crop year (starting October). However, in the 2012-13
season, it released about 10.8 mt, about 20 per cent more than the average, leading to a fall in
prices,” Isma said.
Millers have also urged the government to expedite the process of allowing mills to sell their
unsold levy sugar (sugar to be sold at ration shops) after six months, instead of the current
practice of two years.
Currently, mills have to store the sugar the government doesn’t purchase for distribution
through ration shops, for two years. However, millers have demanded if the government fails
to purchase the entire quantity of sugar for ration shops from them, they should be allowed to
sell it in the open market after six months. They have also demanded the price at which the
government purchases sugar from mills for sale through ration shops be increased by at least
15-20 per cent. Currently, the price stands at Rs 19 a kg. “These steps would give some relief
to the industry and it would be able to find buyers over a longer period,” millers said.
UP cane growers forced to sell below State-advised price (BL, 06/01/2013)
A bigger cane crop does not seem to be doing any good to the sugarcane farmers of Uttar
Pradesh this year.
Sugar mills, while complaining of high State-advised price (SAP), are apparently buying a
lot of cane out of the system ‘for cash’. This would mean a realisation lower than the SAP for
the farmer.
79

Seeking liquidity, the farmers, who are also under pressure to clear cane-fields to plant wheat
(a key winter crop), are selling cane to the intermediaries for cash, which in turn is being
bought by sugar millers, people in the know said.
“Cash purchases are being made by mills through middlemen at Rs 210-230 a quintal, much
lower than the SAP of Rs 280. The State is doing nothing about it at all,” said V. M. Singh,
Convenor, Rashtriya Kisan Mazdoor Sanghatan.
Alleging a nexus between the millers and the State government, Singh said farmers are being
put to a lot of hardship as the middlemen are fleecing them.
The delay in announcement of SAP by the UP Government has led to a delayed start to the
crushing season this year. UP announced a 17 per cent hike in SAP, at Rs 280 a quintal, on
December 7.
Poor implementation
Despite a better cane crop compared to States such as Maharashtra in the 2012-13 season,
sugar production in UP was down 11 per cent till end-December, at 1.92 million tonnes, over
the corresponding period last year.
“The SAP announcement is just on paper and not being implemented properly,” Singh said,
adding that farmers have been protesting in various parts of the State.
The UP sugar output in the current year is projected to be 13.7 per cent higher, at 7.9 million
tonnes, according to the Indian Sugar Mills Association.
This is mainly on account of higher acreage and better yields, aided by good rains.
When asked about the cash purchases by mills, S. L. Gupta, Secretary of the UP Sugar Mills
Association, said he “did not have any idea of such a trend”.
“I don’t think it is possible,” Gupta added.
However, Sudhir Panwar, President of Kissan Jagriti Manch, alleged that the mills were not
interested in purchasing the cane at SAP rates. Only a few co-operative and private mills are
doing it.
Panwar said mills were buying unauthorised cane through middlemen, mainly in Western
Uttar Pradesh and adjoining Haryana. Western UP has seen cane inflow from neighbouring
Haryana, where the prices are relatively lower. Estimates of such unauthorised cane
purchases were not available.
Further, Panwar alleged that mills were colluding with the functionaries of the cane societies
and are delaying cane purchases. Such a trend is exerting pressure on farmers, who want to
plant a second crop, particularly wheat.
Panwar said the concept of middlemen in sugarcane, which was mainly prevalent in the
central and eastern UP has now spread to the western side as well.
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Time value of cane
However, the cash purchases by mills seem to have come in handy for farmers — who
seemed to have made a trade-off in favour of getting cash in one go rather than wait for a
delayed payment. According to Panwar, sugar mills have made about 30 per cent of the
payment in the current year.
India has no plans to raise sugar import tax for now - sources (FE, 07/01/2013)
India has no immediate plans to raise the import tax on sugar, two government sources said
on Monday, casting aside industry's calls for raising the duty to protect mills from cheap
overseas supplies when the country already has a surplus.
"We have no plans to raise the duty for now but we are keeping an eye on prices, imports and
production and we will raise it if there's any need," one of the sources said.
Currently, domestic prices are stable and supplies are comfortable, the second source said.
On December 13, Food Minster K V Thomas said the government was likely to decide on
raising the tax within 15 days.
India, the world's top sugar consumer and the second-biggest producer after Brazil, imposes a
10 percent tax on sugar imports. Local sugar mills, threatened by cheap imports, especially
from neighbouring Pakistan, have asked for an increase in the duty.
Pakistan allowed exports of 500,000 tonnes of sugar in 2012 and Indian traders immediately
sealed some deals for small amounts despite a domestic surplus, seeking to capitalise on
lower prices in Pakistan and higher rates in India.
Pakistan sugar is currently available at around $505 per tonne free on board (FOB). Domestic
futures prices equate to almost $589 per tonne ex-warehouse.
Expectations New Delhi might raise the duty had pushed domestic sugar futures higher early
last week.
But overall since the beginning of December, spot prices in Kolhapur, the hub of sugar trade
in the biggest producing state of Maharashtra, have fallen more than five percent while
futures
have eased about one percent.
India has been a net exporter of sugar in the last two crop years but had to import in 2009/10,
sending international prices spiralling higher.
India is likely to produce about 24 million tonnes in 2012/13, down from 26 million tonnes in
the previous year, the Indian Sugar Mills Association, a producers' body, estimates.
The output forecast is higher than about 22 million tonnes of local consumption.
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On Oct. 1, 2012, when the current season began, carryover stocks from the previous season
were at about 6.5 million tonnes. Surplus output may help India export sugar for the third
straight year in 2012/13.
Karnataka's sugarcane production likely to fall 10% during the current crop year (BS,
08/01/2013)
Karnataka’s sugarcane production during the current crop year (October-September) is likely
to decline by 10 per cent to 30 million tonnes. For the crop year ended September 2012, the
state’s production of sugarcane touched 33.4 million tonnes. Harvesting and crushing for the
current year has begun in most of the growing regions.
The drop in production is mainly attributed to drought in major growing regions across the
state. The major growing regions have witnessed a 28 per cent deficit rainfall during the
southwest monsoon and 23 per cent deficit during the northeast monsoon seasons this year,
according to data by the state department of agriculture.
The state received 615 mm rainfall between June 1, 2012 and September 30, 2012 as
against the normal rainfall of 835 mm during the period. During the period from October 1
to December 27, 2012, Karnataka received 146 mm rainfall as against the normal rainfall
of 189 mm.
NOT SO SWEET
Cane crushing and sugar production in Karnataka
Cane crushed
(In million tonnes)
Sugar production
(In million tonnes)
Average recovery
(In %)
2010-11 2011-12 2012-13*
33.61 34.72 15.77
3.67 3.87 1.56
11 11.16 9.94
* For first 3 months between Oct and Dec 2012
Source: South Indian Sugar Mills Association
“We have seen good growth in the plantation of sugarcane across major growing areas.
However, the drought has affected as much as 100,000 hectares under sugarcane this year.
As a result, we expect about 10 per cent decline in the production of sugarcane this year,”
said an agriculture department official.
Sugarcane is largely grown in the districts of Belgaum, Bagalkot, Bidar, Mandya, Gulbarga
and Bijapur. For the current year, the cane planting has been done in about 500,000
hectares across the state, a marginal increase of two per cent compared to last year.
However, due to unsatisfactory rains, the harvestable cane area is likely to be around
400,000 hectares, which is about seven per cent lower than last year’s 430,000 hectares,
according to the agriculture department.
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Since the sugarcane is largely dependent on irrigation, the decline in rainfall will not have a
significant impact on the final sugarcane output, the official added.
This year, the cane planting in Belgaum has been done in 213,000 hectares, followed by
Bagalkot (92,000 hectares), Bidar (35,000 hectares), Mandya (31,000 hectares), Gulbarga
(25,000 hectares) and Bijapur (10,000 hectares). The average yield per hectare is 75 tonnes,
while it is estimated to go down to about 70-72 tonnes this year.
For the sugar year ended September 2012, Karnataka produced 3.87 million tonnes of
sugar, recording a growth of 6.61 per cent over the previous year, when the state produced
3.63 million tonnes. As many as 57 sugar mills crushed 34.72 million tonnes of cane,
achieving a growth of 5.15 per cent over the previous year’s 33.02 million tonnes. The
average recovery of sugar has increased by 14 basis points to 11.6 per cent, South Indian
Sugar Mills Association said.
Govt likely to hike levy price of sugar by Rs 2/kg for this year (FE 8/1/2013)
The government is likely to raise the levy price of sugar – the rate at which it buys the
sweetener from mills to sell through ration shops – by over Rs 2 to about Rs 22 per kg for the
current year.
For the 2011-12 marketing year (October-September), the levy price of sugar was 19.04 per
kg.
"We have proposed increasing levy price of sugar by over Rs 2 from last year," a senior
government official said.
The proposal is under the consideration of the Finance Ministry. The rise in levy price would
entail additional subsidy of Rs 400-500 crore, the official added.
The sugar sector is under government control. Sugar mills are obliged to sell 10 per cent of
their production to the government to meet the demand of ration shops.
The levy price of sugar is calculated on the basis of Fair and Remunerative Price (FRP),
which stands at Rs 170 per quintal for the 2012-13 marketing year.
The government buys at a below market price from sugar mills and sells at a much cheaper
rate of Rs 13.50 per kg through ration shops.
The government sells 2.7 million tonnes (MT) of sugar every year to poor through ration
shops.
The official said the levy price of sugar is increasing every year but the retail price has been
unchanged since 2002.
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The government has pegged sugar output for the current year to be 23 MT, as against 26 MT
last year. However, the production is expected to be sufficient to meet domestic demand of
21-22 MT.
The official said the government is expected to revise the sugar output estimates after taking
into account the second advance estimate of sugarcane production in the next month.
Sugar industry to lose Rs 1,200 crore in Q1 (BS, 10/01/2012)
Sugar industry in India is set to witness a loss of Rs 1,200 crore in the first quarter of the
current crushing season (October – December 2012) due to mills’ ex-mill realization
sustainably remained substantially lower than the cost of production.
With the State Advised Price (SAP) payable to sugarcane farmers raised 17% in Uttar
Pradesh without any assurance for the proportionate increase in sugar price, mills in the state
is likely to lose Rs 673.75 crore in the first quarter itself. According to an estimate by the
apex trade body the Indian Sugar Mills Association (ISMA), 121 operational mills produced
19.25 lakh tonnes of sugar for the quarter ended December 2012 with around 8.74% of
recovery.
Particular
Uttar
Pradesh
Production
cost
Bitter pills (per kg)
Production
Ex-mill
realisation Loss (As on
Dec 31,
2012)*
Total
Loss #
36 32.5 3.5 19.25 673.75
Maharashtra 32 30.5 1.5 29.07 438.75
Tamil Nadu 33 31 2 3 60
Source: ISMA *Lakh tonnes # In crore
Abinash Verma, Director General of ISMA said that continuous falling sugar prices in the
last quarter would result into higher cost of production than the actual realization.
According to him, cost of production in Uttar Pradesh, India’s second largest sugar producer,
works out to Rs 36 a kg with the revised cane price at Rs 280 a quintal. Against that, mills
realization currently works out to Rs 32.50 a kg which means operational units incur a loss of
Rs 3.5 a kg for every kg of sugar produced in Uttar Pradesh.
In Maharashtra, India’s largest sugar producer, the overall loss during the quarter is estimated
at Rs 438.75 crore with 161 operational mills producing 29.07 lakh tonnes of the sweetener.
Although, there is no SAP system adopted in the state, largely politicians – linked sugar mills
pay incentives to attract farmers. Consequently, the cost of production works out at Rs 32 a
kg against the ex-mill realization at Rs 30.5 a kg resulting into a Re 1.50 loss for every
kilogram of sugar produced by mills in the state.
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The recovery from sugarcane stands around the same as that of last year which was about
10.46%. The reason for slowing pace in recovery revival over last year in Maharashtra is
because of partially dry cane arrival to sugar mills. ISMA has projected 65 lakh tonnes of
sugar production in Maharashtra this year as compared to 91 lakh tonnes in the previous year.
Sugar mills in other states including Karnataka are just breaking even or making a negligible
profit.
The 38 operational mills in Tamil Nadu produced 3 lakh tonnes of sugar by December 31 in
the current crushing season. Against the current ex-mills price of Rs 31 the cost of production
works out to Rs 33 a kg resulting into mills witnessing Rs 60 crore in the first quarter of the
current financial year.
Data compiled by Bombay Sugar Association showed that spot sugar prices fell 8% between
October – December quarter from Rs 3,731 a quintal to Rs 3431 a quintal. During the period,
however, the fundamentals have not changed. Nor the government has come out any concrete
proposal including a raise in levy sugar or ethanol prices. Hence, the weak sentiment
continued in sugar section throughout this quarter, said an analyst with a leading city – based
broking firm.
Meanwhile, sugarcane arrears have shot up to Rs 2,227 crore towards the first week of
January this year out of the total payable amount of Rs 4,222 crore. Towards the end of the
last season, however, the arrears stood at around Rs 50 crore.
Drought will be draining for sugarcane growers in 2 States (BL 10/1/2013)
Drought in parts of Maharashtra and Karnataka has hurt fresh sugarcane planting, which may
affect cane availability for sugar year 2013-14 starting October.
Areas such as Marathawada, Vidarbha and parts of Northern Karnataka are reeling under the
impact of drought induced by erratic monsoon in 2012.
SHIFT TO THER CROPS
“Currently, the planting registration is down by 50 per cent of the normal area, and a clearer
picture will emerge in March when the planting season ends,” said Narendra Murukumbi,
Managing Director of Shree Renuka Sugars Ltd. Sugarcane is planted in Maharashtra and
Karnataka mainly from November to February.
Except for districts such as Kolhapur and Satara in Maharasthra and Gulbarga and Bagalkot
in Karnataka, where water availability is better, farmers are not confident of planting cane in
these States, Murkumbi said. Cane-growing areas of Belgaum and Solapur have seen farmers
shifting to other crops such as jowar that require less water.
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Farmer leader and parliamentarian from Hatkanangle in Maharashtra Raju Shetti said except
for areas in the Krishna valley, cane planting has been poor. “It will have a major impact next
season.”
Cane crushing, which started late by a month, will be over by March-end, Shetti added.
Vinay Kumar, Managing Director, National Sugar Cooperative Federation Ltd, said: “Fresh
cane planting in Maharashtra is definitely lower than last year. It is too early to quantify the
acreage, and a correct picture will emerge by end-February.”
Rains in Marathawada and Vidarbha in Maharashtra were deficient during October-
December. According to the India Meteorological Department data, rainfall was down 48 per
cent in Vidarbha, while it was lower by 29 per cent than normal for the October 1- December
31 period.
Even the adsali planting or the 18-month crop, which gets planted by August, has been lower
by about a third in Maharashtra this year. Indian Sugar Mills Association Director-General
Abinash Verma said: “Only two-thirds of the area was covered in adsali planting due to lack
of water.” He added that it was too early to comment on the impact of the cane acreage.
SHORTAGE OF SEED CANE
Verma also pointed out that some cane-growing areas in Maharashtra could face shortage of
seed cane. Erratic monsoon had led to diversion of the standing cane crop to fodder in
Maharashtra last year, which may result in shortage of seed cane.
According to the Association data, Maharashtra produced 2.9 million tonnes till Decemberend,
about 4 per cent more than the last year. Sugar recovery has so far stood at 10.46 per
cent, almost same as last year, due to partial dry-cane arrivals. Maharashtra is expected to
produce about 6.5 million tonnes in the 2012-13 sugar year, down from 8.95 million tonnes
in the previous year as dry spells had hurt the cane crop. In Karnataka, the output till
December-end is higher by 17 per cent at 1.55 million tonnes.
Higher sugar output in South draws eastern buyers (BL 10/1/2013)
Sugar prices in the Vashi wholesale terminal market remained unchanged on Thursday on
routine demand – supply.
Spot prices were up by Rs 6 a quintal for M-grade, while for S-grade prices declined by Rs
10. Naka and mill tender rates ruled steady despite Rs 5-7 rise in freight charges from
Kolhapur, Karad and Sangli line.
Sources said: “Local demand remained need-based and there is ample supply from
producers. Mills are continuously selling in local market as demand from neighbouring
States is lacking since long in Maharashtra”.
Higher sugar production in southern States has diverted eastern side demand there forcing
producers here to concentrate in local markets.
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Freight rates from Kolhapur, Karad and Sangli line improved by Rs5-7 this week but not
affected on market price due to routine activities.
Sugar futures showing range bound volatility keeping speculators, hedgers away from
markets.
In the Vashi market, arrivals were 62-63 truck loads (each of 100 bag) while dispatches were
58-60 truckloads. Inventories increased to more than 100 truckloads. On Wednesday
evening, about 15-17 mills offered tenders and sold about 54,000-55,000 bags (each of 100
kg) at Rs 3,120-3,170 (Rs 3,120-3,170) for S-grade and Rs 3,230-3,280 (Rs 3,230-3,280) for
M-grade.
On the National Commodities and Derivatives Exchange, February futures prices were Rs
3,257 (Rs 3,258); March Rs 3,291 (Rs 3,293) and April Rs 3,339 (Rs 3,339).
The Bombay Sugar Merchants Association’s spot rates were: S-grade Rs 3,252- 3,332
(Rs 3,262-3,332) and M-grade Rs 3,342-3,472 (Rs 3,336-3,472). Naka delivery rates
were: S-grade Rs 3,230-3,260 (Rs 3,230-3,260) and M-grade Rs 3,280-3,420 (Rs 3,280-
3,420).
State to request Centre to abolish sugar levy (FE 12/1/2013)
The UP Sugar Mills Association has expressed its inability to pay Rs 290 per quintal as the
state advised price to cane growers, saying it is “killing’’ sugar mills.
The UPSMA has asked the state government to provide a cash subsidy of Rs 15 per quintal
to the farmers directly, while its members will pay the remaining amount.
“In the last two years, the SAP has been increased by Rs 80 per quintal. There is a difference
of Rs 40 per quintal from neighbouring states of Haryana and Punjab and Rs 60 from Tamil
Nadu. It has been done for political gains but farmers will be the losers in long run,” S L
Gupta, general secretary of UPSMA, said on Thursday.
Since the sugar mills cannot pay the SAP, “it is better that the state government makes a
payment of Rs 15 per quintal to cane farmers as cash subsidy’’, Gupta stated.
The demand was raised by a UPSMA delegation during a meeting with Chief Minister
Akhilesh Yadav and Samajwadi Party president chief Mulayam Singh Yadav on Wednesday.
On Thursday, the government, in a statement, said that Chief Minister Akhilesh Yadav
assured the UPSMA delegation of taking up their issues with the central government, though
it was silent on their demands related to the state government.
The statement said the state government will request the Centre for removing the compulsion
of supplying 10 per cent sugar as levy and demand hike in the import duty of sugar.
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The levy is given by the mills at a rate of Rs 1,900 per quintal while the cost of production,
according to UPSMA, is around Rs 3,600 per quintal. “The levy only results in annual loss of
Rs 1,000 crore to us,” Gupta remarked.
The import duty on sugar is 10 per cent, so that imported sugar from Brazil and Pakistan
costs Rs 3,200-3,300 per quintal. “The trader gets Rs 300-200 per bag as profit by importing
sugar. This import duty should be increased to 60 per cent as it existed earlier in order to save
the Indian industry,” Gupta remarked.
The UPSMA also demanded from the state government immediate relief by remission of full
purchase tax of Rs 2 per quintal, complete exemption from 2 per cent entry tax and
reimbursement of Rs 3 per quintal from the prevailing Rs 5.10 per quintal as society
commission.
“Presently, the cane societies are not doing any work. We are performing the society work so
it should be reimbursed. All these exemptions and reimbursement will save us nearly Rs 700
crore,” Gupta said.
There are presently 101 sugar mills in the private sector and 23 in the co-operative sector in
UP.
Spinners from Andhra Pradesh may buy power from sugar mills in Karnataka
(ET15/1/2013)
For the first time, a group of over 140 spinning mills from Andhra Pradesh have mooted a
novel power purchase plan by negotiating to buy some 200MW of power from captive power
plants of sugar mills in Karnataka.
The move, aimed at saving at least a third of power costs, comes at a time when Andhra
Pradesh is crippling under a severe power shortage of at least a fourth of capacity and
resorting to weeks of power cuts during peak season.
Andhra Pradesh, India's fourth largest economy that owns country's third largest state-run
power production firm with a capacity of around 9,000 MW, is currently facing a peak
shortage of at least 2,000MW. Private power producers have seen over 2,000MW of their
capacity lying idle for want of gas for years due to disruption of gas supply from the KG
fields operated byReliance Industries.
Though the state has of late decided to allow private power producers to run idle capacities
on costlier fuel - regassified liquefied natural gas, some of the industrial consumers are
exploring cheaper alternatives.
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The state has seen industrial power consumers buying power from merchant power and
captive power plants within the state but this is the first time that industrial consumers in
such large numbers planning to buy such huge quantities from other states, said an official
with the state power transmission corporation.
RK Agarwal, chairman of AP Spinning Mills Assocation (APSMA), who is also the
managing director ofSuryajyothy Spinning Mills, said of around 160 spinning mills in the
state, some 140 mills under the association are negotiating with sugar mills in Karnataka. "As
against some Rs 15 a unit of power through diesel generator sets and as against around Rs 10
a unit for LNG fired power, the cost of power from captive power projects from other states
costs around Rs 8 a unit," he said.
The negotiations are on with several Karnataka-based sugar mills and a few steel companies
with captive power plants that are currently allowed to sell up to 49% of their power
production in the open market. "We hope to firm up power purchase deals with the sugar
mills and start buying power in 6-8 weeks," said Agarwal.
Viswanatah Attaluri, chief operating officer at the consultancy firm Capital Fortunes, termed
the move an innovative power purchase model by industrial consumers that could change the
way the industrial power consumers address their power shortages going forward to stay
afloat and improve productivity.
"In the present scenario of shortage of coal, domestic natural gas and the complexities
involved in importing LNG coupled with high price of RLNG, the market is moving towards
aggregating their demand and adopting innovative methodology of group captive," said
Viswanath.
Fine variety sugar gains as mills hold back stocks (BL 16/1/2013)
Sugar prices on the Vashi wholesale market ruled steady on Tuesday as producers sold fair
quality at prevailing rates. However, they were not willing to sell sugar produced from the
new season cane at current level. Hence, there was a shortage of fine variety in the market.
However, need based local demand kept overall sentiment steady.
Fair quality M-grade sugar was sold in spot at Rs 3,316 in the previous two days, was not
available today, hence, was quoted at Rs 3,362, said sources. “Producers are offloading fair
quality more and holding back for fine variety new sugar due to price disparity.”
Reports of cold weather mainly in producing centres have increased the prospects of sugar
recovery from cane and sugar production weigh on international markets.
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In the Vashi market, arrivals were 62-63 truckloads (each of 100 bags), while dispatches
were 60-61 truckloads. On Monday evening, about 18-20 mills sold about 68,000-70,000
bags (each of 100 kg) at Rs 3,100-3,150 (Rs 3,100-3,150) for S-grade and Rs 3,220-3,270
(Rs 3,200-3,270) for M-grade.
On the National Commodities and Derivatives Exchange, February futures closed lower
by Rs 15 at Rs 3,252 (Rs 3,267); March was down by Rs 15 to Rs 3,283 (Rs 3,298) and April
dropped to Rs 3338 (Rs 3,348).
The Bombay Sugar Merchants Association’s spot rates (Rs/kg) were: S-grade Rs 3,242-
3,322 (Rs 3,242-3,322) and M-grade Rs 3,362-3,472 (Rs 3,316-3,472).
Naka delivery rates were: S-grade Rs 3,200-3,250 (Rs 3,200-3,250) and M-grade Rs 3,250-
3,400 (Rs 3,250-3,400).
Sugar output till mid-Jan up 3% at 108 lakh tonnes (BL 17/1/13)
Sugar production till mid-January was up by about 3 per cent at 108 lakh tonnes aided by
higher cane crushing in Karnataka and Maharashtra.
In the corresponding period last year, the output stood at 105 lakh tonnes.
In Maharashtra, the production was up 3 per cent at 37.70 lakh tonnes, according to the
Indian Sugar Mills Association. In Karnataka, the output was up 16 per cent at 20 lakh tonnes
over the corresponding period last year.
However in Uttar Pradesh, the production was lower by 6 per cent despite a higher recovery
as mills started crushing late.
Amid a bearish trend in sugar prices, cane arrears have begun to build-up and are hovering at
Rs 2,987 crore till date.
Keywords: Sugar production, sugar production in Karnataka, sugar production in
Maharashtra, sugar production in Uttar Pradesh, Indian Sugar Mills Association, ISMA,
Sugar industry seeks hike in import duty (BL 18/1/2013)
The sugar industry has urged the Government to increase import duty on sugar to 30 per cent
from 10 per cent to protect domestic companies from cheap imports. Besides low duty, the
sharp drop in international sugar prices has also led to large quantity of raw and processed
sugar imports.
Domestic sugar production is expected to touch about 24 million tonnes (mt) this year against
the demand of 22.5 mt. The production will exceed demand despite scanty rains in key
growing States such as Maharashtra and Karnataka.
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Ajit Shriram, Deputy Managing Director, DCM Shriram Consolidated and Co-chairman, CII
Task Force on Sugar, said the sugar industry is already suffering owing to excessive controls
of the Central and State Governments, coupled with recent hikes in cane price across the
country.
“Inexpensive import due to low duty is adding to heavy losses. The Government should
increase the import duty immediately from 10 per cent to 30 per cent or more to create a level
playing field for the domestic industry,” he said.
The import duty on sugar was progressively reduced to 10 per cent per cent from 60 per cent
in 2009 when demand outstripped supply by a huge margin. However, the situation has now
reversed and sugar companies are already hit by high cane prices fixed by the Government.
P. Ramababu, Co-Chairman, CII Task Force on Sugar, said the viability of the entire industry
is at stake with large scale imports of processed sugar from Pakistan and raw sugar mainly
from Brazil.
Sugar production cost in Uttar Pradesh works out to Rs 36,000 a quintal with State Advised
Price of Rs 280 a quintal for sugar cane. The sugar price currently hovers around Rs 32,000-
33,000 a tonne, leading to a net loss of about Rs 4,000 produced in the State. With sugar
production estimate of 79 lakh tonnes, producers in the State will incur a loss of Rs 3,000
crore this year alone, he said.
Sugar in India rises on hopes of higher import duty (ET 19/1/2013)
Indian sugar futures rose on Friday on hopes the government would raise import duty on the
sweetener to protect local farmers, though higher supplies weighed on sentiment.
The key February sugar contract on the National Commodity and Derivatives Exchange was
up 0.31 per cent at 3,268 rupees ($60.63) per 100 kg by 0904 GMT.
Sugar rose by 19 rupees to 3,270 rupees per 100 kg in the Kolhapur spot market in the topproducing
Maharashtra state.
"The government may make some policy changes to support sugar mills. It can raise import
duty. It can give more freedom to mills for selling sugar in the open market," said Ashok
Jain, president of the Bombay Sugar Merchants Association.
Sugar mills are struggling to pay farmers cane price as sugar prices have fallen due to higher
supplies and weak demand.
Demand for the sweetener from bulk consumers like cold-drink and ice cream makers
usually drops in India during the winter season.
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India on Thursday slapped a 2.5 per cent import duty on crude edible oils to protect local
oilseed farmers.
India's sugar output rose 3 per cent to 10.8 million tonnes in the first three-and-a-half months
of the season beginning October, a leading industry body said on Thursday.
Mills in India are expected to churn out 24 million tonnes of sugar in 2012/13, down from 26
million tonnes in the previous year, but higher than the expected local consumption of about
22 million tonnes.
Sugar prices up on better offtake, reduced arrivals (FE 23/1/2013)
The wholesale sugar prices improved by Rs 20 per quintal in the national capital today,
following increased buying amid restricted supply.
Marketmen said ongoing marriage season demand and higher advices from mills, mainly
pushed up sweetener prices.
Better offtake by stockist and bulk consumers such as soft-drink and pharmaceutical
industries too influenced the trading sentiment, they said.
Sugar ready M-30 and S-30 prices quoted higher from Rs 3320-3470 and Rs 3300-3450 to
close at Rs 3340-3480 and Rs 3320-3460 per quintal.
In millgate including duty section, sugar Mawana and Ramala asked higher by Rs 15 each to
Rs 3360 and Rs 3210 per quintal. Sugar Nazibabad gained Rs 20 at Rs 3200 while Baghpat
added Rs 15 at Rs 3240 per quintal.
The following were today quotations per quintal: Sugar ready: M-30 3,340-3,480, S-30
3,320-3,460.
Mill delivery: M-30 3,200-3,350; S-30 3,180-3,330. Sugar mill gate (including duty):
Mawana 3360, Kinnoni 3425, Asmoli 3380, Dorala 3340, Budhana 3325, Thanabhavan
3330, Dhanora 3280, Simbholi 3420, Modi Nagar 3300, Khatuli 3330, Dhampur 3320,
Ramala 3210, Bulandshar 3280, Anupshar 3200, Baghpat 3240, Morna 3220, Sakoti 3250,
Chandpur 3265, Amroha 3270 and Nazibabad 3200.
Sugar hits contract low on imports, weak demand (BS 24/1/2013)
Indian sugar futures hit a contract low on Wednesday on sluggish demand and as a sharp
drop in overseas prices raised hopes of higher imports of raw sugar in the coming months.
* Raw sugar prices in New York settled close to two-and-a-half-year lows on Tuesday as
speculative investors and traders continued to sell the sweetener amid concerns about a
growing surplus following forecasts of a record crop from Brazil, the world's biggest
producer, in 2013/14.
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* At 0915 GMT, the key February sugar contract on India's National Commodity and
Derivatives Exchange was down 0.59 percent at 3,211 rupees ($59.67) per 100 kg, after
hitting a low of 3,208 rupees.
* Sugar edged down by one rupee to 3,262 rupees per 100 kg in the Kolhapur spot market in
the top-producing Maharashtra state.
* "The current difference between local and overseas prices is enough to prompt mills to
place new import orders. Local production is more than demand. In such a situation imports
would put downward pressure on prices," said a Mumbai-based dealer.
* India has contracted to import 920,000 tonnes of raw sugar since the season began in
October, turning into a net importer for the first time in two years despite surplus stocks at
home, a senior industry official said.
* Mills in India are expected to churn out 24 million tonnes of sugar in 2012/13, down from
26 million tonnes in the previous year, but higher than the expected local consumption of
about 22 million tonnes.
* India's sugar output rose 3 percent to 10.8 million tonnes in the first three-and-a-half
months of the season beginning October, a leading industry body said on Thursday.
* Demand for the sweetener from bulk consumers like cold drink and ice cream makers
usually drops in India during winter.
Sugar mills' margin to remain under pressure on high production cost (BS 24/1/2013)
Squeezed between higher cost of production and lower realization, sugar mills’ margins are
likely to remain under pressure this sugar year (October 2012–September 2013).Against the
average realization of Rs 32.5 a kg throughout the year in the wake of a marginal increase in
demand post March 2013, the cost of production works out to Rs 33-34 a kg in the north
Indian states where state advised price (SAP) determines mills’ payment outgo.
Elsewhere, however, in non– SAP states where cane prices payable to farmers are fixed on
the basis of the fair and remunerative price fixed by the Centre, the cost of production works
out to Rs 30-32 a kg.
“A rise in the cost of sugar production and subsequent decline in sugar margins will result in
lower operating margins for sugar mills across the country. In 2012, high cash flows from
by-products had cushioned stressed margins from sugar operations. However, such support
from by-products will not be sufficient in 2013. Also, margin benefits from exports that
accrued to some mills in 2012 are unlikely to take place in 2013 given depressed global
prices,” said an India Ratings report.
Domestic sugar mills’ overall profitability is cushioned by the high margins of its byproducts
(distillery and power) business. However, the support from by-product businesses is
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not likely to be sufficient to offset the decline in sugar profitability.
In 2012, operating profits from by-products as a percentage of total operating profits was
around 70%. This effectively masked overall margins, which reduced by 3% y-o-y (based on
financial data of 11 UP-based sugar mills) because of a significantly deteriorated
performance in the core sugar business.
Unlike UP-based mills, operating margins for the mills based in south and west India in 2012
improved around 3% y-o-y (based on financial data of six sugar mills), attributed to benefits
from sugar exports and sugar refinery businesses. Operating profits from the by-products
businesses as a percentage of total operating profits was around 45%.
Meanwhile, the apex trade body the Indian Sugar Mills Association (ISMA) has revised
sugar production forecast upwards by 1.25% to 24.3 million tonnes on favourable climatic
conditions during sugarcane crop maturing period against its earlier estimates at 24 million
tonnes. Last year, total sugar output was recorded at 26 million tonnes.
India Ratings outlook negative on sugar manufacturing cost (FE 25/1/2013)
India Ratings has given a negative outlook to sugar manufacturing companies this year
following rising production costs, sufficient domestic availability and stable global prices.
"There is a negative outlook for sugar manufacturing companies for 2013, considering a
further deterioration in their financial profile. The operating margins of sugar companies in
2013 are likely to be below the 2012 levels (13 per cent), as sugar margins (October 2012-
September 2013) may fall. Thus, financial leverage is expected to worsen. This is based on
financial statements of 18 listed sugar companies," India Ratings today said.
India Ratings said the floor for domestic prices is likely to be around Rs 30-32 per kg in
2013.
However, prevailing sugar prices may be somewhat higher than this range given the high
domestic cost of production.
The costs of sugar production in 2013 will be higher than 2012, as sugarcane costs have
increased 16-17 per cent.
Also, for mills based in Karnataka and Maharashtra, a decline in sugarcane availability due to
unfavourable weather would result in lower capacity use.
However in Uttar Pradesh, cane acreage for 2013 will be higher, resulting in better capacity
use and cost absorptions.
Domestic sugar prices are likely to remain stable this year as there will be more than
sufficient stock to meet internal consumption.
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In 2013, closing stocks are likely to be maintained at previous year levels. Sugar would also
be available for exports, subject to global attractiveness of domestically produced sugar.
India Ratings said a comfortable global demand-supply balance will result in weak
international sugar prices.
World sugar production in 2013 will be up 19 per cent. Thus, the world sugar market may be
in a surplus for a third consecutive year
Small sugar recovers on renewed offtake ( FE 25/1/2013)
Small sugar prices recovered at the Vashi wholesale market here today on renewed stockist
and millers offtake.
Meanwhile, medium sugar declined further due to weak demand from stockist and retailers.
Small sugar (S-30) gained by Rs 4 per quintal to Rs 3,236/3,322 from Wednesday's closing
level of Rs 3,232/3,322.
Medium sugar (M-30) fell by Rs 5/1 per quintal to Rs 3,316/3,451 as against Rs 3,321/3,452
previously.
The following are today's closing rates for sugar (per quintal) with the previous rates given in
brackets:
Small sugar (S-30) quality: Rs 3,236/3,322 (Rs 3,232/3,322).
Medium sugar (M-30) quality: Rs 3,316/3,451 (Rs 3,321/3,452).
Higher sugarcane costs to hit cos margin in 2013(BL 25/1/2013)
Outlook for Indian for sugar manufacturing companies is negative in 2013 (sugar season),
says India Ratings. The rating agency said that this was in the context of a continued
deterioration in their financial profile. “Ample domestic sugar as well as a glut in global
sugar inventory is expected to weigh down sugar prices in 2013, and thus the operating
margins of sugar companies will fall below the 2012 levels (13 per cent).
In 2012, the debt of UP-based sugar companies increased around 7 per cent yoy and
operating profits declined around 14 per cent yoy, leading to leverage deteriorating around 15
per cent yoy.
However, for the mills based in south and west, overall leverage improved around 20 per
cent yoy due to a 3 per cent yoy improvement in operating profit and 8 per cent yoy decline
in debt.
Financial leverage (debt/EBITDA: 4.8x in 2012, 3.9x in 2011), based on financial data of 18
listed sugar companies, is expected to worsen as sugar margins (October 2012-September
2013) may fall to Re 1/kg or lower.
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India Ratings felt that the floor for domestic sugar prices (assuming continuation of current
relevant regulations and tariff) would be Re 30/kg-Re32/kg in 2013. However, the prevailing
prices may be somewhat higher than this range given the higher domestic cost of production.
The costs of sugar production in 2013 will be higher than 2012’s, as sugarcane costs have
increased 16 per cent- 17 per cent over the last season. “Particularly for mills based in
Karnataka and Maharashtra, a decline in sugarcane availability from unfavourable climatic
conditions would result in lower capacity use, and thus lower fixed cost absorption in 2013
than in the previous year.
Unlike in 2012, the expected decline in the operating margins of sugar companies in 2013
will be too steep to be adequately cushioned by the margins of its by-products (distillery and
power) business.
Sugar mills body hikes output estimate to 24.3 mt( BL 25/1/2013)
The Indian Sugar Mills Association (ISMA) has revised sugar production estimate upwards
to 24.3 million tonnes (mt) from its earlier projection of 24 mt on higher than expected
output in Uttar Pradesh, Maharashtra and Karnataka.
In Uttar Pradesh, the largest sugarcane producing State, the output is expected to touch 8.1
mt, up from the earlier estimate of 7.9 mt. In Maharashtra, the output is expected to reach 6.8
mt, up from the earlier projection of 6.5 mt. So far, Maharashtra has produced 3.3 mt of the
sweetener.
In Karnataka, the sugar output is expected to touch 3.2 mt from the earlier 3 mt as the
northern part of the state has more cane on the fields.
However, in Tamil Nadu, the sugar output may be lower due to the drought-like conditions
which may impact the yields and recovery. ISMA has reduced the output forecast to 2.2 mt
from the earlier estimate to 2.55 mt.
In Gujarat, the output is expected to touch 9.6 lakh tonne from 8.8 lakh tonne, while in
Andhra Pradesh sugar production is expected to be lower at 10 lakh tonne from the earlier
estimate of 10.8 lakh tonne.
ISMA’s latest forecast is based on the satellite images of sugarcane acreage as on January 7
and the cane available on the fields. ISMA’s forecast is higher than the Food Ministry’s
estimate of 23 mt for the year, while consumption is expected to remain around 22 mt.
Sugar hits contract low on poor demand, supply (ET 25/1/2013)
Indian sugar futures extended losses on Thursday to hit a new contract low as demand
remained subdued amid rising supplies from ongoing cane crushing and imports.
At 0905 GMT, the key February sugar contract on National Commodity and Derivatives
Exchange was down 0.31 per cent at 3,202 rupees ($59.64) per 100 kg, after hitting a low of
3,191 rupees.
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Sugar edged down by 4 rupees to 3,260 rupees per 100 kg in the Kolhapur spot market in the
top-producing Maharashtra state.
"Supplies situation is very comfortable in India and in rld market. Demand is not supporting.
It is weak," said Badruddin Khan, associate vice-president of research at Indiabulls
Commodities Ltd.
"We can see further downside of around 50 rupees in coming weeks," he said. Demand for
the sweetener from bulk consumers like cold drink and ice cream makers usually drops in
India during winter.
Mills in India are expected to churn out 24 million tonnes of sugar in 2012/13, down from 26
million tonnes in the previous year, but higher than the expected local consumption of about
22 million tonnes.
India has contracted to import 920,000 tonnes of raw sugar since the season began in
October, turning into a net importer for the first time in two years despite surplus stocks at
home, a senior industry official said.
India's sugar output rose 3 per cent to 10.8 million tonnes in the first three-and-a-half months
of the season beginning October.
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XI INPUTS
Nabard sanctions Rs 29.87 cr to TN (BL, 07/01/2013)
National Bank for Agriculture and Rural Development (Nabard) has sanctioned Rs. 29.87
crore loan to Tamil Nadu under its Rural Infrastructure Development Fund - XVIII for
infrastructure projects.
A press release from Nabard quoting Lalitha Venkatesan, Chief General Manager, Chennai
Regional Office of Nabard, said Rs 28.37 crore has been sanctioned for construction of 44 of
Adi Dravidar and tribal community hostels in 17 districts. These will benefit 2,200 students
from 466 villages.
The balance Rs 1.50 crore is for the construction of two godowns in Pudukottai and Karur
district to store 3,000 tonnes of agriculture produce.
The cumulative sanction by the bank under RIDF-XVIII for 2012-13 is Rs 1,286.30 crore
with Rs 152.70 crore for storage and warehousing facility. Other infrastructure development
include rural roads and bridges; irrigation, school infrastructure; strengthening of dug out
ponds for drinking water; sanitary complexes and pay and use toilets in rural and semi urban
areas; fish farms and jetties for inland and marine fisheries; hostels for backward classes,
most backward classes and minorities community students, she said in the release.
‘Hike MRP of urea, slash potash fertiliser prices’(BL, 17/1/2013)
The Government should hike retail prices of urea by Rs 750 a tonne, get the industry to
reduce the same on di-ammonium phosphate (DAP) and muriate of potash (MOP) by Rs
1,000 and Rs 1,500 a tonne respectively, and stop giving any subsidy on imported fertilisers
for one year.
These measures together will help it realise over Rs Rs 22,000 crore worth of subsidy
savings, without harming the farmer while also providing some respite to a cash-strapped
industry, according to the Managing Director of the country’s largest nutrients supplier,
Indian Farmers Fertiliser Cooperative (Iffco), U.S. Awasthi.
“As on January 1, the country has roughly 6 million tonnes (mt) stocks of DAP and various
NPK complexes. We can easily afford not to import any more of these nutrients for one year.
That can be done by completely dispensing with subsidy on their imports,” he told Business
Line.
During the current fiscal till January 15, India has imported 5.77 mt of DAP and 0.4 mt of
complexes.
Taking an average subsidy concession of Rs 14,100 a tonne, the Government can
straightaway save Rs 8,700 crore, not to speak of $3.4 billion of reduced foreign exchange
outgo at a landed import price of $550 a tonne.
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IMPORTED UREA SUBSIDY
Similarly with urea, the Government can stop giving any subsidy on imports amounting to
more than 15 per cent of domestic production. So, if India is producing 20 mt, it means
limiting imports to 3 mt, whereas it has already touched 7.7 mt so in 2012-13.
The subsidy (base concession) given on imported urea is about Rs 18,000 a tonne. On the
excess imports of five mt, the savings from not granting any subsidy will work out to another
Rs 9,000 crore.
“We must take a policy decision to stop giving subsidy on imported DAP/complexes for a
year (given ample stocks) and urea beyond 3 mt. It will lead to subsidy savings of some Rs
18,000 crore,” Awasthi added.
Over and above this, he suggested raising the maximum retail price (MRP) of urea by Rs
750, from the existing Rs 5,265 a tonne.
SAVINGS
The Government can also reduce the concession on DAP and MOP by Rs 1,000 a tonne each,
which will, in turn, translate into lower subsidy rates on N, P and K. The savings from this
would come to nearly Rs 4,700 crore.
The annual subsidy savings from all these together would work out to over Rs 22,000 crore.
As regards farmers, Awasthi said that given the possibility of contracting imported fertilisers
(mainly potash) and raw materials at lower prices this year, the industry would be in a
position to reduce the MRP of DAP by Rs 1,000 and of MOP by Rs 1,500 a tonne.
This will adequately compensate for the increase in the MRP of urea by Rs 750 a tonne. In
any case, farmers in many parts of the country are paying Rs 7,000 or more for every tonne
of this nutrient, as against the official MRP of Rs 5,365.
“When you price something artificially so long, this is bound to happen down the distribution
chain, on which we have no much control,” he noted.
The Rs 22,000 crore-plus savings from the above proposals, Awasthi said, will also help the
industry.
“The budgeted subsidy of Rs 65,000 crore for 2012-13 has already been overshot by Rs
22,000 crore till December. For the remaining three months, we will require another Rs
11,000 crore.
The Government will have to do something fast because we just cannot manage with such
large outstanding dues, which has to be covered by borrowing from banks. Ultimately, it
means paying subsidy to the banks as well”, he quipped.
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AAU’s finding to help reduce crop dependence on Phosphate fertilizers (BL/21/1/2013)
Researchers at Anand Agriculture University (AAU) have isolated bacterial strains from soil
of Pawagadh mining region in Gujarat, which can help reduce phosphatic fertiliser
application in crops by up to 40 per cent.
“Isolates – Burkholderia cepacia and Bacillus – reported for the first time from Pawagadh
mining region (Panchmahal district) are found to be efficient phosphate solubilisers,” AAU
Vice Chancellor A.M Sheikh said.
“They have additional variety of plant growth promoting traits,” he said, adding that the
unique gene in sequence has been deposited at the National Centre for Biotechnology
Information (NCBI).
Phosphate solubilising bacteria (PSB) are a group of beneficial bacteria capable of
hydrolysing (breaking down of compound by chemical reaction) organic and inorganic
phosphorus from insoluble compounds.
P-solubilisation ability of the micro organisms is considered to be one of the most important
traits associated with plant phosphate nutrition.
“They by and large have potential to reduce phosphatic fertiliser application in cereal and
pulses crops by upto 40 per cent. The trials here are being conducted on soyabean,” Head
Microbiology department AAU, R.V Vyas said.
“Compared to those from regular cultivable farmlands, the isolates from mine region show
more potential to liberate phosphorus from calcareous soil (having tri calcium phsophate)
found in Western states of Gujarat, Rajasthan & Maharashtra,” he said.
“Additionally, they provide potash, a key soil nutrient required by the crops,” Vyas said
“We shall be formulating a liquid from the bacterial isolates of Pawagadh mine region and it
will be tested on all the crops. It would later be recommended for the best suitable crop found
during the tests,” Sheikh said.
“AAU plans to promote this isolate for the cultivation of Soyabean crop too,” Vyas said.
In the past, AAU has formulated a liquid fertiliser from few other bacterial isolates costing
around Rs 150 per litre, which they claim is sufficient for one hectare of farmland and helps
farmer save 30 per cent fertiliser.
It has inked MoU’s with state run Gujarat Agro Industrial Coporation (GAIC) and a private
firm, for licensing the technology, and products are already available in the market.
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In Gujarat, particularly Panchmahal and Vadodara districts are well known for dolomite,
apatite and rock phosphate reservoirs.
Fertiliser sales volume down 11.3% in third quarter ( BL 24/1/2013)
India’s fertiliser sales volume, from the companies to the distributor’s level, declined 11.3
per cent year-on-year during Q3FY13. The urea volume was up 6.3 per cent year-on-year,
whereas the non-urea volume dipped 28.6 per cent year-on-year.
The decline has been attributed to excess inventory at the distributor level and higher prices
of fertilisers despite a better rabi crop. According to Edelweiss Securities, the impact of
excess inventory is expected to continue and non-urea volume is expected to show de-growth
during Q4FY13 as well.
For FY14, the quantum of opening inventory and the subsidy rate would be decisive factors
to determine non-urea sales volumes.
The traded non-urea fertiliser has seen a steep decline of 38.9 per cent year-on-year (YoY)
owing to better raw material availability that led to higher manufacturing in non-urea
fertiliser during Q3FY13, the agency has said adding, Q3FY13 numbers are expected to be
muted.
Owing to lower sales volume, net sales are expected to grow by a mere 2.5 per cent YoY
(down 9.5 per cent quarter-on-quarter) and PAT to dip 13.4 per cent YoY (down 10.9 per
cent quarter-on-quarter) in Q3FY13.
Budget may lower provision for fuel, fertiliser subsidies (BL 20/1/2013)
Increased outgo on LPG may be balanced by diesel price hike
The Finance Minister seems to be betting that falling crude oil prices abroad and rising diesel
prices at home will together keep the budgeted amount for fuel and fertiliser subsidies in the
next fiscal lower than that provided for in Budget 2012-13.
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The 2013-14 Budget may provide lower subsidies for fuel and fertiliser, informed sources
told Business Line.
This is despite the expectation that the revised estimate for expenditure under this head this
fiscal will be much higher than the Budget number.
The Budget is to be presented on February 28.
Announcing the roadmap for fiscal consolidation, the Finance Ministry proposed capping the
fiscal deficit at 4.8 per cent of GDP for 2013-14.
Earlier, the then Finance Minister Pranab Mukherkee, while announcing the Budget, had
said: “Over the next three years, it (expenditure on subsidies) would be further brought down
to 1.75 per cent of GDP. Such a step is needed to improve the quality of public spending.”
According to the Budget estimate, expenditure on central subsidies for 2012-13 is 1.9 per
cent of GDP.
FUEL NOT A PROBLEM
A senior government official explained that lowering the fuel subsidy could be easy.
As the Government has authorised oil companies to adjust diesel prices upwards
incrementally over a period and sell diesel at market price to bulk buyers, this will save some
money.
Although raising the cap on subsidised cylinders will be a drain on funds, that extra burden
could be met from a part of the savings on diesel. “So, net-net, there is a lower fuel subsidy,”
the official added.
FERTILISERS TOUGH
However, the task will not be as simple for fertilisers, another senior Government official
admitted, adding that the Fertiliser Ministry’s demand for a special banking arrangement of
Rs 25,000 crore to settle subsidy dues for 2012-13 may create a fresh liability next fiscal.
Since borrowings from banks are to be made against fresh receivables from the Government,
it has to be seen whether the entire liability is provided for in the next Budget or amortised
over the years, the official said.
One option could be providing the money through supplementary demand for grants to be
brought at the time of the Budget.
“Until and unless there is scope through non-tax revenues, providing the entire money
through revised estimates can easily blow the chance of keeping fiscal deficit under 5.3 per
cent,” he said.
Fertilizer sale declines 15% in H1 of 2013: ICRA (BS 24/1/2013)
The sales of fertilizers witnessed a year-on-year decline of 15% in the first half of financial
year 2013, according to a recent report by rating agency ICRA. While urea volumes
continued to remain relatively steady, a steep decline was witnessed in the sales volumes of
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fertilizers such as di-ammonium phosphate (DAP), single super phosphate (SSP) and NPK
complexes.The demand was being affected by higher prices on account of lower subsidy for
these nutrients, increased cost of raw materials globally and rupee depreciation.
The demand for these fertilizers was further impacted by inventory overhang in the first
quarter of financial year 2013 and delayed monsoon. The N:P:K usage ratio is expected to
have deteriorated from 6.5:2.9:1 in FY12 to 8.1:3.2:1 in Kharif 2012 (as par Fertilizer
Association of India). Nevertheless, the core long-term demand drivers for the industry
remain steady despite consumption in the recent past being impacted by price differentials
and other factors, the report said.
The government subsidy allocation for FY13 has been insufficient given the stable import
volumes as well as high global prices, according to ICRA. The impact of lower subsidy
allocation has been reflected in the finances of the industry players as of end-September
2012, with increase in subsidy receivables leading to an increase in working capital / shortterm
debt levels. This is also expected to result in deterioration in capital structure and higher
interest expenses for fertilizer companies in FY2013.
Fertiliser industry wants direct transfer of subsidy to farmers (BL 25/1/2013)
Reiterating its demand for total decontrol, the fertiliser industry has renewed its pitch for
direct transfer of subsidy by the Government to farmers.
“The industry has no vested interest in subsidy. In fact, we have been requesting the
Government to relieve the industry from this responsibility for the past few years,” said R.G.
Rajan, Chairman, Fertiliser Association of India (FAI).
Rajan was responding to allegations of ‘misuse of subsidy’ and ‘windfall gains’ by fertiliser
makers in a section of media. Dismissing the allegations, Satish Chander, Director-General,
FAI, said the fertiliser makers operated on very thin operating margins, when compared to
any other solid bulk commodity such as steel or cement.
To substantiate, Chander said the industry had clocked a net profit of mere Rs 2,500 crore on
a turnover of Rs 117,000 crore in 2011-12. The turnover excluded the subsidy component on
imported urea.
Fertiliser makers earned profit of a mere Rs 110 for each tonne of imported di-ammonium
phosphate, while the profits are a mere Rs 94 a tonne on muriate of potash during 2012-13,
he added.
Each tonne of imported DAP was priced at an average of $580 a tonne, while MOP was $490
. For the fertiliser maker, the total delivered cost for a tonne of DAP worked out to Rs
38,240, while it stood at Rs 31,106 a tonne for MOP, including charges such as handling
costs, freight and insurance among others.
Against this, the subsidy offered by the Government for DAP stood at Rs 14,350/tonne,
thereby resulting in an effective price of Rs 24,000 for the farmers. Similarly, the subsidy
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offered by the Government for MOP stood at Rs 14,400, resulting in a price of Rs 16,800 for
the farmers. “These figures clearly establish that there are hardly any margins for the
industry,” Chandra said.
He further said the fertiliser subsidy for the year-ending March 31 is likely to overshoot the
budgetary estimate by at least Rs 40,000 crore to cross Rs 1 lakh crore. The Government had
made a provision of Rs 61,000 crore for fertiliser subsidy in the Union Budget 2012-13.
He further said that fertiliser companies had not been paid the subsidy for the last eight
months.
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XII OTHER AGRI COMMODITIES/ NEWS
PM Manmohan Singh for shifting farmers to non-agri jobs to raise income (ET,
27/12/2012)
Prime Minister Manmohan Singh today emphasised on the need to shift large surplus farmers
to non-agriculture sector, saying per capita income of farmers would rise only when fewer
people engage in farming.
He also said farmers' income and agri-land yields need to be enhanced to meet the growing
foodgrains demand in the coming years, building on the success of the 11th Plan.
Addressing the 57th meeting of the National Development Council (NDC), Singh said:
"Paradoxically, we should not aim at increasing total employment in agriculture. In fact, we
need to move people out of agriculture by giving them gainful employment in the nonagricultural
sector."
"It is only when fewer people depend upon agriculture that per capita incomes in agriculture
will rise significantly and sufficiently to make farming an attractive proposition."
Although the agriculture share in GDP has fallen to 15 per cent, about half of the population
still relies on farm activities as its principal income source, he added.
Since large population is engaged in farm activities, Singh said, "what happens in agriculture
is therefore critical for the success of inclusiveness."
Better agricultural performance during the 11th Plan is an important reason why poverty
declined faster, he added.
Agriculture being a state subject, the Prime Minister said that most of the policy initiatives
needed are in the realm of state governments.
However, the 12th Plan strategy contains many elements which will ensure growth is as
inclusive as possible, he said.
During the 11th Plan (2007-12), the average agriculture sector growth reached 3.3 per cent
from 2.4 per cent in the previous Plan period, while farm wages grew annually at 6.8 per cent
in the recent years, compared to only 1.1 per cent in the period before 2004-05, he added.
Pawar for greater private sector role in farming (BL, 27/12/2012)
Agriculture Minister Sharad Pawar has called for a greater role for private sector in
agriculture during the 12th Plan (2012-17) period to sustain the high growth in foodgrain
production.
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“The public-private partnership (PPP) model in agriculture should be explored on a wider
and larger scale”, Pawar told the National Development Council on Thursday.
Higher investments in agriculture and allied sectors including irrigation would help ensure
food security and boost incomes. Further, the Agriculture Produce Marketing Committee
(APMC) Acts need to be amended to encourage setting up private markets and contract
farming, he said.
“Doubts on APMCs becoming redundant on entry of foreign direct investments in retail are
misplaced. On the contrary, role of APMC will increase from a regulatory focus to promotion
of grading, branding, packaging and development of markets for local produce” Pawar said.
The Agriculture Minister said that the oilseed sector continues to be an area of concern where
the country's dependence on imports of edible oil was rising.
To overcome the technology fatigue in the farm sector, Pawar said his ministry will be taking
up a number of new initiatives to foster innovation, encourage research, attract and retain
youth in agriculture.
“Our strategy for 12th Plan would comprise of assuring stable and remunerative prices to
farmers, ensure supply of quality seeds and planting material at reasonable prices and make
other inputs available on a timely basis,” he said.
Further, the Centre will also push for crop diversification and R&D, provide greater focus on
small and marginal farmers through promotion of farmer interest groups, commodity interest
groups and make concerted efforts to improve productivity in rainfed areas in general and
Central and Eastern/North Eastern regions in particular while creating a more competitive
environment for agricultural marketing.
To address the challenges in the livestock sector, the Centre will launch National Livestock
Mission during the 12th Plan with the main objective of achieving sustainable development
and growth of livestock sector by providing greater flexibility to the states.
For farmers, a one-stop portal for all agrarian needs (BL, 17/1/2013)
IT in agriculture is not something new. There are 80 Web sites and portals run by
Governments providing information to farmers on soil, plant protection, diseases, weather
forecast, and fertiliser use and farm and crop management. The number could be much more
in the private sector. All this is likely to confuse the farmer.
To tackle this, the Union Government has come up with the idea of a unified portal, to
provide information on all farming needs. The portalwww.farmer.gov.in is not fully live yet.
The basic beta version in English is aimed at integrating all relevant information from the
various Web sites.
The portal integrates the convergence technologies to offer latest information to farmers,
instead of uploading dated information. For example, the information fertiliser dealers upload
through SMS would be updated automatically.
“ We are not going to offer him content in a language he is not familiar with. We are working
with the Centre for Development of Advanced Computing to translate the content into
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various local languages,” Sanjeev Gupta, Joint Secretary, Department of Agriculture and
Cooperation, Government of India, told Business Line.
The Government is hoping to make it available to the farmers in the next few months.
In order to make it a farmer-friendly portal, the Department has divided the country into 125
blocks. “Compare this with the number of agri-climatic zones in the country. They are just
23. When they open the portal, the farmers see the Indian map. Depending on their location,
they can select a State and the block they belong to,” he said.
An IITian, Sanjeev Gupta said the portal would provide information on the sources of all
agricultural inputs. To check hoarding, the Government will mandate the dealers to upload
the stock position through SMS, if they are not familiar with the Internet .
“The system will prompt them with a few questions. The answers will be converted into
updates on the portal, giving the farmers latest information,” he said.
K'taka targets 19% growth in food grain production in 12th plan (BS, 27/12/2012)
The Karnataka government is aiming at increasing its food grain production by around 19%
in the 12th plan period. The government is targeting an average of 14.3 million tonnes per
annum during the period starting 2012-13 as against 12 million tonnes achieved during the
11th plan period.
According to state government the productivity of food grains, which was at 1,278 Kg per
hectare during the 10th Plan increased to 1,631 Kg per hectare during the 11th Plan
registering an increase of 27.6%.
Speaking at the National Development Council (NDC) Chief Minister Jagadish Shettar said:
“The productivity of food grains was stagnant for a long time and which was at 1,278 Kg per
hectare in the 10th Plan. In the 12th Plan the productivity target has been fixed at 1,818 Kg
per hectare.”
He also said, the state was able to achieve an increase of 69% in average seed distribution in
the 11th Plan over 10th Plan period.
The government also said average sugarcane production also witnessed a 63.3% growth in
the 10th Plan from 19.25 million tonnes to 32.20 million tonnes during the 11th Plan. The
State has, however, set an ambitious target of achieving an average sugarcane production of
48 million tonnes per annum during the 12th Plan.
It is also aiming at seed distribution of 1.6 million quintals per year in the 12th Plan
compared to 1.15 million quintals achieved during the 11th Plan.
Shettar also said, “The state could not achieve significant growth in oil seeds and cotton
production. However, this is expected to be corrected in 12th Plan with focused attention on
oil seed and cotton by setting an ambitious annual target of 1.63 million tonnes and 1.25
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million bales in the 12th Plan as compared to the achievement of 1.11 million tonnes and
930,000 bales respectively in the 11th Plan.”
Overall, the agriculture sector has performed well by achieving a growth of 5.7% during the
11th Plan period, the chief minister said.
Area under rabi food grains trails (BL, 28/12/2012)
Rabi acreage under oilseeds such as rapeseed mustard and groundnut has seen a rise, while
the area under wheat sown so far, was marginally lower than last year.
Data released by the Agriculture Ministry revealed that wheat sowing, so far, has taken place
in an area of 272.79 lakh ha, down marginally over corresponding last year’s 276.81 lakh ha.
The hike in minimum support price (MSP) announced by the Government last week is
expected to give a fillip to wheat sowing in the days ahead.
The Government has increased the MSP for wheat by Rs 65 a quintal to Rs 1,350 for the
2012-13 season over last year’s Rs 1,285.
Major wheat growing states such as Madhya Pradesh, Rajasthan, Uttar Pradesh and Bihar
have reported an increase in area under wheat. However, the wheat acreage is lower in
Maharashtra and Gujarat.
The area under oilseeds is up marginally at 78.86 lakh ha against 77.88 lakh ha. Rapeseed
mustard acreage is up by about 1.2 lakh ha at 65 lakh ha. Groundnut and sunflower have also
seen a marginal increase in area.
States such as Rajasthan and Uttar Pradesh have reported a higher area, while the acreage is
down in Maharashtra.
The rice acreage was also lower at 1.87 lakh ha against 3.02 lakh ha in corresponding period
last year.
The acreage under coarse cereals such as jowar, bajra and ragi is up marginally, while that
the area under pulses is slightly lower than last year. States such as Andhra Pradesh and
Karnataka have reported a marginally higher area under coarse cereals such as jowar and
ragi. However, Maharashtra has reported a lower area under coarse cereals.
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Pulses such as gram has seen an increase in acreage while moong and urad have seen a
marginal decline in area.
Rabi acreage almost same as last year (BS, 30/12/2012)
As the rabi sowing season nears its end, acreage of most crops barring wheat is almost same
as last year, raising hopes that if the weather remains benign in the next few months India
could have a bumper rabi harvest.
The acreage under wheat which is marginally down as compared to last year as on Thursday
is not likely to have much of an impact on the final output as area in the four major wheat
growing states of Punjab, Haryana, Madhya Pradesh and Uttar Pradesh is almost same as last
year. The shortfall in acreage is only in Maharashtra, which is not a big producer of wheat.
According to the latest government data, wheat has been sown in around 27.27 million
hectares across India as on December 27, just 1.45% less than last year. The acreage is
almost 1 million hectares more than the normal area (average of last five years).
“As of now sowing of wheat is normal in almost all parts of the country, but the final output
will depend on the weather in next few months,” a senior government official said. Uniform
winter with some moisture in the air is considered ideal for proper growth of wheat crop.
Among other crops, pulses have been sown in around 13.25 million hectares of land till
Thursday, just 1.20% less than the area covered during the same period last year. Oilseeds
have been sown in around 7.88 million hectares, 98,000 hectares more than last year or
1.25%, mainly on account of good mustard sowing.
Coarse cereals have been sown in around 5.62 million hectares till Thursday, almost 1.92%
more than the corresponding period of last year. The only letdown has been in rabi rice
which has been planted in around 187,000 hectares as on December 27, 2012, almost 38%
less than last year because of poor northwest monsoon rains over South India.
According to the India Meteorological Department (IMD), northwest rains have been around
19% below normal till December 19 since October.
This could hurt any plans to push up India’s total rice production in 2012-13 as paddy
production during the previous kharif season is also expected to be around 6.5% less than
2011-12.
However, it is unlikely to have any impact on rice prices as government has ample stocks in
its warehouses to meet any shortfall. As on December 1, the rice stocks in central pool were
estimated to be around 30.60 million tonnes, as against the requirement of 12.8 million
tonnes.
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In total, rabi crops have been planted in around 54.22 million hectares, just 0.8% less than
last year.
Look out for ‘GM’ label on packaged food from Tuesday (BL, 31/12/2012)
Starting Tuesday, consumers will get to know whether the packaged foods they are buying
contain any genetically-modified (GM) ingredient, even as the food processing industry
wants more clarity.
A Gazette Notification issued by the Ministry of Consumer Affairs, Food and Public
Distribution mandates packaged food producers to disclose the GM ingredients, if used any,
in their product.
The notification will come into effect from January 1, 2013, officials at the Food and
Consumers Affairs Ministry said.
“Every package containing the genetically-modified food shall bear at top of its principal
display panel the words ‘GM’,” the notification under the Legal Metrology (Packaged
Commodities) (2{+n}{+d} Amendment) Rules 2012 said.
Such packaged commodity rules are applicable to some 19 products including biscuits,
breads, cereals and pulses among others.
“The labelling will basically help inform the consumer about the presence of GM content in
packaged food products,” said B.N. Dixit, Director, Legal Metrology, Department of
Consumer Affairs.
It will help consumers make a choice as urban markets in the country are flooded with food
products derived and processed in countries such as the US, Canada, Brazil, Argentina,
where a majority of GM crops are cultivated.
India is still debating the regulation of GM crops and the only crop allowed to commercialise
so far is Bt cotton. However, the implementation of such GM food labelling would be done
by the Food Safety and Standards Authority of India (FSSAI), under the Ministry of Health.
The FSSAI is yet to announce any rules for implementing the labelling exercise.
The processed food sector wants the Government to withdraw the notification till such time
the implementation rules are formed by the FSSAI.
“The Government should withdraw the regulation till the rules are formulated by FSSAI,”
industry sources said.
“Though the Government’s intention to label GM products is good, there is lack of clarity on
the implementation part of it. The notification is too sketchy and does not mean anything,”
said Rajesh Krishnan, Sustainable Agriculture Campaigner, GreenPeace.
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The labelling notification does not specify the threshold limits nor does it talk of traceability
or the liability aspects.
GreenPeace and other agencies such as Consumer Coordination Council (CCC) want the
Government to make the GM labelling rules more stringent.
In a letter to the Food Minister K.V. Thomas, the CCC – the apex body of Indian consumer
organisations that represents some 75 outfits - said setting a minimum threshold will
strengthen the labelling initiative.
Besides, the notification should also make the role of the agencies involved in monitoring
and regulation, clear and ensure there is strict punitive action in case of any violation, it said.
Further, CCC wants liability measures to be explicitly mentioned in the labelling rules.
Transformation of agriculture should be top priority: PM (ET, 03/01/2013)
Prime Minister Manmohan Singh today said transformation of the agricultural sector should
be the top priority of the country's public policies including those on science and technology.
He also said that complex issues related to genetically modified food, nuclear energy or the
exploration of outer space cannot be settled by faith, emotion and fear, but by a structured
debate.
"Nearly 65 per cent of our people live in rural areas. The 12th Five Year Plan assumes that a
sustained growth in agriculture at the rate of four per cent per annum is essential to achieve
food security," Singh told the centenary session of Indian Science Congress here.
"This transformation of the agriculture sector must be the top priority concern of our public
policies, including science and technology policies," Singh said.
Noting growth was constrained by shortage of water and land, he said, "We need new
breakthroughs in water-saving technologies in cultivation, enhancement of land productivity
and development of climate-resilient varieties".
Releasing the country's Science, Technology and Innovation Policy 2013, the Prime Minister
said, "India aspires to be among the top five global scientific powers by 2020".
He said development in science and technology had been central to the phenomenal material
advancement and efficiency in the use of resources.
"As India seeks a sustained growth in national income, we must endeavour to harness the
tools of science and technology to cater to the needs of the underprivileged and to bridge the
gap between have and have-nots," Singh said.
The Prime Minister also called upon the younger generation to adopt science-based value
system in order to benefit from what the discipline could offer.
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Chill to bring warmth to farm output, may cool inflation (ET, 04/01/2013)
The icy winter in north India, along with morning dew and sunny conditions in rural areas,
have sown the seeds for bumper harvests, which will cool food prices that had galloped after
erratic monsoon rains hurt farm output last year.
Consumers are already seeing a downward trend in prices of potato, wheat and pulses. Potato
prices had soared 91% from March to November while wheat climbed 18% and pulses 22%
since the start of the fiscal year. Vegetable prices have been falling since September while
wheat has dropped 7% in two months, and analysts say more good news will follow.
Economists say food prices are no longer a worry for India's overall wholesale inflation.
Wholesale inflation has remained stubbornly high and prompted the central bank to delay the
long-awaited cut in interest rates. Inflation in November was 7.24%. Food inflation, which
has a 14.3% weight in the index, was 8.5% as wheat prices were up 24% annually while
potato had jumped 72%.
Expectations of good harvests and favourable international market conditions have boosted
supply and reduced prices of cooking oil. "The mustard crop is expected to be good this year.
And there is enough availability of oil in international markets like Malaysia and Indonesia.
So, we do not see any impact of edible oil on food inflation numbers," said Sandeep Bajoria,
CEO of Sunvin Group, a consultancy firm in oil and oilseeds.
Crude palmoil prices have dropped to $800 per tonne from $1,200 per tonne last March and
soyabean oil prices have also ebbed. Favourable weather conditions and higher acreage are
expected to boost mustard output and lead to a further fall in cooking oil prices, trade
officials said. "If weather remains favourable till January, we are likely to get an output of
6.5 million tonnes as against 5.5 million tonnes last year. This will put pressure on prices,
which have already been dragged by weak palmoil prices," said BV Mehta, executive
director, Solvent Extractors' Association, an industry body.
Crop prospects have brightened in cold and sunny Rajasthan, which harvests 40% of the
mustard grown in India. "Dip in temperature, morning dew and sunshine are good conditions
for mustard crop. The sowing is progressing well and the total mustard acreage is likely to
cross 34 lakh hectares as against 25 lakh hectares last year. Sowing will continue till early
January," said DD Jain, joint secretary, Rajasthan Oil Industries Association.
Favourable weather has also pushed up chana acreage and helped prices come down to Rs
3,600 per quintal from Rs 5,000 last October. Planting has gone up in the two major
producers, Maharashtra and Andhra Pradesh. "Chana prices had come down significantly
from the second half of December. There will be pressure on prices as arrivals will begin
from next week," said Vedika Narvekar, senior research analyst, Angel Commodities.
Pravin Dongre, president, Indian Pulses and Grains Association, said: "Prices have crashed in
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the country with increasing imports of chana from Australia. Chana imports are expected to
be around 4 lakh tonnes this year compared with 1 lakh tonnes earlier." The dip in
temperature and morning dew are also likely to help production of wheat, one of the staple
ingredients in the country's food basket. "The weather is perfect for bountiful harvest. If
conditions prevail for a month, yield will be higher than last year's record produce of 93
million tonnes," said Indu Sharma, director of Karnal-based Directorate of Wheat Research.
January grains stocks substantially higher (ET, 08/01/2013)
Wheat stocks at government warehouses on January 1 were 34.4 million tonnes, more than
four times the official target of 8.2 million tonnes for the quarter ending March, government
sources said on Tuesday.
Rice inventory for the same period was 32.2 million tonnes against a target of 11.8 million
tonnes.
Bumper harvests since 2007 have led to huge stockpiles of rice and wheat, leading to
shortage of space at government-run warehouses. A mound of rice and wheat rotting in the
open led to criticism of the government.
To get rid of some of the surplus stocks, the government has allowed private traders to export
wheat and non-basmati rice. The government has also permitted 4.5 million tonnes of wheat
exports from its own warehouses.
Wheat stocks at government warehouses on December 1 were at 37.6 million tonnes, while
those of rice were 30.6 million tonnes.
India harvests only one wheat crop a year while the new season rice harvest begins in
October, swelling stocks which are then drawn on for distribution in government welfare
schemes.
The government buys grains from farmers for programmes that try to ensure cheaper food for
the poor and to meet emergencies.
Since 2009 the government has also been keeping an additional 3 million tonnes of wheat
and 2 million tonnes of rice as strategic reserves over and above the monthly stocks.
Govt can't ban field trials of GM crops: Sharad Pawar (ET, 10/01/2013)
Dismissing Parliamentary panel's suggestion to halt all field trials of GM crops, Agriculture
Minister Sharad Pawar has said the government can't take "luxurious decision of banning"
them because such kind of farm research is important for ensuring food security.
In August, the Parliamentary Standing Committee on Agriculture, headed by Basudeb
Acharia, had recommended to the government to stop all open-field trials of transgenic crops
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until it develops a better system of monitoring and oversight.
The panel had also called for a complete overhaul of the regulatory system and thorough
probe into how permission was initially granted in 2009 to commercialise Bt brinjal.
"We are not supporting that (Panel's recommendations). Ultimately, food security is the
important issue for a nation like India and here we cannot take this type of luxurious decision
of banning field trials," Pawar told PTI in an interview.
Research in Genetically Modified (GM) crops and their field trials should continue in a
country which has huge population, he said.
Pawar said, however, that caution should be exercised while allowing GM crops for
commercial cultivation.
"We have to take abundant precaution that it will not affect either environment and other
crops or animal and human health. We need to be very, very cautious," he said.
Meanwhile, sources said the ministry in the Action Taken Report on the panel's contention
has stated: "Ban on GM crop field trails will be highly detrimental and not in the national
interest. Adoption of this recommendation would bring to a halt the process of testing the
safety of GM crops."
The government has allowed commercial cultivation of BT cotton, while moratorium has
been put on Bt brinjal. Permission has been given to private companies to conduct field trials
of GM crops such as cotton, corn and maize in Punjab, Haryana, Andhra Pradesh and
Gujarat.
Positive outlook for agri commodities in 2013(ET 15/1/2013)
The past year was not only eventful for thecommodities market, but also remarkable because
various agricultural commodities touched new highs. Considering the fundamentals, supply
fears lingered largely due to poor rains in India during the first half of the monsoon, which
not only reduced the sowing of kharif crops but also raised worries over the crop yield.
Even the US was hit by its worst drought in 56 years, which parched
the soybean and corn crops. However, the revival of monsoon in India during the second half
of the season helped ease some pressure on sowing and yield. Further, the rabi sowing also
progressed well and the weather conditions so far have been favourable for the crop yield.
The incidence of volume driving guar seed and guar gum gave a scare to the agri commodity
market in India. Their prices rose from Rs 4,000 per quintal to over Rs 30,000 per quintal.
Considering the excess volatility, themarket regulator banned futures trading in these
commodities in March 2012. The Forward Markets Commission (FMC) has been more
dynamic after the guar incidence and has made various modifications in contract
specifications, which has resulted in very good results and helped control the excess volatility
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in prices. The implementation of a staggered delivery system, introduced after the June
contract expiry, is one of the moves by FMC that has helped broaden the delivery provisions.
What stood out last year was the drastic movement in commodity prices. Soybean led the
gainers' list in 2012, registering 31% gain, followed by wheat, chana and kapas posting 30%,
27% and 26% returns, respectively, owing to supply-related issues. Commodities like
soybean, corn, chana and mustard seed also achieved new record highs in 2012.
The crude palm oil (CPO) and chilli were the top losers, registering negative returns of 26%
each. In the international markets, wheat posted the highest gain of 18.7% last year on
account of lower production in the major exporting nations caused by unfavourable weather
conditions. Soybean registered a positive return of 15.1%. On the one hand, the international
market was surrounded by fears of supply tightness for corn and soybean, and on the other
hand, there was a supply glut for sugar and cotton, which dented the prices of these
commodities, and posted 14.2% and 17.8% losses, respectively.
India can achieve 4% agri growth in 2012-17: Pranab Mukherjee (FE 16/1/2013)
President Pranab Mukherjee today said the country can achieve the targeted 4 per cent
growth in the agriculture sector during the 12th Plan period with the help of better seeds,
improved water management practice and balanced use of fertilisers and pesticides, among
others.
The farm sector needs priority access to power, credit, water and fertilisers, he said at a
function to distribute 'Krishi Karman' awards to 18 states.
Stating that agriculture is a "challenging" sector, the President said the government should
create employment opportunities in other sectors in order to reduce dependence of rural
families on agriculture for livelihood.
"We can meet the 12th Plan period (2012-17) agricultural growth target of 4 per cent per
annum only through measures such as crop diversification, developing high yielding disease
resistant seeds, improvement in water management practices, promotion of balanced use of
fertilisers and pesticides," he said.
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The growth of agriculture and allied sectors during the 11th Plan period (2007-12) stood at
3.3 per cent.
That apart, he said, better and increased use of satellite communication for weather forecast
and effective information dissemination to farmers would prevent crop failure.
Mukherjee emphasised that farmers need government support for upscaling themselves and
"engaging in agriculture for subsistence to taking up agriculture as a commercial venture".
"Government would simultaneously need to focus on creation of employment opportunities
in other sectors to provide income diversification to rural families who today are dependent
for their livelihood solely on unviable land holdings," he said.
Mukherjee said it was essential to create infrastructure in rural areas in the form of all-season
roads, multi-mode transportation, quality power supply, transparent markets, thriving
financial institutions for better return to farmers.
Deregulate food, fertiliser, sugar as well (BL 21/1/2013)
The fiscal distortions and distributional inefficiencies in these sectors should be done away
with.Last week, the Government of India (GOI) took a bold and wise decision to re-notify
deregulation of diesel prices. It is an attempt to reduce the nation’s fiscal burden, but it also
indicates that the government is serious about getting the economy back on track.
Oil marketing companies (OMCs), at the discretion of the Government, will now increase or
decrease diesel prices. To compensate their current under-recoveries of about Rs 9/litre, oil
corporates will apply “small corrections” of 50 paise in monthly instalments. The “small
correction” upped shares of oil companies next day and improved stock market sentiment.
The recent hike in rail fares, which were untouched for the last ten years, is also a step in the
right direction. Over time, they should promote efficient use of scarce resources, cut down
deficits, and thereby help rein in inflation.
RISING FOOD SUBSIDY
However, there appears to be a selective amnesia in the Government on raising food and
fertiliser subsidies. The FCI has been allocated Rs 75,000 crore in the 2012-13 Budget,
which may only cover 50 million tonnes of grains, while stocks are likely to touch double
this tonnage (100 million tonnes), requiring a funding of Rs 1,50,000 crore. How will these
extra allocations be made?
For wheat and rice, the policy prescription is to reduce prices and inflate demand. This goes
against the ‘grain’ of the Centre’s fuel policy. No long-term export policy is in place for
evacuating official inventories and resolving the problem of plenty. The trade fears
export/import embargos on the slightest supply/demand mismatch.
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Even Russia and Ukraine have refrained from banning wheat export this year, despite the 35
per cent drop in output. Higher domestic prices have compensated losses of farmers in these
countries.
There is a lot of confusion over the implementation of the Food Security Bill (FSB). The
criteria for identifying beneficiaries, and the mode and quantum of disbursal — whether via
PDS or cash transfers, and how many kg per household per month is to be accounted — are
loose ends that may not be tied up even before the 2014 elections. Storing and distributing
about 70 million tonnes (mt) of grain to cater to 67 per cent of the population, is a gigantic
exercise. About 46 million tonnes of built-in covered storage space is available, while plans
to create additional warehousing have been on the blueprint stage for many years.
There also appears to be intense opposition to this Bill within the Government. The Ministry
of ‘Food and Agriculture’ was split for this reason. Sharad Pawar was divested of the charge
of Department of Food, and assigned only the Agriculture Department as he publicly
expressed his reservations about FSB. K.V. Thomas was made Food Minister to expedite
implementation of FSB.
The Chairman of the Commission for Agriculture Costs and Prices (CACP) has come out
with a discussion paper, apprehending unsustainable financial liabilities on account of this
Bill, amounting to Rs 6 lakh crore in the next three years. Members of the Planning
Commission too have given dissenting opinions on FSB.
The direct cash transfer scheme is proposed to be linked to FSB, while the Bill before
Parliament makes no mention of this.
If cash transfers are the preferred route, then open-ended procurement of foodgrains needs to
be restructured and deregulated in a calibrated manner. But no one has given much attention
to this.
The net result is that the Government has become the biggest hoarder of grains, which are
stocked unscientifically, and therefore, with every passing day their quality deteriorates, and
the fiscal deficit goes up! Opposition parties are mute spectators.
FERTILISER COST
The fertiliser industry has a subsidy component of Rs 95,000 crore this year, against a
Budgeted sum of Rs 62,000 crore. This is yet another area with a wide gap between the cost
of production/imports and the release/administered price of urea. While the pricing of
phosphorus and potassium has been partially de-controlled, nitrogen is still heavily regulated.
As a result, the situation has taken a turn for the worse.
Media reports also suggest that CACP has recommended to the Finance Minister to deregulate
urea pricing, while directly compensating the farmer on per hectare basis. This can
reduce the fertiliser subsidy by about Rs 20,000 crore, while incentivising farmers to
optimally use N, P and K, raising the efficiency of fertiliser usage, while cutting down the
fiscal deficit.
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SUGAR POPULISM
The Rangarajan Committee has suggested dismantling all controls on sugar, and aligning
sugarcane pricing to pricing of sugar and first stage by-products. This is a rational
proposition, but the politics of sugar in Uttar Pradesh is such that the State Government has
announced a much higher ‘state advisory price’ (SAP) than what the industry can afford.
This will bleed the industry and damage the interest of farmers. The Centre needs to clean up
the mess in sugar sector, from dismantling levy, to the release system, to export/import
norms. These controls have not served any purpose but promoted rent-seeking, which
bureaucrats and politicians both enjoy. If the sugar sector has to attain value addition in terms
of ethanol and cogeneration, regressive interventionist actions must end forthwith.
The experience in other sectors be it steel or cement or telecom, has shown that by deregulating
these sectors they have become more efficient. If streamlining of the fuel/diesel
policy is meant to rationalise distortions, let a similar prescription be applied to food,
fertiliser and sugar.
Despite food surplus, 20 mn hungry in India: Sam Pitroda (FE 23/1/2003)
Addressing students at the first innovation mela called Tod Fod Jod, at Modern School,
Barakhamba Road, in the capital on Monday, chairman of the National Innovation Council
and advisor to the Prime Minister, Sam Pitroda, said the innovation initiative needs to be
taken to rural areas of the country but it “is very hard to scale things in India.”
He also said this must be well-documented so that it can be put up on the Internet in the form
of a web portal for other children to see and learn from.
He said: “India needs an Indian model of development and we need to develop it ourselves.
Old paradigms don’t seem to deliver and I don’t think we can wait too long.”
He said that there are 20 million hungry people in the country, which has surplus food,
because “we are still thinking in the old way.”
He also told teachers that they should try and connect with teachers in the rural areas and
take the concept of Tod Fod Jod to them.
The aim of Tod Fod Jod centres set up by the National Innovation Council (NIC) is to
“provide a hands-on learning environment where students can de-construct, re-construct and
re-purpose everyday objects that they see or use.”
The initiative is being piloted across India, with NIC sessions being held in schools in Delhi,
Vadodara and Karnataka.
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The initiative is aimed at school students from classes V to XII and first- and second-year
college students, with different levels of sophistication.
Pitroda said the initiative has spread in the last three months but that is “not enough” for a
country like India.
He also requested children who presented their science models at the innovation fair to take
Tod Fod Jod forward by talking to their peers about it.
Springdales School student Anirudh Sharma said, “I learnt about finding out things through
science and also understanding our capabilities and limitations.”
Rabi acreage falls to a three-year low at 29.3 lakh hectare (ET 24/1/2013)
Insufficient rains during Monsoon has dropped Rabi acreage to a three year low of 29.3 lakh
hectare, reveal state government data. The sowing is about 18% lesser than 37.35 lakh
hectare in the previous Rabi season. This is second year in succession that winter sowing has
declined. The kharif acreage in 2012 had also dropped by 7% to 81.71 lakh hectare because
of rains that were about 27% lower than than the 10-year average. The summer sowing is
also likely to face the heat as the storage of water in the dams is lower than in previous year.
Wheat, Rape seed (Mustard), Cumin and vegetables are main winter crop in the state The
water deficiency in the major part of the state is also likely to impact Summer sowing, which
had peaked to 15.82 lakh hectare in 2010-11 and dropped to 13.18 lakh hectare in 2011-12.
A data by state Agriculture department pegs Rabi acreage at 29.3 lakh hectares compared to
37.35 lakh hectares in 2011-12 and 40.05 lakh hectare in 2010-11. Wheat, the largest crop of
Rabi season has been sown over 10.37 lakh hectares in 2012-13, a fall of 18% over 12.64
lakh hectare in 2011-12 and a drop of almost 19% compared to 12.73 lakh hectare, an
average of previous three years.
Acreage of Cumin (Jeera) also fell to 3.34 lakh hectare from 3.68 lakh hectare in previous
year. However, it is higher than the three year average of 3.18 lakh hectare. Acreage of
vegetables also dropped to 1.87 lakh hectare from 3 lakh hectares in previous year and a
three-year average of 2.54 lakh hectare. Unavailability of the water for irrigation is the main
reason for the decline in rabi sowing said state agriculture director BR Shah.
"Current year is not good for the farmers in the state, particularly for the Saurashtra and
Kutch farmers. They have been facing water crisis. Hence sowing has affected," added Mr.
Shah.
Saurashtra is facing a grave situation with six months to go for fresh Monsoon as dams in the
region have 192.37 million cubic metres (MCM) of water, which is 7.69% of the storage
capacity of the dams.
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Similarly Kutch region has 24.26% of its water storage capacity, while north Gujarat has
44.51% of its water storage capacity. Central Gujarat and south Gujarat are more comfortable
with 80% and 65% of water capacity.
Overall the 202 dams (excluding Sardar Sarovar Dam) has a total storage capacity of
14,690.30 MCM. Of this the actual storage stands at 9,233.47 MCM, against 10,489.61
MCM in corresponding period in the previous year.
The state received 580 mm rains in Monsoon of 2012, which is lower by over 27% compared
to a 30-year average of 798 mm. Saurashtra region comprising of seven districts suffered the
most with 371 mm rains or just over half of 648 mm, the average of previous 30 years.
Earlier in August 2012, the state government had declared 123 talukas (out of 226 in the
state) of 14 districts (26 total in the state) as drought affected. The government had
encouraged farming of fodder to save the livestock. This resulted in fodder acreage grow
13% over a three-year average of 3.42 lakh hectare to 4 lakh hectare, but it still falls short of
4.29 lakh hectare in 2011-12.
Mustard witnessed a fall to 2.08 lakh hectare compared to a three year average of 2.3 lakh
hectares. Similarly Gram (Chana) also witnessed a drop from an average of 2.12 lakh hectare
to 1.70 lakh hectare.
Grain output may be close to target despite weather woes (ET 25/1/2013)
Food grain production is likely to decline by 4.5% this year following erratic monsoon
during the kharif season and lower paddy acreage in the rabi season.
However, the output will be close to government's target of 249.52 million tonne grain
production this year.
"Grain production may be around 248 million tonne as against last year's output of 260
million tonne. The estimations, however, may improve if weather remains cool till March,"
said a farm ministry official.
The drop is mainly due to erratic monsoon during the kharif season affecting the production
of coarse grains and rice. The first advance estimate in September last year forecast kharif
grain production to be 117.18 million tonne - down by 9.8% from the previous output of
129.94 million tonne.
"The output forecast in the second advance estimate scheduled in February may improve by
5% as rice yield in eastern states has improved," the official said.
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Rabi wheat acreage is down from 295.93 lakh hectare to 294.98 lakh hectare. Similarly, rice
acreage is down from 10.49 lakh hectare to 8.79 lakh hectare.
"Wheat output, however, will be similar to last year if not higher due to conducive
conditions. This will cover some deficit of kharif season. But it is unlikely that the output
will get closer to last year's level," another official said.
The deficit in production is mainly due to a drop in the output of coarse cereals. The belowaverage
rainfall in Karnataka and Maharashtra has damaged bajra and millet crops.
"We expect to produce around 90 million tonne of wheat and 100 million tonne of rice. The
output in rabi season will be crucial," said RS Sharma, an agriculture scientist.
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XIII AGRICULTURAL COMMODITY PRICES
Bengal potato farmers happy, but paddy growers not so (BL, 30/12/2012)
Purely from market price end, 2012 was a watershed year for farmers in West Bengal. Paddy
and potato – the two major agri commodities produced in the State – have fetched higher
market prices in last one year, when compared to 2011.
The analogy, however, may not hold good if cost push and market uncertainty are taken into
account. Net realisation for paddy has hardly improved against 25-30 per cent cost push on
account of fertiliser and labour costs.
The year, however, brought cheers to potato farmers with prices moving ahead of input cost
inflation. And, early indications suggest that the new crop, slated to hit the market between
January and March, may also get good prices riding on lower crop.
However, as a parallel development potato farmers are showing a clear preference to contract
farming against stable or assured return potential than taking the market risk.
Paddy
With paddy fetching higher price in open market this season, roll back of money was better
for farmers this year. However, this was not sufficient to make good for the accumulated
debts.
In 2011, paddy prices had crashed in the open market following a bumper crop and stalled
procurement by rice mills because of their inability to offload stocks.
Farmers were finding it difficult to offload their produce at the open market price, which was
ruling around Rs 850 a quintal last year.
However, the situation improved in 2012 with the open market price of paddy ruling around
Rs 1,200 on account of an estimated dip in production.
Though the money flow situation improved for paddy growers this year profits have been
muted on the back of a subsequent rise in costs. Input costs, which include primarily labour
and fertiliser costs have witnessed a 30 per cent jump so far. The higher open market prices
have therefore been minimised by the rise in input costs.
Prices to rule firm
The price is likely to inch up further during the coming months on account of an estimated
dip in production and a steady demand from States such as Andhra Pradesh and Tamil Nadu,
said Gobinda Das Ghatak, Director, Shyama Sakti Rice Mill in Burdwan – commonly called
rice bowl of Bengal.
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According to agri-experts, West Bengal might witness a 10-15 per cent drop in paddy
production this season on account of a dip in sowing (due to delayed monsoon and poor
weather conditions).
Potato farmers happy
Potato farmers, on the other hand, were rejoicing the steady rise in prices during this year.
Unlike in 2011, when supply glut and weak market sentiments had pushed down potato
prices to record low levels, 2012 saw prices firming up in the open market.
Wholesale price of potatoes, which were seen hovering around Rs 250-400 a quintal during a
major part of 2011, started improving and was ruling around Rs 950-1,250 in 2012. The
higher prices, however, came on the back of a dip in potato production across the country.
Potato production dropped to about 85 lakh tonne in 2011-12, against 95 lakh tonne last year.
New potato crop
According to sources, potato prices could remain firm at current levels on account of an
estimated dip in production this season.
Potato sowing in the State has been delayed by over a fortnight this year on account of
unfavourable weather conditions, said, Ram Pada Pal, President, West Bengal Cold Storage
Association (WBCSA).
Though it would be difficult to estimate the production of the tuber, however, sowing of the
crop could be almost at par or a little more than that done last year, he said.
Contract farming
An increasing number of potato farmers in Bengal are also going in for contract farming to
get assured returns.
According to the WBCSA, the number of farmers engaged in contract farming of “Atlanta”
variety of potatoes for Pepsico in Bengal has increased from just about 1,800 in 2008 to
around 13,000 in 2012.
The area under contract farming has increased by over 15 per cent to about 7,000 acres in
2012-13.
State-level panels sought to fix support prices for crops (BL, 04/01/2013)
There is a need for setting up state-level commissions for fixing the minimum support prices
for different crops, as varied conditions across the country renders a national-level
Agricultural Costs and Prices Commission incapable of ensuring fair prices for farmers,
according to Y. Sivaji, a former member of the Rajya Sabha and an expert on agriculture.
He made the suggestion to Finance Minister P. Chidambaram in New Delhi earlier this week
when the latter invited him to pre-budget consultations on the farm sector along with others.
Problems that arise after the announcement of the MSP and before the crop reaches the
market should also be taken into account as factors such as adverse weather conditions could
have a huge impact on cost of cultivation.
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He said the cost of cultivation was increasing all the time for all the crops and there was no
commensurate increase in the prices, worsening the agrarian crisis and leading to migration
of farmers and farm labour from rural to urban areas. “Unless the great divide between the
incomes of urban and rural people is reduced through innovative policies, the continuous
exodus of rural people to urban areas will merely result in proliferation of slums with all the
attendant problems,” he said.
Therefore, he said, urgent steps are needed to improve infrastructure, healthcare and
educational facilities and opportunities for employment in rural areas. Both the Union
Government and States would have to step up expenditure in rural areas.
He also wanted the Union Finance Minister to extend the policy of liberalisation to
agriculture and permit free movement of agricultural produce so that the farmer can sell his
produce wherever he gets a better price.
He complained to the Minister that “The Government of India frequently puts curbs on
exports and ensures the prices of agricultural produce do not go up in the domestic market,
ostensibly to safeguard the interests of the so-called common man in the case of foodgrains
or industrialists in the case of produce such as cotton.
The States continue restrictions on free movement of foodgrains even within a State. Again,
whenever the prices of agricultural produce go up because of calamities like floods and
cyclone or drought, the Union Government permits duty-free imports and denies the farmer
the opportunity of benefiting from higher prices. The farmer is thus at the receiving end
whether he reaps a bumper harvest or a poor harvest.”
Sivaji also wondered why the Union Government, so keen on introducing FDI in multi-brand
retail, was not allowing FDI in agro processing industries like tobacco-processing, as it
would really help farmers. He appealed to the Government to launch a concerted drive to
improve production of pulses and oilseeds and make the country self-sufficient. He also
pleaded for decentralised procurement of foodgrains to bring down costs and minimise losses
in storage.
He pleaded for mechanisation in agriculture to reduce drudgery and re-orientation of research
to suit local needs.
He also wanted the Government to promote allied activities to supplement farmers’ income.
Crop loans should be interest-free and agriculture should be introduced in the curriculum at
school level and there should be reservations for rural students in professional colleges, he
submitted to the Finance Minister
Mismanagement of food system causing inflation: Abhijit Sen (BL 7/1/203)
Attributing high inflation to mismanagement of food system, Planning Commission Member
Abhijit Sen today underlined the need for greater coordination between trade and other
policies to deal with the situation.
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“A major source of inflation has been in the case of cereals and this is where we have a clear
case of mismanagement of food system. It is not production shortfall,” he told PTI in an
interview.
There has been 19 per cent rise in wholesale price index (WPI) based inflation compared
with last year, while the country is sitting on a huge stock. The Government does not have a
long-run price policy which can guarantee farmers the price for their produce, he said.
“Mismanagement of food system means the inability to have a long-run price policy which
says that this is what we are going to guarantee the farmers...,” he said.
Sen said India has huge stocks of wheat, but Government is unwilling to release it at a rate
which should bring down prices because the support price was too high and it doesn’t want to
sell it at a rate to make a loss.
Sen also made a case for much greater coordination between the trade policy and other
policies.
“There should be much greater coordination between the trade policy and the domestic
policy... The world prices are very volatile; we therefore need much greater flexibility in our
tariffs. Tariffs should vary as world prices vary. In fact what we end up doing is not tariff
variation but bans on export and bans on import,” he said.
However, variation in tariffs requires a continuous assessment and India does not have that
continuous assessment, he added.
Better price realisation seen for maize, onion, groundnut (BL, 08/01/2013)
There is some good news for maize, groundnut and small onion growers in Tamil Nadu.
Agriculture experts foresee better price realisation from these crops at harvest in April-May,
compared with the prevailing rates.
Advising farmers to sow these crops during the ensuing season (Thai Pattam), experts at the
Domestic and Export Market Intelligence Cell (DEMIC) functioning at the Tamil Nadu
Agricultural University, state that the price of maize could touch a level of Rs 1,450 a quintal
during April-June 2013 as compared with Rs 1,350-1,400 a quintal at present.
The expert said, “even though maize is cultivated all through the year, farmers with irrigation
facilities only would be able to raise the crop during Thai Pattam. The produce will be ready
for harvest during April-May. Since there is continuous demand from the poultry industry
and good prospects for export as well, the price of maize could rule high. To get better
returns farmers should sow varieties/hybrids with bold grains. In 100 gm of maize grain, if
the number of grains is less than 350, the farmer can expect higher price.”
Reverting to groundnut, the expert said that the dried pod could fetch Rs 48-50 a kg during
April-May. Groundnut incidentally is used in confectionary in Erode district. The price,
therefore, is higher than in other districts.
Small onion is cultivated all through the year and is one of the profitable vegetables. The
prevailing market price is around Rs 30/kg. The farm price of the small onion is expected to
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hover around Rs 22-25 a kg in April-June, the expert said, after conducting market surveys
and analysing price trends.
Cold wave and dense fog triggers a sharp rise in vegetable prices, respite for poultry
sector (ET, 09/01/2013)
The cold wave and dense fog in north India have triggered a sharp rise in the price of some
vegetables because farmers are struggling to find labourers to work in icy conditions and
trucks are taking longer to reach markets.
Tomato prices have doubled in the past week, peas are up 60% and brinjals are up 50%.
Traders say prices would rise further if conditions did not improve.
The cold wave has also raised the consumption of eggs and chicken, resulting in a 50-80%
increase in prices since the end of December, traders say.
Apples and oranges are cheaper as consumption has dropped, but there are concerns that
foggy conditions would hit mango production as flowering could be delayed.
"About 300 trucks are arriving in the mandi instead of the normal 550-600 trucks on a sunny
day," says Surinder Kohli, president of Azadpur Vegetable Merchants Association in Delhi.
"In this cold weather, farmers are unable to get labourers to harvest crop, and neither are
transporters able to book cargoes for their return trips. It results in late arrival of fresh fruit
and vegetables," he adds.
The cold wave, which has claimed more than 100 lives so far, is forecast to continue
although the fog is expected to abate after a day. The minimum temperature was 1 degree
below zero at Agra in Uttar Pradesh and Churu in Rajasthan.
The weather office says strong winds would prevail over the Indo-Gangetic plains for 2-3
days causing 'wind chill conditions'.
The cold has not deterred traders in Delhi from receiving truckloads of tomato at 2 am, but it
is giving sleepless nights to Ajaybhai from Adarsh Transport Company as it now takes 40
hours to drive from Narayangaon in Pune to New Delhi, compared with the usual 28 hours.
The cold wave, though, has brought cheer to the poultry industry. The consumption of eggs
and chicken has gone up in north India at a time the sector was planning to cut production
due to rising input costs and incessant power cuts, says P Selvaraj, chairman of the National
Egg Coordination Committee in Namakkal, Tamil Nadu, the largest egg-producing region.
Increasing consumption in north and central India has raised the price of egg to Rs 3.10
apiece at the farm gate.
"The current demand and possible revival of egg exports to Oman after the ministerial talks
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this month will bring some relief to the poultry industry," says PV Senthil, secretary of the
Livestock and Agri Farmers Trade Association.
Live chicken prices have shot up by 80-90%. "Wholesale prices are in the range ofRs68-72
per kg," says Venkateshwara Rao, director of Kohinoor Hatcheries in Andhra Pradesh. Retail
price of live chicken varies between Rs100 a kg and Rs200 per kg.
In the past week, tomato prices have doubled to Rs8-10 a kg. Similarly, prices of green peas
and brinjal have increased by over 50% to Rs18-20 a kg andRs17-18 a kg, respectively.
However, the prices of root vegetables such as potato, radish, carrot, sweet potato, beetroot
are stable.
"Vegetable prices will see an upward trend if temperatures fall further," says Pradipta Sahoo,
business head (horticulture), Mother Dairy Fruit & Vegetable Pvt Ltd. According to him, pea
pods are not maturing.
"Not a single processor has started freezing peas, which usually starts by this time," he adds.
In contrast to the rising demand for egg and poultry, the prices of apples and oranges have
fallen by Rs10 a kg toRs30-60 a kg and Rs20-30 a kg, respectively, due to lower
consumption, says MR Kriplani, president of the Chamber of Azadpur Fruit and Vegetables
Traders.
The cold weather may have hit demand for fruit, but it is required to break the dormancy
period of apple or stone fruit. Horticulturists feel temperatures needs to fall further.
Global food prices drop 7% in 2012: UN agency (ET 10/1/2013)
Global food prices fell by 7.0 per cent in 2012 from the level the previous year, the UN's
Food and Agriculture Organisation said on Thursday, assuaging worries a few months ago
that the world could be heading for a food crisis.
The FAO added that prices had fallen in December for the third month in a row.
The Rome-based FAO's Food Price Index averaged 212 points in 2012, a drop of 7.0 per cent
owing largely to falls in the prices of sugar, dairy products and oil.
According to the FAO's index, a monthly measure of changes in a basket of food
commodities, prices dropped in December by 1.1 per cent to 209 points, down for the third
month from the 263 points registered in August.
"The result marks a reversal from the situation last July, when sharply rising prices prompted
fears of a new food crisis," said Jomo Sundaram from FAO's Economic and Social
Development Department.
"But international coordination, as well as flagging demand in a stagnant
international economy, helped ensure the price spike was short-lived and calmed markets so
that 2012 prices ended up below the previous year's levels," he said.
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The sharpest declines registered in 2012 were sugar (17.1 per cent), dairy products (14.5 per
cent) and oils (10.7 per cent), while price declines were much more modest for cereals (2.4
per cent) and meat (1.1 per cent).
Beating inflation with high returns (BL15/1/2013)
Companies with high ROCE such as FMCGs have the margin of safety to generate positive
ROCE, over and above high interest rates and inflation.
People usually think of gold as a hedge against inflation; a high ROCE business may prove to
be an equal, if not better, hedge during inflationary times.
Last week, this column discussed about how companies (within the BSE 100) that deliver
better Return on Capital Employed (ROCE) — a comprehensive profitability metric —
experienced higher valuation measured in terms of price/book (P/B) multiple at which their
shares trade.
Taking our analysis further this week, I’d like to talk about the stock returns generated by
these companies during the last five-year period, with a particular focus on the FMCG sector.
What’s exceptional about the last five years is that:
The market (Sensex) peaked five years back in January 2008 and is yet to scale its previous
high
India experienced a period of extraordinary inflation c) the world has undergone a mighty
recession, which it is yet to fully recover from.
These factors have caused a flight to safety in terms of investments — into gold — as a
hedge during uncertain times, leading to a run up in its demand and consequently its price.
However, an analysis of BSE 100 companies bucketed, based on ROCE levels, indicates that
companies in the highest ROCE bucket have on average delivered stock returns of 104 per
cent during the last five years compared to 73 per cent returns posted by gold (in dollar rates)
during the same period (Gold has run up more in rupee terms, but let’s exclude the currency
effect).
The chart reveals that the two higher ROCE buckets of BSE 100 firms posted positive
returns vis-a-visthe market during this period, while the two lower ROCE buckets posted
significantly negative returnsvis-a-vis the market.
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THE DICHOTOMY
I would argue that during high inflationary period, firms whose ROCE doesn’t even
compensate for risk-adjusted equivalent of fixed deposit returns, are in essence losing money
in real terms.
Think about NHPC as an example from the lower ROCE bucket.
The company clocks a ROCE of about 8 per cent, which is significantly less than bank FD
return of approximately 10 per cent; NBFC return of approximately 13 per cent and inflation
of close to 10 per cent.
When the company is consistently not making ROCE in excess of what safer alternatives
provide and is, in fact, net negative, post inflation, technically speaking, the capital employed
by the firm is better off getting re-deployed elsewhere.
So suddenly a business that seemed viable during days of low interest rates and inflation can
become unviable (economically speaking) during periods of high inflation and interest rates.
The market penalises such firms with negative stock returns and rewards those which
continue to add economic value (high ROCE firms) with positive returns.
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HIGH ROCE AS A HEDGE
High ROCE companies have the required margin of safety to continue generating positive
ROCE over and above high interest rates and inflation during difficult times.
Nestle is one such company from the high ROCE bucket that clocks average ROCE in excess
of 100 per cent. Nestle would continue to be an economically attractive business, despite
interest rates or inflation moving to double-digits, because the difference between the safer
FD returns and what the business generates is considerably large.
The difference is largely attributable to the FMCG sector to which Nestle belongs.
It is really hard for a company to be in the FMCG business and generate less than 20 per cent
ROCE.
No wonder, the FMCG index has recorded 132 per cent returns during the last five years
compared to 6 per cent for the Sensex.
FMCG SCORES
The FMCG sector is broadly characterised by strong consumer brands and small-to-medium
ticket size of products — making them affordable by many.
So you have many people who seek out the brands and do not mind paying a little extra for
the same (thanks to the ticket size), for example, Maggi, Kit Kat and Nescafe.
This provides for what is considered to be the most powerful weapon in the world of business
— pricing power.
Customers are willing to pay significantly more than what the products cost to make, due to
intangible value of the brand that they perceive in their mind.
This translates to healthy operating margins, a key component of ROCE. Secondly, since
customers are primarily concerned about the brand, the company can outsource many of its
business processes such as manufacturing, distribution, and so on, without worrying about
warranty claims and focus on R&D and marketing.
Such flexibility, along with the fact there is neither hefty licence fee nor any need to hire
rocket scientists, translates to low fixed costs and less capital tied up in bulky fixed assets.
Thirdly, FMCG companies sell for cash and pay their vendors in credit, making way for near
zero or even negative working capital.
These boost asset turns — another key component of ROCE. Lastly, the combination of
pricing power and small ticket size, allows these companies to protect ROCE by passing on
any increase in raw material costs to customers during inflationary times.
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What’s a couple of more rupees on a regular packet of Maggi or Horlicks? After all, you
could always pick up a smaller packet so that you don’t feel the pinch.
(The author is a business consultant. Feedback can be sent to perspective@thehindu.co.in)
Keywords: Return on Capital Employed (ROCE), price/book (P/B) multiple, beating
inflation, stock investment, economy
Retail inflation for farm workers up at 11.33% in Dec (BL 22/1/2013)
Retail inflation for farm workers in December touched 11.33 per cent due to increase in
prices of rice, bajra, ragi, fish fresh, onion and other items.
The same for rural labourers was 11.31 per cent in December, according to an official
release.
“Point to point rate of inflation based on the CPI-AL and CPI-RL increased from 10.31 per
cent and 10.47 per cent in November, 2012 to 11.33 per cent and 11.31 per cent in
December, 2012,” the release said.
Inflation based on food indexes of CPI-AL and CPI-RL are 11.59% and 11.90% respectively
during December, 2012, it added.
The consumer price index (CPI) for agricultural and rural Labourers recorded maximum
surge in Tamil Nadu by 14 points and 15 points respectively mainly due to increase in the
prices of due of rice, bajra, ragi, fish fresh, onion, mixed spices, vegetables and fruits, tea,
pan leaf and firewood.
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XIV AGRICULTURAL COMMODITY FUTURES
FMC examining quality specification of agri-futures contract (ET 16/1/2013)
Commodity market regulator FMC is examining the quality of farm commodities offered for
trading on commodity bourses, and is also looking into the feasibility of adopting standard
food safety measures for the traded agri-contracts.
The decision comes in the backdrop of Food Safety and Standards Authority sealing six
NCDEX-accrediated warehouses in Kerala last month following complaints of adulteration
of black pepper stocks.
"We are examining the quality specification of futures contracts of agriculture commodities.
We are also exploring the feasibility of incorporating standards formulated by Food Safety
Authority, Bureau of Indian Standard and Agmark," FMC Chairman Ramesh Abhishek has
said.
On the sealing of warehouses, he said the FMC has asked NCDEX to take up the matter with
the state government and food safety authority for early resolution.
Earlier this week, NCDEX had said it will resolve the issue at the earliest as per the
exchange's regulations.
"We will resolve the issue at the earliest as per our existing regulations," NCDEX CEO and
Managing Director R Ramaseshan had said when asked about seizure of its six commodity
warehouses in Kerala by the Food Safety authority and consequently the delivery defaults of
the commodity.
Meanwhile, Food Safety Authority has asked state-run Spices Board to examine the samples
of the black pepper.
Commissioner Food Safety (Kerala) Biju Prabhakar had said that the authority has issued
notice to NCDEX to ensure that stock does not enter the market. The stock in the warehouses
was about 8,000 tonnes.
"With one or two samples, we cannot declare the entire stock as adulterated because the
commodity belongs to small and medium farmers. We need to examine carefully," Prabhakar
had said.
With seizure of six warehouses in Kerala, black pepper traders of NCDEX have made
representation to commodity market regulator FMC and also to the exchange demanding
delivery of valid goods or refund the value of the pepper, estimated to be about Rs 300 crore.
Indian edible oil futures extend gains on import duty hike (ET 17/1/2013)
Soyoil and crude palm oil futures on Indian commodity exchanges extended gains on
Thursday afternoon after the government decided to raise import duty on crude edible oils.
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India has slapped a 2.5 per cent import duty on crude edible oils, Information
Minister Manish Tewari, a move taken to stem overseas purchases by the world's top
vegetable oil buyer and protect its domestic oilseed growers.
Soyoil futures on the National Commodity and Derivatives Exchange extended gains up to 1
per cent, while crude palm oil futures on Multi Commodity Exchange rose up to 2.6 per cent
after the announcement.
FMC to implement food safety standards for farm items (BL, 17/1/2013)
The Forward Markets Commission is examining the quality of farm commodities offered for
trading on commodity bourses. It is also looking into the feasibility of adopting standard food
safety measures for the traded agri-contracts.
The decision comes in the backdrop of Food Safety and Standards Authority sealing six
NCDEX-accredited warehouses in Kerala last month following complaints of adulteration of
black pepper stocks. “We are examining the quality specification of futures contracts of
agriculture commodities. We are also exploring the feasibility of incorporating standards
formulated by Food Safety Authority, Bureau of Indian Standard and Agmark,” Ramesh
Abhishek, Chairman, FMC, said in a statement issued here.
On the sealing of warehouses, he said the FMC has asked NCDEX to take up the matter with
the State Government and Food Safety Authority for early resolution. Earlier this week,
NCDEX had said it will resolve the issue at the earliest in line with the exchange's
regulations. Meanwhile, the Food Safety Authority has asked Spices Board to examine the
samples of the black pepper.
Biju Prabhakar, Commissioner – Food Safety (Kerala), said that the authority has issued
notice to NCDEX to ensure that stock does not enter the market. The stock in the warehouses
was about 8,000 tonnes. “With one or two samples, we cannot declare the entire stock as
adulterated because the commodity belongs to small and medium farmers. We need to
examine carefully,” he said.
With seizure of six warehouses in Kerala, black pepper traders of NCDEX have made
representation to commodity market regulator FMC and also to the exchange demanding
delivery of valid goods or refund the value of the pepper, estimated to be about Rs 300 crore.
Cartels will not be allowed to function: FMC(ET 21/1/2013)
Commodity market regulator FMC today said that cartels will not be allowed to 'use or
misuse' futures market.
"Now the functioning of cartels has come under threat. We will not allow them to function.
Government does not want futures market to be used and misused by few cartels in the
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country. We are not going to spare anyone," Forward Markets Commission (FMC)
Chairman Ramesh Abhishek said here referring to allegations of cartels manipulating the
futures market.
Addressing a stakeholders meeting of rubber, pepper and cardamom here, he said the
allegation was not new. But there is need to take effective steps to check it, he said.
The FMC is committed to making market more user friendly and useful to all stakeholders,
especially farmers. "We want more farmers to participate and want the Kerala model in
which farmers come together as cooperatives, be replicated in other states as well," he said.
Kerala is a successful role model where small farmers are participating in the platform of
commodity exchanges, he said.
Pointing out that in the past one year, FMC in partnership with commodity exchanges had
brought in many changes, including introduction of staggered delivery system, he said this
had been widely welcomed by participants and reduced excess speculation.
Referring to the recent issue of about 34 tonnes of pepper being seized from warehouses in
the state citing poor quality, NCDEX Managing Director R Ramaseshan said the exchange
will not spare anyone.
"We are in the process of initiating action against suspected wrongdoers after giving them
opportunity to explain their conduct. We do not come under the influence of anyone and will
do everything to protect the integrity of the exchange," he said.
The Commissioner of Food Safety had visited the warehouses, following allegations that
mineral oil was mixed with pepper. Following advisory from the government, it was decided
that delivery of this quantity of pepper will not be allowed.
As of date, the government advisory that pepper should be delivered after testing still stands,
he said.
The state government has been asked to take up the issue on a priority basis and if it passes
the test, it can be permitted to be dispatched to the market, he said.
On the loss suffered to the seller, which is a consortium of farmers, he said this would have
to be taken up with FMC.
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