The prospects for major Rabi crops — wheat, pulses and oilseeds — are estimated to be satisfactory. It is now the right time to review the utility of extant government controls and restrictions. All indications are that the wheat crop would be in excess of 75 million tonnes. Public stocks in the Central Pool are projected to be well over three times the minimum stock norm of 4 million tonnes as of April 1 when the new season commences.  If the experience of the last season is any guide, this season too the government agencies may ‘manage’ to procure close to a third of the output with the help of restrictions on the private sector imposed by New Delhi. There is a danger in this. Wheat prices can potentially collapse under the weight of heavy arrivals and restrictions on private trade. Growers will be the worst hit because they usually pre-sell the crop to the commission agent, not necessarily at the procurement price. This season there is absolutely no reason to clamp down on private sector procurement at the time of harvest. Also, all restrictions on storage should be done away with. Not only should the private trade be encouraged to support growers, the movement of the grain from production centres to consuming markets should be expedited. Importantly, it would be foolhardy for the government to continue its open-ended procurement policy. Procurement should be not be more than what the public distribution system would require. In addition, the ban on wheat export may be lifted forthwith. BL 60209.

2* MSP COMPUTING MUDDLE-Make CACP Autonomous:

The present system of averaging crop production costs in different states is fundamentally flawed. Costs in the intensively cultivated and irrigated tracts of Punjab, Haryana, western Uttar Pradesh, Andhra Pradesh, Tamil Nadu and Karnataka are generally double those in the rainfed areas of, say, Jharkhand and Chhattisgarh. Several expert committees have gone into this issue and made relevant recommendations which merit consideration. BS040209. It is also essential and imperative to make CACP autonomous to ensure fair prices for farm produce. Govt is loath to the idea as they want to retain iron grip on farm produce prices in order to subserve their political interests.

3* SUGAR MUDDLE- Rid the industry of political interference


Poor commercial intelligence, policy flip-flop and the Government’s unwillingness to loosen its vice-like grip over the sector have all combined to push prices of sugar higher. Even though it was clear, as far back as September, that cane output during 2008-09 would suffer severe reverses be cause of a 20 percent decline in acreage. The Food Ministry’s assessment of sugar production has been pathetic to say the least. Output estimates were revised three times in the last six months and currently stand at 180 lakh tonnes versus the first estimate of 220 lakh tonnes made in August and 200 lakh tonnes in November 2008. This represents a sharp reduction from the sugar production of 260 lakh tonnes for 2007-08. Annual consumption is about 220 lakh tonnes. Despite knowledge about the shortfall, policymakers continued to provide incentives for sugar exports till recently. Now that a serious shortfall is staring everyone in the face and prices have climbed to unaffordable levels, there is a desperate attempt to control the damage by allowing raw sugar imports. Sugar mills in Uttar Pradesh are facing a tough time due to a decline in sugarcane output, forcing at least 28 such mills to end their crushing for the season in just a month's time. With the scarcity of sugarcane, many more mills were likely to close down by February-end and prices of sugar might see a steep rise soon. It is time the sugar industry is decontrolled, and the system of levy and monthly releases done away with. For the PDS, the Government should either buy from the open market or import. The controls on sugar are throttling investment, discouraging industry consolidation and choking modernisation efforts. There is no better time than this to rid the industry of political interference. BL020209

4* Cotton Muddle- consumption by textile mills declines


 Cotton consumption in 2008-09 may range between 18.5 and 20 million bales. Domestic mills had consumed around 22-24.1 million bales of cotton during 2007-08. However, the consumption is estimated to dip by around 3.5 -4 million bales in 2008-09. Mills have purchased 11 million bales so far during the season. The purchasing power of the mills has reduced substantially as the demand as well as exports of garments and textile products have been hit hard. Mills in Tamil Nadu are facing 60 per cent power cut, which has contributed to lower cotton consumption. Around 19.6 million bales have already arrived in the market as on date, which was at 29 million same period last year. Out of the total arrival, Cotton Corporation of India (CCI) has purchased 6.25 million bales. Of the total cotton purchase by CCI across the country, 5 million bales are unsold. Meanwhile, Cabinet on February 5 decided to ask CCI to sell the cotton stocks, which was purchased at the MSP, at discount for bulk purchases. BS 030209

5* CREDIT MUDDLE- RBI STIMULUS MEASURES FAIL- CREDIT FLOW ONLY A TRICLE FOR AGRI


Efforts by the finance ministry and the Reserve Bank of India to ensure a healthy credit flow to the productive sectors of the economy seem to have had no effect on government-owned banks, with their non-food advances growth a meagre Rs 412 crore during the fortnight ended January 16 compared with Rs 18,162 crore in the previous 15 days.

CREDIT to AGRI SECTOR (Rs in Crore)

Financial Year	Amount
2004-05	1,25,309
2005-06	1,80.686
2006-07	2,29,401
2007-08 (Target 2,25,000)	2,41,000
2008-09 -19 DEC 08	1,69,800
2008-09 (Target)	2,80,000

Credit growth to small enterprises fell to a mere 7.4% as on December 19, 2008, down from 35.6% as on December 21, 2007, as per RBI data. The credit flow to the agricultural sector has seen some slowing down. Around Rs 1,69,800 crore has been disbursed by banks to the agricultural sector till December 2008, Last year, disbursements to the agricultural sector was around Rs 2,41,000 crore, much higher than the targeted Rs 2,25,000 crore. A huge amount of over Rs 1,10,000 crore to is to be disbursed in the current quarter. Cooperative institutions were the worst performers. They have achieved only half of their annual target of Rs 55,000 crore, as compared to 82 per cent of the target achieved in the first nine months of the previous year. PSBs therefore are asked to lend 10% more to cover the deficit caused by co-operatives. As rabi season is over, it is doubtful whether this gap of Rs 1,10,000 crore will be bridged. Total flow of resources to the commercial sector from all sources has been lower during the current year (up to Jan, 2009) compared with the corresponding period of the previous year.  According to a survey by industry chamber CII, of the 96 manufacturing segments covered under the CII-Ascon survey, 32 showed a negative growth. Manufacturing sector, reeling under the impact of global financial crisis has reported slowdown in production during the first three quarters of the fiscal. BS 050209 / ET 060209

6* AGRI COMMODITY CONUNDRUMS

Tur Crop

Mustard crop

Potato

Flora Ginger

Pulses prices soar on delayed harvest: The prices of various pulses have climbed in the last few weeks due to the delay in harvest owing to untimely winter rainfall last fortnight. Stockists and retailers have increased prices, trying to make the most out of the sudden shortfall in supply.Arhar dal, a major part of which comes from Maharashtra, has witnessed a hike of Rs 700 per quintal touching Rs 4,900 per quintal in the wholesale market of the city. Massor dal prices have also increased by Rs 500 per quintal. The pulses which were selling at Rs 5,100 per quintal four days ago have crossed Rs 5,700 mark. The chana dal which sold at Rs 2,500 per quintal is now selling at Rs 2,900.B S 040209

Oilseed production to hit record high this year: India hopes to witness record production of oilseeds this year on higher acreage, breaching last year's 28.82 million tones. Areas under different oilseeds have increased by 15 lakh hectares in both Kharif and Rabi seasons. Areas under rabi oilseeds went up to 92.64 LH as on January 22 from 87.48 LH in the same period last year.

Farmers dump potatos: Farmers today spilled potatoes on roads to lodge their protest with the Punjab government. They alleged that the government had been cheating them for the past many years and had not fulfilled their demands. Farmers raised slogans against the government and blocked traffic at the Malerkotla chowk by unloading potatoes on the road. Potato growers failed to get any return after spending huge amounts on potato crop. Pakistan imposed import duty of 25%; the country's potato shipments to Pak  has come to a complete halt.The sunflower seed was also not available in the market and farmers were forced to purchase the same at a price of Rs 2,200 or Rs 2,500 for the quantity to be sown per acre. Farmers said if their demands were not met soon, they would gherao the Vidhan Sabha. TT 040209

Ginger market slips: price of dried ginger has plummeted to Rs 10,200-10,500 per quintal. The market had opened this year in a range of Rs 11,300-11,500, but currently on a slightly bearish mode thanks to heavy local arrival. Throughout last year the price had moved on a lower range, Rs 8,500-9,500, thanks to better crop.

7* Prices of Food Articles remain high at 11%, badly affecting poor people most.

While Whole sale Price Index has declined to 5%, prices of food articles continue to be very high at 11% as on 24 Jan 09. The correlation between movements in WPI and CPI since 2006-07 ranges between 0.62 and 0.65 – which is quite high. The gap between WPI and CPI can rise to about three percentage points during episodes of high inflation in food articles, as food articles account for 15 per cent of the weight of WPI, but the weight of urban and rural consumer indices it is as high as 50% and 65%. Conversely, when food prices are not rising sharply, WPI and CPI can converge, as they did in March 2007. Contrary to popular perception, WPI inflation between December 2007 and July 2008 was driven less by foodgrains and more by manufactured food products (11% weight in the index). Hence, CPI was below WPI in the early months of 2008-09. Dr R. Sthanumoorthy of the IIMK, says, “When everyone was talking about a food crisis in 2007-08, WPI inflation in food articles was moderate between December 2007 and July 2008. What were driving the WPI during this period were manufactured food products and non-food items within primary articles, rather than foodgrains. But the trend has reversed since July 2008.” WPI inflation in food articles increased from 5.3 per cent for the week ended July 5 to 10.2 per cent for the week ended October 4. It has remained close to double digits ever since, touching 11 per cent now. Dr Ramesh Chand of the National Centre for Agricultural Economics and Policy Research said, “High food prices are here to stay. They can only be addressed through productivity improvements in agriculture.” BL 060209

8* SNIPPETS: How many suits and shoes a person needs?

(A)Satyam Raju owned 1000 suits 321 shoes, 310 belts. Apart from leading a lavish lifestyle, Ramalinga Raju visited various big temples in Andhra Pradesh regularly and donated huge amounts of gold approximate about two tonnes. His stargazing pursuits led him to buy a telescope, which valued at more than Rs 1 crore would be the most expensive in any Indian home. Like many other multi-billionaires, Raju too liked to collect trophy properties around the world. Sources said he had “palatial mansions and villas” in 63 countries. ET 040209: Comment: Greed leads to suffering and eventual downfall. Nature has provided for every man’s needs but not every man’s greed.