AGRI NEWS ANALYSIS-34-05-01-09

1*FOOD MUDDLE-GLUT-SPOILAGE OF GRAINS IN OPEN STORAGE

As part of the food security system, the Government went in for a procurement policy that has now landed it with unmanageable stocks, starting 2005 when it came to power. Between 2006 and 2007, India imported six million tonnes of wheat at prices higher than what was paid to the Indian farmer. A Punjabi or Haryanvi wheat farmer got only Rs 7 a kg, while the one exporting to India got Rs 9.26 a kg. There was an outcry by the wheat lobby about the discrepancy. To appease it, the following year, more than one million tonnes were imported, and the Government paid Rs 8.50 a kg to the Indian farmer, while the private companies still got Rs 14.82 a kg. None, not the least the agricultural messiahs, cared to answer the disturbing question, why import at such high prices, when the country was supposedly “self-sufficient” in wheat! It is now politics, with an impending general election, burdened with the public outcry of importing wheat at very high prices and draining the exchequer, that has prompted Mr Sharad Pawar to go in for massive procurement.

Overflowing stocks


As of October, the Food Corporation of India (FCI) godowns were overflowing with 22 million tonnes of wheat, double the buffer norm at 11 million tonnes. Together with rice, the FCI godowns have bulging stocks of 29.8 million tonnes, 13.6 million tonnes more than the 16.2 million tonnes buffer norm – a mind blowing 84 per cent increase!

The million dollar question is: what will New Delhi do with this excess stock? Close to 5 million tonnes are lying in the open due to shortage of storage facility and the grains must be already rotting, unfit for human consumption. Never mind, it can be dumped into the seas, while the poor are starving.  It was India’s wheat imports that led to the sudden upswing in wheat futures in the Chicago Board of Trade nearly two years ago.  And now, there is a re-enactment of what the NDA government did, when it offloaded the excess wheat into the open market leading to distress sales. On both occasions, it will be the agri-business community that stands to gain. The poor can starve, of course.

What meaning is there to the so-called 9 per cent GDP — though now tempered down to 7 per cent — that we have been trumpeting for quite some time, when the very government that swears by the poor throws the hungry to the wolves? BL 31120

 Prospective Glut BL291208
In fact, the Centre’s main worry now is over dealing with a prospective glut situation in most agri-commodities – a far cry from how things were only 5-6 months ago. Apart from a record production of rice at 96.4 million tonne (MT), wheat at 78.4 MT, coarse cereals at 40.7 MT, pulses at 15.1 MT, oilseeds at 28.8 MT and cotton at 25.8 million bales, the buffer stock with the government has marked a phenomenal increase. Rice stock has increased to 28.5 MT and that of wheat to 22.6 MT. With all indications of bumper wheat crop and rice procurement in the ongoing kharif marketing season on course to surpass the record 284.93 lakh tonnes (lt) of 2007-08, the worst fears are of a repeat of 2000-04 taking place. The period from 2000-01 to 2004-05 saw almost 300 lt of foodgrains – 178.29 lt of wheat and 120.81 lt of rice – getting exported from the Central pool at highly subsidised rates.

2*Commodity conundrums

i* Over-regulation and muddled policies have disturbed market dynamics for sugar sector

The sugar sector has for long been the victim of over-regulation and muddled policy regimes. This has led to needless government action that has disturbed market dynamics, and perpetuated an unhealthy cycle of ups and downs in both production and prices. A needless controversy has been stoked by the proposal to import raw sugar. The factual position is that the country does not, at this point of time, need to import raw sugar. The season would end with a surplus of at least 4 to 5 million tones, thanks to the cushion provided by the opening stock. BS 26120

ii* Cotton production likely to fall short of target

Cotton production is expected to dip to 28.5-29.5 million bales in 2008-09 as against the target of 32.3 million bales, due to pest attacks and unfavourable weather conditions in some parts of Maharashtra and Gujarat, a top official of the Cotton Association of India has said. The preliminary estimates of Cotton Advisory Board placed cotton production at 32.3 million bales, although the area planted under cotton in 2008-09 was estimated lower by five per cent to about 9.2 million hectares, Cotton Association of India President P D Patodia said while addressing the 86th annual general meeting of CAI in Mumbai. With production falling short of consumption, world-ending stocks of cotton depleted further to 11.92 MT from 12.25 MT. World cotton prices continued to decline further due to lack of demand. PTI

iii* Basmati woes to worsen as new crop hits mkt

India’s fast losing position as the world’s foremost producer and exporter of basmati (aromatic) rice could be further dented as the new crop hits the market over the next few weeks.  Exporters and traders warned that the export duty of Rs 8,000 a tonne and a minimum export price (MEP) of $ 1,200 per tonne on basmati rice which has already made Indian rice costlier to its sole competitor Pakistan would also create obstacles in absorbing the expected bumper output of basmati rice. “We would see a worse scenario in the coming weeks as the bumper yield enters the market with area under cultivation being increased significantly,” Rajeev Setia, President, Punjab Rice Miller and Exporter Association, told FE.  Indian farmers planted more areas under different basmati rice varieties like PUSA 1121, Super or PUSA and traditional in 2008-09 due to high price realisation last year. FE241208

iv* Rice procurement up - to cross 160 lakh tonnes  PTI 130109

Rice procurement was 159 lakh tonnes till last week up by 21 per cent from 131.07 lakh tonnes in the year-ago period, a senior government official said. Since daily procurement of rice is in the range of 40,000-50,000 tonnes, its purchase would soon cross 160 lakh tonnes, he added. Government purchases paddy from farmers and later on converts it into rice for storage.  In 2007-08 season (October-September), the government had bought a record 284.93 lakh tonnes of rice though the target was 276 lakh tonnes. On the basis of present arrival and procurement of paddy, officials are hopeful of procuring over 280 lakh tonnes rice.

v* Decision on rabi crops support price deferred again

3*Organic farming has little scope, reveals report

The report, compiled by the Punjab State Farmers Commission called ‘Organic Farming, How Far It Can Go’, reveals that the estimated total organic sources (farmyard manure-FYM) are hardly sufficient for 15% of wheat and 20% of rice growing area of Punjab. “In the remaining area, without chemical fertilisers, the yield decline could be 25% in case of rice and 60% in case of wheat. Even if we assume reduction of 20% for the country as whole, the reduction in food grain production will be about 25-30 million tonne from irrigated area of wheat and rice not covered by the organic sources which will pose a serious threat to the national food security”, the findings of the study said. Fe 311208

4*Almost half govt schemes fail to deliver the goods

The scheme to build houses for people with low income could meet only 10% of the quarterly target.

Major schemes which missed the targets include Rajeev Gandhi Grameen Vidyutkarana Yojana and Prime Minister’s Grameen Sadak Yojana. When it comes to rural water supply programme, more than 95% of the states missed the targets. In constructing houses for lower income groups, the target has been missed by more than 95% in the states. In assisting scheduled caste families, more than 80% of the states have missed the targets.
Other programmes that have missed the targets include welfare schemes addressing poverty alleviation, employment generation in rural areas, housing, education, family welfare and health, protection of environment and many other schemes having a bearing on the quality of life, especially in the rural areas.
In terms of overall performance in implementing social welfare programmes, the north eastern states fared worse with Assam, Nagaland, Manipur and Mizoram taking the last four positions. ET 301208

5*SNIPPETS: POLITICS- HIGHLY PROFITABLE BUSINESS

A cursory look at the affidavits filed by MLAs in the recent lot of assembly elections shows how dramatically their assets have grown. In Delhi, while the assets owned by candidates hoping to become MLAs rose from an average of Rs 24 lakh in 2003 to Rs 167 lakh in 2008. In Karnataka, the average assets for all MLA candidates rose from Rs 52 lakh in 2004 to Rs 203 lakh in 2008. Ms Mayawati herself has seen her wealth multiply manifold.