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Agrinews: February 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

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CONTENTS

SECTION TITLE PAGE

I HIGHLIGHTS 1

II AGRICULTURAL POLICY 3

III RICE 12

IV WHEAT 18

V MAIZE/COARSE GRAINS 26

VI PULSES 28

VII EDIBLE OILS AND OILSEEDS 30

VIII MILK 50

IX VEGETABLES/ ONION-POTATO 57

X SUGARCANE/SUGAR 71

XI INPUTS 93

XII OTHER AGRI COMMODITY/NEWS 106

XIII AGRICULTURAL COMMODITY/ FOOD PRICES 122

XIV AGRICULTURAL COMMODITY FUTURES 125

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.

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1

HIGHLIGHTS

Agricultural Policy

Farm costs panel pitches for stable agri-trade policy (BL 1/2/2013)

Centre calls states to discuss Food Bill on February 13 (ET 12/2/2013)

Amartya Sen for strengthening Food Security Bill (BL 17/2/2013)

Govt revises Food bill, sends to Law Min for vetting (ET 19/2/2013)

Rice

Rice procurement up 5% at 22.33 million tonnes (BL 29/1/2013)

Poor infrastructure hits rice exports from Kakinada (BL 24/2/2013)

New enquiries support rice market (Bl 25/2/2013)

Wheat

Wheat output at nearly last year’s record level (BL 28/1/2013)

Prolonged rains can cause damage to wheat crop: Experts (ET 6/2/2013)

Wheat procurement may rise 15% to touch record 44 mn tonne (BS 19/2/2013)

Wheat exports may rise by 23% to 8 million tonnes this year (ET 22/2/2013)

Edible Oils and Oilseeds

Oilseeds, soyoil rise on demand, dryness in Argentina (ET 30/1/2013)

Curb on edible oil exports lifted; nod for (BL 31/1/2013)

Industry wants 20% import duty on RBD palmolein, refined edible oils (BL

5/2/2013)

Rapeseed-mustard production to touch 71 lakh tonnes (ET 12/2/2013)

Rapeseed output seen up 20% on higher yield (BL 13/2/2013)

Milk

Bihar aims to emulate Gujarat model in milk procurement (BL 4/2/2013)

Dairy farmers in AP want to do an Amul (BL 5/2/2013)

No milk price hike by Amul after record procurement (ET 6/2/2013)

Vegetables -Onion / Potato

Onion exports jump 17% in April-December (BL 27/1/2013)

Potato prices in Bengal continue to decline on rising inflows (BL 29/1/2013)

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Clear imperfections in onion market, cartels exist: CCI study (ET 7/2/2013)

Onion prices double, stir up trouble in election year (FE 9/2/2013)

No proposal to ban onion exports: Government (ET 23/2/2013)

Sugar/Sugarcane

Sugar drops to 6-1/2 month low on poor demand, supply (ET 31/1/2013)

Cabinet panel okays 23.5% hike in sugarcane floor price (BL 31/1/2013)

Sugar output up 3% at 13.75 mt (BL 5/2/2013)

Government may raise excise duty after sugar decontrol (ET 11/2/2013)

Government appoints a taskforce to study cane productivity (ET 12/2/2013)

Agri Ministry favours hike in excise duty on sugar (BL 18/2/2013)

Inputs

Policy makers turn jittery as unsold fertiliser stocks pile up (BL 27/1/2013)

Seed exports may double in next 2-3 years (BL 11/2/2013)

Other Agricultural Commodities/News

Foodgrain output may touch 250 mt on better Rabi harvest (BL 28/1/2013)

Allocate 25 per cent Rashtriya Krishi Vikas Yojana funds for allied farm sector:

Sharad Pawar to states (ET 6/2/2013)

Rs 52,000 cr farm loan waiver scheme a big financial scandal? (ET 7/2/2013)

India's foodgrain export likely to be $40 billion in 2012-13 (ET 10/2/2013)

Agricultural Commodities Futures

Sugar futures at 6-mth low on poor spot demand, ample supplies (ET 1.2.13)

Potato futures fall 1.04 per cent on reduced offtake (ET 7/2/2013)

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AGRICULTURAL POLICY

Farm costs panel pitches for stable agri-trade policy (BL 1/2/2013)

The Commission for Agriculture Costs and Prices (CACP) has pitched for a stable, long-

term agri-trade policy that will regulate exports and imports taking recourse to tariff

measures, not quantitative restrictions.

In a discussion paper on “Farm Trade: Tapping the Hidden Potential,” the CACP Chairman

Ashok Gulati said a stable and liberal trade policy with moderate duties of 5-10 per cent

would go a long way in promoting agricultural growth.

MONITORING PRICE MOVEMENTS

The guiding principles of such a policy should be the alignment of domestic and

international prices along long-term trends, while guarding against sharp spikes and troughs.

When global prices fall below a pre-identified triggers, higher import duties may be

imposed, and when the world prices move above the trend line, an export may be imposed

on a calibrated basis, the paper said.

The key to implementing such a policy is to continuously monitor domestic and

international price trends and identify the trigger points for prompt action. This

responsibility can be entrusted to CACP, which tracks global prices on a regular basis.

CACP can advise the Government when to hike or lower import duties or when to export

duties, base on the global price movements, it said.

DUTY STRUCTURES

Further, the Commission can also help the Government in identifying the distortions in

import duty structures of a crop complex and streamline them to get efficiency gains.

Highlighting the potential to increase agri-trade with East and South East Asian nations, the

paper made a case for reviewing the exclusion of agri-products from the free trade

agreement-type arrangements with Association of South East Asian Nations and with Japan

and Korea.

India, a net agriculture exporter, had shipped agri-commodities worth more than $37 billion

in 2011-12 against imports of around $17 billion.

India has emerged as the world’s largest exporter of rice, displacing Thailand and Vietnam.

Besides, India has also emerged as the largest exporter of buffalo meat worth $3 billion

beating Brazil, Australia and the US.

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Commission for Agricultural Costs and Prices moots cap on wheat buy to avert

storage crisis (ET 8 /2/2013)

Ahead of the fresh harvest season, theCommission for Agricultural Costs and

Prices (CACP) has asked the government to cap wheat procurement in states which levy

taxes higher than 5% and offer a bonus over and above the minimum support price (MSP) to

farmers. "The government should defer open-ended procurement in such states.

It should cap the purchase to 75% of the last year's procurement to save the food

management system, which is in complete disarray," said Ashok Gulati, chairman, CACP, a

government body which advises the government on farm prices. He said state governments

have made grain procurement a source of income. "They levy high taxes on procurement to

fill their coffers.

But they don't invest in creating storage facilities, resulting in damage to grains. If the

Centre decides to cap the purchase, wheat production will come in line with demand," he

said. India wastes 21 million tonne of wheat every year, which is equivalent to the entire

production in Australia, according to an international study by theInstitution of Mechanical

Engineers.

If the government accepts the CACP suggestion, procurement in Punjab and Haryana will

be greatly reduced as they levy 14.5% and 11.5% state taxes respectively. Madhya Pradesh,

an emerging wheat producer, too will be affected although it levies a 4.7% tax. "It offers a

bonus of Rs100 a quintal to encourage wheat production which ultimately results into deficit

financing," Gulati said. The food ministry, which purchases wheat for public distribution, is

considering changes in its policy to limit grain purchase amid a rising food subsidy bill and

limited storage space.

Recently, food minister K V Thomas had met C Ranagarajan, chairman of the Prime

Minister's Economic Advisory Council, to discuss means to curb the procurement bill. "An

open-ended procurement is causing a huge burden on food subsidy, costs on storage,

preservation and carrying. We need around Rs1 lakh crore to carry out food procurement

and distribution exercise," said a senior food ministry official.

The food ministry purchases grains at the minimum support price (MSP) from farmers when

market prices go down. There has been an 80% increase in MSP from Rs750 a quintal in

2006-07 toRs1,350 a quintal in 2012-13, encouraging farmers to grow MSPsupported crops

like wheat and rice irrespective of local conditions. States are imposing higher mandi fee,

development cess and VAT to raise more revenue from this procurement exercise. "We are

proposing to have a uniform rate of statutory charges and other fee across the country to

neutralise the impact of tax revisions.

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This way we can budget our procurement cost irrespective of varying tax structure in

different states," he said. The official said wheat has seen a 11.8% rise in production

following a 25.29% increase in procurement from 2008-09 to 2011-12. Similarly, in 2006-

07, only 14.68% of total output of 75.8 million tonne was procured by government agencies

as against 38.79% of total production of 90.2 million tonne in 2011-12.

The government is skeptical about storage facilities ahead of the new harvest season, which

again promises a record production. The government is sitting on 34 million tonne (mt)

wheat stock and it is likely to procure another 40 mt wheat this season - up from last year's

purchase of 39 mt. 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 in

good condition for more than a few weeks.

"The condition would worsen if the government doesn't find buyers for 6.5 million tonne of

wheat allocated for open market sales. Grains should be removed immediately from

godowns to make way for fresh ones. How long can we keep on creating storage space amid

irrational and unending procurement?" asked the official.

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Scientists oppose Agri Ministry’s bid to link GM crops with food security, writes to

MoEF (BL 10/2/2013)

Over 150 scientists have sought the intervention of the Ministry of Environment and Forests

(MoEF) to counter the Ministry of Agriculture’s affidavit in the Supreme Court that

genetically modified (GM) crops were essential for food security.

In a letter to the Environment Minister, Jayanthi Natarajan, the scientists said food security

had no link with yield increases. They presented data from various countries to support their

argument.

“Food security is not just about yield increases, but poverty, livelihoods and access for the

vast majority of the people. We have buffer stocks, mountains of grain rot and yet 320

million people go hungry in the country. So, it’s not a supply side issue, as is made out to be

by the Agriculture Ministry,” said Kavita Kuruganti, Member, Coalition for a GM-Free

India, at a press conference to observe Food Safety Day, marking three years of the

moratorium on Bt Brinjal in India.

Calling for non-transgenic solutions to increase productivity, such as the rice-intensification

programme, Kuruganti said there were molecular approaches to developing newer seeds and

India should invest in them instead.

On why open-field trials were being opposed, she said organisms that could propagate

themselves in open fields were dangerous without proper safeguards in place and strict

implementation of regulatory measures. “We are not opposed to research trials. But

something as complex as transgenics should be tested in greenhouses with simulated

conditions such as drought etc,” Kuruganti added.

In the letter to Jayanthi Natarajan, the scientists pointed out the flaws in the Agriculture

Ministry’s stance that the apex court’s Technical Expert Committee (TEC) had

recommended a 10-year moratorium on agri-biotech research.

“The Ministry has in its narrow definition included only GM crops as agriculture

biotechnology. The TEC is specific; it is about GM crops and trees, and not about other

biotechnologies,” says the letter.

Also, TEC has not recommended a 10-year moratorium on field trials of all GM crops, but

has specified “Bt GM crops, HT GM crops and crops for which India is centre of origin or

diversity”.

“Contrary to the assertions of the Ministry of Agriculture, it is in fact the Indian public

sector GM crop research that will continue in a scenario where the TEC recommendations

are accepted,’ said the letter.

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The letter urged Jayanthi Natarajan to “proactively” adopt the sound recommendations of

the TEC in this regard.

Centre calls states to discuss Food Bill on February 13 (ET 12/2/2013)

With a Parliamentary panel suggesting further pruning of the Food Bill, the Centre has

called a meeting of state food ministers on Wednesday for detailed consultations once again

before taking the revised version to the Cabinet.

The Food Bill, which was introduced in the Lok Sabhain December 2011, aims to give legal

right over subsidised foodgrains to two-third of the country's population.

In its latest report, the Parliamentary panel has suggested drastic changes in the Bill, saying

that all the beneficiaries be provided 5 kg of wheat and rice per month at a uniform rate of

Rs 2 and Rs 3 per kg.

"It (Conference) will discuss proposals made in the Bill and further action for finalisation of

the Bill in the light of recommendations of the Parliamentary Standing Committee," an

official release said.

At present, below poverty line (BPL) families effectively get 7 kg of wheat and rice at Rs

4.15 and Rs 5.65 per kg per month.

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/kg for wheat and Rs 10/kg for rice.

The Parliamentary panel's recommendations are generally not binding on the government.

However, if accepted, the recommendations will benefit the general population in both price

and quantity, while BPLmember will get lesser quota than what was proposed in the original

bill.

Amartya Sen for strengthening Food Security Bill (BL 17/2/2013)

Nobel Laureate Amartya Sen on Friday said that the tabling of the Food Security Bill in

Parliament was “a big achievement”, but also drew attention to its shortcomings and called

for it to be strengthened, especially with regard to child entitlements.

He was participating in a panel discussion on ‘Hunger and Nutrition: Time to Act’ held at

IIT- Delhi, with Montek Singh Ahluwalia, Deputy Chairman, Planning Commission,

Shantha Sinha, Chairperson, National Commission for the Protection of Child Rights,

Reetika Khera of the IIT faculty and NREGA activist, a Right to Food Campaign release

said.

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Addressing an audience of about 1,500 students and faculty, Sen recalled the critical

importance of early childhood for lifetime health and well-being and flayed the fact that

children’s entitlements under the Bill were weak.

Children’s rights

He pointed out that there were powerful lobbies for diesel and LPG subsidies, and even for

exemptions of Custom duties on gold imports, but not for children’s rights.

He said recent the Supreme Court orders on mid-day meals and the Integrated Child

Development Services had made an important contribution to the health and nutrition of

children. The Bill, he felt, should not dilute these entitlements in any way.

Malnutrition

Ahluwalia agreed that malnutrition among children was indeed a national shame, as the

Prime Minister said a year ago.

Also a matter of shame, he said, was the state of nutrition statistics, with the latest

comprehensive data on child health and nutrition going back to the Third National Family

Health Survey, conducted in 2005-06.

He stressed the need for interventions related to immunisation, breastfeeding, drinking water

and sanitation.

The Plan panel Deputy Chairman also said that the Government was committed to a public

distribution system that provided access to subsidised grains.

Food Bill costs

Anticipating concerns about the costs of the Food Bill, he said: “I don’t think the

Government or anyone else should say that we can’t afford the food subsidy because of the

fiscal deficit… that would be actually dishonest.’

He added, however, that funding the Bill might call for a reduction of other expenditure.

Govt revises Food bill, sends to Law Min for vetting (ET 19/2/2013)

Government has revised the Food bill and now proposes to give legal right to over 5 kg of

foodgrains at Rs 1-3 per kg per month to about 70 per cent of the population as suggested by

the Parliamentary panel, Food Minister K V Thomas said here today.

A revised bill has been sent to the Law Ministry for vetting, after which it will be moved to

the Cabinet, he said.

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In the original bill, introduced in December 2011 in theLok Sabha, the government had

proposed giving 7 kg of wheat (Rs 2/kg) and rice (Rs 3/kg) per month per person to 'priority

households', while at least 3 kg of foodgrain at half of the government fixed support price

was proposed for the 'general' households.

"We have accepted most of the recommendations of the Parliamentary panel. The revised

bill has been sent to the Law ministry for vetting. After we receive its comments, we will

place the Bill before the Cabinet," Thomas told PTI.

The Minister said the government would not withdraw the existing bill and rather move

amendments to incorporate changes as suggested by the panel and some states.

"We have accepted panel's recommendation to do away with priority and general

classifications of beneficiaries and provide uniform allocation of 5 kg foodgrains (per

person) at fixed rates to 67-70 per cent of the country's population," Thomas said.

The Minister said that 2.43 crore poorest of poor families under the Anthodaya Anna

Yojana (AAY) would continue to get supply of 35 kg foodgrains per month per family.

According to sources, the Food ministry has revised the Bill after consultation with UPA

chairperson Sonia Gandhi, who has strongly favoured higher allocation for AAY people.

The Food ministry is working closely with the Planning Commission to finalise the criteria

for excluding 30-33 percent of population from the benefits of the Bill, he added.

"The Planning Commission's formula for exclusion of population will be given to the states.

On that basis, states will be allowed to include or exclude beneficiaries," Thomas said,

adding the Centre has taken into account the state governments' views in the revised Bill.

Tackle food security in 'fundamental ways', activists tell Pawar (BL 20/2/2013)

Food rights organisations, under the aegis of the Right to Food Campaign (RFC), have

written to Agriculture Minister Sharad Pawar urging him to tackle food security in more

‘fundamental ways’ rather than link it with genetically modified (GM) crops.

At a press conference here on Tuesday, RFC released the letter signed by hundreds of

organisations, including National Advisory Council member Aruna Roy, which flayed the

Agriculture Ministry’s stance in an affidavit to the Supreme Court calling it a “trivialisation

and mockery of the grave situation of hunger and malnutrition that exists in India”.

“In this affidavit, your Ministry argued that GM crops and their field trials were needed for

India’s food security, in addition to wilfully choosing to misinterpret the sound

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recommendations of the Technical Expert Committee set up by the Supreme Court,” says

the letter.

Maintaining that food security was not “a simplistic supply-related matter, as our paradox of

overflowing godowns, record buffer stocks and the hungry millions showcases”, the letter

said it was unfortunate that while the discourse around food security and hunger had become

more nuanced the world over, the Indian Government chooses to be “unscientific” in its

outlook.

It urged the Agriculture Ministry not to “come in the way of much-needed improvements in

the transgenics scene in India,” reminding it of the recommendations made by the Technical

Expert Committee.

The letter said it did not make sense that the Agriculture Ministry, instead of focusing on

strengthening local food production and distribution, was diverting valuable investments

towards “controversial, unproven techno-fixes.”

Agriculture status sought for warehouses (BL 25/2/2013)

The Government is attaching top priority to achieving food security, with the Planning

Commission estimating India’s foodgrain production to touch 272 million tonnes (mt)

during the 12th Plan. The National Food Security Bill has proposed subsidised foodgrains to

at least 75 per cent of the country during the Plan Period.

A vital input to this mission is having in place a network of modern, scientifically managed

warehouses and cold storage facilities. However, India is currently facing a yawning gap in

this segment. The projected supply gap for storage of all agri-commodities and the required

chemical fertilisers is estimated to touch 120 mt by this year and 123 mt by 2014-15.

The total covered storage capacity with the public sector, including Food Corporation of

India and Central Warehousing Corporation, and co-operatives is about 60 mt. But of this,

27 mt is owned by co-operatives, most of which is not used for storage of foodgrains.

Clearly, the private sector has to be encouraged to bring in investments in this sector. But,

there are some deterrents being faced by the 10-odd players in this segment, with the

industry hoping some incentives in the Budget.

“A minimum investment of Rs 5,000 is required for one tonne of capacity and the payback

time is 10-12 years,” Aditya Bafna, Executive Director of Shree Shubham Logistics, a

subsidiary of Kalpatru Power Transmission Ltd, points out.

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The industry is thus, seeking an agriculture status for this segment so that it could access

bank loans below the base rate.

It is hoping that term lending institutions such as Nabard, which has been provided with low

cost dedicated funds for supporting this sector, should be allowed to lend directly.

“We also feel that capital subsidy under Agriculture Marketing Infrastructure, Grading and

Standardisation must be revised upward to 30 per cent of the total project cost and the

ceiling of Rs 50 lakh be revised to Rs 3 crore so that larger facilities can come up,” Bafna

said.

The Budget should address issues such as availability and usage limits and certain reforms

in the Agriculture Produce Market (Regulation) Act.

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RICE

Rice procurement up 5% at 22.33 million tonnes (BL 29/1/2013)

Rice procurement by Government agencies has crossed the half-way-mark of the targeted 40

million tonnes (mt) for the kharif marketing season 2012-13 starting October.

Procurement as of end-January stood at 22.33 mt, up by 5 per cent over that in the

corresponding period last year at 21.17 mt.

Procurement has been higher in Punjab, Haryana, Chhattisgarh and Odisha, while States

such as Andhra Pradesh and Uttar Pradesh have registered a decline.

Procurement of paddy by the State agencies has been completed in the major rice growing

States with the exception of Andhra Pradesh, Bihar and Odisha.

Punjab has procured a total of 8.55 mt of rice this year against last year’s 7.73 mt, a growth

of 10.6 per cent. Chhattisgarh has procured 3.76 mt (3.23 mt in the corresponding last year),

while Haryana has registered a 25 per cent increase in rice procurement at 2.5 mt (1.99 mt).

In Odisha, rice procurement is up 55 per cent at 1.68 mt (1.08 mt). However, in Uttar

Pradesh, the procurement is down 38 per cent at 1.25 mt (2.01 mt)

The Government agencies had procured 35 mt of rice in the 2011-12 kharif marketing

season and are targeting 40 mt in the current season.

Rice stocks in the Central Pool as on January 1 stood at 32.22 million tonnes, more than

twice the buffer and strategic reserves of 13.8 million tonnes required at this point in time.

Similarly, wheat stocks in the Central Pool stood at 34.38 million tonnes, about thrice the

buffer and strategic reserve required at this point in time. The total food grains in the Central

pool stocks as on January 1 stood at 66.60 mt, more than twice the buffer and strategic

reserve requirement at this point in time.

Haryana’s rice output at all-time high of 39.76 lakh tonnes (BL 30/1/2013)

Haryana has recorded all-time high rice production at 39.76 lakh tonnes during 2012-13

seasons despite scanty rainfall last year.

The state recorded its highest-ever rice production of 39.76 lakh tonnes, since the inception

of the state in 1966, an official spokesman of Haryana Agriculture Department said here on

Wednesday.

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This has been achieved despite the state receiving 36.8 per cent less rainfall as against the

normal rainfall from May to September, 2012, he added.

In case of coarse rice, 23.54 lakh tonnes of the crop were produced with a productivity of

40.03 quintals per hectare in an area of 5.88 lakh hectares has been achieved.

Similarly, the production of basmati rice was also achieved at 16.22 LT with a productivity

of 25.87 quintals per hectare in an area of 6.27 lakh hectares which was also the highest

since 1966-67.

He said that as statistics of area, average yield and production of all Kharif crops 2012-13

has been received, the state has made some other achievements in the agriculture sector.

The productivity of kharif foodgrains in 2012-13 is 2,819 kg per hectare, which is the

highest so far.

He said the state also achieved productivity of cotton at 681 kgs per hectare (Lint) and the

total production of cotton was 23.84 lakh bales.

Similarly, the productivity of Bjara was 1,925 kg per hectare and that of maize 2,556 kg per

hectare. Also, the productivity of Sugarcane during 2011-2012 was 73,253 kg per hectare

which is the highest since 1966-67.

He said all these achievements could only be made possible as the state government

supplied 254 lakh units of more electricity per day to farm sector from May to September,

kharif 2012-13 as against 2011-12.

Bihar: Officials asked to camp in districts for paddy procurement (BL 28/1/2013)

Bihar Chief Minister Nitish Kumar on Monday directed officials in-charge of districts to

camp in areas under their jurisdiction to supervise expeditious paddy procurement to meet

the target of 30 lakh metric tonnes during 2012-13 kharif season.

Presiding over a review meeting at his official residence, Kumar took a dim view of

procurement of only 2.49 lakh metric tonnes paddy till date as against the 30 lakh metric

tonne target and directed the officials to set up procurement centres at all places where they

are yet to come up, an official release said.

He told officials the credit limit of Primary Agriculture Co-operative Societies (PACSs)

should be increased so that these cooperatives could procure more paddy from the farmers.

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The Principal Secretary (Food and Consumer Protection) Shishir Sinha informed the chief

minister that the State Food Corporation would be asked to clear its outstanding dues to the

cooperative department and the money could be used for raising the credit limit of PACSs.

Food and Consumer Protection Minister Shyam Rajak, Cooperative Minister Ramadhar

Singh, Chief Secretary A.K. Sinha and other senior officials were present at the meeting.

Punjab to sow new short duration Basmati variety next kharif (FE 18/2/2013)

Punjab will be the first state to commence cultivation of new the short duration variety of

Basmati rice from the next Kharif season.

The new variety is expected to give boost to export potential of aromatic rice from the

country.

Developed by scientists of Indian Agricultural Research Institute (IARI), under the ministry

of agriculture, the new variety referred as 'Pusa Basmati 1509' takes about 115-120 days to

mature against 145-150 days for 'Pusa 1121', which constitute a major chunk of India's

aromatic long grain rice exports.

Besides, the new variety does not shatter in case of any delay in harvesting and has a

superior grain quality.

An agriculture ministry official said following the meeting of All India Rice Workers Group

meeting, which consist of rice breeders and other concerned officials, in April, the ministry

will notify the variety '1509' as Basmati.

“Because of lesser duration of crop, the new variety would help farmers in saving atleast 5-6

irrigations and ensure better yield,” KV Prabhu, Head, Division of Genetics, IARI told FE.

Prabhu said the short duration variety would help Punjab farmers in reducing the ground

water usage significantly by using monsoon rains.

In Punjab and Haryana, groundwater has depleted to alarming level because of excessive

usage in growing paddy and wheat. This has forced the two states to ban usage of ground

water in the summer month of June for rice sowing so that monsoon rains could be used in

July.

Exporters said the new variety are definitely going to replace large areas under Pusa 1121,

which has more than 70% share in India's Basmati rice exports market.

During the trial phase, yield wise, the '1509' variety has given around 6.5 tonne per hectare

against around 4.5 and 2.5 tonne reported for the widely grown 1121 and traditional Basmati

varieties respectively.

“Through the field trial we have witnessed that new variety gives better grain quality and

yield by using less water which would help the country in increasing exports,” Vijay Setia,

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former president, All-India Rice Exporters Association and leading exporter of Basmati rice

said.

India's Basmati rice export is set to cross Rs 16,000 crore mark duing current fiscal. The

country shipped aromatic and long grained rice worth Rs 15,450 crore during 2011-12.

Pusa Basmati 1121 – also developed by IARI – was released for commercial cultivation in

2003. This variety presently occupies more than 1.5 million hectare of Basmati rice grown

area estimated at around 2.6 mh.

An official with Agricultural & Processed Food Products Export Development Authority

(APEDA) said India’s Basmati rice exports rose sharply following the introduction of Pusa

1121 variety in the global markets. Pusa 1121 has a huge demand from mostly middle-east

countries such as Iran and Saudi Arabia.

Last six years have been watershed years as far as India's basmati rice export goes. From a

modest Rs 2792 crore of aromatic rice exports during 2006-7, the exports have increased by

many times and are set to cross Rs 16,000 crore mark during the current fiscal.

Basmati rice is mostly grown in Punjab, Haryana, Western Uttar Pradesh and Uttarkhand.

India exports Basmati rice to middle-east countries mostly Iran, Saudi Arabia and UAE,

European Union and the US.

Saudi Arabia and Iran account for more than 60% of India's total Basmati rice exports.

Chinese scientist questions Indian's world record rice harvest (ET 22/2/2013)

Piqued over loosing out to an Indian farmer who beat his world record by harvesting

22.4 tonnes of rice per hector, a top Chinese scientist known as the "father of hybrid rice"

has questioned the feat, terming it as "fake".

It is "120 per cent fake", Yuan Longping, who held the record earlier by growing 19.4

tonnes of rice in 2011, was quoted as saying by the Hong Kong-based South China Morning

Post.

"I introduced the intensification method to China myself. It could increase yields by 10 to 15

per cent in low-yield fields, but it's not possible for fields that are already producing

relatively high yields," Yuan said.

"He (Indian farmer) said they had lots of rain and little sunshine last year, but high yields

would be impossible without adequate sunshine," Yuan told official China News Service,

according to the Post.

Yuan was reacting to Sumant Kumar's success story published by the British

newspaper Guardian which carried a feature on the achievement of the young farmer from

Nalanda district of Bihar last year by using a method called System of Rice Intensification

(SRI).

Yuan said judging by photos, the harvested plants appeared short and couldn't possibly

16

produce high yields.

"Good soil is the basis of high-yield rice," Yuan said, adding that the soil where Kumar

farmed was apparently inferior in quality.

Yuan also questioned the way India verified Kumar's claim. "How could the Indian

government have confirmed the number after the harvesting was already done?" he asked.

"If Kumar is able to repeat his success next year, I will be glad to examine the results in the

field personally," Yuan said.

Poor infrastructure hits rice exports from Kakinada (BL 24/2/2013)

As much as four million tonnes rice have been exported till date from the old (anchorage)

port here after the lifting of ban on non-basmati rice exports, in spite of the poor condition

of roads and other infrastructure, and it could have been much more, with better facilities,

according to local rice exporters and traders.

They expressed the opinion at a one-day seminar on strategic export management, organised

by the Cocanada Chamber of Commerce in association with the Federation of Indian Export

Organisations (FIEO) here.

D. Surya Rao, President of the chamber, said the approach roads to the old port were in a

very poor shape and there was also acute paucity of jetties at the wharf to expedite rice

exports. As a result, the trade was paying huge demurrages.

He said the issue should be addressed immediately, as it would worsen in the monsoon

season. Road works at least should be completed before that.

S.B.S. Reddy, Joint Director-General of Foreign Trade, said the economic recession in the

West had adversely affected our exports and the current year’s target of $345 billion may

not be achieved and in fact the country may not even touch last year’s export level of $303

billion.

“Therefore, the export performance of Kakinada is very laudable in these recessionary

times. The State Government, in charge of the port, would have to address the

infrastructural problems.

But we will do everything possible to make it easy for the exporters procedurally,” he

promised.

17

When asked about the service tax on rice exports, he said the exporters could claim refund

from the department.

East Godavari Collector Neetu Prasad said earlier a proposal had been sent to the State

Government seeking Rs 5 crore for improvement of approach roads to the port, but it had

not been sanctioned.

She asked the port officials to prepare a fresh proposal for Rs 30 crore for the purpose and

she would try to secure the funds from the State or Union Government under various

schemes.

K.R Nath of Indus Business Academy (Bangalore), K. Unnikrishnan, Director FIEO, and

several exporters addressed the open house organised on the occasion.

18

WHEAT

Wheat output at nearly last year’s record level (BL 28/1/2013)

Wheat output is likely to be close to last year’s record level of 93.90 million tonnes and

conducive weather in the next two months is crucial for better yields, Agriculture Secretary

Ashish Bahuguna said on Monday.

He also said that the final food grains production estimate for last year would be revised

upward by less than one per cent from the earlier estimated all-time high of 257.44 million

tonnes.

“I am hopeful of achieving last year’s wheat output level. Gains in crop yields would

depend on good weather in February-March,” Bahuguna told reporters on the sidelines of an

event here.

The country was able to achieve a bumper wheat crop in the 2011-12 crop year (July-June)

as crop yields rose due to conducive weather during February and March, he added.

Asked if production would be affected due to a lag in wheat sowing so far, Bahuguna said,

“Sowing of major rabi crops including wheat is almost over now. Wheat area is down by 0.4

lakh hectare as compared to last year. If you compared with average acreage in the last five

years, the area coverage is higher by 4.1 lakh hectares. There is nothing to worry”.

According to official data, area sown under wheat has declined to 294.98 lakh hectares so

far in the current rabi season, from 295.93 lakh hectares in the year-ago period.

Rabi (winter crop) sowing starts from October onwards and harvesting begins from

February-end. The government has kept a conservative production target for wheat at 86

million tonnes for the current year.

On other rabi crops like coarse cereals, pulses and oilseeds, the Secretary said, “Sowing of

most rabi crops is over now. Rabi production looks as good as last year”.

States like Maharashtra, Andhra Pradesh and Tamil Nadu are likely to be affected as area

under rabi crops are lower, while Karnataka, Rajasthan and Gujarat (which suffered drought

during Kharif season) are doing well, he said.

During the rabi season of the 2011-12 crop year, the country had produced a record 127.50

million tonnes of foodgrains. The target for the current year’s rabi has been kept at 120.5

million tonnes.

19

As far as pulses and oilseeds are concerned, Bahuguna said: “We are doing well, especially

in chickpea (chana) and mustard seed. Frost damage in mustard seed is insignificant”.

Sowing of crops like wheat, rice, maize and oilseeds like soyabean are taken up well by

farmers as market for these commodities are developed, he said.

However, the same is not the case with minor oilseeds like sunflower and cereals like jowar

and bajra, he observed.

Overall, rabi crops have been sown in 592.02 lakh hectare so far compared to 591.56 lakh

hectare at this time last year.

Wheat rules steady on moderate purchases (BL 6/2/2013)

Moderate buying kept wheat and flour prices unaltered on Tuesday. Steady domestic

demand and supply are keeping wheat and flour prices stable, said market sources.

Radhey Shyam, a commodity expert, told Business Line that since the demand matched

supply, prices were unchanged. In the absence of any major market moving factors in the

market, dara and flour prices have been ruling firm since last week and may continue to rule

around current levels for the next few days, too, he added.

Inconsistent rainfall since Sunday night has also disturbed the trade.

In the physical market, Dara wheat quoted at Rs 1,520-1,525 a quintal. Around 500 quintals

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

Mill delivery was at Rs 1,520 a quintal while delivery at the chakki was Rs 1,525 a quintal.

On the National Commodity and Derivatives Exchange, wheat for February contracts

improved by Rs 12 and traded at Rs 1,525 a quintal; it had touched a high at Rs 1,527 a

quintal earlier in the day. March contracts decreased by Rs 8 to Rs 1,449 a quintal. While,

wheat spot prices on the exchange increased by Rs 10 and traded at Rs 1,510 a quintal.

February contracts improved on buying interest. Demand for Indian wheat is strong in South

Korea, Thailand and Philippines where Indian wheat is largely used for animal feed.

South Korea's Major Feedmill Group purchased 110,000 tonnes of wheat from India last

week.

Flour Prices

Following a steady trend in wheat, flour prices too ruled unaltered and quoted at Rs 1,750 a

quintal. Similarly, Chokar ruled flat and sold at Rs 1,370-1400 a quintal.

20

Prolonged rains can cause damage to wheat crop: Experts (ET 6/2/2013)

With moderate to heavy rains lashing the northern region, farm experts today warned of

damage to wheat crop if downpour accompanied by high speed winds prolongs for the next

couple of days.

With farmers keeping fingers crossed, wheat experts advised winter crop growers in Punjab

and Haryana to drain out excess water from the fields in order to prevent crop from being

lodged and getting yellowish.

"If rains prolong then there could be chances of (attack of) yellow rust (fungal disease on

wheat crop)," Punjab Agricultural University, Director Research, S S Gosal said today.

Yellow rust is a fungal disease which attacks the leaves of wheat crop by forming yellow

stripes and affects their photosynthesis activity that causes shrivelling of grain size.

The incidence of attack of fungal diseases was traced in Ropar, Nawanshahar (in Punjab)

and Ambala (in Haryana) last month.

Karnal-based Directorate of Wheat Research Project Director Indu Sharma said the rains

accompanied by strong winds could prove "damaging" for early sown wheat variety.

Moderate to heavy rains lashed various parts of Punjab and Haryana during last 24 hours.

Maximum rainfall activity was observed in Rewari (48.7 mm), Gurgaon (25.3 mm), Sonepat

(52.1 mm), Panipat (27.5 mm), Karnal (23.8 mm), Kapurthala (50 mm), Jalandhar (14 mm),

Gurdaspur (35 mm) and Patiala (13.6 mm).

Meteorological Department has predicted rains during next 48 hours.

However, there was no report of any damage to wheat crop received so far caused by

continuous rains in wheat growing areas of Punjab and Haryana, agricultural officials said

here today.

"We have not received any report of damage to wheat crop because of rains in any part of

the state (Haryana)," an official of the Haryana Agriculture department said here.

But farmers were worried over continuous rain lashing the region and said that it could

flatten the crop. "Excess rain will damage particularly the early sown crop as strong winds

and rains have the potential to flatten the crop," Karnal based farmer V K Kapoor said.

21

Cabinet to consider extra wheat exports on Thursday to cut stocks at warehouses (ET

7/2/2013)

Cabinet is expected to discuss allowing extra wheat exports on Thursday, Farm

Minister Sharad Pawar told reporters on Wednesday, as part of efforts to cut stocks at

warehouses to make room for the new season crop.

Recent rains have improved wheat productivity prospects, Pawar said, but have hit oilseed

crops, he added, without giving details.

Farmers in India, the world's biggest wheat producer after China, are likely to harvest a

bumper crop in 2013, its sixth in a row to exceed demand.

After lifting a four-year-old ban on wheat exports by private traders in 2011, last year the

government approved 4.5 million tonnes of exports from its overflowing warehouses.

On Jan. 31, Food Minister K. V. Thomas told Reuters that the government was considering

additional wheat exports.

Govt may allow export of 5 million tonnes more wheat (BL 8/2/2013)

Private trade may soon get access to the wheat stored in Food Corporation of India (FCI)

godowns for exports, as the Government plans to allow an additional shipment of 5 million

tonnes (mt) soon.

The Government, the biggest wheat stockholder with an estimated 30.8 mt as on February 1,

is under pressure to create storage space for fresh produce as the country looks forward to a

bumper harvest for the third year in a row. As on January 1, the current central pool stocks

were close to thrice the prescribed buffer and strategic reserves of 11.2 mt.

EXPORTS

Sources said the Food Ministry had circulated a note for inter-ministerial discussions on

allowing exports of an additional 5 mt for which the Union Cabinet is expected to set the

price.

The Government has, so far, allowed exports of 4.5 mt from the Central pool stocks mainly

by State-run trading corporations.

The State entities, such as PEC, STC and MMTC, have tendered about 2.5 mt so far and

have actually shipped out 1.6 mt.

Private trade, which largely sources from the open market, has exported about 2 million

tonnes. Total wheat exports from India since October 2011 till date stand at around 3.6 mt.

22

BUMPER CROP LIKELY

India has emerged as one of the largest exporters of wheat this year and the bulk of it has

been shipped to Korea and Taiwan, as also to neighbouring countries such as Bangladesh,

Sri Lanka and Yemen.

The country, which produced close to 94 mt last year, aided by a conducive climate, expects

to harvest a similar crop in the current year as acreage is almost similar to that of last year.

However, the temperature during February and March would decide the crop size.

The Government, which hiked the minimum support price for wheat by Rs 65 a quintal to

Rs 1,350, expects to buy about 42 mt in the rabi marketing season 2013-14.

Food ministry's move to cut wheat prices rejected (ET 15/2/2013)

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday turned down the food

ministry's proposal to cut wheat prices sold under the open market sales scheme (OMSS) to

biscuit makers, flour millers and other bulk buyers.

According to sources, the finance ministry opposed moves to shell out any further subsidy

for selling wheat to flour millers. The food ministry had proposed a cut in wheat prices in a

bid to offload excess grains from government godowns. The government is in a hurry to

create space in its silos for fresh procurement starting April this year.

"We had allocated 6.5 million tonne for OMSS. Of which, the government could find buyers

for hardly 3 million tonne. For faster offtake, we proposed to lower the prices but the CCEA

opposed the move," said a food ministry official. The ministry had proposed to sell

thegrain at a price covering the minimum support price of Rs 1,285 a quintal plus freight

charges for supplying from Food Corporation of India godowns at Ludhiana.

This would have lowered the price by at least Rs 2 a kg. At present, prices vary between Rs

1,404 and Rs 1,550 a quintal depending on the extent of state levies.

The CCEA, however, extended the period of OMSS scheme, which was expiring this

month. Now, bulk buyers can purchase wheat from government godowns till March this

year. The government is sitting on a huge pile of wheat stock of around 34 million tonne.

"The condition is alarming as the government is likely to procure around 40 million tonne of

wheat this season, if one looks at 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.

23

Traders sell up to 750,000 tonnes new season wheat: Sources (ET 19/2/2013)

Traders have jumped in to take advantage of attractive global prices by sealing deals to

export up to 750,000 tonnes of the new season wheat, three trade sources said on Tuesday,

kicking off overseas sales for the harvest to begin in March.

While private traders have struck deals for 500,000-750,000 tonnes at $295-$300 a tonne

free on board, the government is still dragging its feet on allowing extra exports from its

overflowing grain bins to make room for this year's crop.

Farmers are expected to harvest another bumper crop this year after a record 95 million

tonnes in 2012. Domestic demand runs at around 76 million tonnes.

The private trade contracts are for April-June shipments for buyers in South Korea, Taiwan,

Thailand, Malaysia, Indonesia and Vietnam, and 80 percent of the contracted quantity is

feed wheat, one of the sources said.

The global trade in feed wheat is around 30-40 million tonnes a year and total wheat trade is

about 140 million tonnes.

All three New Delhi-based sources work at the Indian units of global trading companies and

are actively involved in these deals.

Wheat procurement may rise 15% to touch record 44 mn tonne (BS 19/2/2013)

The government's wheat purchase is expected to touch 44 million tonne in the 2013-14

marketing year starting April, surpassing last year's record of 38.1 million tonne, Food

Minister K V Thomas said today.

This year, wheat procurement is likely to increase by over 15 per cent despite marginal fall

in output by 2.6 million tonne to 92.3 million tonne. Procurement of wheat, a major rabi

crop, begins from April and continues till June.

"We are targeting to procure 44 million tonne of wheat this year, about 5.9 million tonne

higher than the last year," Thomas told PTI.

These estimates were finalised in a meeting of the State Food Secretaries yesterday, he

added.

Anticipating higher procurement, Thomas said the government is gearing up to buy wheat at

the minimum support price (MSP) of Rs 1,350 per quintal from farmers by increasing

purchase centres from Rs 10,000 to 12,000.

In order to ensure immediate payments to farmers on delivery of wheat, the Minister said

24

that the states have been asked to make available adequate funds for procurement agencies

and farmers should be paid via cheque.

In view of problem faced by some states regarding availability of packaging material during

last year, states have been asked to ensure adequate availability in advance, he added.

India may buy record 44 million tonnes of wheat this year (BL 20/2/2013)

The Government expects to procure a record 44 million tonnes (mt) of wheat in the current

rabi marketing season starting April. This is about 6 mt or 15 per cent more than last year’s

38.14 mt.

The wheat procurement estimates were finalised at a meeting of State Food Secretaries on

Monday. The country is expected to produce 92.3 mt of wheat this year against last year’s

record output of 94.88 mt.

For the current year, the Centre has declared a minimum support price of Rs 1,350 a quintal,

up from last year’s Rs 1,285. Sudhir Kumar, Secretary, Food and Public Administration,

requested the Food Corporation of India and State procurement agencies to proactively open

adequate purchase centres with sufficient manpower. The meeting also reviewed storage

plans and discussed other issues such as the availability of credit to State agencies involved

in procurement, setting of purchase centres and availability of adequate packaging material.

The Food Corporation was directed to computerise information about the number and

locations of its agencies. All States have been asked to set up a control room to update daily

information on the progress of procurement on a Web portal.

Wheat exports may rise by 23% to 8 million tonnes this year (ET 22/2/2013)

Wheat exports are likely to grow by 23 per cent to 8 million tonne in the marketing year

starting April due to strong global prices and surplus domestic supply, according to a

report.

25

The country had shipped 6.5 million tonne wheat last year, with maximum stock exported

from government godowns. Ban on wheat exports was lifted in September 2011, but

shipments took off strongly only after August 2012.

"Assuming continued exports of wheat from government stocks and export price parity for

Indian wheat vis-a-vis other origins, wheat exports during 2013-14 marketing year are

forecast to increase to 8 million tonne," the US Department of Agriculture (USDA) said in

its latest report.

Of this, 5 million tonne wheat will be from government side, while 3 million tonne will be

sourced from open market by private traders, it said.

Indian wheat has been very price competitive in the global market, particularly after the

government allowed exports of wheat from its godowns in July 2012, it added.

According to the USDA, exports of government-held stocks are likely to continue unabated

this year due to tight storage facilities, while the government will be under tremendous

pressure to clear stock to accommodate the new crop.

"The government is likely to continue to liquidate additional wheat stocks in the export

market in 2013-14 and possibly 2014-15" also because current international prices are

significantly higher than the domestic prices, it said.

However, any significant weakening of global wheat prices may adversely affect export

prospects, USDA cautioned.

Despite the government's efforts to offload wheat in the domestic and export markets,

government-held wheat stocks on February 1, 2013, were estimated at 30.8 million tonne,

compared to 23.4 million tonne in the year-ago period.

Wheat stocks in government godowns have piled up due to record production in the last two

consecutive years. This year too, the country is set for a near-record wheat harvest of 92.3

million tonne on strong planting and favourable growing conditions.

26

Maize/ Coarse Grain

Maize price moves up in thin trade (FE 28/1/2013)

In thin trade, maize prices moved up by Rs 10 per quintal in the wholesale grains market

today on fresh demand against restricted arrivals from producing regions.

However, other grains moved in a narrow range in restricted activity and settled around

previous levels.

Marketmen said fresh demand against limited arrivals from producing regions mainly

influenced maize prices.

In the national capital, maize rose by Rs 10 to Rs 1,510-1,540 per quintal.

The following are today's quotations per quintal: Wheat MP (deshi) 2,050-2,250, Wheat

dara (for mills) 1,570-1,575, Chakki atta (delivery) 1,580-1,585, Atta Rajdhani

(10 kg) 210, Shakti bhog (10 kg) 210, Roller flour mill 830-850 (50 kg), Maida 860-890 (50

kg) and Sooji 920-950 (50kg).

Basmati rice (Lal Quila) 9,500, Shri Lal Mahal 9,500, Super Basmati Rice, 9,000, Basmati

common new 6,800-6,900, Rice Pusa-(1121) new 6,400-7,000, Permal raw 1,950-2,050,

Permal wand 2,225-2,275, Sela 2,450-2,500 and Rice IR-8 1,600-1,650, Bajra 1,340-1,345,

Jowar yellow 1,425-1,450, white 2,250-2,450, Maize 1,510-1,540, Barley 1,440-1,450,

Rajasthan 1,080-1,090.

Corporate demand lifts maize prices 30% (BL 30/1/2013)

Maize prices in Karnataka are trading 29.52 per cent higher at Rs 1,360 a quintal compared

to last year.

“Due to large scale corporate demand, prices have firmed up in the last one month. Demand

is mainly from starch manufacturers and poultry feed makers,” B.V. Gopal Reddy, Vice-

President, Karnataka Maize Merchants’ Association, told Business Line.

The major companies sourcing maize for starch extraction from Karnataka are Riddhi

Siddhi and few Ahmedabad-based factories.

Along with starch makers, poultry feed makers such as Sugana and Venkateshwara

Hatcheries are also buying.

According to Reddy, “At present, factory delivery which includes transportation and APMC

cess is quoted much higher than the procurement (buying from farmers) price of Rs 1,450-

1,470.”

27

LATE RAINS

Due to late rains in Karnataka, the maize crop harvested is fairly good. Crop grown in

Davengere, Haveri and Shimoga have entered the market.

“Summer maize crop from Tamil Nadu and Andhra Pradesh is expected to enter market

some time in February/March. Till then prices are expected to be firm,” Reddy said.

According to the Domestic and Export Market Intelligence Cell (Demic)-Dharwad,

Karnataka has 3.44 lakh hectares under maize and the productivity is estimated at 2,869

kg/hectare.

Maize price in Bidar market is ruling at Rs 1,385.

The Minimum Support Price (MSP) announced by the Central Government is Rs 1,175 a

quintal.

Keeping in view the market price movements, Demic in its advisory to farmers has said,

“Farmers can store maize up to April to get a margin of around Rs 100-150 a quintal

compared to February and March prices.”

28

PULSES

Gram, its dal prices weaken on sluggish demand (ET 30/1/2013)

In limited deals, gram and its dal prices declined by Rs 50 per quintal in the wholesale

pulses market today, due to slackened demand against increased arrivals from producing

belts.

Marketmen said sluggish demand from retailers against increased arrivals from producing

regions mainly led to decline in gram and its dal prices.

In the national capital, gram, gramdal local and best were down by Rs 50 each at Rs 3,850-

4,250, Rs 4,450-4,550 and Rs 4,750-4,850 per quintal respectively.

The following are today's pulses rates per quintal: Urad 3,300-3,700, Urad Chilka (local)

4,300-4,650, best 4,750-5,250, Dhoya 5,150-5,250, Moong 5,150-5,750, Dal Moong Chilka

local 5,700-6,100, Moong Dhoya local 6,100-6,200 and best quality 6,800-6,900.

Masoor small 3,625-3,825, bold 3,775-3,975, Dal Masoor local 4,325-4,425, best quality

4,425-4,525, Malka local 4,025-4,125, best 4,225-4,325, Moth 3,600-4,200, Arhar 3,750-

3,950, Dal Arhar Dara 5,350-5,550.

Gram 3,850-4,250, Gram Dal (local) 4,450-4,550, best quality 4,750-4,850, Besan (35 kg)

Shakti bhog 1,840, Rajdhani 1,840, Rajmah Chitra 7,500-8,500, Kabli Gram small 4,000-

6,300, dabra 2,700-2,800, imported 4,700-5,100; Lobia 3,500-4,600, Peas white 2,650-2,675

and green 2,750-2,850.

Moong prices decline on sluggish demand (FE 12/2/2013)

Moong and its dal prices fell by Rs 50 per quintal on the wholesale pulses market today due

to sluggish demand at higher levels.

However, other pulses continued to trade in a narrow range on scattered deals and settled

around previous levels.

Marketmen said sluggish demand at higher levels mainly led to decline in moong and its dal

prices.

In the national capital, moong and its dal chilka local fell by Rs 50 each at Rs 5,100-5,700

and Rs 5,650-6,050 per quintal respectively. Moong dal dhoya local and best quality also

traded lower by the same margin to Rs 6,050-6,150 and Rs 6,750-6,850 per quintal,

respectively.

The following are today's pulses rates per quintal: Urad 3,300-3,650, Urad Chilka (local)

4,100-4,450, best 4,550-5,050, Dhoya 5,000-5,100, Moong 5,100-5,700, Dal Moong Chilka

local 5,650-6,050, Moong Dhoya local 6,050-6,150 and

29

best quality 6,750-6,850.

Masoor small 3,550-3,750, bold 3,700-3,900, Dal Masoor local 4,200-4,300, best quality

4,300-4,400, Malka local 3,825-3,925, best 4,025-4,125, Moth 3,400-4,000, Arhar 3,650-

3,850, Dal Arhar Dara 5,150-5,350.

Gram 3,450-3,800, Gram Dal (local) 4,050-4,150, best quality 4,350-4,450, Besan (35 kg)

Shakti bhog 1,760, Rajdhani 1,760, Rajmah Chitra 7,700-8,550, Kabli Gram small 3,500-

6,000, dabra 2,700-2,800, imported 4,700-5,100; Lobia 3,500-4,600, Peas white 2,600-2,625

and green 2,700-2,800.

Pulses up as labour strike hits arrival (BL 16/2/2013)

Pulses and pulse seeds rose have risen here as a strike by daily wage labourers on for the last

four days has hit arrival. Masoor (bold) gained Rs 50 to Rs 3,650-3,675 a quintal, while

masoor (medium) rose to Rs 3,450. Compared with last week, masoor is up Rs 50-75 a

quintal. Masoor has remained between Rs 3,600 and Rs 3,700 in the last fortnight.

Traders say masoor is likely to remain range-bound as long as the imported stock lasts in

local mandis. Overall, masoor prices may rise on a lower crop and dependency on imported

masoor. Costlier imports may push up masoor prices, said a trader.

With decline in arrival of masoor, its dal has risen by Rs 100 a quintal in the past one week.

On Friday, masoor dal (average) rose to Rs 4,025-4,050 (up Rs 25), masoor dal (medium) to

Rs 4,125-4,150 masoor dal (bold) to Rs 4,200-4,225.

Amid decline in arrival and improved buying, moong and its dal also have gone up. Moong

(bold) in local mandis on Friday rose to Rs 5,200-5,500, while moong (medium) ruled at Rs

4,500-4,800. Moong dal (medium) quoted at Rs 6,000-6,100, moong dal (bold) at Rs 6,600-

6,700 and moong mongar at Rs 7,000-7,300.

30

EDIBLE OILS & OILSEEDS

Groundnut oil prices up on local demand (FE 28/1/2013)

Prices of groundnut oil rose up to Rs 50 per quintal in an otherwise steady wholesale oils

and oilseeds market today on scattered local demand. Linseed oil in the non-edible section

also moved up on fresh enquiries from paint industries.

Traders said scattered demand from local parties mainly led to rise in groundnut oil prices.

They said fresh enquiries from paint industries helped linseed oil to trade higher.

In the national capital, groundnut mill delivery (Gujarat) oil rose by Rs 50 to Rs 12,400 per

quintal, while groundnut solvent refined traded higher by Rs 25 to Rs 2,100-2,150 per tin.

In the non-edible section, linseed oil went up by Rs 50 to Rs 6,300 per quintal on increased

demand.

Edible oils strengthen on millers' buying, global cues (ET 30/1/2013)

Edible oil prices strengthened up to Rs 100 per quintal in the wholesale oils and oilseeds

market today on increased offtake by vanaspati millerssupported by ongoing marriage

season demand and a firming global trend.

Neem oil in the non-edible section also moved up on the back of increased demand from

consuming industries.

Traders said sustained buying by vanaspati millers to meet wedding season demand amid a

firming global trend, where palm oil advanced to over three-week high mainly influenced

the sentiment here.

Meanwhile, palm oil for delivery in April rose 0.7 per cent to $ 809 a metric tonne on

the Malaysia Derivatives Exchange, the highest since January 4.

In the national capital, sesame mill delivery oil strengthened by Rs 100 by Rs 100 to Rs

10,900 per quintal.

Tracking a firming global trend, soyabean refined mill delivery (Indore) and soyabean

degum (Kandla) oils rose by Rs 50 each to Rs 7,700 and Rs 7,250, while crude palm oil (ex-

kandla) traded higher by the same margin to Rs 7,550 per quintal respectively.

Palmolein (rbd) and palmolein (Kandla) oils followed suit and gained Rs 50 each at Rs

7,700 and Rs 7,200 per quintal respectively.

In the non-edible section, neem oil moved up by Rs 50 to Rs 5,000-5,100 per quintal.

31

Oilseeds, soyoil rise on demand, dryness in Argentina (ET 30/1/2013)

Oilseeds and soyoil futures rose on Wednesday on good demand in local spot markets and

as dryness in Argentina, a key soybean exporter, boosted overseas oilseed futures.

The gains were capped by a strong rupee, which makes edible oil imports cheaper and at the

same time trims returns of oilmeal exporters.

US soybeans rose for a fourth straight session with prices underpinned by dry weather

hurting crops in top exporter Argentina.

As of 0805 GMT, Malaysian palm oil futures were up 1.25 per cent at 2,506 ringgit per

tonne, while US soybeans rose 0.36 per cent to $14.57 per bushel.

"The rally in overseas prices and strong demand in local spot markets are supporting

oilseeds," said ChowdaReddy, a senior analyst with JRG Wealth Management.

"In case of soybean, arrivals are coming down. Currently futures are trading in discount to

spot. Futures are now chasing firmness in spot prices," said Reddy.

The actively traded soyoil contract for February delivery on the National Commodity and

Derivatives Exchange was 0.76 per cent higher at 731 rupees per 10 kg.

The most-active soybeans contract for February delivery was up 0.52 per cent at 3,272

rupees per 100 kg, while rapeseed contract for April climbed 0.38 per cent to 3,436 rupees

per 100 kg.

At the Indore spot market in Madhya Pradesh, soyoil edged up by 1.1 rupees to 755.5 rupees

per 10 kg, while soybeans rose by 5 rupees to 3,316 rupees per 100 kg. At Sri Ganganagar

in Rajasthan, rapeseed dropped 120 rupees to 3,950 rupees.

India raised the base import price of crude palm oil by nearly 80 per cent to $802 per tonne,

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 to stem overseas purchases

by the world's top vegetable oil buyer.

The upward revision in palm oil import duty is making overseas purchases costlier and

supporting all edible oils, Reddy said.

Curb on edible oil exports lifted; nod for (BL 31/1/2013)

The Government on Thursday lifted quantitative restrictions on export of premium edible

oils in branded consumer packs of up to 5 kilograms, but fixed a minimum export price

(MEP) of $1500 a tonne.

32

The Cabinet Committee on Economic Affairs (CCEA) cleared a proposal moved by the

Commerce Ministry on removing the quantitative ceiling on exports which stood at 20,000

tonnes a year. Edible oils such as groundnut and sesame oils are exported from India mainly

to cater to the demand of expatriates.

The MEP is expected to help the Government keep a tab on the edible oils exports as the

country still relies on huge imports to meet its growing demand. This move would ensure

that the low priced edible oils (which are consumed by the general public and have a large

domestic demand) are not allowed to be exported, an official statement said.

The CCEA also decided to set up an inter-ministerial committee under the chairmanship of

Commerce Secretary with Secretaries of Department of Consumer Affairs and Department

of Food & Public Distribution as members to periodically calibrate the MEP so as to

provide flexibility in using MEP as an instrument to regulate exports.

Further, the CCEA also approved the export of coconut oil from all EDI ports and through

Land Customs Stations (LCS) to be notified by the Department of Commerce subsequently.

At present, the coconut oil is exported through Kochi port.

The move to allow coconut oil exports through other ports would help the domestic

producers, who are suffering because of a sharp drop in prices.

The export of unbranded edible oils was banned since 2008 as the domestic output was

insufficient to cater to the growing demand.

However, the Government while extending the ban on such exports in October last year had

allowed the shipments in consumer packs of up to 5 kgs with a ceiling of 20,000 tonnes per

annum.

The extension of export ban last year was seen as a move to boost the domestic supplies in

the context of erratic monsoons hurting the kharif edible oilseed output. The latest move to

allow unrestricted edible oil exports is aimed at promoting the shipments of processed

agriculture products.

India is the largest importer of edible oils. The imports for edible oil year November 2011 to

October 2012 stood at 9.98 million tonnes, up 20 per cent over the previous year’s 8.37 m t.

Mustard oil rally ends as offtake falls (BL, 1/2/2013)

Lack of demand has put an end to the rally in mustard oil. In the past week, mustard oil

in mandis here has declined by Rs 12 for 10 kg. On Thursday, it ruled at Rs 758 for 10 kg

33

(down Rs 12 from last week). Similarly, in Neemuch and Morena in Madhya Pradesh, it was

down Rs 15 at Rs 750 in the former and Rs 760 in the latter.

In Rajasthan, mustard oil has been witnessing a downtrend due to weak demand. In Kota,

mustard oil on Thursday ruled at Rs 765 (down Rs 10 from last week), while it was Rs 770

in Ganga Nagar and Rs 780 in Jaipur (down Rs 5 from last week). However, the biggest

decline has been in Gujarat, where it has dropped by Rs 20 in the past one week to Rs 750

for 10 kg on the prospect of a bumper mustard crop this year. About a week ago, mustard oil

was ruling high despite steep decline in demand.

On the other hand, mustard seeds ruled stable ruling stable here at Rs 4,500 a quintal,

while raida ruled at Rs 3,700. Despite weak buying, stockists are not willing to scale down

prices despite a likely bumper crop and adequate carryover stock. However, once arrival of

new mustard starts, it may decline to as low as Rs 3,000, said mustard broker Vinod

Agrawal. With about a 30-35 per cent rise in sowing area, output in the country this year is

expected to be around 65 lakh tonnes against 50-55 lakh tonnes last year.

Amid weak demand from crushers, mustard plant deliveries for the Jaipur line have also

declined by about Rs 100 a quintal in the past week. On Thursday, mustard oil plant

deliveries for the Jaipur line were quoted at Rs 3,900-3,920. On the other hand, mustard

seeds futures have been rising on speculation with the April and May contracts on the

National Commodity and Derivatives Exchange closing at Rs 3,454 a quintal (up Rs 5) and

Rs 3,490 (up Rs 7) respectively.

Overall, 94,000 bags of mustard seeds arrived in the country including 6,000 in Madhya

Pradesh, 10,000 in Uttar Pradesh, 50,000 in Rajasthan, 10,000 in Punjab and Haryana, 4,000

in Gujarat.

Soya oil rises on global cues (BL 01.02. 2013)

Imported palmolein and soyabean refined oil rose by Rs 3 and Rs 2 for 10 kg each on

bullish futures on Friday. The Malaysian palm oil market was closed due to holiday but firm

projection of Chicago soya oil pushed domestic soyabean oil futures by Rs 12-15 for 10 kg

for March-April. Traders continued fresh buying on demand. Spot cottonseed refined oil

increase by Rs 4 for 10 kg, while groundnut oil, rapeseed oil and sunflower oil ruled steady.

Groundnut oil in Saurashtra dropped further by Rs 20 for a 15-kg telia tin on higher sales.

“Weather concerns in Argentina for the soya crop pushed up Malaysian palm oil futures to

their highest in more than three months on Thursday, apart from better-than-expected

exports,” said Shailesh Kataria of Riddhi Brokers.

Demand is shifting to palm oil, which is $300 a tonne cheaper than soya oil. Malaysia’s

January palm oil exports fell marginally from a month ago and showed a significant

improvement from a double-digit decline earlier in January.

34

In the local market, stockists continued buying on expectation of higher demand. They

covered 1,650-1,700 tonnes of palmolein on Friday, taking total volume traded to 5,000-

5,500 tonnes in the last three days. During the day, Liberty sold 1,100-1,200 tonnes of

palmolein at Rs 515-517 and 200-250 tonnes of super palmolein at Rs 560-562. Resellers

offloaded about 200-250 tonnes of palmolein at Rs 511 (excluding Jawaharlal Nehru Port

Trust).

Industry wants 20% import duty on RBD palmolein, refined edible oils (BL 5/2/2013)

Fearing large-scale cheaper refined oil imports, the edible oil industry has urged the

Government to hike duty on refined, bleached and deodorised (RBD) palmolein to up to 20

per cent.

At present, refined oils attract a duty of 7.5 per cent. The Government recently imposed a

duty of 2.5 per cent on crude palm oil (CPO).

This has reduced the duty differential between the two oil categories to 5 per cent and has

made imports of refined oil cheaper, thereby threatening the viability of domestic refineries.

“A 10 per cent duty differential between crude and refined edible oils will benefit both the

farmers and refining industry,” said Vijay Data, President, the Solvent Extractors

Association of India (SEAI).

However, Data said the hike in import duty would not affect consumers as edible oil prices

have seen the slowest hike in the past eight years, according to the Government’s wholesale

price index data, compared with other commodities such as rice, wheat, pulses and eggs.

SEAI wants the import duty on crude edible oils to be increased to a minimum of 10 per

cent and that of refined oils be pegged at 20 per cent to protect the domestic industry, Data

said.

India is the largest importer of edible oils and its total imports stood at 9.8 million tonnes

(mt) last year.

For the current oil year ending October 2013, SEAI expects imports to grow by 15 per cent

to 11.5 mt, Data said.

India imports bulk of its palm oil required from Indonesia and Malaysia.

CAPACITY UTILISATION

The 15 million tonne edible oil refining industry is currently operating at a capacity of 50-60

per cent. “With refined oils turning cheaper, the capacity utilisation could slip further to 40

per cent,” said Sushil Goenka, Director, Food Fats and Fertilisers Ltd

35

RBD palmolein accounted for about 11 per cent of the total palm oil imports into the

country during the August-December period.

“If the duty structure is not changed, we expect the RBD palmolein to account for 20-25 per

cent of the total imports in the next few months,” Data said.

Soyoil falls over 1 per cent; rapeseed up (ET 5/2/2013)

Soyoil dropped more than 1 per cent on Tuesday, weighed by falling overseas markets,

while rapeseed futures edged higher, trading at a sharp discount to spot market.

Malaysian palm oil futures eased on Tuesday on some profit-taking after four straight

sessions of gains, but hopes of better-than-expected inventory and export data next week

limited losses.

The actively traded soyoil contract for March delivery on the National Commodity and

Derivatives Exchange (NCDEX) was 1 per cent down at 718.60 rupees per 10 kg by 0955

GMT, after hitting a contract high of 730.35 rupees last week.

The most-active soybean contract for March delivery on the NCDEX was 0.30 per cent

lower at 3,285.00 rupees per 100 kg, while rapeseed contract for April rose 0.41 per cent to

3,469 rupees per 100 kg.

Farmers and traders expect a limited downside in rapeseed after prices fell 7 per cent since

the beginning of November.

Exports of soyabean meal rises by 28.07% in January 2013: SOPA (ET 6/2/2013)

Exports of soybean meal during January, 2013 was 6,20,133 tonnes as compared to 4,84,195

tones in January, 2012 showing a increase by 28.07% over the last year, according to

the Soybean Processors Association of India.

On a financial year basis, the export during April 2012 to January 2013 is 25,36,062 metric

tonens (MT) as compared to 30,82,267 MT in the same period of previous year showing a

decrease of 17.72%.

During current Oil year, (October - September), exports during October 2012 to January

2013 is 16,98,984 MT as against 19,53,415 MT last year, showing a decrease by 13%. The

data has been collected and compiled bySOPA based on the information received from the

members, port authorities and other Agencies. The data does not include exports to Pakistan,

Nepal and Bangladesh by rail or road.

36

South orea has imported 765635 tonnes of oilmeal in the period April 2012 to January 2013

as compared to 609883 tonnes in the corresponding period of the previous

year. Vietnam has imported 538863 tonnes of oilmeal as compared to 786595 tonnes in the

previous year. Similarly Japan has importred 463222 tonnes of oilmeal.

Oilmeals export down by 18% in 10 months of 2012-13 (ET 6/2/2013)

Oilmeals export from India declinee 18% during the first 10 months of financial year 2012-

13, said a data provided by Solvent Extractors' Association of India, (SEA).

Country has exported 36, 78,861 tonnes of oilmeals between April 2012 to January 2013,

compared to 44,85,197 tonnes during the same period last year due to decrease in demand

from the overseas markets.

India, mainly exports oilmeals to the south east Asian countries include South Korea,

Vietnam, Thailand andIndonesia. Last year, country added Iran as a important buyer of

Indian oilmeals, which saw a 190% rise in oilmeals export.

According to SEA data, export of oilmeals during January 2013 is reported 767,646 tons

compared to 549,716 tons in January 2012, up by 40%.

Among the total oilmeals export, soybean meal constitutes 70% of the export. As per the

data compiled by Soybean Processors Association of India (SOPA), Indore-based body of

soybean processors, country exported 25,36,062 tonne soybean meal in first 10 months

compared to 30,82,267 tonne in the same period last year which showing a decline of

17.72%.

Madhya Pradesh is the largest producer of soybean in the country followed by Maharashtra

and Rajasthan. As per the SOPA estimate, India produced 1.25 crore tonne of soybean in the

last kharif marketing.

South Korea emerged as the largest importer of Indian oilmeals with total import of 7.65

lakh, 25% higher from the same period last year.

However, Japan witnessed a sharp fall of 56% in the import during 10

months. Vietnam another major market, imported of 538,863 tonne compared to 786,595

tonne last year.

Thailand also imported 395,228 tonne compared to 382,890 tonnes during same period last

year. Iran imported 554,758 tonnes compared to 190,962 tonnes of last year. It mainly

bought a soybean meal. Europe and others imported 366,795 tonnes compared to 259,568

tonnes during last year.

37

Oilmeal exports jump 40% on improved demand (BL 7/2/2013)

Oilmeal exports in January increased 40 per cent to 767,646 tonnes compared to 549,716

tonnes in the same period last year.

This was largely due to good demand on the back of a drop in prices.

However, in the first 10 months of this fiscal, oilmeal exports dipped 18 per cent to

3,678,861 tonnes (4,485,197 tonnes) as the global economic slowdown depressed demand,

said the Solvent Extractors’ Association.

Soyameal shipments were priced at $517 a tonne against $531 in December, while rapeseed

meal was down at $293 from $324 in the previous month.

The appreciation of the rupee against the dollar to 54.24 in January from 54.65 in

December, also aided the fall in prices.

S. KOREA LEADS

The major demand for oilmeal in January emerged from South Korea, Thailand and

Vietnam. There was also marked improvement in demand from West Asia led by Iran and

Turkey.

Overall exports to West Asia more than doubled in January to 122,609 tonnes (49,998

tonnes).

Between April and January, shipments to South Korea increased 26 per cent to 765,635

tonnes (609,883 tonnes). It consisted of 142,068 tonnes of soyameal, 303,533 tonnes of

castor meal and 320,034 tonnes of rapeseed meal.

Demand from Vietnam, another major market, was lower by 31 per cent at 538,863 tonnes

(786,595 tonnes) consisting of 309,660 tonnes of soyameal, 27,889 tonnes of rapeseed meal,

1,412 tonnes of groundnut meal, 502 tonnes of castor meal and 199,400 tonnes of rice bran

extraction.

Japan imported 463,222 tonnes (1,067,207 tonnes), while Thailand and Indonesia shipped in

395,228 tonnes (382,890 tonnes) and 165,590 tonnes (238,566 tonnes).

Iran marked up its imports to 554,758 tonnes (190,962 tonnes) and Europe and others have

imported 366,795 tonnes (259,568 tonnes).

Bearish futures drag edible oils (BL 7/2/2013)

Edible oils prices dropped on Wednesday tracking bearish futures markets.

Imported palmolein and soyabean refined oil declined by Rs 2 and Rs 7 each. Groundnut

and sunflower oils dropped by Rs 5 and Rs 10 each. Cotton and rapeseed oils weakened by

Rs 3 each.

38

Increased selling pressure on expectation of start of new arrivals of rabi crop soon and weak

futures cooled down overall moral said a leading broker.

Soyoil drops on likely high edible oil imports, strong rupee (ET 7/2/2013)

Soyoil futures fell more than 1 per cent on Wednesday to their lowest in a week on a drop in

edible oil prices overseas and expectations of record palm oil imports in January.

Soybean futures eased due to a stronger rupee, while rapeseed dropped on expectations of a

bumper crop.

A strong rupee makes edible oil imports cheaper, but trims the returns of oilmeal exporters.

As of 0812 GMT, Malaysian palm oil futures were down 0.2 per cent at 2,543 ringgit per

tonne, while U.S. soybeans fell 0.57 per cent to $14.87 per bushel. * "The market expects

record high palm oil imports in January. Indian oil mills took advantage of Malaysia's

decision to allow palm oil exports at zero duty," said Prasoon Mathur, a senior analyst

with Religare Commodities.

India meets more than half of its edible oil requirement through imports, which largely

constitute palm oil.

Soybean supplies are decreasing in the local spot markets as farmers are holding back their

produce, in expectation of prices to rise during the summer months.

"There was rainfall in a few pockets in Rajasthan and Uttar Pradesh. Rapeseed crop is in

maturing stage. The rains will help," Mathur said.

Rabi crop arrivals cast shadow on edible oils (BL7/2/2013)

Edible oils extended their loss on Thursday on the back of bearish domestic futures markets.

Imported palmolein and soyabean refined oil declined by Re 1 each for 10 kg. Groundnut,

cotton and sunflower oils dropped by Rs 5 each. Rapeseed oil eased by Rs 2. The sentiment

was weak on hopes of rabi crop arrivals beginning soon, said sources.

A spokesman of Riddhi Broker told Business Line: “Positive outlook for rabi oilseed crop

and expectation of start of new arrivals of seeds especially mustard- rapeseed in producing

centres have weakened the undertone of the markets.

“The market will be looking for direction from the US Department of Agriculture monthly

supply and demand reports scheduled to be released on Friday. It could turn out to be bullish

for palm oil due to tighter soyabean stocks”.

39

Mustard sluggish on slack buying (BL 8/2/2013)

Sluggish trend in mustard continued today amid lack of buying support and rise in arrival of

new mustard crop in mandis.

On Thursday, mustard oil in Indore slipped to Rs 730 for 10 kg (Rs 738). Similarly it was

down Rs 10 in Morena at Rs 735, while it ruled at Rs 725 in Neemuch (Rs 730).

In Rajasthan and Gujarat also mustard oil witnessed downtrend with prices in Kota

declining to Rs 735 (Rs 745), while in Jaipur, it declined by Rs 15 at Rs 750.

In Gujarat also, mustard oil slipped by Rs 5 to Rs 730 for 10 kg. Compared with last week,

mustard oil in Indore has fallen by Rs 28, while it has declined by Rs 25 each in Moorena

and Neemuch.

Sluggish trend in mustard oil will likely to continue as arrival of new mustard seeds will

pick up in the coming days.

Sluggish trend also prevailed in mustard seeds amid arrival of new seeds. While new

mustard seeds were quoted at Rs 3,900 a quintal, mustard seeds (old) in Indore ruled at Rs

4,300, while raida ruled at Rs 3,700.

With arrival of new mustard seeds picking momentum, futures of mustard appear to be

bearish in the coming days.

Expected rise in crop output will further lend support to bearish sentiment in mustard. The

output in the country this year is expected to be around 65 lakh tonnes against 50-55 lakh

tonnes last year.

Plant deliveries also declined to Rs 3,900-3,925.

In futures, mustard seeds traded lower on lack of buying support with its April and May

contracts on the NCEDX closing at Rs 3,427 (down Rs 20) and Rs 3,454 (down Rs 24).

Arrival of new mustard seeds was recorded at 15,000 bags, while 60,000 bags of old

mustard seeds were offloaded in the country against 4,000 in Madhya Pradesh, 6,000 in

Uttar Pradesh, 35,000 in Rajasthan, 7,000 in Punjab and Haryana, 3,000 in Gujarat and the

remaining 5,000 elsewhere in the country.

40

India working to ensure no need for edible oil imports: Sharad Pawar

(ET 8/2/2013)

India is working to promote self-sufficiency in edible oil supply so that the country doesn't

need to import to meet domestic demand, Farm Minister Sharad Pawar said on Friday.

India imports about half the 16 million to 17 million tonnes of edible oils it consumes every

year, mainlypalm oil from Indonesia and Malaysia, and guarantees minimum prices to its

farmers to spur production and trim a hefty import bill.

The farm and food ministries have been working together to see that India doesn't need to

depend on vegetable oil imports in the next few years, Pawar told reporters at a conference

on seed productivity.

India, the world's biggest importer of vegetable oils, buys mainly palm oil from the two

south East Asian nations, and a small quantity of soyoil from Brazil and Argentina.

Edible oil stable as trade awaits USDA report (BL 8/2/2013)

Edible oils prices ruled steady on Friday as stockists kept away from fresh bet due to ease in

local demand.

Trading in spot edible oils was closed due to sudden demise of a leading trader.

In futures markets, sentiment remained calm – slightly weak as market participants were

waiting for the US Department of Agriculture (USDA) monthly supply and demand reports

later in the day.

Sources said there were no fresh bulk commitments from the stockists as they have covered

sufficient quantity this month for February delivery.

Local refineries quoted prices but there was no business.

New arrivals of rapeseed – mustard seed started in Rajasthan and Gujarat. Positive outlook

for rabi oilseeds crop weigh on indigenous edible oils. Malaysian inventory and output data

for January from the Malaysian Palm Oil Board (MPOB) will give more trading clues when

it is released next Wednesday as the country’s markets return from the Lunar New Year.

"The market is waiting for the edible oil imports data for January. Imports would be higher,

but traders want to know the quantum of the rise," said Vedika Narvekar, a senior analyst

with Angel Commodities Broking.

41

The country meets more than half of its edible oil requirement through imports, which

largely constitute palm oil. A Mumbai-based industry body will release import data next

week.

Soybean supplies are decreasing in the local spot markets as farmers are holding back their

produce in the expectation that prices would rise during the summer months.

A weak rupee makes edible oil imports expensive and at the same time raises the returns of

oilmeal exporters.

Oilseeds, soyoil rise on global cues, weak rupee (ET 12/2/2013)

Oilseeds and soyoil futures edged higher on Tuesday on lower level buying, supported by

gains in overseas markets and a weak rupee.

A weak rupee makes edible oil imports costlier and at the same time raises returns of

oilmeal exporters.

India meets more than half of its edible oil requirement through imports, which largely

constitute palm oil.

"At lower level traders are buying. The recovery in overseas markets is also supporting

sentiments," said Subhranil Dey, an analyst with SMC Comtrade.

The actively traded soyoil contract for March delivery on the National Commodity and

Derivatives Exchangewas 0.60 per cent higher at 698.5 rupees per 10 kg.

The most-active soybean contract for March delivery was up 0.76 per cent at 3,191.5 rupees

per 100 kg, while the rapeseed contract for April rose 0.71 per cent to 3,412 rupees per 100

kg.

At the Indore spot market in Madhya Pradesh, soyoil fell by 0.15 rupee to 730.90 rupees per

10 kg, while soybeans eased 8 rupees to 3,319 rupees per 100 kg. At Jaipur in Rajasthan,

rapeseed rose by 10 rupees to 3,800 rupees.

Rapeseed-mustard production to touch 71 lakh tonnes (ET 12/2/2013)

The overall area under rape-mustard has increased by 1.85 lakh hectares to 67.17 lakh

hectares while the production is expected to jump by 12.32 lakh tonnes to 71.12 lakh tonnes,

due to good subsoil moisture at the time of sowing, useful showers during January and

February and no damage due to severe cold and continuous favourable weather has helped

to increase the production. This was indicated by theSolvent Extractors Association of India

(SEA) after the representatives of the association made an extensive field visits.

42

The team members reported that in some districts of Rajasthan, there is variation in the area

reported by the Rajasthan government. This year due to late sowing and high temperature in

the beginning of the season, the crop is delayed by 15 to 20 days. Also the estimate is based

on current weather condition and expecting that cold temperature will maintain for next 2 to

3 weeks, a SEA release said. However, if temperature rises in next few days, may have

some impact in yield and the overall production.

The association is being involved in various programmes for increasing the productivity of

different oilseeds, including Rapeseed. Gujarat Mustard-3 variety (GM-3) is a very

promising high yielding variety. In the beginning of rabi season, the association had

procured this mustard seed variety and distributed to the progressive farmers through the

members - solvent extraction plants, across Gujarat, Rajasthan, Madhya Pradesh and also in

Maharashtra and had requested to grow a small portion in their farm as a trial and evaluation

purposes.

These farms were continuously monitored by the coordinators of the solvent extraction

plants and some of the farms also visited by the members of Survey Team to see themselves

the progress. It was found that wherever Gujarat Mustard-3 variety sown, the yield has

increased by 30% to 50% in comparison with yield of conventional variety grown in the

same farms.

The SEA release said that they are monitoring the exact yield in each farms where GM-3

seed variety grown vis-a-vis yield of conventional variety of the said farms. The data

collected would greatly help us to evaluate and promote GM-3 variety in the next season in

a big way.

If the seed of this variety is abundantly made available and propagated, it will not be

difficult to achieve the target of 100 lakh tonnes of rapeseed mustard in the next three to five

years, as happened in BT Cotton in last one decade.

Stockists avoid new edible oils orders before Budget (BL 13/2/2013)

Edible oils remained calm on Tuesday, as stockists avoided fresh buying and concentrated

on taking deliveries of old commitments. Talk of a higher import duty kept the market

cautious.

Bursa Malaysia Derivatives was closed for holiday, while domestic soya oil futures

improved slightly. Volume was thin and need based in the ready market. Groundnut oil rose

here by Rs 5 for 10 kg. Palmolein ruled steady. Soyabean and cotton refined oil dropped by

Rs 3 and Rs 2 for 10 kg. Sunflower and rapeseed refined oils decline by Rs 5 and Rs 10 for

10 kg.

43

There was no fresh bulk commitment from stockists, as they have covered enough for

February. Fear of a hike in import duty in the Budget has led traders to concentrate on

taking deliveries of advance commitment made in the past to avoid any tax burden or

dispute. In the spot market, resellers traded about 150-200 tonnes of palmolein at Rs 503-

504 (excluding Jawaharlal Nehru Port Trust) and at Rs 508-509 (excluding Shapur). There

was no direct trade with refiners, as their prices were higher than resellers.

New arrivals of rapeseed-mustard seeds in Rajasthan and Gujarat and positive outlook for

rabi oilseeds crops are putting pressure on the market sentiment. Palm oil inventory and

output data for January from the Malaysian Palm Oil Board on Wednesdaywill give more

trading clues.

The US drought and deficient rains during the third quarter of 2012 led to heightened

worries over soybean supplies for the second consecutive year. Nevertheless, commodities

follow a seasonal production cycle and higher prices in 2012 encouraged the farmers

in Argentina and Brazil to opt for soybean. Accordingly, 2012-13 shall see record high

acreage and production of soybean in these two major producing and exporting countries,

bringing some relief to the soaring prices.

Rapeseed output seen up 20% on higher yield (BL 13/2/2013)

Rapeseed-mustard crop output in the forthcoming rabi season is expected to go up by 20 per

cent to 71 lakh tonnes against 59 lakh tonnes estimated in March last year on the back of

better yield and favourable climatic conditions, according to the Solvent Extractors

Association survey.

Area under rapeseed/mustard has dropped marginally to 64 lakh hectares against an earlier

estimate of 66 lakh hectares.

The yield per hectare is expected to go up by 24 per cent to 1,103 kg a hectare against last

estimate of 893 kg.

The SEA survey was conducted in major rapeseed-mustard growing regions in Gujarat,

Rajasthan, Haryana, Uttar Pradesh and Madhya Pradesh.

B.V. Mehta, Executive Director, SEA, said the crop may be delayed by 15-20 days due to

late sowing and high temperature during the season beginning.

The good sub-soil moisture at the time of sowing and showers in January and February and

favourable weather have helped farmers to better their yield, he said.

Besides, the estimates are based on current weather condition and expectation that the

prevalent cold temperature will continue for two to three weeks, he added.

44

The yield and overall production may be impacted if the temperature rises in next few days.

While association has maintained Government record on area, it has made adjustment on

yield to reflect the correct production of rapeseed/mustard, he said.

NEW VARIETY

The association has been involved in various programmes to increase productivity of

different oilseeds, including rapeseed/mustard. At the beginning of rabi season, the

association procured seeds of high yielding Gujarat mustard-3 variety (GM-3). It was

distributed to progressive farmers in Gujarat, Rajasthan, Madhya Pradesh and Maharashtra

for evaluation purpose.

A study has found that the GM-3 yield increased by 30-50 per cent in comparison with yield

of conventional variety grown in the same farms.

If this variety is abundantly made available and propagated, it will not be difficult to achieve

the target of 100 lakh tonnes of rapeseed mustard in the next three-five years, said Mehta.

The largest produced oilseed globally is known for its high protein content and is crushed

to obtain soy oil and soy meal. Almost 18% of the oil is used for direct consumption and

industrial purpose.

The remaining 82% is soy meal, used mainly as feed for livestock.

Soybean prices are largely impacted by the supply scenario in the chief producing and

exporting nations—US, Brazil and Argentina—which account for over 80% of global

production.

The demand side fundamentals are influenced by the consumption pattern of China, the

largest consumer and importer of soybean, accounting for over 27% of global consumption.

The latter has witnessed a modest growth of around 2.9% CAGR for over a decade and was

256 million tonne in 2011-12. The global production has grown at 2.5% CAGR for over a

decade and was 238 million tonne in 2011-12.

India holds a minuscule share of 4.5% in the global soybean production, but it takes cues

from the international soybean prices as it is the largest importer of edible oil.

Soybean is the largest produced oilseed, with a 40% share in the Indian oilseed production.

To boost domestic production and reduce dependence on imports, the government has raised

the MSP from Rs 1,690 per quintal in 2011-12 to Rs 12,200 in 2012-13.

The domestic soybean production in 2012-13 is estimated to increase to 113 lakh tonne.

45

India produces about 72 lakh tonne of edible oil, of which soy oil contributes more than

22%.

On the other hand, it consumes 170-175 lakh tonne of edible oil and has to import 50-55%

of this. Of the imports, palm oil has 85% share, followed by soy oil (12%). Thus, domestic

prices of edible oil have a significant correlation with the global palm oil prices.

Poor demand, global cues pull down palmolein (BL 14/2/2013)

Groundnut oil and cottonseed refined oil were up Rs 5 and Re 1 for 10 kg each despite weak

reports from producing centres. Imported palmolein and soyabean refined oil dropped by Rs

2 and Rs 3 for 10 kg each on lack of demand and weak overseas markets. Sunflower oil and

rapeseed oil ruled unchanged. Malaysian palm oil futures edged down on Thursday, as data

showed stockpiles in the world’s No.2 producer remained high and on improving weather in

key soya-growing regions in South America.

Seasonally slowing production in Malaysia could see stockpiles in February easing but

inventory levels are unlikely to dip below 20 lakh tonnes in the first quarter of 2013,

according to analysts. This should keep crude palm oil prices below 3,000 ringgit a tonne in

the first quarter of 2013.

As stockists have covered enough for February, they preferred to stay away from fresh

ready buying but took fresh positions for March delivery, a broker said. Local refiners have

started quoting palmolein for March Rs 2-5 higher and about 700-800 tonnes was traded

directly with two local refiners, the broker added. There were no direct volumes for

February delivery with them, as resellers were offering at Rs 5 less. Resellers traded only

50-60 tonnes of palmolein. Indigenous edible oils were under pressure of new arrivals of

crops in producing areas.

Select edible oils recover on fresh buying, global cues (ET 16/2/2013)

Select edible oils recovered by Rs 50 per quintal on the wholesale oils and oilseeds market

today on fresh buying by vanaspati millers amid a firming global trend.

A few oils in the non-edible section, also showed some strength on increased offtake by

industrial units and other consuming industries.

Traders said fresh buying vanaspati millers amid afirming global trend as its discount to

soybean oil, a substitute in food and fuel, and prices at a two-week low boosted demand.

Meanwhile, palm oil for the contract for April delivery climbed 1 per cent to $814 a tonne

on the Malaysia Derivatives Exchange.

46

In the national capital, mustard oil rose by Rs 50 to Rs 8,300 per quintal on local buying.

Strong demand may push up olive oil imports by 30% (BL 20/2/2013)

Dalmia Continental, which sells olive oil under Leonardo brand, today said India’s olive oil

import could increase by 30 per cent to 9,360 tonnes in the current fiscal, with demand

growing due to rising awareness about health benefits of the cooking oil.

“In the 2011-12 financial year, total imports of olive oil stood at 7,200 tonnes. This year,

imports are expected to grow by 25-30 per cent,” Dalmia Continental, Assistant General

Manager, Himani Dalmia said at an event here.

Import of olive oil in volume terms has been growing at a fast pace due to a rise in demand

following greater awareness among consumers about health benefits and usage in everyday

cooking, she said.

India largely imports from Spain, Italy and Turkey.

She attributed the rise in the awareness level about olive oils in India to the launch of a

three-year campaign ’Oliveitup’ by an Italian organisation Consortium of Guarantee of

Quality Extra Virgin Olive Oil (EVC) that completed today.

“Earlier, consumers used to think olive oil was used only for massage purpose. But now,

this perception is changing and the oil is being used for cooking purpose,” Dalmia said.

The awareness about different kinds of olive oils and its usage clearly reflects in India’s

imports. For instance, the share of ‘olive oil’, used for massage purpose, has been declining,

while ‘olive pomace oil’ variety used for high temperature cooking has been growing, she

explained.

Even the import of ‘extra virgin olive oil’, which is used in salad and pasta making, has

been on the rise.

In the last three years, Consortium of Guarantee of Quality Extra Virgin Olive Oil has made

efforts to reach out to untapped markets to educate Indian consumers about the nutritional

benefits of olive oils of European origin.

The top 3 brands in the domestic market, which together control more than 60 per cent of

retail sales, are Leonardo, Figaro and Borges (including Cesar).

Some other prominent brands include RS, Bertolli, Del Monte, Fragata, Colavita and

Athena.

Edible oil stockists keep away from fresh bets (BL 21/2/2013)

47

Firm trend continued in physical edible oils market despite slack demand and steady futures

markets.

Stockists preferred to stay away from fresh buying and concentrated on fulfilling old

commitments.

Volume was thin and isolated. Imported palmolein and soyabean refined oil rose by Rs 4

and Re 1 each.

Sunflower refined oil shot up by Rs 10 and cotton refined oil by Rs 6, tracking firm reports

from producing centres.

Groundnut oil declined by Rs 5. Rapeseed oil was unchanged.

Local stockists after covering more than 3,500 tonnes of palmolein in the last three days for

March, kept away from fresh bet.

They concentrated on taking deliveries of February contracts made in advance before the

expiry of due date.

Buyer’s outstanding commitments were roughly about 5,000-6,000 tonnes for February still

pending, hence, merely 80-100 tonnes of palmolein were resale traded at Rs 517-518 during

the day.

Soybeans jump 2 per cent on lower supplies, global cues (ET 23/2/2013)

Soybean futures jumped nearly 2 per cent on Friday, supported by thin supplies and an

upside in overseas prices due to strong demand from top importer China and tight US old-

crop supplies.

Soyoil and rapeseed rose, tracking gains in Malaysian palm oil prices, though a likely rise in

rapeseed production weighed.

As of 0803 GMT, Malaysian palm oil futures were up 0.28 per cent at 2,543 ringgit per

tonne, while US soybeans rose 1.76 per cent to $15.14 per bushel. * "Soybean supplies are

falling. Since prices are rising, farmers are holding back supplies. They expect a further rise

in prices," said Vedika Narvekar, a senior analyst with Angel Commodities Broking.

The actively traded soyoil contract for March delivery on the National Commodity and

Derivatives Exchangewas 0.99 per cent higher at 707.8 rupees per 10 kg.

The soybean contract for March delivery was up 1.34 per cent at 3,375 rupees per 100 kg. It

rose to 3,392 rupees earlier. The rapeseed contract for April edged up 0.17 per cent to 3,460

rupees per 100 kg.

48

Chinese importers have booked up to nine cargoes of US soybeans this week for shipment

beginning next month, trade sources said on Thursday.

India meets more than half of its edible oil requirement through imports, with palm oil

constituting a major part.

At the Indore spot market in Madhya Pradesh, soyoil edged up 0.6 rupee to 727.65 rupees

per 10 kg, while soybeans rose by 30 rupees to 3,441 rupees per 100 kg. At Jaipur in

Rajasthan, rapeseed fell by 55 rupees to 3,834 rupees.

India's rapeseed output is expected to surge by a fifth this year due to favourable weather

conditions, helping the world's biggest vegetable oil importer boost local supplies by

400,000 tonnes.

Soybeans rise on global cues, thin supply; rapeseed flat (ET 19/2/2013)

Indian soybeans and soyoil futures rose on Tuesday on a rise in overseas markets and on

thin supplies of soybeans in the local spot markets, while rapeseed was trading flat.

As of 0847 GMT, Malaysian palm oil futures were up 1.03 per cent at 2,562 ringgit per

tonne, while US soybeans rose 1.7 per cent to $14.48-1/2 per bushel. "The market is taking

support from overseas fundamentals. Good rainfall was expected in Argentina, but it didn't

get enough rains," said Badruddin Khan, associate vice-president of research at Indiabulls

Commodities Ltd.

The rain that had been expected to bring relief to wilting Argentine soybean and corn crops

over the weekend was lighter than expected, raising the prospect of lower yields in the

2012/13 harvest, a weather specialist said.

The actively traded soyoil contract for March delivery on India's National Commodity and

Derivatives Exchangewas 0.55 per cent higher at 712.20 rupees per 10 kg.

India meets more than half of its edible oil requirement through imports, which largely

constitute palm oil.

The soybean contract for March delivery was up 1.55 per cent at 3,305 rupees per 100 kg,

while the rapeseed contract for April edged up 0.06 per cent to 3,480 rupees per 100 kg as

hopes of bumper rapeseed crop weighed.

India's rapeseed output is expected to surge by a fifth this year due to favourable weather

conditions, helping the world's biggest vegetable oil importer boost local supplies by

400,000 tonnes.

At the Indore spot market in Madhya Pradesh, soyoil eased by 0.35 rupees to 735.25 rupees

49

per 10 kg, while soybeans rose by 23 rupees to 3,408 rupees per 100 kg. At Jaipur in

Rajasthan, rapeseed fell by 18 rupees to 3,942 rupees.

Mustard oil falls on higher arrivals (Bl 25/2/2013)

A cautious trend prevailed in the edible oils market on Monday with the market looking

ahead to the Budget. A bearish global market, too, had an impact. Groundnut oil dropped by

Rs 5 for 10 kg. Rapeseed/mustard oil declined sharply by Rs 15 on higher arrivals of seeds

in producing centres on Monday. Cotton and palmolein lowered by Re 1 each on higher

selling pressure. Soyabeans dropped on a strong rupee, while rapeseed fell on an estimated

rise in production.

Sources said that arrivals of new rapeseed – mustard seeds at national level increased to 1.70

lakh-1.90 lakh bags led to higher selling pressure at spot. Tracking weak sentiments,

rapeseed oil dropped by Rs 15 in Mumbai.

50

MILK

Hatsun Agro to expand milk processing capacity (BL 1/2/2013)

Hatsun Agro Product Ltd plans to set up a 2.5 lakh litre a day milk processing plant in south

Tamil Nadu.

R.G. Chandramogan, Managing Director, Hatsun Agro, said the company will invest about

Rs 50 crore in the plant to come up in Tirunelveli.

CURD UNIT

A curd unit with a capacity of about 20,000 litre a day is also likely to come up at the

facility.

This will process and pack curd in packets.

Hatsun Agro now has about 1.2 lakh litres of curd production and packaging capacity.

The company has a total capacity to process about 24 lakh litres of milk and dairy products

daily and its capacities are stretched.

According to information provided on the BSE, the company’s Board has given an in-

principle approval to set up the milk plant.

RIGHTS ISSUE

Hatsun Agro has also decided to withdraw a proposed Rights Issue as it is generating

adequate internal accruals to meet its requirements.

The company has tied up with a private firm for its power requirement instead of making

separate capital investment in a power project and the power situation in the State is

expected to improve with time.

Therefore, the Board decided to withdraw the proposed issue. The Board has declared a

second interim dividend of Rs 0.50 (50 per cent) for an equity share for 2012-13.

Q3 NET UP

The company has reported a 40 per cent jump in net profit for the third quarter ended

December 31, 2012 compared with the corresponding quarter previously.

The company has reported a net profit of Rs 15.02 crore (Rs 10.66 crore) on a total income

of Rs 543.20 crore (Rs 404.35 crore).

51

Bihar aims to emulate Gujarat model in milk procurement (BL 4/2/2013)

Inspired by the success of Gujarat’s Amul which started the dairy movement in the country,

Bihar has drawn up a five-year roadmap to become a major milk-producing state.

Aiming to procure 44 lakh litre of milk daily, the dairy roadmap forms part of a

comprehensive agriculture policy drawn up by the state for 2012-17.

“Bihar is working hard to successfully follow the Amul model of dairy,” Chief Secretary

Ashok Kumar Sinha told PTI.

He said Bihar now holds the ninth position in the list of milk-producing states, Tamil Nadu

being at the top.

Verghese Kurien, the man behind Amul, laid the foundation of the Cooperative of Milk

Production Federation (COMFED) in Bihar, which he visited twice.

The Managing Director of COMFED, Harjot Kaur Bamhara, said that by the end of 2017,

the state would be able to increase milk procurement to 44 lakh litre per day.

The daily off-take of milk at present is 14.96 lakh litre. Bihar figures ninth in milk

production in the country.

According to National Dairy Development Board (NDDB) data, milk production in Bihar

which was 48.55 lakh litre in 2005-6 rose to 65.17 lakh litre in 2010-11.

“The objective is to link 8.4 lakh families to dairy milk in Bihar by 2017,” Bamhara said.

Bamhara said that a Rs 704-crore loan had been approved by the NDDB for 16 projects out

of which 9 have already got the green signal.

COMFED General Manager A K Kulkarni said that a total of 13,000 milk cooperatives are

active in Bihar at present. The aim is to increase this to 25,000 by the end of 2017.

According to Kulkarni, COMFED turnover in 2012-13 was Rs 1,500 crore and is going up

further.

Per capita consumption of milk in Bihar was 184 gram in 2010-11 against a national

average of 281 gram.

Kulkarni said that in addition to enhancing its milk procurement potential, COMFED, which

sells its product under the brand ‘Sudha’ after success in Bihar and Jharkhand has now

entered Delhi and NCR.

The Sudha brand experiment has been fetching good results, he said.

Kulkarni said COMFED is planning to expand to markets of eastern Uttar Pradesh.

COMFED aims to increase marketing of milk to 21 lakh litre daily by 2017, Kulkarni said.

At present it is 8.25 lakh litres.

The State Government has made arrangements for veterinary centres in villages and

vaccination of cattle at subsidised rate to help increase milk production.

52

Dairy farmers in AP want to do an Amul (BL 5/2/2013)

Small dairy farmers in Andhra Pradesh have decided not to depend on the corporate milk

firms to sell their produce.

After the recent milk glut that resulted in huge losses, farmers have resolved to form a

cooperative to procure milk, process it and market the same by creating its own brand.

To begin with, a group of 25 farmers will form the cooperative in the State capital.

“The milk firms pay us just Rs 17 a litre but sell it at Rs 36 to the consumer. We are

perennially facing losses. We will start the cooperative in the next few weeks,” K. Bal

Reddy, a dairy farmer from Bhongir in Nalgonda district with about 500 animals,

told Business Line.

Andhra Pradesh has about 40 lakh dairy farmers, small and big, who are by and large

unorganised. With a cattle population (cows and buffaloes) of 2.45 crore, the State produces

12.1 million tonnes of milk comprising 10 per cent of country’s annual production of 122

million tonnes.

Only 30 per cent of the 12.1 million tonnes of milk is procured by organised players such as

Vijaya-Visakha, Heritage, Tirumala and Jersey dairies.

PANIC SELLING

About two months ago, the private dairies had either stopped or significantly reduced milk

procurement owing to a glut. This had led to panic selling by farmers. In several towns,

some even dumped the produce on roads as a mark of protest.

“Neither the consumers nor the producers are getting any benefit. The companies are

making money. We can’t run the show like this for long. So, we floated the idea. The

response has been good from members. We know that change cannot happen overnight,”

Bal Reddy, who is also Secretary of Progressive Dairy Farmers’ Association (PDFA), said.

On the milk firms’ argument that the cost of production forced them to fix a cap on purchase

price, Bal Reddy said Mulkanur Cooperative Society (a successful cooperative in

Telangana) was giving Rs 22 a litre.

“We should work for 2-3 years to see some results in our model. We are holding meetings at

district levels to gain support for our model,” M. Jitender Reddy, President of PDFA, said.

No milk price hike by Amul after record procurement (ET 6/2/2013)

Record milk procurement would help consumers breathe easy in the near future. Liquid milk

prices increased by 3-4% in 2012-13, but record milk procurements by the Gujarat Co-

operative Milk Marketing Federation (GCMMF) that owns dairy brandAmul could

put breaks on the rise for now.

"Milk price hike is not in the radar currently," said GCMMF's GM (Planning & Marketing)

53

Jayen Mehta. GCMMF is expected to procure record milk for the second consecutive

month of 2013. After collecting 145 lakh litres of milk per day from Gujarat in January, the

co-operative that has 17 member unions under its fold, expects to collect as much milk in

February, he said.

Gujarat has seen a rise in milk procurement by 52 lakh litres over last 24 months. "Milk

procurement that stood at 112 lakh litres during this period, touched the peak (collection) at

134 lakh litres in February 2012," he said.

GCMMF milk processing capacities would stand at 200 lakh litres per day by the year end,

he said. Amul expects to improve its global ranking in International Farm Comparison

Network (IFCN) list from 18th

to 14th

in 2012. Fonterra (New Zealand), Dairy Farmers of

America (US), Nestle (Switzerland), Dean Foods (US), Royal FrieslandCampina (The

Netherlands), Lactalis (France), Arla Foods (Denmark), Danone (France), California Dairies

Inc. (US), Kraft Foods (US) were the top 10 in International Farm Comparison Network

(IFCN) 2011 list.

Centre starts dairy scheme with Rs 130 crore outlay for FY'13 (ET 5/2/2013)

The government today said it has commenced the first phase of a central scheme in 13 states

to develop dairy sector with an outlay of Rs 130.71 crore for this fiscal.

The National Dairy Plan, a central scheme funded by the World Bank and being

implemented by National Dairy Development Board (NDDB), has started operations in 13

major dairying states, an official statement said.

Highlighting the progress made by the scheme so far, NDDB Chairman Amrita Patel said,

"Rajasthan, Andhra Pradesh and West Bengal are likely to be covered in a month's time."

An outlay of Rs 130.71 crore has been approved for 2012-13 fiscal and covers 49 proposals.

A baseline survey has been completed in nine states and all 14 major dairying states will be

covered by the end of the current fiscal, she added.

Under the scheme, milk production would be raised by increasing the productivity of milch

animals through a scientific and systematic process. The activities under NDP will

contribute to production of high genetic merit bulls, make available high quality fodder

seeds and provide milk producers better oppportunities for sale of surplus milk.

NDDB also mentioned that it has conducted workshops for better implementation of the

scheme with various stakeholders besides giving training programmes for farmers and

officials of dairy cooperatives. India is the world's largest milk producer.

Mother Dairy aims at capturing 20% ice-cream market share by 2014 (ET 6/2/2013)

Mother Dairy, India's third-largest ice cream maker, has chalked out a strategy to expand in

the southern states, which account for a fourth of the Rs 2,000-crore domestic market, to

sustain its growth rate.

54

Subhashis Basu, business head of dairy products division, told ET that Mother Dairy would

aggressively expand its footprint in the south, aiming to garner a 20% market share by 2014.

"Expansion in southern markets should help us maintain our growth rate of 30% a year

across the country in a sustainable manner going forward. We hope our strong local supply

chain would help us gain a sizable place in this market."

Apart from multinational brands, such as Kwality Walls, and home grown players

like Amul, Vadilal, Lazza Ice Creams and Cream Bell, the southern market also has local

players like Heritage Foodsand Scoops.

"When we entered Bangalore last year, we aimed at 10% share in the local ice cream market

of Rs 130 crore in two years. We could achieve it in the first year itself thanks to our brand

image and strong supply chain. This gives us hope to achieve similar penetration in

Hyderabad and Chennai," Basu said.

Mother Dairy, which reported Rs 300 crore sales in year to March 2012, claims a share of

around 18% in the Indian ice cream market.

For its expansion in the region, Mother Dairy plans to tie-up with local retail majors and

focus on corporates for institutional sales, apart from using its own milk outlets network.

Basu said Mother Dairy was also looking at setting up an ice-cream manufacturing facility

in the south. "The ice cream manufacturing facility could come up either in Hyderabad or

Bangalore, a call on which would be taken by the year-end."

He refused to divulge further details on the capacities and investments involved in the

manufacturing facility.

Having entered the Hyderabad market last month, Mother Dairy is now looking at

expanding into cities such as Chennai, Patna and Ahmedabad over the next 12-18 months.

Maharashtra starts work on Dairy Plan 1st phase (BL 9/2/2013)

The first phase of the National Dairy Plan has commenced in Maharashtra, which is among

14 major dairying States where work has begun. The Plan has an outlay of Rs 130.71 crore.

The National Dairy Plan (NDP) is a central sector scheme funded by the World Bank and

being implemented by the National Dairy Development Board (NDDB). Discussions to roll

out the scheme are at an advanced stage with Bihar.

“The National Steering Committee has approved an outlay of Rs 130.71 crore for the year

2012-13,” confirmed Amrita Patel, Chairman, National Dairy Development Board.

55

“The outlay covers 49 proposals, pertaining to progeny testing, pedigree selection,

strengthening of semen stations and fodder development among others,” she added.

Village-based milk procurement systems from eight states — Karnataka, Tamil Nadu,

Punjab, Gujarat, Uttar Pradesh, Madhya Pradesh, Odisha and Maharashtra have also been

approved by the project steering committee.

Rajasthan, Andhra Pradesh and West Bengal are likely to be covered in a month’s time, she

said.

A baseline survey has been completed in nine States and all the 14 major dairying States

would be covered by end of the current financial year, Patel added.

A focused and scientific process to increase productivity of milch animals and thereby

increase milk production to meet the rapidly growing demand for milk is being adopted

under the NDP.

Cooperatives are also being supported to provide greater access between rural milk

producers and the organised milk processing sector.

Haryana dairy body doubles milk handling capacity (BL 9/2/2013)

The Haryana Dairy Development Cooperative Federation has doubled the milk handling

capacity of its five plants from 4.70 lakh litres a day to 8.80 lakh litres a day during the year

2012-13.

This follows the average milk procurement in Haryana during the current financial year

touching the mark of 3.64 lakh litres a day, an official said today.

Haryana Cooperation Minister Satpal Sangwan said that in the year 2011-12, the Federation

had recorded sales turnover of Rs 940 crore and net profit was Rs 2.76 lakh.

The tentative profit during the current financial year would be Rs 6 crore, he added.

He said that the State Government has decided to set up another plant at Ujhana village in

district Kaithal where a milk chilling centre is already in operation.

The other plants are located at Jind, Ambala, Ballabgarh, Rohtak, Sirsa.

He said that while the milk plants of Rohtak, Ballabgarh, Ambala and Jind have obtained

ISO-9002 and IS-15000 certificates, the remaining plants would also obtain ISO-9002

shortly.

Each plant has taken steps to implement Hazard Analysis and Critical Control Points.

56

He said that there was also a plan to provide Automatic Milk Collection Units and Milko

Testers to all the societies in the next five years. This will help in maintaining good quality

of milk.

Sangwan said that main objective of the federation is to promote economic interest of milk

producers of Haryana, especially those belonging to economically weaker sections.

57

VEGETABLES/ ONION-POTATO

Onion exports jump 17% in April-December (BL 27/1/2013)

Onion exports have risen by over 17 per cent to 12.95 lakh tonnes during April-December

this fiscal, but shipments in the coming months are expected to slow down as local prices

have begun to rise.

The country had exported 11 lakh tonnes in the same period last year, the Nashik-based

National Horticultural Research and Development Foundation (NHRDF) said.

“So far, onion exports have been better than last year.

However, the pace has come down as domestic prices have risen making the agricultural

commodity less competitive in the international market,” NHRDF Director R.P. Gupta told

PTI.

The rise in domestic prices by Rs 2-3 per kg to Rs 14-15 per kg in the growing regions in

anticipation of a drop in output this year, has reduced the export margins, he said, adding

that shipments during January and February are seen lower.

Onions are exported mainly to Gulf nations and South-east Asia countries especially

Indonesia and Malaysia.

Allaying fears of a fall in onion production in the 2012-13 crop year (July-June), Gupta said:

“Total onion production is expected to be the same as at last year’s level of 174 lakh tonnes

despite 10 per cent decline in acreage.’’

Productivity of onion this year is expected to be higher and there will be no supply shortage,

he said.

Potato prices in Bengal continue to decline on rising inflows (BL 29/1/2013)

Potato prices in West Bengal dipped by about Rs 50-100 a quintal over the weekend on

improved supply of the tuber.

Taking into account this current dip, potato prices have come down by about Rs 150-200 in

the last one month. The drop is primarily on account of the arrival of the new crop including

the early varieties – Pokraj and S6.

58

Wholesale price of potato was ruling around Rs 500-550 a quintal on Monday, down from

Rs 600-650 about two weeks ago, said Ram Pada Pal, President of West Bengal Cold

Storage Association.

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 price of the tuber depends

upon the supply. So prices start trickling downwards once harvesting picks up,” Pal

told Business Line.

HIGHER PRODUCTION

According to Pal, price will depend on the production of the crop this year.

The sowing of the crop in Bengal is higher by about 4-5 per cent this year. Though it is

difficult to estimate the exact production of the crop, however, initial estimates suggest that

the State might produce close to one crore tonne of potatoes this year, compared to 85 lakh

tonne in 2011-12.

“Till now the weather and crop situation looks very favourable. If it continues to be like this

we expect a very good crop this year. This could bring down prices to some extent,” Pal

said.

Going by the consumption pattern across the country, if the production exceeds 90 lakh

tonne then it would be difficult to hold the market and there could be a tendency for prices

to crash, sources said.

“The next 10-15 days we will get a clearer picture as production will be almost complete,”

Pal said.

Rise in onion prices temporary phenomenon: Pawar (BL 30/1/2013)

Amid soaring onion prices bringing tears to consumers, Agriculture Minister Sharad Pawar

today termed the rise in its rates as a ‘temporary phenomenon’ and said supply would

improve in the coming days.

Wholesale prices of onion at Lasalgaon in Nasik, Asia’s largest onion market, have

increased more than five-fold to Rs 20.50 per kg today from Rs 3.55 per kg in the year-ago

period, according to Government data. A similar increase is seen in retail prices across the

country.

“Prices have hardened as the onion area in Maharashtra, the major growing State, has been

affected due to drought. Rise in prices is a temporary phenomenon,” Pawar told PTI.

59

Stating that onion is grown in areas dependent on rains, the Minister said the onion area in

drought-hit States such as Maharashtra has been affected but overall production would be

sufficient to meet the domestic demand.

“I had visited the key onion areas yesterday, the crop from other parts of the States is good

and availability will improve in the coming weeks,” he said.

According to the Nasik-based National Horticultural Research and Development Foundation

(NHRDF), the area under onion crop is down by 10 per cent from 10.87 lakh hectares this

year.

NHRDF Director R. P. Gupta said: “Prices of onion are rising in anticipation of a drop in

output. But we expect overall production to be the same at last year’s level of 174 lakh

tonnes. Productivity is expected to be higher and there will not be a shortage of supply.”

According to the official data, retail prices of onion have increased to Rs 28 per kg now

from Rs 13 a kg in the year-ago period in most parts of the country.

Maharashtra, Karnataka and Gujarat are the top three onion growing States which have

suffered drought.

Last year, onion production in India stood at 174 lakh tonnes.

Onion price rise: Delhi Govt writes to Pawar to curtail export (BL 1/2/2013)

With retail onion prices remaining high, Chief Minister Sheila Dikshit on Thursday sought

Union Agriculture Minister Sharad Pawar’s “urgent” intervention to curtail export of the

basic vegetable.

In a letter to Pawar, Dikshit said curtailing export of onion would help in bringing down the

price of the vegetable which is selling between Rs 30-35 a kg in the city.

At a meeting to review the price situation, the Chief Minister directed Food and Civil

Supplies department to keep a close watch on the market trends and take strict action against

hoarders.

The meeting was attended by Food and Civil Supplies Minister Harun Yusuf and senior

officials of the department.

Prices of onion have almost doubled as it was selling between Rs 15-20 in the city couple of

weeks back.

“The Chief Minister instructed the department to take all possible measures to bring down

the prices of onion,” officials said.

60

They said the price of the vegetable is likely to come down in the next couple of weeks

when supply from states of Rajasthan, Madhya Pradesh and West Bengal improves.

Pawar had yesterday termed the rise in onion rates as “temporary phenomenon” and said

supply would improve in the coming days.

Wholesale prices of onion at Lasalgaon in Nashik, Asia’s largest onion market, have

increased by more than five folds to Rs 20.50 a kg today from Rs 3.55 a kg in the year-ago

period, according to government data. A similar increase is seen in the retail prices across

the country.

Onion rates have hardened as its production in Maharashtra fell significantly due to drought.

Maharashtra, Karnataka and Gujarat are the top three onion growing states in the country

which suffered drought.

As per the official data, retail prices of onion have increased to Rs 28 a kg now from Rs 13 a

kg last year in most parts of the country.

Officials said the Azadpur wholesale fruit and vegetable market received 150 truckloads of

onion in the last couple of days and there was no shortage in supply.

The Azadpur Mandi is considered one of the largest fruit and vegetable wholesale markets

in Asia.

Onion tumbles on arrivals, Bengal price cap (BL 1/2/2013)

After having run to a two-year high, onion prices dropped by over Rs 200 a quintal on

Friday, as arrivals increased in markets around growing areas in Maharashtra and Gujarat.

Reports of West Bengal Chief Minister Mamata Banerjee’s order to ensure that onion is not

sold above Rs 30 a kg also worked on the markets’ psyche.

“Onion prices have dropped to Rs 18-19 a kg in terminal markets today from Rs 22 on

Thursday. Arrivals have increased. They will keep flooding the market as the late rabi crop

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has started arriving,” said C.B. Holkar, Vice-President of the National Agricultural

Cooperative Marketing Federation.

“Arrivals are higher today. So, prices dropped,” said a trader from Nashik in Maharashtra.

“We heard of reports that the West Bengal Government has ordered that onion should not be

sold above Rs 30 a kg. It seems to be playing on the minds of traders,” said a trading

source.“Buying by traders from West Bengal and Kolkata was slack today, resulting in

prices dropping,” said the source.

“Late kharif arrivals have begun. Besides, some farmers are reportedly harvesting crop that

is yet to mature fully and bringing to market. It has led to a fall in prices,” said Madan

Prakash, Director of Rajathi Group of Companies that exports agricultural produce

including onion.On the other hand, export demand has slowed. “We temporarily had some

demand from Sri Lanka since there were problems in Karachi. Now that has got over,

demand will likely shift away from here,” said Prakash.Current prices are also not

conducive for buying countries, he said.

While Pakistan consignments cost $275-300 a tonne, Indian shipments cost above $400.

“Arrivals will not continue to rise and after February 15, they will flood the market,” said

Holkar. “Prices could drop to levels of Rs 15-16 a kg,” he said.

Onion price jumps, to remain high for a fortnight (FE 2/2/2013)

Onion prices are likely to remain high the next two weeks. A spurt from Rs 355 a quintal

last year to a heady Rs 2,225 at Lasalgaon Agriculture Production Market Committee, the

biggest onion trading hub in the state, has meant the vegetable is now selling at Rs 23-35 a

kg in Mumbai.

Drought-like conditions in the state have resulted in a drop in production. This, coupled with

alleged hoarding by traders, may shoot up prices in the next few days till Rangda, the late

kharif crop, enters market in the next 15 days.

“Production in major cultivating areas such as Sinnar and Chandwad has fallen sharply due

to water shortage,” Dashrath Chaudhary, an onion farmer at Niphad in Nashik district, said.

Maharashtra produces nearly 30 per cent of all onion grown in India with Nashik

contributing nearly 50 per cent of it.

Small Farmers Agri-Business Consortium has forecast a decline in output by 30 per cent.

“Drought is one of the major reasons for the rise in prices. I am, however, confident in the

next few weeks prices will stabilise with the market entry of Rangda,” former vice-chairman

of National Agriculture Cooperative Marketing Federation Changdeo Holkar said.

Industry watchers said the increase in price could be due to hoarding by traders.

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“There is enough onion to keep prices in control. Traders are hoarding to inflate prices,”

social activist and agriculture expert Giridhar Patil said.

Pol, Rangda and Gavthi

Onion is produced thrice a year in Maharashtra from October to April. Three types of onions

are produced in the state

Pol: This is the onion, a kharip crop that is being sold in the market at present. The produce

is of inferior quality, has a low yield and cannot be stored for long. It represents 20 per cent

of the onion crop in the state. Planted during May-June and harvested during October-

November, this crop has been affected by drought, raising prices

Rangda: The late kharif crop has started entering the market. It is of better quality than pol

and represents 20 per cent of the onion crop in the state. It is planted during August-

September and harvested during January-February. This crop has not been affected much by

deficit rain and its entry in market by February 15 will put the brakes on prices

Gavthi: It is a rabi crop that has high yield. The best quality onion can be stored for close to

six months. This crop represents 60 per cent of onion production in the state. It is sown

during December-January and is out in the market by April. This crop keeps prices in

control

Onion prices to script another tear-jerker, likely to surge further (FE 3/2/2013)

Onion prices have been on the rise over the past week due to higher demand and inadequate

supply.Observers Saturday said the prices are likely to climb further as the supply at the city

markets is likely to go down due poor production owing to bad weather, diversion of stock

to other states and export of the vegetable.

On Saturday, price of onion in retail market went up from Rs 25 to Rs 35 per kg as

compared to Rs 15 to Rs 18 per kg a fortnight ago. Wholesale traders at the Gultekdi market

projected that the price may climb higher by as much as 50 per cent in a month.

Data with the Agriculture Produce Market Committee (APMC) shows that the wholesale

market received 25, 695 quintals of onion on Friday. The average price was Rs 1,800 to Rs

2,000 per quintals.

Lower rain fall in the onion producing belt has hit production this year. “Drought is one of

the major reasons for drop in production. Hoarding has also caused prices to shoot up,” an

onion trader said.

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“The arrival of Rangda onion has begun to flood the market. Hence the arrival has seen a

marginal rise as compared to last month. Also quality of the produce is good.

But due to export and increased demand within and outside the state has resulted into

inadequate supply at the local markets,” added Bhosle.

Nikhil Mishra, a resident of Shivajinagar said, “In the last few weeks, the prices have gone

up from Rs 10 per kilo to Rs 25 - Rs 30 per kilo. In such a case the we have to cut down our

expenditure on other vegetables as the we can’t do without onion.”

PRICES VEGETABLES:

Chennai, Feb 4 (PTI) The following are the wholesale prices of vegetables at Koyambedu

market here today.

MIN/MAX (PER KG)

1. Tomato : Rs 8.00/10.00

2. Potato : Rs 13.00/16.00

3. Onion Bellary : Rs 18.00/22.00

4. Brinjal : Rs 7.00/18.00

5. Cabbage : Rs 5.00/5.50

6. Beans : Rs 12.00/16.00

7. Field Beans : Rs 10.00/15.00

8. Carrot : Rs 15.00/18.00

9. Raddish : Rs 6.00/ 7.00

10. Lady's Finger : Rs 12.00/18.00

11. Drum Stick : Rs 18.00/25.00

12. Beetroot : Rs 7.00/9.00

13. Bitter Gourd : Rs 12.00/18.00

14. Snake Gourd : Rs 12.00/14.00

15. Capsicum : Rs 14.00/22.00

16. Green Chillies : Rs 8.00/14.00

17. Tomato Navin : Rs 15.00/20.00

18. Onion Small: Rs 20.00/35.00

19. Plantain (Per one) : Rs 2.00/4.50

Wholesale onion prices drop by Rs 4/kg in Delhi & Nasik (FE 5/2/2005)

Wholesale price of onion fell by 17 per cent to Rs 18.21 per kg in the last two days at Nasik

in Maharashtra, the major producing region in the country, due to low demand.

On February 1, the wholesale price stood at Rs 22 per kg at Lasalgoan in Nasik, Asia's

largest wholesale market for onion, as per the data maintained by National Horticultural

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Research and Development Foundation (NHRDF).

Prices today fell to Rs 18.21 per kg in Nasik despite fall in supply of the key kitchen item.

In Delhi too, wholesale prices have declined by Rs 4 per kg to Rs 21 per kg in the last few

days.

Traders attributed the moderation in prices to low demand compared with previous few

days. The buying was more last week in anticipation of further rise in prices.

Onion production is expected to be close to last year's level of 174 lakh tonnes even as total

area under the crop is down by 10 per cent this year.

The government is a watching closely the price movement of onion both in wholesale and

retail markets.

Onion prices to decline in next few days: Sharad Pawar (ET 6/2/2013)

Onion prices will come down in the next few days on improved supply from

Gujarat, Rajasthanand some parts of Maharashtra, Agriculture MinisterSharad Pawar said

today.

"The onion issue will be addressed in the next few days. The stock is adequate in the

country. Supply is expected to improve in the coming days," Pawar said on the sidelines of a

function here.

Arrival of new crop from Gujarat, Rajasthan and some parts of Maharashtra will start after

February 15, he said.

Onion prices have increased significantly in the last few weeks fearing a fall in production.

In the national capital, the retail price has gone up by more than two-fold to Rs 31 per kg

compared to Rs 13 per kg in the same period last year, as per the official data.

On reasons for rise in onion prices in North India, Pawar said, "I have received

communications from Nasik and talked to some traders. They complain that they are not

getting railway wagons to transport onion to northern parts of the country."

"This particular point was discussed with the Cabinet Secretary yesterday. I hope they will

initiate corrective action. If wagons are made available, I am sure the situation will change

dramatically," he said.

There is last year's stock lying in Nasik and traders are eager to offload that stock in north

India and get better price, he added.

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On onion production in 2012-13, Pawar said the onion belt in Maharashtra has been affected

due to severe drought. But the situation has substantially improved in other growing regions

of Rajasthan, Gujarat and other states.

"That's why, the country as a whole, there should not be any problem about availability of

onion," the minister said.

According to National Horticultural Research and Development Foundation ( NHRDF),

onion production this year is expected to be close to last year's level of 174 lakh tonnes

despite 10 per cent fall in the area.

Clear imperfections in onion market, cartels exist: CCI study (ET 7/2/2013)

Country's onion market, dictated by traders, has clear imperfections including cartelisation

and hoarding that impacts price of the agricultural commodity, a Competition Commission

study has said.

There are "clear imperfections in the onion markets and presence of interested cartels", it

said.

Bangalore-based Institute for Social and Economic Change conducted the study for fair

trade regulator -Competition Commission of India (CCI). The report, which looked at

competitiveness in major onion markets of Maharashtra and Karnataka, was submitted to

the regulator in December.

"Results of seasonal indices, correlations, daily, monthly arrivals their prices etc. indicated

existence of anti-competitive elements in the onion markets.

"A few big traders having well connected networks with market intermediaries in other

markets seem to play a major role in hoarding for expected high prices," said the findings,

released recently.

According to the report, market structure of onion is unilaterally dictated by the traders, not

farmers. Minimal role of farmers in price discovery due to low size of average farm

holdings - 1.15 to 1.3 acre, unfavourable weather conditions and price risk are cited as major

reasons for the situation.

"Most of trading is in the hands of commission agents and traders... Lack of trading

expertise, market knowledge and risk bearing capacity has prevented most of the farmers to

make any dent in onion trading," it noted.

The report stressed that changes in onion prices have a huge impact on the food security,

farmer and consumer welfare.

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"Factors like significant marketing costs, lack of market infrastructure, control of trade in

the hands of few traders, restricting entry for new traders, often strikes by market

functionaries, etc. can also responsible for high prices of onion," it said.

During the agricultural year 2011-12, onion was grown in an area of 1.04 million hectares

with a production of 15.75 million tonnes.

The study has also suggested various measures to improve the overall functioning of onion

markets.

"To avoid collusion between traders, involvement of Agriculture Produce Market

Committee (APMC) officials in the auctioning process should be mandatory. Besides, co-

operative marketing societies must be encouraged so as to prevent collusion amongst

traders," it said.

"Onion is one of the most market sensitive commodities that create ripples in the trade as

also political circles. Its significant position in the diets across all income groups and an

important ingredient in many Indian recipe causes wide ranging effects of any significant

price change," the report said.

Bansal assures more rakes for onion transportation (BL 8/2/2013)

The Railway Minister, Pawan Kumar Bansal today promised to provide adequate number of

rakes required for the transportation of onions in the country.

The assurance came after Agriculture Minister Sharad Pawar wrote a letter to the Cabinet

Secretary, Ajit Kumar Seth about the shortage of rakes for transportation of onions.

“I have also received the letter from Pawar about the demand of rakes for onion

transportation,” Bansal said, adding that “we will provide whatever number of rakes is

required.”

The Central Railway had provided 50 rakes for transportation of onions in January and nine

rakes have been given this month, he said.

Nine more rakes are required and we will provide that, he added.

Onion prices have increased sharply in the recent past.

The government has banned its export as part of its measure to control the prices.

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Onion prices double, stir up trouble in election year (BS 8/2/2013)

Onion prices have climbed sharply in India following a drought, a worry for the government

as it heads into state elections that have been known to turn on the cost of the vegetable.

Prices have more than doubled in the last three months and no respite is in sight. Supplies

remain tight as low rainfall has cut sowing and curtailed growth of individual bulbs.

Indians eat their way through 15 million tonnes of onions a year, using them as the base for

traditional dishes such as biryani and bhaji and making them a hot political issue and a kick

to inflation when the price rises.

"I don't understand how suddenly prices skyrocket. I have to buy at whatever price vendors

are asking. I can't buy less just because prices are high," said Pooja Kadakia, 28, a

housewife shopping in central Mumbai.

Onions cost 35 rupees (66 U.S. cents) per kg on Friday, compared with 10 rupees three

months back. Further increases look likely, with food inflation running in double digits.

"Planting is down in all the major producing states. There is severe water scarcity in

Maharashtra, Gujarat and Karnataka," Satish Bhonde, a director at the National Horticultural

Research and Development Foundation, told Reuters.

Bhonde predicted a 10 percent drop in production from last year. India produced a record

17.5 million tonnes in 2011/12.

Relief could come with the new crop in October, but the government faces 10 state elections

this year and needs a good summer monsoon. National elections are due next year.

The opposition Bharatiya Janta Party (BJP) will be sure to use rising prices against the

Congress party-led government in the campaigns. In 1998, the BJP suffered heavy losses in

a key state poll, a result widely blamed on high onion prices.

"The recent political history shows onion price rises go against the ruling party," said Jaidev

Dole, an analyst at Marathwada University in Maharashtra.

"The government is already unpopular ... the onion price rise may be the last straw that

breaks the camel's back."

BATTLING CORRUPTION, INFLATION

The coalition government faced a string of corruption scandals last year and is battling to

get the sluggish economy back on track while trying to control inflation, with food prices

rising 13 percent year-on-year in December.

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"Until the next onion crop arrives, prices will remain high. It will definitely have an adverse

impact on inflation," said Madan Sabnavis, an economist at CARE Ratings.

The Congress-led state government of Maharashtra, the top onion producer, is planning to

act against hoarding and limit the amount of stock traders can hold, a state official said.

Traders are talking about a repeat of the 2011 export ban.

"The government can ban exports, start imports through state-run agencies. These measures

can help a bit, but they can't pull down prices sharply," said a Mumbai-based exporter, who

declined to be identified.

India, a key supplier to Asian and Gulf countries, exported 1.38 million tonnes in the first 10

months of the financial year from April 1, 2012, up 10.4 percent from a year earlier.

But the government may not have to intervene.

"Already exports are slowing due to higher prices. Pakistan is offering a steep discount

compared to Indian quotes," the Mumbai exporter said.

What could make a difference would be to improve a creaky distribution system and

storage. Post harvest losses account for nearly 30 percent for all vegetable production.

"Every year, improper handling and storage leads to large scale wastage. If we minimise the

wastage, we can arrest price rise," said Bhonde of the Horticultural Foundation. ($1 =

53.2850 Indian rupees)

Onion prices set to soften soon (BL 11/2/2013)

Consumers shedding tears over onion prices that have quadrupled in the last six months can

heave a sigh of relief. Prices are set to decline soon.

Changdev Holkar, Board member of the National Agricultural Cooperative Marketing

Federation (Nafed), is of the view that prices will ease as soon as the rabi onion crop, which

was planted in October, arrives in the market, in early April.

Supplies from States such as Madhya Pradesh, Gujarat and Rajasthan are also improving, he

said, adding that these would help cool prices. Currently, the market is facing a shortage

because kharif and late-kharif crop got affected due to the poor rain in June and July “There

was not enough water for a good yield. There is almost a 30 per cent decline in kharif and

late kharif production. Plus, kharif onion does not have a long shelf life,” Holkar said.

In the last six months, onion prices have soared to Rs 1,700-2,000 a quintal from Rs 500-

600 at Lasalgaon market in Nashik district of Maharashtra. Lasalgaon, in Northern

Maharashtra, is Asia’s largest onion market.

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Since November, prices have more than doubled in the retail market. With supplies being

tight due to low rainfall, onion is quoted at Rs 37/kg across the country.

DECLINE IN ACREAGE

Another onion trader from Lasalgaon, Nitin Jain, said the onion market has in the last two

years witnessed major price fluctuations and a massive increase in input costs. Therefore,

farmers had cut the area under onion, affecting supplies to some extent.

He said that the decline in onion acreage has led to a higher area getting covered under

maize. “After all, farmers find alternative crops to augment their income,” he said.

Onion prices tumble on late kharif arrival (FE 17/2/2013)

Much to the government’s relief, wholesale onion prices declined sharply on Friday in

Nasik, the country’s trading hub of the key agricultural commodity. Late kharif arrival from

key onion-producing states of Maharashtra and Rajasthan into various mandis has been

attributed to the decline in onion prices.

According to a trader from Nasik, the average wholesale onion price was around R1,000 per

quintal on Friday, lower than the R1,800 per quintal reported two weeks back.

Correspondingly, retail onion prices in the Delhi region have declined to R20-25 a kg from

R30-35 a fortnight ago. “There has been improvement in the supply situation in the last few

days,” a trader told FE.

Officials from the departments of consumer affairs, commerce and agriculture recently held

a meeting with the Union cabinet secretary to discuss the spike in onion prices. The

temporary rise was attributed to a fall in kharif production because of drought-like

conditions in parts of Maharashtra, Rajasthan and Gujarat.

In 2011-12 (July-June), onion production was estimated at 15.13 million tonne. This year’s

output is expected to decline by 15- 20% because of poor rainfall in Maharashtra, the state

that accounts for more than 40% of the country’s onion output.

Despite a sharp spike in onion prices, the commerce ministry refused to impose a minimum

export price (MEP) on exports to improve domestic supplies. The government lifted a ban

on onion exports in May last year for boosting exports, an idea that stemmed from a bumper

summer crop. The country had been exporting about 1 lakh tonne of onion every month

since June.

India, the second-largest onion producer in the world, had shipped 1.5 million tonne of the

vegetable in 2011-12. The realisation from onion exports during 2011-12 was at R1,714

crore.

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No proposal to ban onion exports: Government (ET 23/2/2013)

The government today said there is no proposal to ban export of onion and its prices in the

domestic market are showing a declining trend.

"There is no proposal to ban export of onion," Minister of State for Agriculture Tariq

Anwar said in a written reply to the Rajaya Sabha.

The untimely rains in different onion growing areas, which has affected the crop and its

supply chain, has contributed to sharp increase in its prices, he said.

A sharp increase in onion prices was seen during three months till January, he added.

However, there has been a declining trend in onion prices since the beginning of the current

month.

The wholesale prices have dropped to Rs 16/kg today in Nasik, Maharashtra, from Rs 25/kg

in the beginning of the month, as per the data maintained by government research body

NHRDF.

Similarly in the national capital, wholesale prices have declined from Rs 25/kg to Rs

17.50/kg in the review period.

Prices of vegetables such as onion are governed by market forces of demand and supply,

cost of transportation, cost of storage and rising demand among others, Anwar said.

Due to tight supply, onion exports have shown a declining trend since November, 2012. The

shipments fell by over 40 per cent to 83,044 tonnes in January, as against 1,47,255 tonnes in

the year-ago period, according to the NHRDF data.

According to the Nasik-based National Horticultural Research and Development Foundation

(NHRDF), the area under onion crop is down by 10 per cent from 10.87 lakh hectares this

year. But the overall production is expected to be the same at last year's level of 174 lakh

tonnes.

Maharashtra, Karnataka and Gujarat are the top three onion growing states which have

suffered drought.

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SUGARCANE/ SUGAR

Cabinet panel may consider hiking sugarcane floor price by over 23% (BL 30/1/2013)

The Cabinet Committee on Economic Affairs (CCEA) on Thursday is likely to consider

raising the fair and remunerative price (FRP) for sugarcane for the 2013-14 sugar seasons by

23.5 per cent to Rs 210 a quintal.

FRP, the benchmark cane price for 2013-14 sugar year, starting October, is linked to a basic

recovery rate of 9.5 per cent, subject to a premium of Rs 2.21 a quintal for every 0.1 per

cent increase in recovery above 9.5 per cent. For 2012-13, the FRP was at Rs 170.

FRP is fixed by the Centre but there at least five States – Uttar Pradesh, Haryana, Punjab,

Uttarakhand and Tamil Nadu – that announce their own rates, called the State Advisory

Price (SAP). SAP is higher than FRP.

TO HELP FARMERS

The proposed hike in FRP, if approved, could help farmers offset the rising cultivation

costs, including both labour and fuel.

Planting of sugarcane starts a year-ahead and an early announcement of FRP would help

farmers make informed decisions.

The proposed FRP hike would be in line with the recommendation of the Commission for

Agriculture Costs and Prices.

SUGAR OUTPUT

India is expected to produce about 24 million tonnes (mt) of sugar in the current year, down

from 26 mt last year. Domestic consumption of sugar is pegged at 22 mt.

Sugar output till mid-January is up by about 3 per cent at 10.8 mt aided by higher cane

crushing in Karnataka and Maharashtra. In the corresponding period last year, sugar output

stood at 10.5 mt.

EDIBLE OILS

The CCEA is also expected to consider allowing export of edible oil from the domestic

tariff area (DTA) to special economic zones.

Besides, it is also likely to consider allowing export of coconut oil and permit the export of

edible oils with a minimum export price (MEP) of $1,500 a tonne in branded consumer

packs of up to 5 kg without any quantitative restrictions.

72

In October last year, the Government had permitted export of edible oils in branded

consumer packs of up to 5 kg with a ceiling of 20,000 tonnes to meet the growing demand

from overseas Indians.

Retail offtake expected to rise in sugar (BL 30/1/2013)

Sugar market ruled steady on Wednesday.

Prices at spot, naka and mill level were unchanged on routine demand and ample supply.

Market seems to be under pressure of regular supply from mills while local demand eased

due to month end.

Domestic futures markets show thin volatility with bearish mood said sources.

The only possible chance of improvement in sentiment is a start of the new months when

retail off take is expected to rise, a dealer said.

Higher sugar productions this year, lesser chances of sugar exports from India and lower

world market prices are the factors forcing domestic producers to offload commodity in

local markets.

Prices in other main producing centres are ruling at par with Maharashtra keeps

neighbouring states buying away from the State”.

Sugar drops to 6-1/2 month low on poor demand, supply (ET 31/1/2013)

Sugar futures extended losses on Friday to their lowest in six-and-a-half months on sluggish

demand and rising supplies from local production and cheaper imports of raw sugar.

At 1024 GMT, the key February sugar contract on India's National Commodity and

Derivatives Exchange was down 1.38 per cent at Rs 3,145 ($59.12) per 100 kg, after hitting

a low of Rs 3,097, a level last seen on July 13, 2012.

Sugar edged down by Rs 7 to Rs 3,243 per 100 kg in the Kolhapur spot market in the top-

producing Maharashtra state.

"Mills are slashing quotes, but still demand is weak. That is putting pressure on mills to

reduce prices further. They need money to make outstanding cane payments," said a

Kolhapur based dealer.

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Mills usually pay farmers a large chunk of the cane price immediately after harvest or

within two weeks.

Demand for the sweetener from bulk consumers like cold drink and ice cream makers

usually drops in India during the winter season.

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.

"Rising imports of raw sugar are also worrying mills. Local prices are still very high

compared to overseas prices," the dealer said.

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.

Cabinet panel okays 23.5% hike in sugarcane floor price (BL 31/1/2013)

The Government today increased the sugarcane price that mills are required to pay to

farmers by 23.5 per cent to Rs 210 per quintal for the year starting October 2013.

The Fair and Remunerative Price (FRP), the minimum price that sugarcane farmers are

legally guaranteed, was at Rs 170 a quintal in the 2012-13 marketing year (October-

September).

“The Cabinet Committee on Economic Affairs (CCEA) has approved sugarcane FRP for

2013-14 at Rs 210 per quintal. This is an increase of Rs 40 per quintal from the last year,”

Food Minister K.V. Thomas told reporters after the meeting.

The CCEA has approved the proposal of the Food Ministry, which was in line with the

recommendation of the Commission for Agricultural Costs and Prices (CACP) that

suggested Rs 40 increase in the FRP at Rs 210 a quintal for 2013-14.

The CACP is a statutory body and advises the Government on the pricing policy for major

farm produce.

The FRP is the sugarcane price fixed by the Centre but there are some States like Uttar

Pradesh and Tamil Nadu which announce their own rate called state advisory price (SAP).

The SAP is much more than the FRP.

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The FRP is linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 1.46

for every 0.1 percentage point increase in recovery above 9.5 per cent. The recovery rate is

the quantity of sugar that is produced from the crushed cane.

Separately, Thomas said the sugar production forecast for the ongoing 2012-13 marketing

year has been revised upward to 24 million tonnes from 23.5 million tonnes.

“Earlier, we had estimated sugar output for 2012-13 at 23.5 million tonnes. Now, this has

been revised to 24 million tonnes, whereas the industry body ISMA estimated 24.2 million

tonnes,” the minister told PTI.

This year’s production is expected to slightly lower than 26 million tonnes achieved in

2011-12 but sufficient to meet the domestic demand of 22 million tonnes, he added.

Keywords: sugarcane pricing, cane pricing, Fair and Remunerative Price for

sugarcane, sugarcane FRP, sugarcane SAP

Sugar prices slightly lower on millers selling (ET 31/1/2013)

Sugar prices softened marginally by Rs 20 per quintal in the national capital today following

increased selling by mills.

Marketmen said selling pressure from mills due to month end mainly put weight on

sweetener prices.

Sugar ready M-30 and S-30 prices moved down from Rs 3280-3450 and Rs 3260-3430 to

settle at Rs 3280-3430 and Rs 3260-3410 per quintal, respectively.

Among millgate section, sugar khatauli fell by Rs 20 at Rs 3305 per quintal. Dmapur and

Amroha slipped by Rs 10 each to Rs 3265 and Rs 3260 per quintal.

Sugarcane floor price fixed at Rs 210/quintal (BL 1/2/2013)

The Government has fixed the fair and remunerative price (FRP) of sugarcane payable by

factories at Rs 210 a quintal for the 2013-14 season starting October. This is 23.5 per cent

more than the Rs 170/quintal in 2012-13.

The Cabinet Committee on Economic Affairs (CCEA) approved the price, which will be

linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 2.21 a quintal for

every 0.1 percentage point increase in recovery above that level.

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The ‘fair and remunerative price’ of sugarcane is determined under the Sugarcane (Control)

Order 1966. This will be uniformly applicable all over the country.

The revision will be in the interest of sugarcane growers keeping in view the need for a

remunerative price and the present situation of the sugar industry, an official statement said.

This revision is a continuation of a steady sugarcane pricing regime with moderate

increases, which is not likely to disturb inter-se cropping pattern and ensure adequate

availability of sugar as well as other basic foodstuff in coming years, it added.

Sugar output up 3% at 13.75 mt (BL 5/2/2013)

Sugar production has touched 13.75 million tonnes (mt) in the first three months of the

2012-13 crushing season starting October.

This is about 2.95 per cent more than the corresponding period last year, the Indian Sugar

Mills Association (ISMA) said on Monday.

ISMA has recently revised upwards its forecast for 2012-13 season by 3 lakh tonnes at 24.3

mt on better recovery and lesser sugarcane diversion to other sweeteners.

Maharashtra, UP

Maharashtra has produced 4.82 mt so far, marginally higher than last year. However, sugar

recovery in the State is marginally lower at 10.82 per cent. Maharashtra is expected to

produce 6.8 mt this year.

Uttar Pradesh, which will emerge as the largest producer this year, has so far produced 3.62

mt, marginally lower than last year. Sugar recovery is marginally higher in the State, which

is expected to produce 8 mt in the current season.

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Karnataka, Andhra Pradesh

Karnataka has so far produced 2.4 mt, about 11 per cent more than last year. The State is

expected to produce 3.2 mt. Similarly, Andhra Pradesh has produced 5.85 lakh tonnes, about

5 per cent more.

Tamil Nadu has produced 6.25 lakh tonnes, about 9 per cent more than last year. However,

the recovery has been marginally lower due to the poor North-East monsoon. Tamil Nadu is

expected to produce 2.2 mt this season.

Decontrolling of sugar will improve industry's commercials (ET 6/2/2013)

The noise for the sugar decontrol has never been as louder as today. The Food Ministry, for

the first time ever, is seeking a cabinet approval to lift control on the sugar. As per the

ministry sources, the Cabinet note on sugar is nearly ready and is expected to be out in next

one week.

Things for the sector started moving after theRangarajan committee recommended removing

regulations and freeing the sector from Government direct intervention.

The industry is expecting the levy and the sugar release mechanism to be decontrolled in the

first phase. The sugar release mechanism is expected to be an easy one to let go as

the Central government can take a direct call on that and mills will be freed of the monthly

and quarterly quota release mechanism.

The other one, i.e. the levy quota, where the industry supplies 10 per cent as levy for PDS at

subsidized prices will require some considerations.

Once the mills are freed of levy obligation, the government will have to buy from mills or

open market at the market prices. The government will then have to shell out approximately

Rs 3000 crore, an expense which till now is being borne by the sugar mills.

To pay up this amount, the Centre will have to arrange funds, which according to the

Rangarajan committee report could be increasing the excise duty, which is currently at

around Re 0.71 per Kg. The second option is to divert the sugar development fund for this

purpose or the third option is to raise funds by increasing import or export taxes.

Decontrol Impact

The above said changes when implemented will improve the commercials for the Industry,

and also pave way for more easing in sense of cane prices in couple of years to come. The

sugar mills would be free to make commercial decisions about when to sell, how much to

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sell and the prices of sales as well.

As a result of a competitive industry, bulk buyers like cola makers, chocolate and sweetmeat

makers who account for the 70 per cent of Indian demand, will get better prices and quality.

The farmers who have been getting a good cane price will also benefit once the industry

benefits.

The Prices

The sugar prices are under pressure due to over-supplies in domestic and the global markets.

The Indian Sugar prices are trading at a 7-month low on higher output expectations of 24.3

milllion tonne, a high carry-over stock of 6.5 million tonne.

To make thing worse, sugar from overseas market are being imported due to cheap prices.

Raw sugar prices in the US are trading at near 2-1/2 year lows.

The global sugar market is facing third year of surplus in 2012-13 estimated at 8.5 million

tonne. There is high output from Brazil and India which may lead to decline in prices for

third straight year.

The strong China imports in 2012 have led to doubling of their inventory during the start of

2012-13 season at 3.605 million tonne. This indicates that perhaps this year the Chinese may

not actively buy.

Sugar rebounds from 7-month low on bargain buying (HT 7/2/2013)

Sugar futures rebounded on Wednesday from their lowest in seven months on bargain

buying driven by expectations the government would give mills freedom in selling sugar in

the open market.

At 1051 GMT, the key March sugar contract on National Commodity and Derivatives

Exchange was up 0.32 per cent at 3,131 rupees ($58.94) per 100 kg, after falling to 3,108

rupees in the previous session.

Spot sugar fell 8 rupee to 3,217 rupees per 100 kg in the Kolhapur market in top-producing

Maharashtra state.

"The sugar industry is expecting some supportive steps from the government and it is likely

to abolish non-levy sugar release mechanism," said a Mumbai-based dealer.

Non-levy, or free-sale sugar, is sold by millers in the open market, but the quantity each mill

can sell is fixed by the federal government.

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"At lower level, buying is emerging. Traders are expecting an improvement in demand in

the coming weeks with a rise in temperature," said Prasoon Mathur, a senior analyst

with Religare Commodities.

Demand for the sweetener from bulk consumers like soft drinks and ice cream makers

usually drops in India during the winter season.

India's sugar output rose 3 per cent to 13.8 million tonnes on year in the first four months of

the season beginning October 2012, a leading industry body said on Monday.

Mills in India are expected to churn out 24.3 million tonnes of sugar in 2012/13, down from

26 million tonnes in the previous year.

‘Sugar decontrol likely before Budget’ (FE 8/2/2012)

Food minister KV Thomas on Thursday said the government is likely to take a decision on

decontrolling the sugar industry before the Budget.

His ministry has proposed unshackling of the industry from decades-old control in what is

being billed as a major reform initiative.

The sugar industry sells 10 per cent of its output to the government at state-determined

prices for sale through public distribution system.

The government also determines the quantity of sugar that mills can sell in the open market

on a quarterly basis to check hoarding and to keep supplies steady.

The food ministry, in a note circulated among ministries, has proposed dispensing with the

regulatory release mechanism and abolishing the levy system.

Asked if the Centre would take a decision in this regard before the budget, Thomas said

“most probably.”

Sugar prices may go up Rs 2 per kg after April on less supply: ICRA (ET 11/2/2013)

Sugar prices may rise by Rs 2 per kg after April on supply constraints in the wake of

expected fall in domestic output of the sweetener, rating agency ICRA has said.

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While sugar mills are likely to benefit from steady sugar and by-product realisation, growth

in cane prices will impact profits of sugar mills adversely in the ongoing 2012-13 marketing

year (October-September), it noted.

Pegging country's overall sugar output at 23-24 million tonnes and consumption at close to

23.5 million tonnes for this year, ICRA said that domestic prices could firm up due to

supply pressure in the second half of this year as extra stocks would be 6 million tonnes

sufficient to meet three months demand.

"Given the production decline, ICRA expects a marginal increase of Rs 1,000-2,000 per

tonne in the second half of 2012-13 from current levels," it said.

Currently, ex-mill price of sugar is Rs 31-32 per kg, while rates in the retail market are

ruling at Rs 40 per kg.

In the medium terms, ICRA said sugar price trend will continue to be determined by three

factors.

"Firstly, the domestic sugar balances. Secondly, the global crude oil prices, which will

determine the raw sugar: ethanol mix in Brazil, the world's largest producer and exporter;

and finally, government's policies regarding exports of sugar and import duties."

Last year, sugar production stood at 26 million tonnes. ICRA has said that the fall in output

this year was due to weak and delayed monsoon in several key growing regions.

Maharashtra is likely to witness the largest decline in sugar production this year followed by

Northern Karnataka although Uttar Pradesh is likely to witness growth in production

because of higher sowing in previous seasons and more favourable weather conditions, it

said.

On performance of sugar mills this year, ICRA said the operating profits for millers in most

parts of the country barring Uttar Pradesh has been supported by higher volumes and

improved conversion margins, however the impact at the net level has been moderated by

higher interest costs.

While margin pressures will be partly offset by improved volumes for UP-based sugar mills,

in Karnataka and Maharashtra reduced crushing will also impact profits for most mills, it

added.

Government may raise excise duty after sugar decontrol (ET 11/2/2013)

The Centre may raise the excise duty on sugar output and levy a moderate export duty if it

decides to lift controls on the commodity.

This will help the Union government to reduce the financial burden of selling sugar at

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subsidised rates to poor families after buying it at market rates from sugar companies.

Currently, mills have to sell 10 per cent of their total production (termed levy sugar in

government parlance) to the government at Rs 19.04 per kg as against the wholesale market

price of Rs 31 per kg.

The government then sells this sugar at Rs 13.50 per kg to 6.52 crore poor families for

public distribution through ration shops bearing a subsidy of Rs 2,300 crore - Rs 2,500 crore

a year.

"We are discussing various measures to meet the additional financial burden likely to come

after the removal of levy obligation on mills. We are considering an increase in excise duty

or levying a nominal export duty (5-10 per cent) to recover part of the cost," said a food

ministry official.

Food minister KV Thomas recently told ET the government needs to take a cautious

approach on removing levy sugar obligation. "We are discussing on ways we can manage if

levy sugar obligation is removed," he had said.

At present, the excise duty on sugar is 71 paise per kg. The government distributes 27 lakh

tonne sugar through ration shops. The financial implication of removing the levy obligation

on mills is around Rs 2,700 crore over and above the current subsidy paid for the difference

between the levy and the issue price and costs of distribution.

"The government will have to levy an additional excise duty of Rs 1.15 per kg to recover Rs

2,700 core on a production of 23.5 million tonne. But it will end up increasing retail prices.

So we may not increase the duty to such an extent," the official said.

The government may also impose a moderate duty on export after a nominal increase in

excise duty. The Rangarajan committee, set up last year to study sugar decontrol, has

recommended levying an export duty to recover the financial implication following the

removal of levy obligation.

"Going by export figures in the recent years and the current market prices, an annual export

of around 2 million tonne on the average would translate into a revenue stream of around Rs

300 crore - Rs 600 crore annually," the committee led by C Rangarajan, the influential head

of the Economic Advisory Council of the Prime Minister, has said in its report.

The government may earn another Rs 500 crore - Rs 600 crore if it uses the Sugar

Development Fund (SDF) to meet a part of levy sugar procurement cost. SDF is raised by

levying a cess of Rs 24 per quintal of cane for providing soft loans to sugar factories for

cane development, modernisation, cogeneration and ethanol project.

"Once the levy obligation is dismantled, SDF may be used to fund sugar procurement and its

distribution through ration shops," the official said.

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Sugar climbs further on talk of excise duty hike (BL 13/2/2013)

Sugar prices on the Vashi wholesale terminal extended gains by Rs 10-20 a quintal on

Tuesday tracking a firm futures market and on talk of an increase in excise duty. Spot prices

were up Rs 10-20 a quintal. Nakaprices gained Rs 20-30 a quintal. Mill tender rates rose by

Rs 15-20 a quintal on improved demand from stockists. Domestic futures prices extended

gain for the third consecutive day. “The market sentiment remained positive as futures

extended gain by Rs 20 a quintal till noon and crossed Rs 3,100. Prices at the producing

level have dropped by more than Rs 150 to Rs 3,050-3,150 in the last one and a half month

on selling by mills,” said a wholesaler in Vashi.

He added that considering the higher production cost of about Rs 3,300-3,400, the current

price level seems to be a bottom and demand from retailers as well as wholesalers may lift

prices again. Though, as Vashi carries excess inventory and upcountry buying at the mill

level is absent, prices may rise slowly.

Government appoints a taskforce to study cane productivity (ET 12/2/2013)

The Centre has constituted a task force for improving sugarcane productivity and sugar

recovery. The taskforce will submit its report by April this year and will help decide the

quantum of state-specific cane development loans and other reforms in sugarcane area

development.

"The task force will come up with short-term and long-term recommendations with an

actionable plan that is implementable in the immediate future to improve sugarcane

productivity and sugar recovery," said an official of the sugar directorate, which will review

the recommendations. The task force will have officials from food and agriculture ministries

besides representatives from sugarcane research institutes and the industry.

"The average rate of sugar recovery has gone down from 10.48% in 2000-01 to 10.17% in

2011-12. We need to raise it beyond 11% to benefit cane farmers. The recommendations of

this task force will be a key factor in improving income levels of farmers and raising the

efficiency of sugar sector, which is likely to see major reforms," he said.

The rate of sugar recovery in Maharashtra is the highest (11.32%) followed by Karnataka

(10.93%), Andhra Pradesh (9.77%), Uttar Pradesh (9.16%) and Tamil Nadu (9.11%). The

recovery is lowest in Punjab (8.7%), which produces 4.6 mt cane. "UP has the largest area

under cane at 2.68 m hectare, producing 159.5 mt cane. But the yield is low at 59 tonne per

hectare. The yield in Tamil Nadu is highest at 100.2 tonne per hectare as against the

country's average yield of 70 tonne. We need to raise the yield with the increase in area as

cane is a water-intensive crop," he said. According to the International Water Resources

Group, India's water availability will shrink by 50% by 2030.

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Drought to trim India's sugar production below consumption (FE 13/2/2013)

India's sugar production for the 2013/14 season is set to fall below consumption for the first

time in four years as a water shortage trims acreage in three key states.

The drop could boost global sugar prices as the world's top sugar consumer imports raw

sugar to maintain stocks and to take advantage of lower prices in Brazil. "Farmers in

Maharashtra, Karnataka and Tamil Nadu are switching to other crops. If we look at prices,

cane is attractive, but water is not available," said a Mumbai-based official with a global

trading firm, who declined to be named.

Figures from the Indian Sugar Mills Association show that the western state of Maharashtra

and southern Karnataka and Tamil Nadu are likely to produce 12.2 million tonnes, or more

than half of India's total production, in the 2012/13 season, which ends on Sept. 30.

India, the world's biggest sugar producer after Brazil, is likely to produce a total of 24.3

million tonnes of sugar in the current year, compared with demand of about 23 million

tonnes.

It would then need imports over the following season to maintain opening stock levels for

the year starting Oct. 1, 2014, dealers said.

Though the country is likely to start the year starting October 2013 with stocks of 7.5

million tonnes, it would want to maintain these levels going into the next year.

After the 2009 drought sugar production fell sharply, forcing India to make big purchases

from overseas markets, which pushed the price of raw sugar futures to 30-year highs.

FODDER SHORTAGE

"It is difficult to estimate sugar output for next year. It depends on the diversion of cane for

fodder, monsoon rains and recovery rate," said the trading firm official, who declined to be

named. "Right now, we can say around 20-21 million tonnes can be produced."

In 2012 state governments bought cane to offer cheaply or free as fodder when alternative

supplies were short because of lack of rain. Cattle become the main source of income for

farmers during drought years.

The fodder shortage is likely to rise between March and June this year, raising demand for

mature cane as fodder.

"Total cane area in Maharashtra and Karnataka will be down 20 to 25 percent for next

season," said Narendra Murkumbi, managing director of Shree Renuka Sugars, the country's

biggest sugar refiner.

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New plantation is down by nearly 50 percent in both states, Murkumbi said. "Drought is

affecting new plantation and it will even cut availability of the ratoon crop next season," D

B Gavit, a director at the Maharashtra Sugar Commissioner's office, said.The ratoon crop is

the root stub of cane after the first harvest that remains in the ground for a second harvest. It

usually accounts for more than a third of total cane production. The water shortage in the

central region of Maharashtra is so severe that people are struggling to secure drinking

water, but the situation is better in the northern state of Uttar Pradesh.

"Uttar Pradesh will compensate for some of the production losses in Maharashtra and

Karnataka. It is not facing a water shortage," said Kamal Jain, managing director of sugar

brokerage Kamal Jain Trading Services. Uttar Pradesh is expected to produce 8.1 million

tonnes of sugar in 2012/13.

Govt may take decision on sugar decontrol in next 15 days: Thomas (BL 15/2/2013)

The Centre is likely to take a decision on giving freedom to the Rs 80,000-crore sugar

industry to sell the sweetener in the open market in the next 15 days, Food Minister K.V.

Thomas said today.

In October last year, the expert panel headed by PMEAC Chairman C. Rangarajan had

recommended immediate removal of two major controls — regulated release mechanism

and levy sugar obligation — and other restrictions gradually.

“Our sugar position is comfortable this year. The Rangarajan committee’s recommendations

are before the department. I believe in the next 15 days, we will be able to take a decision on

the entire issues like levy sugar, release mechanism and others,” Thomas said at an

Assocham event.

The Minister assured that the recommendations will not see the plight of other panels’

suggestions which have not yet been implemented.

He also said the Food Ministry is seeking the views of various ministries on the panel’s

recommendations and a Cabinet note will be moved shortly.

Sugar decontrol

According to sources, about 10 States have given their views on the panel’s suggestions on

sugar decontrol. However, the two major sugar producing States — Uttar Pradesh and

Maharashtra — have not yet responded.

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Release mechanism, levy sugar system

At present, sugar sector is controlled right from production through distribution. Through

the release mechanism, the Centre fixes the sugar quota that can be sold in the open market.

Under the levy system, it asks mills to contribute 10 per cent of the output to run ration

shops costing the industry Rs 3,000 crore a year.

Currently, the Centre buys sugar from mills at about Rs 20 per kg and sells to ration card

holders at Rs 13.50 per kg.

On removal of quota allocation for sugar sale in the open market, Thomas said: “We have

moved to four-monthly mechanism. There is no problem in removing this system.’’

The removal of release mechanism would help mills manage inventories and cash-flows

better, while the abolition of levy sugar system would result in savings of Rs 3,000 crore

annually that it currently incurs on selling cheaper sugar to the Centre for running PDS.

Barring two key regulations with respect to fixing sugarcane price and sharing of 70 per

cent revenue by sugar firms with farmers, the Rangarajan report has suggested giving

freedom to mills to sell sugar in the open market and having a stable export and import

policy.

Sugar output up 2.7% at 166 lakh t till Feb 15 (BL 18/2/2013)

Sugar production has increased by 2.7 per cent to 165.9 lakh tonnes till February 15 during

the current marketing year that started in October last year.

“The country has produced 165.9 lakh tonnes of sugar up to February 15, 2013. This is

about 2.7 per cent more than the same period last year,” Indian Sugar Mills Association

(ISMA) said in a statement today.

ISMA attributed the increase in sugar output to higher sugarcane crushing and better

recovery. The production is up even though there are 24 less number of mills operating now

compared to last year.

“Till date, almost 1,680 lakh tonnes of sugarcane have been crushed with an average

recovery of 9.8 per cent from October 2012. The country has crushed about 1.7 per cent

more sugarcane than last year along with better recoveries,” ISMA said.

ISMA has projected 243 lakh tonnes production for the 2012-13 marketing year (October-

September), which is 20 lakh tonnes less than last year.

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According to ISMA, Maharashtra has produced 57.8 lakh tonnes, which is about 3 per cent

more than last year. Uttar Pradesh has produced 43.6 lakh tonnes, which is about 4 per cent

less than the year-ago period.

Maharashtra and Uttar Pradesh are the two leading sugar producing States in the country.

Tamil Nadu and Andhra Pradesh have produced 7.8 lakh tonnes and 7.3 lakh tonnes,

respectively, which is about 3 per cent and 1 per cent more than last year. Karnataka has

produced about 28.3 lakh tonnes of sugar.

“Maharashtra and Karnataka have already started showing signs of lower sugarcane

availability for the current season, 2012-13,” ISMA said.

Agri Ministry favours hike in excise duty on sugar (BL 18/2/2013)

The Agriculture Ministry is in favour of increasing the excise duty on sugar by Rs 1.50 per

kg, Union Agriculture Minister Sharad Pawar said on Monday.

The current excise duty on sugar stands at Rs 98 per quintal.

“We support the Food Ministry’s proposal in this regard,” Pawar told reporters on the

sidelines the annual general meeting of the Indian Council of Agricultural Research.

Levy burden

The Food Ministry is in favour of increasing the excise duty on sugar to offset the levy

burden even as the Government gears up to remove the controls on sugar sector, including

doing away with the levy obligation.

Such a move is expected to help the Government reduce its financial burden on selling the

sweetener to poor families at subsidised rate under the public distribution system.

Levy system

Under the levy system, the sugar factories currently have to sell 10 per cent of their total

produce to the Government at Rs 19.04 a kg against the ex-factory price of around Rs 31 per

kg.

This levy sugar is sold by the Government at Rs 13.50 per kg to the poor families under

PDS, incurring a subsidy burden of around Rs 2,500 crore a year.

Keywords: Excise duty of sugar, hike in sugar excise duty, Agriculture Ministry, Food

Ministry, levy sugar, sugar mills, PDS sugar sale, Sharad Pawar,

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Mills produce 16.54 mn tonnes of sugar so far: Industry body (FE 13/2/2013)

Sugar production in the country has increased by 2.42 per cent to 16.54 million tonnes so far

in the ongoing marketing year that started from October 2012, according to cooperative

industry body NFCSF.

Sugar output stood at 16.15 million tonne in year-ago. The sugar year runs from October to

September.

Production in Maharashtra, the country's biggest sugar producing state, has increased

marginally to 5.7 million tonnes as on today, as against 5.61 million tonnes in the year-ago

period, the National Federation of Cooperative Sugar Factories (NFCSF) said in a statement.

However the output in Uttar Pradesh, the second biggest sugar producing state, declined by

1.9 per cent to 4.43 million tonnes from 4.52 million tonnes in the review period.

Sugar production in Karnataka has increased to 2.8 million tonnes during October-February

15 period of the 2012-13 marketing year, as against 2.55 million tonnes in the same period

corresponding year.

The industry body has pegged the country's overall sugar output to touch 24.2 million

tonnes this year, lower than 26 million tonnes achieved in 2011-12 marketing year.

However, the government has estimated sugar output at 24 million tonnes, sufficient to meet

the domestic demand of 2 million tonnes for this year.

Sugar output in other small producing states like Tamil Nadu, Gujarat and Bihar remained

higher so far this year. The industry has pegged total sugar production for this year at 24.2

million tonnes, as against the actual output of 26 million tonnes achieved last year.

Expect sugar decontrol before Budget 2013: ISMA (ET 19/2/2013)

The government seems to be inclined to follow the recommendations of the expert panel

headed by Prime Minister's Economic Advisor Council Chairman C Rangarajan and is

expected to decontrolsugar sector before the Union Budget, said Abinash Verma, DG,

Indian Sugar Mills Association ( ISMA).

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"The reform is likely to take place in 2 phases. The first phase would include decontrol of

the sugar sales. We understand that the levy sugar obligation from the sugar mills and the

regulated release mecahnism, both these controls, would go away," he told ET Now.

He added that the industry loses Rs 3,000 crore every year because it has to bear the burden

of the government's social welfare programme.

"We are told by the government every quarter how much of sugar we can sell, which means

we have no control over our cash flows," he added.

Meanwhile, Union Agriculture Minister Sharad Pawar has supported the food ministry's

proposal to dismantle sugar control as recommended by the Rangarajan committee.

"We favour the food ministry's proposal to increase the excise duty on sugar to offset the

financial burden on the Centre if it decides to buy the sweetener from the open market for

ration shops," he said. The food ministry has sent a note to the Cabinet after an inter-

ministerial consultation.

In the proposal, which is likely to be taken up in this week's Cabinet meeting, the ministry

has recommended the removal of levy sugar obligation on mills from this season which

began October 2012.

It has also suggested that the government offer a fixed subsidy for levy sugar while asking

state governments to buy sugar from the open market. 'The financial burden on removing

the levy sugar obligation will be Rs 5,676 crore. It can be recovered by increasing the excise

duty by Rs 150 per quintal," the cabinet note says. At present, the excise duty on sugar is Rs

71 per quintal. The food ministry has also recommended the removal of release mechanism

immediately to allow free flow of sugar in the market according to demand.

Sugar decontrol: Rs 150/quintal additional excise duty likely (BL 19/2/2013)

The Government may impose an additional excise duty of Rs 150 a quintal on sugar as part

of the measures to decontrol the sector over the next few days. The current excise duty on

sugar, including the sugar development fund and education cess, stands at 98 paise a kg.

The Government expects the proposed hike in excise duty to reduce its financial burden on

levy sugar sales.

The Food Ministry has moved a Cabinet note on decontrolling the highly regulated sugar

sector. Sources said the Government favours scrapping the release-order mechanism and

doing away with the levy obligation immediately, broadly in line with the Rangarajan

Committee recommendations.

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PRICE HIKE UNLIKELY

Such a move would help millers better manage their inventories and cash flows, besides

saving them the levy burden of around Rs 3,000 crore annually. As a result, the proposed

hike in the excise is unlikely to result in sugar becoming costlier, millers said.

Of the 24 million tonnes (mt) of sugar produced in the country, levy sales account for

around 2.7 mt and open market sales, around 20 mt.

At present, the Centre sets the quota that millers can sell in the open market under the

regulated-release mechanism. Sugar factories, under the levy system, are obliged to sell 10

per cent of their output at a lower price of Rs 19.04 a kg to the Government for sale through

the public distribution system (PDS).

The Government sells the levy sugar at Rs 13.50 a kg to poor families under the PDS,

incurring a subsidy burden of around Rs 2,500 crore annually.

According to sources, the Government hoped to regulate the exports and imports of the

sweetener through a tariff mechanism. An inter-ministerial group may take a call on the

tariff structure, based on the prevailing prices — both local and global.

Last week, Food Minister K. V. Thomas had hinted that decontrol could be part of the

Budget announcement. The Food Ministry expects more consultations with the States on

issues relating to rationalisation of cane pricing, abolition of cane area regulation, and

scrapping the minimum distance criteria for setting up mills.

Sugar gains on move to levy more excise duty (BL 19/ 2/2013)

Sugar prices shot up by Rs 20-25 a quintal at all level on Tuesday as producers sold at

higher price on demand and possibilities of increase in excise duty on sugar in the Budget.

The Government’s willingness to decontrol the sugar sector has improved the overall

sentiment in the market. After a long time Maharashtra’s mills sold sugar in rail rakes to

eastern buyers. This is seen as a sign of demand recovery, said an observer.

Harakhchand Vora of Kavita trading co said: “The Vashi terminal market was closed for

Shivaji Jayanti, hence, there were no arrivals and dispatches.

Mills are getting good buying support even at higher price. After a long time, Maharashtra

mills sold about two rail rakes (approximately 54,000 bags) to buyers from West Bengal.

Producers also sold more than 1.25 lakh bags to State-level stockists at Rs 20-25 higher, he

said.

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No sugar exports expected for up to 3 years (ET 20/2/2013)

India, the world's biggest sugar producer after Brazil, is unlikely to export the sweetener for

up to three years as high production costs price shipments out of the global market and a

drought in major growing regions squeezes output.

A lack of shipments from India, which exported sugar in the last two years, would support

global prices now trading near 2-year lows on a world surplus estimated at about 8 million

tonnes.

As the world's biggest consumer of sugar, India is a key player in the global market and

shifting weather conditions can make it an exporter one year and significant importer the

next.

Imports in 2008/09 and 2009/10 drove a near tripling in global sugar prices, while its

exports in subsequent years helped to halve prices from a 30-year high. The sugar year runs

from October 1 to September 30.

"Current prices are not viable for exports," Abinash Verma, director general of the Indian

Sugar Mills Association (ISMA), told Reuters.

"As of now, no, we are not exporting. If the prices remain the same, then it will not be

viable for us to export."

Sugar futures were trading at Rs 3,156 per 100 kg ($581.5 per tonne) by 0456 GMT, while

in London May futures settled at $495.60 a tonne on Tuesday.

Global prices are likely to come under further pressure with new season sugar supplies

starting in Brazil from April.

"For exports, India needs a sharp rise in global prices, which is unlikely," said a Mumbai-

based dealer with a global trading firm, who declined to be named because he is not

authorised to speak to the media.

"It is unlikely for India to become a sugar exporter in the next three years."

Also from April, domestic prices are set to spike as demand from bulk users such as makers

of soft drinks and ice-cream peaks with the start of India's sweltering summer, said Vedika

Narvekar, a senior analyst with Angel Commodities Broking.

Annual sugar output could drop nearly 7 percent to 24.3 million tonnes in the year to

September 2013, though this would still exceed domestic consumption of about 23 million,

the ISMA estimates.

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The higher domestic prices mean India is unlikely to find buyers overseas for its surplus

sugar. In fact, mills have been importing raw sugar, drawn by lower overseas prices.

Export of sugar 'banned' for up to 3 years by Indian government (FE 21/2/2013)

India, the world's biggest sugar producer after Brazil, is unlikely to export the sweetener for

up to three years as high production costs price shipments out of the global market and a

drought in major growing regions squeezes output.

A lack of shipments from India, which exported sugar in the last two years, would support

global prices now trading near 2-year lows on a world surplus estimated at about 8 million

tonnes.

As the world's biggest consumer of sugar, India is a key player in the global market and

shifting weather conditions can make it an exporter one year and significant importer the

next.

India's imports in 2008/09 and 2009/10 drove a near tripling in global sugar prices, while its

exports in subsequent years helped to halve prices from a 30-year high. The Indian sugar

year runs from Oct. 1 to Sept. 30.

"Current prices are not viable for exports," Abinash Verma, director general of the Indian

Sugar Mills Association (ISMA), told Reuters.

"As of now, no, we are not exporting. If the prices remain the same, then it will not be

viable for us to export."

Indian sugar futures were trading at 3,156 rupees per 100 kg ($581.5 per tonne) by 0456

GMT, while in London May futures settled at $495.60 a tonne on Tuesday.

Global prices are likely to come under further pressure with new season sugar supplies

starting in Brazil from April.

"For exports, India needs a sharp rise in global prices, which is unlikely," said a Mumbai-

based dealer with a global trading firm, who declined to be named because he is not

authorised to speak to the media.

"It is unlikely for India to become a sugar exporter in the next three years."

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Also from April, domestic prices are set to spike as demand from bulk users such as makers

of soft drinks and ice-cream peaks with the start of India's sweltering summer, said Vedika

Narvekar, a senior analyst with Angel Commodities Broking.

India's annual sugar output could drop nearly 7 percent to 24.3 million tonnes in the year to

September 2013, though this would still exceed domestic consumption of about 23 million,

the ISMA estimates.

The higher domestic prices mean India is unlikely to find buyers overseas for its surplus

sugar. In fact, mills have been importing raw sugar, drawn by lower overseas prices.

India is likely to import 1.5 million tonnes of sugar in the year to September 2013 and

imports will continue next year unless import duty is hiked, sugar broker Kamal Jain said.

CANE POLITICS

India sets a floor price that mills must pay farmers, which individual state governments can

increase to ensure returns for a crop that takes around a year to mature.

For this season, the northern state of Uttar Pradesh, India's second-biggest sugar producer,

has raised by as much as 16 percent the price mills must pay for cane, while mills in top

producer Maharashtra have agreed to pay nearly a fifth more after protests by farmers.

With a general election to be held by early 2014, mills will face pressure to raise cane prices

again for the year starting from Oct. 1, Narvekar said. Farmers are a key block of India's

voters and moves to please them form part of election strategy.

Such pressures would further push up mills' prices to domestic wholesalers and bulk

consumers.

"It is difficult for India to export even in coming years, due to higher production costs. If it

rises, then ultimately mills can't sell sugar below a certain level," said Mukesh Kuvadia,

secretary of the Bombay Sugar Merchants Association.

Western Maharashtra and the southern cane-producing states of Karnataka and Tamil Nadu

are reeling from a harsh drought that could drive sugar production in the 2013/14 season

below consumption for the first time in four years.

Such scarcity would give farmers the upper hand in negotiating cane prices with mills next

year.

Cane supplies will remain tight even in 2014/15 as drought slashes planting and affects

crops, said Balasaheb Patil, chairman of the Sahyadri Co-operative Sugar Mill in

Maharashtra.

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Sugar drops on slack demand (BL 25/2/2013)

Sugar prices on the Vashi wholesale market dropped by Rs 10-20 a quintal on Monday on

slack month-end demand.

Naka prices for S-grade declined by Rs 10-20, while M-grade ruled mixed according to

quality.

At mill level, prices were unchanged as very few producers offered sale tenders on Saturday

evening.

Market players are now eagerly waiting for Budget proposals for sugar sector for further

directions.

Jagdish Rawal of B. Bhogilal and co said: “The volume was thin at upper level while in the

physical market, it remained under pressure due to month-end local demand.

Very few producers offered sale tenders on Saturday evening and sold small quantity”.

He said that “as Vashi market carries sufficient stocks, stockists feel that there is no need to

bet for fresh commitment as retail demand is not expected to increase till the start of new

month.

“Freight rates were steady after rising by Rs 10 recently on shortage of trucks in Kolhapur-

Karad line”.

Mills are not very eager to sell at lower rates.

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INPUTS

Policy makers turn jittery as unsold fertiliser stocks pile up (BL 27/1/2013)

It is not just surplus foodgrain stocks in Government godowns that is giving policy makers

the nightmares.

The coming days could see a similar crisis with regard to unsold fertiliser stocks, disposing

of which may eventually lead to a burden on the exchequer.

The fertiliser industry is expected to start the next financial year with record high stocks of

close to 8 million tonnes.

According to estimates, as on April 1, the opening stocks of di-ammonium phosphate (DAP)

alone would be about 3.1 million tonnes (mt). This includes 0.6 mt with the companies and

another 2.5 mt that they have already sold and billed to dealers, but would go unlifted by

farmers.

Similarly, there would be around 2.4 mt stocks of complex fertilisers (containing different

ratios of nitrogen, phosphorous, potash and sulphur), which includes 0.4 mt with companies

and 2 mt with the trade. In addition, there will be 1.5 mt of muriate of potash (MoP), which

includes 0.5 mt lying in various ports.

If one were to also add opening urea stocks of 0.8-0.9 mt to these, the total would work out

to 7.8 mt or more. This is as opposed to less than 3 mt at the start of the current financial

year.

Industry sources attribute the unprecedented surplus stocks situation to two factors. The first

is the erratic monsoon rains that led to poor offtake by farmers. Second, the prices of

decontrolled non-urea fertilisers shot up following the Government’s move to cut nutrient-

based subsidy rates on these.

RETAIL PRICES

Since Rabi 2011, retail prices of DAP have increased by almost a third, from about Rs

18,200 to Rs 24,000 a tonne, while MoP shot up from Rs 12,000 to Rs 17,000 a tonne. The

farm gate prices of single super phosphate also soared from Rs 4,800 to Rs 7,800 and that of

10:26:26, a popular complex fertiliser, from Rs 16,000 to Rs 22,000 a tonne.

Nobody was prepared for this, including the Government. And nobody knows what really to

do about it, sources said. The only consolation, they added, was that there would be very

little appetite for purchases by Indian companies, which would, in turn, impact global prices

as well.

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For once, Indian firms can hope to negotiate better prices from a market — whether for

potash or DAP — that was hitherto controlled by a cartel of global suppliers. There has

already been a softening, with landed DAP prices in India currently quoting at $520 a tonne,

against $580 last year. Phosphoric acid prices, too, have eased now to $770 a tonne, from

$1,080 in April-June and $835 during October-December.

These could go down further, opening up the possibility to contract small shipments at

attractive rates, sources said.

But not everyone can exercise this option, given that the bigger players are saddled with

older stocks contracted at higher rates when the rupee was at Rs 56/dollar.

Fertilisers to be sold in smaller packs (BL 3/2/2013)

Farmers will soon be able to buy non-urea and complex fertilisers such as di-ammonium

phosphate and muriate of potash (MOP) in smaller packs of 5 and 10 kg At present, the

fertiliser complexes are sold in conventional bags of 50 kg each.

The Fertiliser Ministry has recently allowed the sale of non-urea fertilisers – DAP, MOP,

complexes, fortified fertilisers and customised fertilisers in smaller packs of 5 kg, 10 kg, 25

kg and 40 kg besides the conventional bag size of 50 kg.

The latest move is in response to the demands from various quarters as a sharp rise in non-

urea fertiliser prices had led to decline in sales and an imbalance in consumption. It is also

expected to encourage the balanced fertiliser application and promote the fertiliser use in

low consumption and in-accessible areas.

The prices of non-urea fertiliser have shot up by a third since Rabi 2011 tracking global

prices and a weaker currency. The retail prices of DAP have increased by almost a third to

Rs 24,000 a tonne from Rs 18,200 a tonne. The MOP prices have shot up to Rs 17,000 a

tonne from Rs 12,000 a tonne. The farm gate prices of single super phosphate has also

soared from Rs 4,800 to Rs 7,800 and that of 10:26:26, a popular complex fertiliser, from Rs

16,000 to Rs 22,000 a tonne.

Govt clamps down on movement of imported DAP, complex fertilizer (BL 4/2/2013)

In a virtual clampdown on imports, the Government has stopped issuing fertiliser movement

control orders on all imported di-ammonium phosphate (DAP) and NPK complex nutrients

from this month.

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The move has been triggered by the huge unsold stocks of fertilisers lying both with

companies and the distribution chain, following the recourse to large-scale imports

undertaken this fiscal and poor offtake from farmers.

QUANTITATIVE CURBS

While the Government has freed the maximum retail prices chargeable by companies for all

non-urea fertilisers, it, however, still regulates how much material is to be sold in different

States. Accordingly, it also decides which company would sell how much quantity. These,

in turn, are regulated under the Fertiliser (Movement Control) Order issued every month.

Without obtaining an order, a company cannot avail of the Government’s subsidy

concession on the material that has been despatched by it. The order, moreover, is

applicable on both fertilisers manufactured by the company and imported by it.

“For this month, orders have been issued only for the DAP and complexes being

manufactured by the companies. No order is being issued for any new material that is being

imported. The imported material can only be kept in the ports and since no subsidy will be

paid without a movement control order, nobody will import,” an industry source

told Business Line.

According to him, the Department of Fertiliser has told all companies verbally that it will

not issue any movement control orders, without giving in writing though.

IMPORTS

During April 2012 to January 2013, fertiliser makers have imported about 58 lakh tonnes

(lt) of DAP and another 4 lt of complexes containing nitrogen, phosphorous, potash and

sulphur in various proportions.

Indian Potash Ltd has been the single largest importer at 14.44 lt (all DAP), while the

erstwhile KK Birla Group companies – Chambal Fertilisers, Zuari Industries and Paradeep

Phosphates – together have brought in 15.5 lt of DAP and 1.04 lt of complexes.

The other major importers include Nagarjuna Fertilisers and Chemicals (3.60 lt DAP and

1.84 lt complexes), Mosaic India (4.14 lt DAP), Tata Chemicals (3.23 lt DAP), Gujarat State

Fertilisers and Chemicals (3.07 lt DAP), Coromandel International (2.05 lt DAP), Krishak

Bharat Co-operative (1.96 lt), the SPIC Group-controlled Greenstar Fertilisers (1.78 lt DAP

and 18,700 tonnes complexes), Indo Gulf Fertilisers (1.78 lt DAP), and Indian Farmers

Fertiliser Cooperative (1.73 lt DAP).

Besides these, DCM Shriram Consolidated (80,000 tonnes DAP), Deepak Fertilisers (41,000

tonnes DAP) and KPR Fertilisers (35,000 tonnes DAP) have imported small quantities.

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INVENTORIES

“With some 55 lt opening stocks of DAP and complexes likely on April 1, there is enough

material to take care of the coming kharif season requirements. The Government does not

want to incur unnecessary additional subsidy burden from fresh imported material. That is

probably why they are discouraging imports now,” the source said.

RISING PRICES

The current unprecedented stock build-up has been due to the erratic monsoon rains that led

to poor offtake by farmers. Besides, the prices of de-controlled non-urea prices shot up

massively following the Government’s move to cut the nutrient-based subsidy rates on

these.

Since Rabi 2011, retail prices of DAP have increased by almost a third, from about Rs

18,200 to Rs 24,000 a tonne, while similarly going up from Rs 12,000 to Rs 17,000 a tonne

for MoP. The farm gate prices of single super phosphate has also soared from Rs 4,800 to

Rs 7,800 and that of 10:26:26, a popular complex fertiliser, from Rs 16,000 to Rs 22,000 a

tonne.

Fertiliser companies to import 3.5 milion tonne potash at $427 per tonne (ET 6/2/2013)

Fertiliser companies have agreed to buy potash for 2013 at $427 per tonne and they are

likely to buy 3.5 million tonnes of the crop nutrient, a negotiator with overseas suppliers

told Reuters on Wednesday.

"We have reached an agreement with suppliers," said P S Gahlaut, managing director

at Indian Potash Limited (IPL), the biggest potash importer in the country.

IPL has signed deals for 1 million tonnes potash and other Indian buyers are set to sign deals

for another 2.5 million tonnes in a week, Gahlaut said.

Urea pricing – Government must walk the talk (BL 7/2/2013)

About six months back, the Committee of Secretaries (CoS) had recommended that the

MRP of urea be raised by 10 per cent. However, this was stoutly opposed by the Fertiliser

Minister. Even the Agriculture Minister, who is Chairman of the Group of Ministers on urea

pricing and other related issues, is not favourably disposed towards this proposal.

However, Prime Minister Dr Manmohan Singh is keen to accept the CoS recommendation.

Having taken some baby steps (diesel price, etc), he would like to do more to bolster the

reform credentials of the UPA Government.

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POLICY STEPS

For close to five decades, the Government has kept urea under pricing and distribution

control. In the 1950s and 60s, it operated a Central Fertiliser Pool (CFP). All material

procured – from domestic and import – was put in CFP and given to State agencies for

distribution.

Based on the Sivaraman Committee (1965) recommendations, controls were removed in

1969. However, these were resurrected but under a new form. In 1972-73, Govt started

regulating distribution, movement and use under Essential Commodities Act. The system

continues till date.

Until the early 1970s, the cost was low and was fully covered by MRP. Following the oil

price spurt in 1974, import costs zoomed, exceeding MRP. The Government made up the

resultant loss by collecting a cess, called Fertiliser Pool Equalisation Charge (FPEC), from

domestic manufacturers, whose cost was still lower than MRP.

Meanwhile, the cost of domestic urea too was increasing and threatening to exceed MRP

(reduced progressively till 1979). The Government not only had to abolish FPEC (1980) but

was also forced to take long-term measures to protect and encourage domestic industry –

despite the need to keep MRP low.

Based on the recommendations of the Marathe Committee (1976), it introduced the

erstwhile retention price scheme (RPS) in 1977 (DAP and complex fertilisers were covered

in 1979). Under RPS, it reimbursed to producers the excess of cost over MRP as subsidy.

Although the RPS was abolished in 2003, the system of reimbursing the excess of

production and distribution cost over MRP to urea manufacturers has continued till date.

The New Price Scheme (NPS) under which this is being done is nothing but ‘old wine in a

new bottle’.

FISCAL CONSOLIDATION

The RPS/NPS creates a sort of ‘China Wall’ between producers, and consumers or farmers.

Farmers are totally immune to what happens to costs. For decades, they are accustomed to a

low price of urea, thereby resorting to indiscriminate use.

Producers, too, need not worry about rising cost as under RPS/NPS, the Government is

obligated to give them full compensation for all costs incurred, plus a guaranteed return on

investment.

But, all this comes at a heavy cost to the exchequer. Fertiliser subsidy, which was Rs 500

crore in 1980-81, increased to around Rs 4,400 crore in 1990-91, crossing Rs 10,000 crore

by 1998-99.

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In the next decade, it zoomed to Rs 96,000 crore by 2008-09. After dipping somewhat in the

following 3 years, during current fiscal it will again touch Rs 100,000 crore.

The Government considers this to be a serious threat to its ‘fiscal consolidation’ efforts.

Having already revised its initial fiscal deficit target for current fiscal from 5.1 per cent to

5.3 per cent, it is no mood to permit any further slippage. But what is it doing to walk the

talk?

The goal cannot be achieved merely by denying to the Department of Fertilisers (DoF)

additional funds (around Rs 40,000 crores) over the Budget allocation of Rs 60,000 crore.

DoF has been asked to arrange for loan of Rs 25,000 crores from banks, which simply

postpones the problem to next year!

The Prime Minister has categorically stated that prices of oil and oil-based products should

be linked to international prices. The Rangarajan Committee has recommended that price of

domestic gas should be linked to a basket of global prices from four sources. If adopted, this

would result in near-doubling of prices.

Under the new Urea Investment policy (UIP), Government proposes to allow cost

reimbursement to greenfield projects linked to an import parity price (IMPP) of $305-335

per tonne, based on a gas price of $ 6.5 per mmBtu plus $ 20 per tonne for each dollar per

mmBtu increase in price up to $14 per mmBtu.

The cost of a new urea plant could thus go up to $485 per tonne or an astronomical Rs

30,000 per tonne.

Already, the cost of imported urea to farmers works out to around Rs 30,000 per tonne.

The cost of domestic urea, though lower at around Rs 15000-20,000 per tonne, too, is

substantially higher than MRP.

As for MRP, the Government has been able to raise it only twice in last decade. In April

2010, it raised the price by10 per cent from Rs 4,830 per tonne to Rs 5310 per tonne.

A few months ago, it revised the price by Rs 50 per tonne to Rs 5,360 per tonne. The price

is a third of the cost of domestic urea and about a sixth of the cost of imported urea.

Even if MRP is raised by 10 per cent per annum, it would take a minimum of 10 years for

gap between cost and price to be eliminated, if cost stays at current levels. With costs

heading north, we would be looking at a much longer time horizon for the subsidy to go

away.

Thus, policymakers are not addressing the urea subsidy imbroglio. Currently about Rs

60,000 crore, this will only leapfrog in absence of credible initiatives.

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REDUCE IMBALANCE

Urea de-regulation seems a distant cry. However, the least the Government should do is to

put in place Nutrient Based Scheme (NBS) – on same lines as DAP/complex fertilisers –

and fix subsidy in a way that urea MRP gets aligned with other fertilisers (at present, latter

are more than 3 times expensive than former).

That will yield a huge saving in subsidy; rein in indiscriminate use of urea; reduce

imbalance in NPK use ratio; restore soil health and improve agricultural yield. (This article

was published on February 6, 2013)

Battling fiscal deficit, India to cut fertiliser subsidy for FY14 (FE 8/2/2014)

India plans to cut its fertiliser subsidy bill by at least 15 percent for the fiscal year 2013-14,

four sources told Reuters, a move that takes advantage of a fall in international prices to

help narrow the country's fiscal deficit.

Fertilisers, after oil and food, account for the third-biggest share of India 's total subsidy bill,

which is expected to rise to 2.4 percent of gross domestic product (GDP) in fiscal 2012/13.

The government had estimated the fertiliser subsidy at 609.7 billion rupees ($11.4 billion)

for the fiscal year ending next month, but it is likely to be much higher than the target.

Based on the estimated subsidy level for 2012/13, a 15 percent cut would save the

government nearly 91.5 billion rupees. Calculating from the projected fiscal deficit for this

year, this would narrow the deficit by as much as 0.1-0.2 percentage point.

Finance Minister P. Chidambaram has staked his reputation on lowering the deficit to 5.3

percent of GDP to improve the investment climate following ratings agency threats to

downgrade India 's sovereign debt to junk if action was not taken.

Reuters reported exclusively last week that, after small steps to reduce fuel subsidies,

Chidambaram is now putting welfare, defence and road projects on the chopping block in a

last-ditch attempt to hit his deficit target by next month.

A senior official at the fertiliser ministry with direct knowledge of the plan said the subsidy

bill would be reduced by at least 15 percent or more in the next financial year, though the

actual cut will depend on the views of the agriculture and finance ministries.

"Since international prices have fallen, obviously, (the) subsidy will go down," Junior

Fertiliser Minister Srikant Jena told Reuters separately, adding that a final decision on the

extent of the cut was yet to be taken.

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The move is unlikely to trigger opposition from farmers as the government plans to leave

unchanged the subsidy for urea, the most-used fertiliser, an official with a Mumbai-based

state-run fertiliser company said.

A senior official with the country's leading co-operative fertiliser company said most of the

subsidy reduction would come from potash and phosphate-based fertilisers as import prices

have gone down.

India imports all its potash and about 90 percent of its phosphate requirement.

India imported muriate of potash (MoP) at an average price of $490 a tonne in 2011/12,

while prices of diammonium phosphate (DAP) hovered around $580 per tonne.

This week, India agreed to buy MoP at $427 a tonne for 2013/14 while global DAP prices

have fallen to about $525 a tonne, giving the government much-needed leverage to cut

subsidies without raising retail prices and angering farmers.

Shares of the top North American potash sellers, Potash Corporation of Saskatchewan Inc,

Mosaic Co and Agrium Inc were mixed in early trading.

The three producers, through their offshore sales agency Canpotex Ltd, struck a potash

supply contract with India n buyers this week, following India 's similar deal with Russian

producers Uralkali OAO and Belaruskali.

"India n importers, such as IPL ( India Potash Ltd), would likely only agree to new potash

contracts once it had an idea on the government's views on 2013/14 subsidy levels, so the

pricing/volume agreed to would likely have already been factoring in where the subsidy

levels are going," said analyst Joel Jackson of BMO Capital Markets.

Potash Corp said on Jan. 31 that it expects 2013 to be a more profitable year than 2012, but

Chief Executive Bill Doyle said he wasn't expecting India to drive global potash demand

this year.

Potash producers have long criticized India 's government for slashing subsidies for the crop

nutrient. Farmers do not generally apply potash to soils every year, unlike nitrogen, but

going too long without it can lower yields and crop production.

The state-run fertiliser company official said the government wants companies to lower

retail prices of potash and phosphate, cushioning the impact of lower subsidies.

For the current fiscal year, India slashed subsidies for DAP by 27.4 percent from the

previous year, while subsidies for MoP were cut by 10 percent. This forced fertiliser

companies to raise retail prices, angering farmers, who cut consumption.

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"Higher fertiliser prices and drought in some areas cut consumption this year. Consumption

is unlikely to revive next year, if the government decides to cut subsidies further," said the

fertiliser company official.

Weak fertiliser demand can hit the profitability of India n firms such as Rashtriya Chemicals

and Fertilizers, Tata Chemicals, National Fertilizers, GSFC, Coromandel International and

Chambal Fertilisers and Chemicals.

It can also reduce India’s DAP and MoP imports.

ICL Israel Chemicals Ltd and Germany's K+S AG are also major potash suppliers to India .

Moroccan phosphate producer Office Cherifien des Phosphates (OCP), PhosChem and

Russian fertiliser group Phosagro are key DAP supplier to India.

Seed exports may double in next 2-3 years (BL 11/2/2013)

Export of agri-seeds from the country may more than double to Rs 1,000 crore in the next 2-

3 years as 38 varieties from India have been registered in the OECD list, industry body

National Seed Association ( NSAI) said on Sunday.

The listing of Indian seeds with the Organisation for Economic Co-operation and

Development (OECD), a group of 34 countries, guarantees the quality of seeds that can be

imported by countries participating in the OECD Seed Schemes. About 57 nations are

registered in such seed schemes.

“Seed export is expected to rise to Rs 1,000 crore in the next 2-3 years as for the first time

38 Indian private seed varieties have been registered in the OECD list,” Executive Director

of NSAI, Raju Kapoor said.

Currently, India exports Rs 400-450 crore worth of seeds. The shipment of agri-seeds is

likely to increase as non-member countries of OECD also go by this list, he said.

Kapoor said the registration of 38 varieties takes the total number of Indian seeds in the

OECD list to 95. The recently registered varieties are hybrid and mostly cotton, millets,

maize and vegetables.

Another 118 Indian varieties are in the pipeline for registration with OECD in the coming

months, he added.

At present, the size of the domestic seed market is Rs 13,000 crore, while India’s share in

the world seed market is one per cent. However, the proposed National Seed Mission aims

to increase the trade to 10 per cent of global trade by 2020, Kapoor said.

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Sukhbir criticises Centre for proposed fertiliser subsidy cut (BL 12/2/2013)

SAD President and Punjab Deputy Chief Minister Sukhbir Singh Badal today criticised the

Centre for the proposed 15 per cent cut in fertiliser subsidy from the next financial year.

Describing the step as “anti-farmer”, he said instead of slashing the subsidy, the Centre

should link the Minimum Support Price of crops with the price index, as had been

recommended by the Dr Swaminathan Commission.

Addressing an election gathering in favour of party candidate Joginderpal Jain at various

villages, he also criticised the Centre for decontrolling diesel prices.

“These steps will sound the death knell for the already dwindling agriculture sector,” he

said.

He demanded Rs 2,200 per quintal as wheat MSP in view of the rising cost of agriculture

inputs.

“If immediate steps are not taken, farmers will be pushed deeper into the debt trap, which

can create socio-economic problems,” Sukhbir warned.

He claimed that the Centre was favouring multinational companies which had been raising

prices at their will.

The UPA government’s ill-conceived policies had reduced the country’s economic growth

to 5 per cent whereas inflation had already crossed the double digit figure, he said.

The Moga by-poll is slated for February 23

Fertiliser makers oppose Rangarajan panel suggestions on gas pricing (BL 13/2/2013)

Fertiliser makers have pitched for the continuance of the existing domestic gas pricing

mechanism.

Opposing the recommendations of the Rangarajan Panel on production sharing contract, the

Fertiliser Association of India has said the existing formula for calculating the price of gas

from the Reliance Industries operated KG-D6 block may be followed.

The FAI said the existing formula was suggested by the gas producers, approved by the

Government and accepted by the consumers like the fertiliser makers. The existing formula

is linked to the crude oil price. It stipulates a ceiling of $60 per barrel on the crude price.

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The FAI said the ceiling may be removed and allowed to float with monthly price of Brent

crude. The Indian crude basket is currently traded at $114 a barrel.

The Rangarajan Panel has suggested a gas pricing formula based on the average of two

prices — price at other producing destinations and the volume-weighted price of US’s

Henry Hub, UK’s NBP and Japan Custom Cleared (on net-back basis, since it is an

importer)

“If another formula has to be worked out, then the cost of production for domestic gas

should have at least 50 per cent weightage in the new formula. The other 50 per cent should

exclude the price of imported LNG into Japan and take a weighted average of price of the

domestic gas traded in the US and Europe,” FAI Director General, Satish Chandra said in a

statement.

Rationalise fertiliser subsidy to improve fiscal health: IMF (ET 17/2/2013)

The International Monetary Fund (IMF) has said India needs to rationalise its fertiliser

subsidies to ease burden on government's purse and utilise the funds for infrastructure

development among others.

The IMF in its annual report also welcomed government's move towards direct cash transfer

of subsidies using the Unique Identification Authority of India (UIDAI).

"Directors stressed, however, that rationalising fuel and fertiliser subsidies is essential to

create fiscal space and make the adjustment more equitable. They supported the

reorientation of spending from untargeted subsidies to infrastructure investment and social

spending," it said.

The Executive Directors welcomed the government's fiscal roadmap and underscored the

importance of quality and sustainability of fiscal consolidation.

They welcomed the implementation of direct cash transfers using the UIDAI, the IMF report

added.

The government's budgetary allocation for fertiliser subsidies for the current fiscal was Rs

61,256 crore, but it is likely to cross Rs 1,00,000 crore, putting pressure on fiscal health.

In absolute terms, the fiscal deficit or gap between expenditure and revenue receipts stood at

Rs 4,04,699 crore at the end of December 2012, according to the data released by Controller

General of Accounts (CGA). Government has estimated the fiscal deficit for 2012-13 at Rs

5,13,590 crore.

The Executive Directors of the global agency in their report stressed on "...focus on

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sustainable reforms would rebuild confidence more than reaching deficit targets with one-

off measures."

"With spending pressures, such as the National Food Security Bill, likely to rise under the

12th Plan, the need to reorient expenditure toward socially and economically productive

areas is vital," the report said.

However, reforming the fuel and fertiliser subsidies should be the central plank of

expenditure rationalisation as the Kelkar committee has recommended, it added.

The committee on roadmap for fiscal consolidation, headed by former Finance

Commission Chairman Vijay Kelkar, has recommended that the most urgent reform

required on the fertiliser subsidy front is revision in the price of urea.

"On subsidy reform, various pilot schemes are under way to move toward direct cash

transfers and the use of the UID to replace current delivery mechanisms. They expect that

by 2016-17 cash transfers are expected to be in place for key subsidies, which will reduce

the fuel and fertiliser subsidy bill," IMF said.

Govt may not give additional fertiliser subsidy this fiscal (BL 25/2/2013)

In a double whammy for the fertiliser sector, the Finance Ministry is unlikely to provide

additional subsidy in the current financial year.

At the same time, the fertiliser companies have been asked to bear part of interest burden on

account of the special banking arrangement for payment of subsidy in the current year itself.

“The revised estimate for fertiliser subsidy in 2012-13 may remain a Budget estimate,” a

senior Government official told Business Line.

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The Government announces the first estimate of expenditure for next financial year in the

Budget, which is termed the ‘Budget estimate.’ Now, after a change or even in case of no

change, the Finance Minister gives the revised estimate in the next year’s Budget.

FISCAL PRESSURES

The Finance Ministry has repeatedly expressed its intention to keep the fiscal deficit within

5.3 per cent. Since additional allocation has been made under the petroleum subsidy, there is

no possibility of giving more to the fertiliser sector.

That is the reason why the revised estimate on account of fertiliser subsidy may not see any

change, the official added.

SPECIAL ARRANGEMENT

The fertiliser industry has sought an additional subsidy of Rs 40,000 crore. Since the

additional allocation was not made in the first supplementary demands for grant, the

Fertiliser Ministry planned a special banking arrangement of Rs 25,000 crore.

However, the Finance Ministry gave its nod for Rs 5,000 crore to be raised as loan.

Accordingly, a consortium of banks, led by the State Bank of India, agreed to provide a loan

of Rs 5,000 crore to be paid to fertiliser companies in lieu of subsidy due.

Another Government official said, “The consortium has intimated that under the present

market conditions, they have tied up the full syndicated amount of Rs 5,000 crore of short-

term credit under the special banking arrangement at an interest of 10.25 per cent per

annum.”

LETTER TO MANUFACTURERS

Accordingly, a letter has been sent to all fertiliser manufacturers and importers.

The letter said, “The interest liability of the Government in respect of the loan to be allowed

in lieu of the subsidy due to the fertiliser companies/importers will be limited to eight per

cent (maximum G-Sec rate) per annum and interest beyond eight per cent and up to 10.25

per cent per annum will be borne by the fertiliser companies.”

“This provides for partial relief. However, it is badly delayed,” said Satish Chandra,

Director General of the Fertiliser Association of India.

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OTHER AGRI COMMODITIES/ NEWS

Select grains prices up on increased offtake (FE 29/1/2013)

Firm conditions prevailed on the wholesale grains market today as wheat and rice prices

firmed up on increased offtake by flour mills and stockists.

Bajra and barley also moved up on increased demand. Marketmen said increased offtake by

flour mills to meet the ongoing marriage season demand mainly led to rise in wheat prices.

They said increased demand against restricted arrivals helped rice basmati prices to trade

higher.

Haryana agri board to rope in pvt sector for horticulture market (BL 27/1/2013)

The Haryana State Agricultural Marketing Board (HSAMB) is planning to rope in private

sector to work as service providers at the India International Horticulture Market (IIHM),

Ganaur, and the 100 horticulture collection centres, it plans to set up all over the State.

HSAMB has invited expressions of interest from intending partners from private and public

sector to work as service providers at the IIHM, Ganaur in Sonipat, and at the 100

horticulture centres, an official release said here today.

The PPP route is being taken to combine the vastness of the state infrastructure with

efficiency of the private sector to bring growers better return and the consumers fresh

produce at reasonable prices, it said.

The Board is setting up IIHM at Ganaur in the National Capital Region, in an area of over

500 acres.

It will be positioned as a potential hub for export of fruits, flowers and vegetables from all

over the country.

Ganaur has close proximity to Azadpur market in Delhi which accounts for 30 per cent of

the total inflow and 28 per cent of the total outflow of fruits and vegetables, the release said.

“First-of-its-kind in the country, the market will be built on international standards.

“When operationalised, it will offer farmers, consumers and traders access to modern

sorting, washing, grading, packaging, waxing, preservation, testing and certification

facilities,” it said.

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Foodgrain output may touch 250 mt on better Rabi harvest (BL 28/1/2013)

Despite the erratic monsoon, the country’s foodgrain production in the current crop year

may touch the targetted 250 million tonnes (mt). “We are aiming for 250 mt this year.

Though total foodgrain production cannot be the same as last year the kharif output is seen

better-than-expected,” Agriculture Secretary, Ashish Bahuguna, told reporters.

Last year, the country’s food grain production stood at 257.44 mt with record rice output of

104 mt and wheat at 94 mt.

Bahuguna said wheat production this year is likely to be closer to last year’s level, while

mustard and chana crop are looking good. The impact of frost hurting the mustard crop

recently would be negligible, he said.

In its first advance estimates, the Agriculture Ministry had forecast a 10 per cent drop in

kharif output at 117.18 mt, due to erratic monsoon and it expects to revise the numbers

soon. The kharif output in 2011-12 stood at a record 129.94 mt.

Current rabi crops such as wheat and maize are doing well, Bahuguna said. However, the

size of wheat output would be largely decided by the temperatures in February and March,

Bahuguna said.

The Agriculture Secretary maintained that certain crops such as sunflower, jowar and bajra

were facing stress. Rice transplantation was at a sluggish pace due to the poor availability of

water in states such as Tamil Nadu and Andhra Pradesh, he said.

Advisory council urges Govt to promote farmer producer organization (BL 30/1/2013)

To protect the interests of about 10 crore crisis-hit small and marginal farmers, the

Government should promote Farmer Producer Organisation (FPOs) in mission mode on a

scale like the self-help group movement, a National Advisory Council (NAC) working

group has said in its draft recommendations to the Government.

India has an estimated 9-10 crore small and marginal farmers who depend on agriculture for

income and employment. With continued land fragmentation, about 15-20 lakh new small

and marginal farmers are being added every year, the paper said.

The working group, which met here last week and has invited comments on its draft, said it

was important to create small and marginal farmer collectives to ensure better earmarking of

resources, thereby strengthening grassroots democracy.

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In India, 83 per cent of the farmers are small and marginal (2005-06), covering nearly 50 per

cent of operational holdings. Over 90 per cent of such farmers are dependent on rain for

their crops. Hit by the vagaries of the weather, shrinking land assets and profit margins,

difficulties in accessing critical inputs such as credit, water, power and quality seeds,

fertilisers, this segment has been facing a deep crisis, leading to continued farmer suicides in

many regions.

RISK MITIGATION

“The present arrangements for risk mitigation, especially crop insurance instruments, are

highly unsatisfactory and do not adequately cover the risks faced by small and marginal

farmers,” it noted.

The working group, therefore, suggested that first and foremost there was need to aggregate

small holders into members-based FPOs to provide essential goods and services to the rural

poor and contribute significantly to the process of rural poverty alleviation.

It also urged the Government to open more procurement centres in remote areas and deepen

the minimum support price system to help mitigate the risks involved.

Among other measures, the NAC group also proposed the creation of a professionally-

managed apex organisation, with functional autonomy, to act as a single-window source for

technical support, training needs, research and knowledge management to State

Governments, FPOs etc.

FINANCING

As far as financing goes, quick estimates by the working group suggest that if in the 12th

Plan, one crore small and marginal families are targeted to be brought under the FPO

umbrella, the Budgetary requirement would be about Rs 3,600 crore for the entire five-year

Plan period or about Rs 720 crore a year.

The annual budget of the Rural Development and Agriculture Ministries in the 12th Plan is

likely to be about Rs 1,30,000 crore, which means that only 0.55 per cent of the budget of

the two Ministries would be adequate to promote FPOs,” it said.

The National Advisory Council had set up a working group in July 2012 to look into

“Enhancing Farm Income for Small Holders through Market Integration”.

Allocate 25 per cent Rashtriya Krishi Vikas Yojana funds for allied farm sector:

Sharad Pawar to states (ET 6/2/2013)

Agriculture Minister Sharad Pawar today asked state governments to allocate 25 per cent of

funds under the RKVY scheme for livestock and fisheries sector.

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"In 11 states, the share of livestock and fisheries sector in Rashtriya Krishi Vikas

Yojana (RKVY) was only 15 per cent or less. I would urge the state governments to allocate

at least 25 per cent of resources under RKVY," Pawar said at an event here.

Launching of RKVY during the 11th Five Year Plan has resulted in flow of additional

resources for farm and allied sectors, while empowering and providing flexibility to the

states, he said at the National Conference of State Ministers.

In the 11th Plan, the livestock and fisheries sector received 18.59 per cent (Rs 5,102 crore)

of total RKVY allocation of Rs 27,452 crore for all states as against the target of 25 per

cent, Pawar added.

In the current fiscal, the projects amounting Rs 1,165 crore have been sanctioned under the

scheme for animal husbandry, dairying and fisheries sector.

Emphasising that allied farm sector has potential to drive total farm growth to targeted 4 per

cent, Pawar asked the states to utilise funds available under various central schemes to

address major challenges like shortage of feed and fodder, effective control of animal

diseases and skill development among others.

He asked states to effectively utilise funds allocated to them under the National Mission for

Protein Supplements (NMPS), launched as part of RKVY last year.

The Centre has allocated Rs 160.99 crore to states, as against the total of Rs 500.26 crore

under NMPS for the 2012-13 fiscal.

On the proposed National Livestock Policy, Pawar said the Centre has formulated a draft

policy and has been circulated to states for views.

"This may be furnished expeditiously," he added. The draft policy aims to develop livestock

sector in a holistic manner.

Pawar said he has proposed reorientation of several schemes to provide more flexibility to

states in formulating projects to address major challenges facing the sector.

He said the animal husbandry, dairy and fishery sector is yet to receive it due attention.

Rs 52,000 cr farm loan waiver scheme a big financial scandal? (ET 7/2/2013)

The UPA-1's Rs 52,000 crore farm loan waiver scheme is turning out to be a big financial

scandal. Out of 1 lakh farm loan waiver accounts audited in 700 bank branches across the

country — involving disbursement of Rs 500 crore — about 30% of the waiver amount was

allegedly found to have been siphoned off by a nexus of bank managers andmicrofinance

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institutions (MFIs).

A comptroller and auditor general (CAG) inquiry into nearly 1 lakh accounts revealed that

more than Rs 150 crore was paid to half a dozen MFIs. These MFIs have provided no

relevant records to the banks if the benefits have actually gone to deserving farmers. The

auditor has also raised objection to the payouts made to MFIs as it was against the mandate

of the scheme, which was meant for small and marginal farmers. The disbursement was to

be made directly by the banks to eligible farmers.

TOI had reported on January 17 that the RBI had asked all banks responsible for

implementation of the waiver scheme to register FIRs against bank officials and MFIs who

fraudulently drew part of the benefit meant only for individual farmers.

As per the direction of the finance ministry and the RBI, banks have started recovery of

such fraudulent payments, starting with the accounts that have been scrutinized by the CAG.

The government may consider enlarging the scope of the audit, given that the CAG has

pointed out irregularities in more than 25% of the accounts.

The opposition BJP and Left have demanded that the CAG report on farm loan waiver be

tabled in the Budget session of Parliament and sought investigation of all disbursements

under the scheme.

The scrutiny was part of CAG's performance audit on the farm loan waiver scheme of 2008-

09. Sources said close to half a dozen MFIs have been caught in the act of colluding with

senior bank officials to claim part of the disbursement. When bank officials were asked to

produce documents against which they gave money to MFIs, no authentic accounts were

produced.

As per government records, loans of more than 3.2 crore farmers were waived till 2008-09,

thus making them eligible for avail fresh agricultural loans. This would have also helped the

banks de-clog their credit disbursement system.

Though the full waiver of loans was meant for farmers possessing less than two hectares of

land, the report revealed that the beneficiaries of the scheme constituted many big farmers

with large land holdings. Many of the bank branches have been accused of overlooking

deserving farmers having accounts in their bank who were denied benefits of the scheme.

After a directive from the finance ministry, the RBI issued a notice to chairmen and CEOs

of government banks to register FIRs against bank officials who tampered with records. The

directive also asked these banks to complete the recovery of such fraudulent disbursements

within a month.

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Budget 2013: Agriculture Ministry seeks more fund allocation to push output (ET

7/2/2013)

The agriculture ministry is seeking more budgetary support to increase farm sector growth

rate to 4% per annum from 3.5% at present.

"The allocation this year would be more as the country needs to produce more to

provide food security to the nation," an agriculture ministry official said. "The scheme

'Bringing Green Revolution in Eastern India' has done well with increased funds of Rs 1,000

crore. We expect more allocation." In the last budget, the total plan outlay for agriculture

and cooperation was increased by 18% from Rs 17,123 crore in 2011-12 to Rs 20,208 crore.

The upcoming budget is expected to focus on promoting assured stable and remunerative

prices, greater involvement of private players, quality input, power supply and distribution

of more institutional credit.

The outlay for farm sector programmes, such as Rashtriya Krishi Vikas Yojna, National

Mission on Agriculture Extension, National Mission on Seeds and Planting Material,

National Mission on Agricultural Mechanisation, National Mission on Oilseeds and Oil

Palm, National Mission for Sustainable Agriculture, and National Mission for Protein

Supplements and the Accelerated Fodder Development Programme, should be increased to

cover more farmers. The budget may reinforce the need to increase access to credit.

"Last year, the finance minister has raised the target of credit flow to farmers from Rs 4.75

lakh crore to Rs 5.75 lakh crore. This year also, more liquidity should be inducted in the

system to benefit farmers," the official said.

The budget may offer provisions for setting up National Agriculture Climate Damage Fund

and creation of post-harvest infrastructure in villages. "More focus is needed on National

Agriculture Research System, extension of the advance quality seeds to the farmers,

creating environment for equitable and employment generated agriculture," another official

said.

The food ministry is also gearing up for its ambitious food security programme. For food

subsidy, the ministry has demanded a budgetary provision of Rs 1.25 lakh crore, against the

existing Rs 80,000 crore. It has also sought funds for strengthening the public distribution

system (PDS) and putting an IT-enabled PDS in place for direct transfer of cash subsidy.

Meanwhile, to protect domestic refiners, the edible oil industry has sought an increase in

import duty on refined palmolein to 10% from 7.5% at present.

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Foodgrains output estimated to have crossed 250 mt this year: Pawar (BL 8/2/2013)

India’s foodgrains production is estimated to have crossed 250 million tonnes in 2012-13

crop year despite drought in several parts of the country, Agriculture Minister Sharad Pawar

has said.

“We had produced 260 mt foodgrains last year.

This year, we have crossed 250 mt irrespective of drought in some districts of Maharashtra,

Gujarat, Rajasthan and parts of Karnataka,” Pawar said at the Indian Seed Congress

organised by the National Seed Association of India (NSAI).

This year’s production is sufficient to meet the domestic demand, he said, adding that the

Government’s second advance estimate of foodgrains for 2012-13 crop year (July-June) will

be released later in the day.

Pulses, edible oil import

He said the country needs to reduce its import dependence on pulses and edible oil.

“My colleagues in the Finance Ministry are worried about higher import of pulses and

edible oil. We have to increase domestic production of these two commodities for which the

support of technological breakthrough in seeds and other inputs is required,” Pawar said.

India imports more than 50 per cent of its edible oil and pulses requirement.

Growth rate

To achieve the desired growth rate of 4 per cent in agriculture, Pawar said there is a need to

pay attention to all vital links in the value chain including seed.

“Seed is the critical initial input for agriculture. Public and private sectors have to partner

the process of change equally by bringing in better products, supplement the transfer efforts

of government and ensure that we never have to go back to the era of food shortages,” he

said.

Highlighting the private sector’s participation in crops like pulses and oilseeds is low, the

Minister said: “While there are technological barriers in developing hybrids in pulses,

success met with some of the oilseeds crops need to be pursued with vigour. This will help

reduce the import bill.”

Seed Bill

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On the New Seed Bill, Pawar said: “The important Bill is pending for a long time. The hope

is that the Bill will come for discussion in the Budget session. The Bill will resolve a lot of

issues faced by the industry.”

India's foodgrain export likely to be $40 billion in 2012-13 (ET 10/2/2013)

The country is expected to export foodgrain worth around $ 40 billion in 2012-13 on

account ofsurplus production, Minister of State for AgricultureTariq Anwar said today.

The country has shipped foodgrains worth $ 20-25 billion so far. The export is expected

to touch $ 40 billion by the end of 2012-13 fiscal, Anwar told PTI.

Foodgrains production in the country is expected to scale up to 250 million tonnes (MT) in

2012-13. Out of this, 240 MT foodgrain productions has already been achieved.

The Minister said there was tremendous scope for improvement of agriculture in the eastern

states. Keeping this in mind, the Union government has launched a special scheme to

achieve second green revolution in Bihar, West Bengal, Odisha and Assam.

Bihar Chief Minister Nitish Kumar had a meeting with Agriculture Minister Sharad

Pawar recently during which he gave details of a five-year agriculture roadmap formulated

by the state government. Pawar, he had said, assured all help to the Bihar CM for the

success of the roadmap for 2012-17.

Delay in regulatory clearance delaying technology transfer in agri sector (FE

13/2/2013)

Delay in regulatory clearances is slowing down the technology transfer to India's

agricultural sector, a top official with global agri major Syngenta on Tuesday said.

With more than $ 14 billion dollar annual turnover, Switzerland-based Sygenta which as

significant presence in country's hybrid seeds market, has been facing delays in regulatory

clearances for the chemical mixtures which improves crop protection.

“Many of the technology for crop protection and improvement has been readily available

globally. Yet because of slow pace of regulatory approval, the introduction of new

technology and solutions had been delayed,” Davor Pisk, Chief Operating Officer, Sygenta

told FE.

The company which also has a major presence in India's agrochemical market, had applied

to the agriculture ministry for introduction of insecticides – ampligo, difenoconazole and

propiconazola few years back. “We are yet to clearance for such chemical mixtures because

of lack of availability of technical manpower in the agriculture ministry,” Pisk said.

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He said government's policy makers must address the concern of regulatory constraints

urgently so that farmers get global technology at faster pace.

He said for introduction new chemicals, it takes more than two years of field testing before

the product is approved for commercial use. “No other regulatory systems have such time

consuming process which slows down introduction of new chemicals even with a small

variations,” Pisk noted.

Syngenta is major players in India's hybrid seeds varieties – cotton, corn, tomato, cabbage,

caulipower, okra and sweet corn. In 2011-12, the company reported a turnover of Rs 357

crore on its seed business against combined turnover of Rs 2539 crore for the country.

Notwithstanding the slow progress of expansion of hybrid rice area in the country, Syngenta

is bullish about India's market. The company is banking on varieties developed by Belgium

based Devgen which Syngenta acquired last year

Syngenta acquired Beglium based Devgen by paying $ 523 million which is expected to

help expand hybrid rice seed market in India. Devgen has rice traits that have been

engineered to resist disease, as well as other formulas for crop protection.

“We admit that earlier varieties of hybrid rice introduced earlier in India were not accepted

by consumers. We need to improve the quality of hybrid rice varieties which would be

acceptable to consumers,” another official with Syngental said.

Syngenta is also planning to scaled up its patented technology Tegra, where seedlings are

transplanted mechanically and also supported by agronomy consultation services. Tegra was

developed by Syngenta for the Indian market and was introduced in States such as Tamil

Nadu and Andhra Pradesh in 2011.

Centre seeks states' consensus on contentious Food Bill issues (BS 13/2/2013)

With Centre planning to present Food Bill in the Budget session of Parliament, Food

Minister K V Thomas today urged states to evolve a consensus on contentious issues like

coverage and identification of beneficiaries.

The Food Bill, which was introduced in the Lok Sabha in December 2011, aims to give

legal right over subsidised foodgrains to two-third of the country's population.

In its latest report, the Parliamentary panel has suggested drastic changes in the Bill, saying

all the beneficiaries be provided 5 kg of wheat and rice per month at a uniform rate of Rs 2

and Rs 3 per kg respectively.

"The Standing Committee has made recommendations. However, those relating to coverage

under PDS, identification of beneficiaries, entitlement to foodgrains and their prices are the

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principle ones, which require careful consideration. There are divergent views on each of

these issues," Thomas said.

He was addressing the consultation meet of state food ministers on Food Bill here.

The challenge is "to arrive at a workable, practical and equitable approach, keeping the

larger objective of the bill in mind," he said.

Stating this is the last opportunity for consultation before finalising the Bill, Thomas

said,"We need to finalise our views on these recommendations early, give a final shape to

the Bill and present it back to Parliament for consideration and passage in the ensuing

Budget session."

The views of the state governments are "extremely important" as "still there are certain

aspects which need to be discussed before taking a final view."

At present, below poverty line (BPL) families effectively get 7 kg of wheat and rice at Rs

4.15 and Rs 5.65 per kg respectively per month.

Government had proposed to change this in the Food Security Bill by allotting 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 per kg for rice.

If the Parliamentary panel's recommendations are accepted, it 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.

Thomas further said the Supreme Court has also from time to time passed orders for

strengthening the Public Distribution System (PDS) on which states are also required to file

their response.

About 17 states including West Bengal, Tamil Nadu, Kerala and Gujarat are participating in

day-long meeting.

Additional Rs 20,000 crore needed to implement Food Security Bill: Thomas (BL

15/2/2015)

The Government would require an additional Rs 20,000 crore to implement the proposed

Food Security Bill, said Food Minister K.V.Thomas on Thursday. The proposed Bill would

increase the food grain requirement by around 7 million tonnes (mt) to 62 mt.

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“We hope to introduce the Bill in the last week of the first half of the Budget session and

pass it in the second half,” Thomas said. The Budget Session is expected to commence from

February 21.

An ambitious programme of the United Progressive Alliance II Government, the proposed

Food Security Bill aims to provide subsidised food grains to about two-thirds of the

country’s population.

Currently, the Government incurs a subsidy burden of about Rs 1 lakh crore in providing

subsidised food grains of about 55 mt to the poor through the public distribution system.

Several States had expressed reservations on the provisions of the proposed Bill, especially

on subsidised grain allocation. Tamil Nadu had even sought an exemption, saying it wanted

to stay out of it.

Seeking to allay the concerns raised by the States, Thomas said, “We will protect the current

subsidised grain allocation of the States. We hope Tamil Nadu will also come around to our

view.” The Food Minister further emphasised that the distribution system should be

strengthened for effective implementation.

The Bill was introduced in the Lok Sabha in December in 2011 and sent to a Parliamentary

Standing Committee. The revised Bill is being worked out on the basis of the Parliamentary

panel recommendations.

The proposed Bill provides for coverage of up to 75 per cent of the rural population, with at

least 46 per cent of the population belonging to priority households. It will also provide for

up to 50 per cent of the urban population, with at least 28 per cent of the population

belonging to priority households for receiving subsidised foodgrains under the targeted

public distribution system.

Budget boost likely to small and marginal farmers (BS 18/2/2013)

To boost small and marginal farmers, the Budget is likely to announce a credit guarantee

fund for Farmer Producer Organisations (FPOs), with equity participation by government in

such organisations.

An FPO is typically a company comprising only farmers and producers but formed under

the Companies Act. It is different from a cooperative society, though in most places these

are called co-ops. In an FPO, only a producer can become a member; in a co-op society,

others can, too. The latter are registered under states’ cooperative acts. According to a senior

official from the department of agriculture, there are close to 300 FPOs, covering a little

over 500,000 farmers. These numbers could go up significantly with Budget support.

“By June, our target is to have 500 FPOs, with a combined membership of almost 10 lakh

farmers. For that, we would need some support, as there are almost 60 crore farmers in the

country who can be brought under the FPO umbrella,” the official said.

The role of FPOs in alleviating the plight of small and marginal farmers has also been

recognised by the government’s National Advisory Council (NAC), chaired by Sonia

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Gandhi, president of the ruling party. A working group of the NAC has recently said FPOs

were a necessity in the Indian environment, if one has to effectively address issues such as

shrinking land, difficulty in accessing critical inputs like fertiliser and credit, a fragmented

value chain, weak bargaining with market agents and low return on investments.

An official said the Small Farmers’ Agri-Business Consortium (SFAC), promoted by the

department of agriculture, is to act as a nodal agency to provide support for creation of

FPOs. “Typical FPOs start with a equity base of Rs 5-10 lakh, which can expand if the

business expands. In this, the member-contribution is Rs 500-1,000. The members also

contribute a minimum amount of their produce and ensure a fixed quantity of input is

purchased, so that the organisation does not fail,” the official explained. He said farmers

who grow diverse crops can also form an FPO because there would be some common

produce between them.

FPOs are being mobilised through a network of about 25 grassroots non-governmental

organisations. It takes six to nine months for an FPO to get registered. The biggest problem

they face since inception in the past decade has been access to funds. This is more acute for

new FPOs, officials explained.

According to a background note on the financing of FPOs, discussed in an official meeting

some months earlier, these organisations suffer from inadequate funding because formal

financial institutions such as commercial banks are wary of lending to these bodies, largely

due to their inability to provide adequate collateral to cover risk.

Specified agencies like the National Bank for Agriculture and Rural Development do have a

dedicated corpus to provide loans to producer organisations but it entertains proposals from

only mature FPOs, with a credit history of at least three years. SFAC’s own venture capital

fund remains, in principle, open to financing of FPOs. However, the condition of clubbing

venture capital with a bank loan has resulted in zero disbursal to producer organisations in

the past five years.

It is these difficulties that Budget allocation might help surmount. The NAC’s working

group’s report said the biggest catalyst to bringing small farmers together in an FPO would

require committing funds to develop capacity for at least three years, the minimum time

required for these organisations to grow.

Icrisat global meet: Focus on inclusive growth in farm sector (BL 18/2/2013)

The Global Planning Meeting of the International Crops Research Institute for the Semi-

Arid Tropics (Icrisat) has focussed on inclusive market-oriented growth to support poor

farmers.

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The five-day event held at the institute’s headquarters near here was centred on extending

the market opportunities for smallholder farmers and their families in the dryland tropics.

Tackling the complexity of challenges in the tropical drylands of Asia and sub-Saharan

Africa, the meeting was attended by about 160 senior scientists and managers from the

institute’s locations in India, Eastern and Southern Africa and West and Central Africa.

“We should never forget to connect the improvement of our crops to the improvement of the

poor peoples’ lives,” ICRISAT Director-General William Dar, said.

The emphasis of the event was on how to transition the institute’s work most effectively into

the new programmes. The institute is leading the research on grain legumes, dryland cereals

and neglected crops.

The institute conducts agricultural research for development in Asia and sub-Saharan Africa

with a wide array of partners throughout the world.

“We must ensure that our agricultural research for development initiatives help the dryland

poor move from poverty to prosperity by harnessing markets while managing risks — a

strategy we call Inclusive Market Oriented Development, ” Dar stressed.

Spread over 6.5 million square km of land in 55 countries, the semi-arid tropics have over 2

billion people, and 644 million of these are the poorest of the poor.

The institute through its partners help empower these poor people to overcome a degraded

environment through better agriculture. The institute has two regional hubs and five country

offices in sub-Saharan Africa.

Food rights organisations flay Sharad Pawar’s pitch for GM crops (BL 20/2/2013)

Food rights organisations, under the aegis of the Right to Food Campaign (RFC), have

written to Agriculture Minister Sharad Pawar urging him to tackle food security in more

‘fundamental ways’ rather than link it with genetically modified (GM) crops.

At a press conference here on Tuesday, RFC released the letter signed by hundreds of

organisations, including National Advisory Council member Aruna Roy criticising the

Agriculture Ministry’s stance in an affidavit to the Supreme Court calling it a “trivialisation

and mockery of the grave situation of hunger and malnutrition that exists in India”.

“In this affidavit, your Ministry argued that GM crops and their field trials were needed for

India’s food security, in addition to wilfully choosing to misinterpret the sound

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recommendations of the Technical Expert Committee set up by the Supreme Court,” says

the letter.

Maintaining that food security was not “a simplistic supply-related matter, as our paradox of

overflowing godowns, record buffer stocks and the hungry millions showcases”, the letter

said it was unfortunate that while the discourse around food security and hunger had become

more nuanced the world over, the Indian Government chooses to be “unscientific” in its

outlook.

It urged the Agriculture Ministry not to “come in the way of much-needed improvements in

the transgenics scene in India,” reminding it of the recommendations made by the Technical

Expert Committee.

The letter said it did not make sense that the Ministry, instead of focusing on strengthening

local food production and distribution, was diverting valuable investments towards

“controversial, unproven techno-fixes.”

Pushing for the GM crops to boost farm output, Pawar on Monday had said scientists should

not be denied the right to conduct field trials of such crops. In August last year, the

Parliamentary Standing Committee on Agriculture had recommended discontinuation of that

all field trials in GM crops. Three years earlier, the Government had placed a moratorium on

the commercial release of Bt brinjal.

Centre doing discrimination in foodgrain procurement: Nitish Kumar (ET 22/2/2013)

Chief Minister Nitish Kumar today accused theCentre of discriminating gainst Bihar with

Food Corporation of India (FCI) going back on its promise of procuring foodgrain speedily

despite repeated requests.

Kumar, who intervened while Food Minister Shyam Rajak was replying to a question of

Leader of Opposition in the assembly Abdul Bari Siddiqui, said FCI had promised the

government that it would speedily procure grains from farmers.

"During Adhikar yatra (last year) I had interacted with FCI officials for procurement of

grains and they had assured me that the process would be carried out speedily but FCI is not

delivering on its promise...The state government's huge cash is held up due to this," he said.

The process of purchase of grain has been hit hard in the state due to unavailability of

quality controller and frequent strikes in FCI, Kumar said, adding that he has drawn

attention of the Centre on the matter.

The Opposition is seeking to score political points on this issue, he said and appealed to

them to fight unitedly against the "discrimination".

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"Had it been Punjab or Uttar Pradesh, all the legislators would have been on their feet to

unitedly fight suchdiscrimination against the interest of farmers," he said.

On slow procurement of wheat in the state, he said it was because farmers were getting good

rates in the open market than the minimum support price.

Earlier, the state food minister rubbished the opposition leader's claim that paddy was

rotting in open space atSitamarhi and other places.

Gujarat foodgrain production dips by 8 lakh tonnes in 2011-12 (ET 25/2/2013)

The foodgrain production in Gujarat has dipped by 8 lakh tonnes in 2011-12 over the

previous financial year, according to Socio Economic Review of the state.

As per the second advance estimates for year 2012-13, the production of total foodgrains

and oil seeds are estimated to be 71.56 and 38.28 lakh tonnes, respectively, a considerable

dip.

However, the overall agricultural growth rate of the state continues to be in double digit.

During Rabi season, at end of January 21, 2013, the acreage under various crops was

reported at 29.64 lakh hectares, which is 87 per cent of average area (34.21 lakh) sown

during the last three years, the review said.

"The acreage under wheat could dip further this year," Gujarat Director Agriculture B R

Shah told PTI.

During 2011-12, the state produced an estimated 92.57 lakh tonnes of foodgrains compared

to 100.71 lakh tonnes in 2010-11, the review said.

The dip in production is being attributed to decrease in area under foodgrain in the state.

The average yield per hectare for foodgrains has also marginally dipped to 1,955 in 2011-12

as compared to 2,053 in 2010-11.

The area under foodgrains decreased from 4,905 hectares in 2010-11 to 4,735 hectares in

2011-12, where as area under oil seed crops remained almost unchanged.

In foodgrain basket, the wheat acreage reported a dip of 14.98 per cent in 2011-12 at 1,351

hectares, in the state. It was 1,589 hectares in 2010-11.

The wheat production in Gujarat also dipped by 18.77 per cent at 40.72 lakh tonne in 2011-

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12. It was 50.13 lakh tonne in 2010-11.

The production of oil seeds also marginally dipped at 50.35 lakh tonnes in 2011-12

compared to 51.42 lakh in 2010-11.

Output of agricultural sector in Gujarat has been largely dependant on south-west monsoon.

The wide variation in rainfall received by different parts of the state has been the

characteristic feature of the monsoon here.

The acreage under Kharif crops till October 1, 2012 was 81.72 lakh hectares against normal

area of 87.97 lakh hectares, the review said.

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AGRICULTURAL COMMODITY PRICES

January consumer price inflation at 10.79 % (BS 12/2/2013)

Rising for the fourth consecutive month, retail inflation remained in double digits at 10.79%

in January, driven by higher prices of vegetables, edible oil, cereals and protein-based items.

The retail inflation had stood at 10.56% in December, 9.90% in November and 9.75% in

October, 2012.

The vegetables basket in January recorded the highest inflation of 26.11% among all the

constituents that make the Consumer Price Index (CPI), according to data released today.

Vegetables were followed by the oil and fats segment at 14.98%. Meat, fish and egg became

13.73% more expensive during the month.

While cereals and pulses became dearer by 14.90% and 12.76% respectively on an annual

basis, sugar turned more expensive by 12.95%.

Clothing and footwear witnessed 11% increase in prices during the month.

In urban areas, retail inflation rose to 10.73% in January from 10.42% in the previous

month. The CPI for rural population increased to 10.88% during the month from 10.74% in

December.

The data for wholesale price index (WPI)-based inflation is expected on Thursday. The WPI

figures for December stood at 7.24%, much higher than RBI's comfort level of 5-6%.

The Reserve Bank of India (RBI) in its monetary policy last month had slashed its key

interest rates by 0.25% and released Rs 18,000 crore additional liquidity into the system to

perk up growth through reduced cost of borrowing.

The RBI has forecast the March end WPI inflation at 6.8%.

Meanwhile, industrial output growth rate contracted by 0.6% in December, 2012 compared

to a growth of 2.7% in same month a year ago.

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Restricted arrivals, rising domestic demand push rice, wheat, poultry items up (BL

18/2/2013)

Restricted arrivals in the market coupled with rising domestic demand, pushed rice, wheat

and poultry prices upwards last week.

WHEAT

After ruling flat for almost two weeks, dara wheat prices improved by Rs 10 to 1,530-1,535

a quintal on account of frantic buying by the small aata chakki owners.

Sewa Ram, a wheat trader, told Business Line that small aata chakki owners have been

depending on open market to meet their demand as they were not able to get stocks from

Food Corporation of India. Traders expect that any major alteration in market is unlikely in

the next week, he added.

Similarly, wheat futures extended a firm trend on export and strong physical demands.

On the National Commodity and Derivatives Exchange, wheat contracts from February to

June ended up with a positive note.

Similarly, spot market remained supportive and went up by Rs 30 last week.

According to the reports, wheat exports are expected to remain competitive at least till July.

RICE

Prices of aromatic and non-basmati rice varieties went up by Rs 50-400 on account of low

availability of good quality stocks.

Rising domestic demand and fresh trade enquires also supported the market throughout this

week.

Pusa-1121 (steam) and Pusa-1121 (sela) were quoted at Rs 7,600 and Rs 6,600,

respectively, which were the highest level of the season.

Traders expect that market may rule range-bound for the next few days.

Retail inflation for agri workers rises to 12.3% in January (BL 21/2/2013)

Retail inflation for agriculture workers increased to 12.30 per cent in January mainly due to

increase in prices of food items and bus fare.

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The same for rural labourers was 12.28 per cent in January, according to an official release.

“Point to point rate of inflation based on the CPI-AL and CPI-RL increased from 11.33 per

cent and 11.31 per cent in December, 2012 to 12.30 per cent and 12.28 per cent in January,

2013,” a Labour Ministry statement said here.

According to the data released today, the retail inflation based on food index of Consumer

Price Index—Agriculture Labourers (CPI-AL) and Consumer Price Index-Rural Labourers

(CPI-RL) are 12.98 per cent and 12.94 per cent respectively during January this year.

The All India CPI numbers for agricultural and rural labourers for January increased by 6

points each to stand at 694 points 695 respectively.

In case of farm workers, the index recorded an increase which varied between 2 to 12 points

in 17 states and a decrease between 1 to 9 points in 3 States.

Haryana with 765 points topped the index table whereas Himachal Pradesh with the index

level of 554 points stood at the bottom.

In case of rural workers, the CPI recorded an increase between 2 to 11 points in 17 states

and a decrease between 2 to 8 points in 3 states.

Haryana with 759 points topped the index table whereas Himachal Pradesh with the index

level of 578 points stood at the bottom.

Karnataka and Rajasthan registered the maximum increase of 12 points each for farm

workers.

Rajasthan registered the maximum increase of 11 points in respect of farm workers mainly

due to increase in the prices of wheat or atta, jowar, bajra, maize, ragi, moong dal, meat

goat, milk, mixed spices, onion, firewood, Anacin and bus fare.

On the other hand, Maharashtra state registered the maximum decline of 9 points and 8

points respectively for CPI-AL and CPI-RL due to more supply of rice in fair price shops

and decline in the prices of wheat, pulses, fish fresh, chillies dry, sugar and gur.

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AGRICULTURAL COMMODITY FUTURES

‘Commodity futures needed to hedge price risks’ (BL 1/2/2013)

Commodity futures offer a safe, scientific way of hedging price risks, besides opening up

another avenue of investment, according to Deepak Sayana, Deputy Manager, and NCDEX.

He was speaking here today at a seminar on stakeholders’ awareness and education on

agribusiness and commodities organised by the Hindu Business Line in association with

NCDEX and Forward Markets Commission.

He said the five national commodity exchanges and 21 regional exchanges offere a safe,

standardised futures trading opportunity for traders to mitigate price risks. Transaction costs

would be low and there would be no counter party credit risk in transactions conducted

through commodity exchanges, he said. He said NCDEX has emerged as the sixth-largest

commodity exchange in the world, with a daily volume of Rs 6,000 crore.

Twenty-four commodities were being traded presently on the exchange and it was growing

annually at 29 per cent.

He said options and indices need to be introduced in future in the commodity exchanges, as

they would be more beneficial to farmers. Banks and MFs should also be allowed to

participate and warehousing reforms would also be needed. There was also a need for

improvement in grades and standards, he added. As commodities markets mature in India,

these changes would be introduced.

Earlier, A. Anjaneyulu, President of the Indian Chamber of Commerce, said many local

merchants and traders burnt their fingers while trading in commodities, and there should be

greater regulation and control over futures trading. There should also be a ceiling on

quantities, he felt. Though futures trading may be good in principle, the Government should

bring about many changes in policy to make it useful to the traders and farmers.

G. Chandrasekhar of the The Hindu Business Line earlier explained the features of

commodity futures trading and how it would help in hedging price risks in the commodities

market. A similar seminar was held in Vijayawada on Thursday. M. Muralikrishna,

President of the Andhra Chamber of Commerce, said there is a need to conduct more such

programmes to enhance awareness about the commodities market.

N. Venkateswarlu, President of the Siddharth Academy, said commodities market had

assumed great importance of late.

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Deepak Sayana, Deputy Manager, NCDEX, said commodities exchanges lowered the

transaction costs, standardised the contract size and also eliminated the credit risk.

Potato futures extend gains, up 0.83 per cent on increased demand (ET 1/2/2013)

Potato prices extended gains for the second day by rising Rs 6.90 to Rs 838.50 per quintal in

futures trading today as traders busy in enlarging their positions, driven by increased

demand in the spot market.

Tight supplies in the physical market following less arrivals from producing regions further

fuelled the uptrend.

At the Multi Commodity Exchange, potato for delivery in April added Rs 6.90, or 0.83 per

cent, to Rs 838.50 per quintal in business turnover of 31 lots.

The potato for delivery in the March contract also gained Rs 6.40, or 0.76 per cent, to Rs

848 per quintal in 31 lots.

Analysts said besides increased demand in the spot markets, restricted arrivals from

producing regions mainly helped potato to maintain a rising trend at futures trade.

Sugar futures at 6-mth low on poor spot demand, ample supplies (ET 1/2/2013)

Sugar prices fell by Rs 19 per quintal to trade at nearly six-month low of Rs 3,128 in futures

trade today as speculators engaged in reducing their positions largely due to poor demand

amid higher supplies in physical markets.

At the National Commodity and Derivatives Exchange, sugar for delivery in February

declined by Rs 19, or 0.60 per cent, to trade at Rs 3,128 per quintal, a level last seen in July

2012, with an open interest of 35,620 lots.

The sweetener for delivery in March also shed Rs 15, or 0.47 per cent, to Rs 3,184 per

quintal, in an open interest of 15,950 lots.

Marketmen said persistent fall in sugar futures prices was mostly due to poor demand

against higher supplies in the physical markets.

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Wheat seen down on improvement in supplies, higher production (ET 5/2/2013)

Wheat futures are likely to fall this week on an expected rise in production amid signs of

improvement in supplies in spot markets.

The government is sitting over huge stocks, more than four times the target of 8.2 million

tonnes, and traders expect it to offload some of the stocks in the open market and allow

additional exports to create space for the new season crop.

The government 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.

Traders expect the government to sell wheat in higher quantities in the open market, which

could weigh on prices.

"There is nothing in the market to support prices. Wheat production is likely to rise, and

stocks in warehouses are very high, all these factors could drag prices down," said Manjit

Singh, a trader based in Ludhiana, Punjab.

After lifting a 4-year-old ban on wheat exports by private traders in 2011, last year the

government approved 4.5 million tonnes of exports from its overflowing warehouses, and

more than 2 million tonnes of this total has yet to be shipped.

India grows one wheat crop, which is planted in November-December and harvested in

April-May.

Sugar rebounds from 7-month low on bargain buying (ET 7/2/2013)

Sugar futures rebounded on Wednesday from their lowest in seven months on bargain

buying driven by expectations the government would give mills freedom in selling sugar in

the open market.

At 1051 GMT, the key March sugar contract onNational Commodity and Derivatives

Exchange was up 0.32 per cent at 3,131 rupees ($58.94) per 100 kg, after falling to 3,108

rupees in the previous session.

Spot sugar fell 8 rupee to 3,217 rupees per 100 kg in the Kolhapur market in top-producing

Maharashtra state.

"The sugar industry is expecting some supportive steps from the government and it is likely

to abolish non-levy sugar release mechanism," said a Mumbai-based dealer.

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Non-levy, or free-sale sugar, is sold by millers in the open market, but the quantity each mill

can sell is fixed by the federal government.

"At lower level, buying is emerging. Traders are expecting an improvement in demand in

the coming weeks with a rise in temperature," said Prasoon Mathur, a senior analyst

with Religare Commodities.

Demand for the sweetener from bulk consumers like soft drinks and ice cream makers

usually drops in India during the winter season.

India's sugar output rose 3 per cent to 13.8 million tonnes on year in the first four months of

the season beginning October 2012, a leading industry body said on Monday.

Mills in India are expected to churn out 24.3 million tonnes of sugar in 2012/13, down from

26 million tonnes in the previous year.

Potato futures fall 1.04 per cent on reduced offtake (ET 7/2/2013)

Potato futures prices fell by Rs 8.90 to Rs 845 per quintal today as speculators offloaded

their positions, driven by less offtake in the spot market.

At the Multi Commodity Exchange, potato for April delivery fell by Rs 8.90, or 1.04 per

cent, to Rs 845 per quintal, with a business volume of 39 lots.

For delivery in March, potato traded lower by Rs 4.80, or 0.56 per cent, to Rs 839 per

quintal, with a trade volume of 74 lots.

Marketmen said fall in potato prices was mostly due to offloading of positions by

speculators, driven by subdued demand in the spot market.

They said increased supplies in the physical market, following persistent arrivals from

producing region further pulled down the prices.

‘Commodities futures will mitigate price risk’ (BL 20/2/2013)

The importance of commodities futures trading is going to be enhanced manifold in the

coming decades and will be of immense use to farmers, traders and processors as well,

according to Ashish Argade, Manager of NCDEX.

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He was speaking here on Tuesday at a stake-holders awareness seminar on commodities

futures organised by The Hindu-Business Line in association with the Forward Markets

Commission and NCDEX.

He said that commodities future trading would result in price discovery and facilitate

hedging of risks for all those involved in the field of commodities. He said the Government

had permitted futures trading in commodities from 2004 and at present five major

commodities exchanges were functioning in the country.

He said there was a lot of price volatility in commodities and therefore there was an

imperative need for price risk mitigation which can be achieved by futures trading through

commodities exchanges.

There would be transparency in the transactions and there would not be any defaults.

He said that in future there would be integration of spot and futures markets in commodities

which would be of greater use to farmers. Currently, spot markets are under the control of

State governments and the futures markets in commodities are under the control of Union

Government. There is a need for uniform regulations to bring about integration of spot and

futures markets.

G. Chandrasekhar of Business Line explained about the mechanics of futures trading

through commodities exchanges and how commodities would be the critical drivers of the

Indian economy in the next 25-30 years. He also said that India was an ancient nation with

young population and commodities markets also opened up a great investment opportunity

for the public. However, deeper knowledge of the market and commercial intelligence

would be required for investments in commodities markets. For price risk mitigation,

commodities futures trading offered the best solution, he added. Srikakulam Rice Millers

Association President T. Jogarao said that the rice market should be freed from controls and

it would be of use to farmers as well as rice millers. He said that it was not correct to project

rice millers as exploiters, as the margins in the business were very slender.There was an

interaction session at the end of the semi.

Wheat futures may remain supportive on hopes of higher exports (Bl 24/2/2013)

After witnessing a downtrend in the first half of the week, rice and wheat market ended on a

positive note last week while poultry items witnessed a mixed trend.

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WHEAT

On the National Commodity and Derivatives Exchange, following profit booking, there was

some volatility but wheat contracts from March to June ended on a positive note on the

hopes of higher exports.

Similarly, spot market remained supportive and went up by Rs 10 last week.

According to trade experts, wheat futures are likely to remain supportive in near term on the

expectations of higher exports.

However, some aggressive selling is expected and sellers may try to sell below the market

price because the demand is slowing.

In the physical market, dara wheat remained in keen demand following good domestic

demand for flour and managed to rule firm throughout the week. After witnessing a price

rise in the recent past, dara wheat remained unchanged and sold at Rs 1,530-1,535 while

flour prices increased marginally by Rs 5 on fresh buying and sold at Rs 1,755 a quintal.

RICE

After witnessing some correction earlier on Monday on profit booking, rice market regained

its upper levels.

Frantic buying by the bulk buyers in order to take good advantage of lower prices pushed

rice prices up. According to Amit Chandna, Proprietor of Hanuman Rice Trading Company,

market may rule range bound for the next few days but within a positive territory.

Market sentiments are still largely positive as domestic demand is expected to pick up in the

coming days, he added.

POULTRY

Restricted arrivals coupled with rising domestic demand pushed egg prices further up last

week.

Egg prices increased by 22 paise over the last one week and settled at Rs 3.77.

On the other hand, after witnessing a good rally in recent past, chick prices remained

unchanged on steady demand and sold at Rs 33, while broiler witnessed some correction on

reduced off-take.

Traders expect that broiler may regain its upper levels in the next few days as arrivals are

still on the lower side.