Japan & Small Farmers & WTO + Commodity Futures & Manipulations

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In This NEWS Bulletin **************************** On WTO Issues- 1. Balance between trade ambition and development must: AFGC - Asian Farmers' Cooperatives 2. Japanese farmers urge India not to sacrifice farm interests thru FTAs 3. Mantra for Japan farmers in global trade: Cooperatives - The Indian Express 4. US tells India to open up for global trade 5. India-Sri Lanka FTA - Higher quota for vanaspati import from Lanka resented 6. Manipulations in COMMODITY FUTURES : Ketan Parekh manipulating maize market: IB

7. Multi-commodity exchange MCX registers highest cardamom contract in November -------------------------------- Balance between trade ambition and development must: AFGC - Asian Farmers' Cooperatives http://www.financialexpress.com/fe_full_story.php?content_id=146892 ASHOK B SHARMA Posted online: Monday, November 20, 2006 at 0422 hours IST TOKYO, NOV 19: With a view to protecting the livelihood and security of small farmers in the Asian monsoon region, farmers’ cooperatives have advocated the idea of using special products (SPs) and special safeguard mechanism (SSM) in the global trade. The 4th special seminar of the Asian Farmers’ Group for

Cooperation (AFGC), which concluded its deliberations last week here, called for a proper balance between development issues and trade ambition level in WTO negotiations. Some leading AFGC members also participated in the summit of agriculture ministers of 10 Asean countries, Japan, South Korea and China, in Singapore. The AFGC conclave was hosted by the Central Union of Agricultural Cooperative of Japan, JA Zenchu. Farmers’ organisations from India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam took part in the conclave. The AFGC resolution, however, fell short of demanding stronger options -- restoration of the mechanism of quantitative restrictions (QRs) on imports and removing items like fisheries, mining and forestry from the non-agricultural market access (NAMA) negotiations. Currently, the AFGC does not support the concept of

an alternative global trading system, replacing WTO, for ensuring farmer-centric, sustainable agriculture, as demanded by several interest groups across the world. Emphasising the need for a strong cooperative movement to protect the small farmers in the Asian monsoon region against the adverse impact of the unfair global trading system, the AFGC resolution urged trade negotiators to accept the fact that farmers in different countries operate under varying environment and natural conditions and have equal right to survive and prosper. The resolution called for phasing out "trade-distorting subsidies", which have depressed global prices to the disadvantage of Third World farmers. It also called for cooperation among small farmers across the world. JA Zenchu president Isami Miyata clarified that subsidies given by Japan had not

distorted global prices as the country did not export farm products. The farmers’ cooperatives said countries in the region had suffered heavily due to liberalisation in imports. The matter of the fact that trade flows might increase if market access reforms are aggressively pursued. Moreover, there is no guarantee that the move will make domestic markets and the economy more productive and ensure security for small and marginal farmers. "Trade negotiators should realise that that it is only a small number of large exporting countries and not majority of the farmers in the Asian monsoon region that seek a high level of ambition from increased market access," the AFGC said and added that "poor countries should be given sufficient time to adjust to the trade liberalisation regime." Addressing the AFGC conclave, Osamu Kusumoto, secretary general of

Asian Population and Development Association, alleged that the developed countries had transferred their profit from industrial sector to the farm sector. He also said that these countries exported food at a price lower than that of production cost in developing countries. He accused the developed economies of exporting wasteful energy to developing countries through industrialised agriculture. Although the population in Asia is moving towards stabilisation, the momentum will be there for the next 50 years. The WTO should, therefore, consider aspects like population and environment in trade negotiations. Japanese farmers urge India not to sacrifice farm interests thru FTAs http://www.financialexpress.com/fe_full_story.php?content_id=146986 ASHOK B SHARMA Posted online: Tuesday, November 21, 2006 at 0300 hours IST TOKYO, NOV 20: Japanese farmers’ cooperative have urged India and other developing countries to resist from temptation of entering into free trade agreements (FTAs) particularly with the developed countries which may endanger the interests of small and marginal farmers. "Business organisations in Japan are pressing the government to enter into FTAs or economic partnership agreements (EPAs) with Australia and the US. We are asking the government to keep farm products out of these proposed agreements," said Isami Miyata, president of the country’s central union of agricultural cooperatives - JA Zenchu. JA Zenchu executive director, Shigeo Fuji said that FTAs and EPAs with the developed countries would be fatal to small and marginal farmers in

the Third World as the developed countries would ask for more market access for their cheap subsidised farm products. "We hear that India has proposed to sign a number of FTAs. Adequate considerations should be made to keep farm products out of these agreements," he said. Japan though a developed country is not a food exporting country, but a net importer of food to the extent of 60% to meet its domestic needs. The country is very much concerned for protecting its domestic farm production through various subsidies and adequate tariff protection. In event of reduction in support under the Amber Box, the country plans to shift a portion of its subsidies to Green Box. Japan is in a difficult situation, says Fuji. It is classed a developed country and therefore is pressurised to reduce its subsidies and tariff. On the other side it has the obligation to protect its farmers, majority

of them are small landholder by default. In this context, Fuji makes a common cause with the developing world which are predominant with small and subsistence farming. "We have a common cause with farmers in India," he said. He called upon the farmers and cooperatives in the developing countries to resist attempts to sacrifice farmers’ interests through FTAs and EPAs. He said JA Zenchu has been collaborating with farmers’ groups and cooperatives in Asian countries in projects for capacity building, micro-credit, demonstration farms. It has also roped in AgriCord, an agency of International Federation Agricultural Producers (IFAP) to assist similar projects for small farmers in the developing world.------------------------------ From The Fields - THE INDIAN EXPRESS Mantra for Japan farmers in global trade: Cooperatives http://www.indianexpress.com/story/17152.html ASHOK B SHARMA Posted online: Friday, November 24, 2006 at 0000 hrs Tokyo, November 23 : A network of strong cooperative movement has shown Japan the way to protect its small farmers in the era of liberalisation and globalisation of trade. Japan’s farm cooperatives — JA — has its presence in every counties and municipalities. The apex organisation, Central Union of Agricultural Cooperatives — JA Zenchu — in collaboration with 47 prefectural unions of farm cooperatives guides the network of local village-level cooperatives which are engaged in extending credit, mutual insurance business,

supplying inputs and marketing farm produces. Another body, the National Federation of Agricultural Cooperatives — JA Zennoh — collects orders from farmers for supply of inputs and bargains with companies concerned for reducing the prices of inputs to be sold to farmers. JA Zennoh also markets farmers’produces through local cooperatives. A number of local cooperatives manage a chain of supermarkets and gas stations for member families and local people. The vibrant network of cooperatives has protected the farmers — a concept which India needs to emulate. India, though comparable with Japan in predominance of small and marginal farmers, has not made much headway in putting in place a vibrant cooperative movement for the benefit of farmers. Success stories of cooperatives are only in case of select farm commodities like sugar, dairy products, tobacco, fertiliser. The role of marketing cooperative National

Federation of Agricultural Marketing Cooperative is limited and highly dependent on government support. The Japanese government supports the farm cooperatives and NGOs involved in the farm sector. But there is strict monitoring by the ministry of agriculture and forestry of the funds released to the cooperatives. “We need to support our farm sector as we have already become a net food importing country,” says JA Zenchu president Isami Miyata. “Japan started the process of liberalisation through multilateral trade negotiations 30 years back. The country’s food self-sufficiency rate gradually eroded and farm imports rose 3.5 times in the past 30 years. Today, Japan imports 60 % food to meet its needs. We are the largest food importers among the developed countries.” But there is problem, which Japan faces in rendering subsidies to farmers. The country is categorised as developed country in WTO and like

food-exporting developed countries, it is being called upon to make deep cuts in bound tariff rates and sharp reduction in subsidies. Such a situation would entail disaster for Japanese farmers, says Takayuki Sugiyama of JA Zenchu’s WTO and EPA office. “India and Japan share the same same concern of protecting the small farmers. We do subsidise our farm sector, but our subsidy regime do not distort global trade as we do not export food products. Hence, we should not be called upon to reduce our protection,” he says. Japanese farmers, therefore, want to make a common cause with the small and marginal farmers in the developing world. JA Zenchu is supporting demonstration projects for jatropha cultivation in Thailand, micro-credit venture in Indonesia. It has roped in International Federation of Agricultural Producers and through the organisation’s arm AgriCord a number of capacity-building projects for farmers in

developing countries are taken up. Institute for Development of Agricultural Cooperation in Asia undertakes capacity building of cooperatives. The concern is to protect 40 per cent of the domestic food production, says JA Zenchu executive director Shigeo Fuji. He says that apart from cheap subsidised imports, there are problems of aging farmers, people moving out of agriculture, finding farming not remunerative and abandoned farm land increasing from 5.1% in 2000 to 10.1 % in 2005. Japan and India stand in comparison as far as problems of small farmers are concerned. Japan’s total population is much less than that of India because of the area size of the country. Yet, Japan’s population problem is comparable with India’s. Japan has a population density of 336.23 per sq km higher than India at 306.92 per sq km. Though the number of people in agriculture is not that large as in

India, yet it has a good number of farmers. Japan has deployed modern technologies suitable to small farms, which has resulted in sharp increased in production. But crop productivity has reached a plateau as in most countries which have deployed modern technologies. -------------------------------US tells India to open up for global trade http://www.financialexpress.com/fe_full_story.php?content_id=147023 ASHOK B SHARMA ECONOMY BUREAU Posted online: Wednesday, November 22, 2006 at 0039 hours IST NEW DELHI, NOV 21: The United States on Tuesday reiterated that resolving the issue of market access was important for the Doha round of talks to be successful. It said that India could lift millions of its people out of poverty by further opening up to global trade. Not budging from his country’s rigid official position, the secretary in the US department of agriculture, Mike Johanns, while speaking at the Federation of Indian Chambers of Commerce &

Industry on Tuesday, said that his country was not the world leader in render cash support to farmers. He alleged that the European Union, followed by Japan, were ahead of the US in the race. Johanns blamed the developing countries for asking a few million dollars subsidy cut, instead of making sincere efforts for ensuring greater market access, which would benefit the world trade. He said several studies have shown that greater market access can reduce poverty. Commenting on the G-20 coalition of developing

countries, he said Brazil, China, India and South Korea were all strong emerging economies and could be competitive in global trade. The US had large trade deficits with India and other countries, he pointed out. Strongly defending farm practices in the US, Johanns said that in the US about 60% of farmers did not depend on any subsidy. There was no subsidy for beef, poultry, pork, fruits and vegetables, he said, adding that only 40% of farmers get the benefit of the subsidy regime. In the US, it was the soybean

and cotton growers who take the chunk of 93% of the subsidy, he said When pointed out that Indian farmers would be adversely affected by opening up of markets to the cheap subsidised goods, Johanns said: "Indian textile industry imports cheap subsidised cotton from the US and make huge profits." Subsequently, when he was told that it was the industry that had prospered on account of cheap imports while the Indian cotton growers were in distress, Johanns did not have any satisfactory answer. He said that the US farm support programme cannot be accommodated under Amber Box and Blue Box and therefore there was a need to shift a part of the support to the Green Box "which is not trade-distorting". He said that the US has already committed to a 60% reduction in Amber Box subsidy and two-and-half per cent cut in Blue Box subsidy. All parties to the WTO negotiations should show flexibility, he said.---------------------------- Higher quota for vanaspati import

from Lanka resented http://www.financialexpress.com/fe_full_story.php?content_id=147226 ASHOK B SHARMA Posted online: Friday, November 24, 2006 at 0315 hours IST NEW DELHI, NOV 23: The manufacturers of hydrogenated vegetable oil -vanaspati - have resented the withdrawal of canalisation of the duty-free imported product from Sri Lanka. They have also opposed fixation of a high quota for vanaspati import amounting to 250,000 tonne from Sri Lanka against zero duty. The directorate general of foreign trade in a notification on November 21 has allowed imports of

250,000 tonne duty-free vanaspati per year from Sri Lanka without canalisation by any agency. Earlier the National Federation of Agricultural Marketing Cooperatives of India (Nafed) was the designated agency for canalisation of duty-free vanaspati imports from Sri Lanka. In a joint letter to the Prime Minister, Manmohan Singh, the chiefs of two leading industry bodies - Vanaspati Manufacturers’ Association of India (VMA) and Indian Vanaspati Producers’ Association (IVPA) - have demanded that canalisation of duty-free import of vanaspati from Sri Lanka by Nafed should be restored. They also demanded that tariff rate quota (TRQ) of duty-free vanaspati import from Sri Lanka be reduced to 100,000 per year. The India-Sri Lanka free trade

agreement since its operation has become a cause of concern for the vanaspati industry. The Indian industry is largely affected by the surge in cheap imports. The cheap imports have been possible as Sri Lanka has allowed import of crude palm oil (CPO) - an essential raw material - against a low duty. The Sri Lankan units, taking advantage of this situation, import cheap CPOs and process the same by simple hydrogenation process and export to neighouring India. In this context, the domestic vanaspati industry have demanded that they be given the option to import CPO against 20% duty on actual user condition as against the present duty of 70%. This, they say would make them competitive with their counterparts in Sri Lanka, Nepal and Bhutan. The domestic industry leaders also drew the attention of the Prime Minister to similar problems with free trade agreements with other neighbouring countries - Nepal and Bhutan. They pointed out that 50% of the country’s domestic consumption are being met through duty-free imports from these three countries which has adversely affected their capacity utilisation. The domestic industry leaders said that apart from duty-free import of 250,000 tonne vanaspati from Sri Lanka, 100,000 tonne from Nepal and 70,000 tonne from Bhutan, about 150,000 tonne are being smuggled through the porous India-Nepal border. They called for canalisation of all duty-free vanaspati imports with a view to ensuring effective equitable distribution across the country for keeping the falling price trend under control and stringent steps to check

smuggling.----------------------------- Ketan Parekh manipulating maize market: IB http://www.financialexpress.com/fe_full_story.php?content_1d=146965 P VAIDYANATHAN IYER Posted online: Tuesday, November 21, 2006 at 0209 hours IST NEW DELHI, NOV 20: Rogue trader Ketan Parekh seems to have targeted the commodities market again, despite the ban ordered by the Forward Markets Commission in January this year on him and his entities. This time around, he is allegedly manipulating trade in maize, an essential commodity, according to a report by the Intelligence Bureau to the government last week. Commodities regulator FMC, for its part, has initiated a probe and is trying to find out if Parekh has indeed squeezed the

market by stocking maize in warehouses in Nizamabad, a major centre. When contacted, FMC chairman S Sundareshan said, "The regulatory authority is investigating his involvement. We will send a report shortly to the government." India is the seventh largest producer of maize in the world and the commodity is traded on the National Commodity & Derivatives Exchange. Market sources said maize prices have shot up 20-25% in the last month. They attributed the sharp rise to systematic manipulation and said the current demand-supply position did not warrant such a price rise. At present, the regulator has not specified any position limits for maize and mentha oil. For some other commodities, including politically sensitive ones like wheat, the regulator has fixed position limits. Such limits restrict a trader from taking huge positions on that particular commodity, thereby reducing the possibility of manipulative

practices. Earlier, the regulator received similar reports from the Intelligence Bureau on Parekh’s involvement in manipulating the prices of some commodities, including mentha oil. It had investigated the issue and banned all entities, including those of Parekh that were prohibited by the Securities & Exchange Board of India, the Bombay Stock Exchange and the National Stock Exchange. The sources, however, said manipulators could always float new companies and enter the market again. It is likely that Parekh is taking help from professional broking houses in the country to rig the futures market by first accumulating physical stocks in various warehouses. Both mentha oil and maize are not big-ticket commodities as far as market value is concerned. The total value of maize contracts traded on November 17 stood at Rs 133 crore. Market players

said a significant difference between the spot price of a commodity and its near month delivery price was a pointer to manipulation. On November 16, the difference was over Rs 60 for maize.-------------------------------- MCX registers highest cardamom contract in Nov http://www.financialexpress.com/fe_full_story.php?content_id=147227 ASHOK B SHARMA COMMODITIES BUREAU Posted online: Friday, November 24, 2006 at 0318 hours IST NEW DELHI, NOV 23: The multi-commodity exchange of India, MCX recorded highest physical delivery of 140 quintals of cardamom in the just concluded November contract. Prior to this, 138 quintals delivery was recorded in April contract, according to a press release issued by the

exchange. Cardamom contract is the third largest agri-commodity of MCX agri-basket, after refined soya oil and mentha oil contracts. Currently December 2006, January 2007, February and March 2007 contracts are available for trading on MCX. MCX has recently commenced futures trading in February and March 2007 contracts with its revised contract specifications. MCX has reduced the quantum of trading and delivery unit of cardamom futures from 500 kg to 100 kg and the daily price range from 6% to 4%.