Farmers & Pre-Budget Consultations + IMPORT & Prices + Market Dynamics of Crops

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In This NEWS Bulletin ********************************* 1. Farmers’ organisations seek fair deal in New Year - Condemns Union finance minister, P Chidambaram for not inviting them in the pre-Budget consultations 2. DEBATE In The Financial Express, India --- With the sharp increase in food prices pushing up inflation, will liberalised imports help dampen the trends? 3. Conference on market dynamics of Rabi crops ----------- Almost all the farmers' organisations in India have expressed dissapointment over the finance minister ignoring them in the pre-Budget consultations. They have suggested alternative proposals for dealing with farmers' distress and suicides ------ Farmers’ organisations seek fair deal in New Year

http://www.financialexpress.com/fe_full_story.php?content_id=150514 ASHOK B SHARMA Posted online: Tuesday, January 02, 2007 at 0151 hours IST NEW DELHI, JAN 1: With the beginning of the New Year, farmers’ organisations have come together to exert pressure on the government to pay heed to their views on solving farmers’ distress. They are aggrieved over finance minister P Chidambaram for not inviting them for pre-Budget consultations. “On December 29, 2006, the finance minister discussed farm issues only with select agriculture economists and plantation industry and ignored the farmers’ organisations. He termed it as a discussion with agriculturists,” alleged Krishan Bir Chaudhary, executive chairman of Bharat Krishak Samaj (BKS) and said “we appeal to

the prime minister to hear our views, if the government is sincerely interested in resolving the issue of farmers’ suicides and distress.” BKS is the farmers’ outfit of the ruling Congress party and others peasant organisations are surprised about its exclusion from the pre-Budget consultations. Atul Kumar Anjaan of the CPI’s farmers’ outfit–All India Kisan Sabha said, “The government needs to fix support prices for all crops, factoring in rising cost of cultivation and rising market prices of essential commodities.” When contacted the angry farmer leader of CPM, NK Shukla said: “How can the government formulate farm budgetary policies without hearing farmers and depending upon what the pseudo agriculturists say. The pseudo agriculturists always propagate the concepts eked out by the World Bank.” The farmer leaders are ready with a solution. They

want to suggest that a simple interest of not exceeding 4% should be charged on all kinds of agriculture loans. Farmers’ loans should be waived on account of two successive crop failures and the interest on loans should be waived on account of a single crop failure. All types of risks should be covered under crop insurance and scheme should cover all crops. Assessment for damage should be done on individual basis.The premium charged for insurance should not exceed 1%. Excise duty should be waived on all farm inputs and also on materials used in farm inputs. “Consortium of Indian Farmers Associations (CIFA) had earlier met in early December, 2006 and discussed several problems confronting country’s agriculture,” said P Chengal Reddy. The farmers’ leaders expressed grave concerns over the government’s reluctance in making adequate investment in the agriculture sector. They have suggested that completion of

irrigation projects should be given the top priority. But irrigation projects should address ecological concerns and make adequate compensation for the project-displaced people. On the issue of subsidies, the leader of Bharatiya Kissan Union (BKU), Rakesh Tikait said, “All subsidies, including that for fertilisers, should be given directly to farmers. The subsidy under National Horticulture Mission should be conditional on farmers taking loans from banks and it should not be a back-ended one. It should also be given directly to farmers.” Chaudhary (of Bharat Krishak Samaj) vehemently opposed conversion of prime farmland for different projects, particularly for special economic zones (SEZs). He said, “The government should invest and patronise agri export zones which causes integrated rural development and scrap all SEZs which usurps farmlands.” Chaudhary also said,

“Farmers have suffered a lot due to failure of Bt cotton and the multinational, Monsanto is reluctant to compensate farmers’ losses while it has charged hefty technology fee for its Bt cotton seeds.” He suggested special subsidy for organic farming. Majority of the farmers’ leaders suggested that peasant rights over seeds should not be ignored in the proposed Seeds Bill. They expressed concern over the new Food Standards and Safety Act which is likely to displace small vendors and fresh fruits and vegetable from the market.------------------------------- DEBATE In The Financial Express, India --- With the sharp increase in food prices pushing up inflation, will liberalised imports help dampen the trends? Our farmers will pay the price KRISHAN BIR CHAUDHARY* Posted online: Tuesday, January 02, 2007 at

0146 hours IST http://www.financialexpress.com/fe_full_story.php?content_id=150513 The policy of facilitating cheap imports of agro produces with the view to containing domestic prices has already caused substantial damage to the country’s farm sector. It would be fatal to farmers if the government continues with this policy instead of learning the lessons of the past. If the government wants to keep prices under control, it should try a logical option like cracking down on hoarders and market manipulators. Imports should be facilitated only in commodities that are in short supply. The technology mission could achieve near self-sufficiency in oilseeds production. But the import liberalisation launched in the mid-1990s completely wiped out the gains of the technology mission and today

the country is a major importer of vegetable oils. Another case was when duty-free cotton imports were allowed in the early 1990s. The monopoly procurement of Cotton Corporation was terminated and imports placed under OGL. Subsequently, a surge in imports depressed domestic prices, pushing farmers into a debt trap -- and suicides. The government realised the situation and raised the import duty to 5% in the year 2000 and today it is at a low 6%. No wonder the incidence of farmers’ suicides is still on the rise in the cotton belts of the country. Global cotton prices will continue to remain depressed as long as developed countries, particularly the US, heavily subsidise production. Not only cotton, the prices of many other agro produces are depressed in the global market on account of heavy subsidies in the developed world. According to one estimate, the developed world renders

$1 billion a day to subsidise its farm sector. Opening up for imports to the subsidised products would, therefore, damage the country’s farm sector. Many countries in Asia, Latin American and Africa, which have unilaterally opened up agro imports have already suffered heavily. In the last one year, the main reason for the sharp rise in prices of many agro commodities was hoarding of stocks by traders, corporates and multinationals, and manipulation in the futures market. Unfortunately, instead of cracking down on hoarders and market manipulators, the government resorted to large-scale wheat imports in 2006, when the production was 73 million tonne against consumption need of only 60 million tonne. Quality norms were relaxed for the import of 5.5 million tonne duty-free import of wheat on the government account. The government also extended same facility to food companies to import wheat. The result was India, which was once the 7th largest

exporter, became a major importer of wheat The government’s plan of importing cheap wheat eventually ended in a nightmare. In February 2006, when the government initially imported 500,000 tonne from scam-tainted AWB Ltd, global prices were ruling around $131 a tonne on FoB basis. But AWB offered to supply at $178.75 a tonne on CIF basis. But the import price did not remain at this level when India made subsequent imports. It soared to $238 a tonne on CIF basis. Today, the domestic price of wheat is still in the range of a high Rs 12 to16 a kg. The imports failed to reduce domestic prices, as hoarding of stock and market manipulation still continues to keep prices at a high level. Earlier experiences had shown that whenever India and China entered the global market as importers, the prices shot up. It would be fatal to destroy the production base of the country with the influx of cheap imports and later pay

high prices at the dictates of overseas suppliers. With a view to cover up its misdeeds, the government said that it needed to import wheat to replenish its wheat buffer stock. In fact the government deliberately kept its purchase price low and made no sincere efforts to purchase wheat from farmers at reasonable prices. It shaved the production estimate to justify is imports. In 2006, the government also liberalised sugar imports under TRQ against a reduced duty of 20%. No substantial imports have flowed in because global prices are ruling high. But this policy is likely to adversely affect cane growers in future when global prices will crash and cause an influx of cheap imports. — * (The writer is the executive chairman of Bharat Krishak Samaj - country's largest and the oldest farmers' organisation), VIEW FROM THE OTHER SIDE --- With the sharp increase in food prices pushing up inflation, will liberalised imports help dampen the trends? Import food only as a last resort P K JOSHI Posted online: Tuesday, January 02, 2007 at 0145 hours IST http://www.financialexpress.com/fe_full_story.php?content_id=150512 The liberalisation of food imports, especially of wheat, has sparked a debate on food security issues and the welfare gains of producers and consumers. Rising incomes, changing demand patterns and lowered import barriers have led to an almost three-fold increase in agricultural imports from the 1990s to $3.81 billion in 2004-05. Among food items, India has now become one of the largest markets for pulses and

edible oil. Obviously, imports are decided to meet the domestic demand and check the price rise. But the prices of a commodity are also determined by its supply-demand gap in domestic and global markets, prices of substitutes and/or complementary commodities, domestic and trade policies, purchasing power of the consumers, and strength of the currency. In 2006, rising prices of essential food commodities has become a major policy challenge for the government. The prices of food commodities increased faster than non-food commodities. Among food articles, the prices of pulses increased much faster than any other commodity. Unfortunately, the production of most foodgrains and oilseeds has stagnated and/or declined. But rising incomes and a growing population have pushed up their demand and created a shortfall that led to the price rise. To check rising prices and meet the shortfall,

imports of essential food commodities were allowed. Important commodities that were imported in the past were pulses and edible oil. A decision was also taken to import 5 million tonne of wheat to meet the requirements for the public distribution system. Whether imports of food items bring down their prices is determined by factors such as tariff rates, imported prices and volume of import. The global food production scenario also dictates prices of essential commodities. For example, there are predictions that world grain supplies (coarse grains and wheat) are expected to be tighter in 2006-07 and boost global grain prices. Centad trade news revealed that international wheat prices are set to rise in the next six months on expected shortages in wheat-producing countries. The question often raised is whether the import of food items would check overall inflation in the economy. The current scenario reveals

that the import of essential food items may marginally check overall inflation. The share of three major imported food items, namely, pulses, edible oil and wheat, is less than 5% in the major commodity (food and non-food) basket of the economy. Such a small share in volume and value would not significantly bring down inflation. For example, in 2005-06, wheat prices increased by 10.7% but contributed only 0.16% in the overall 4.7% inflation. A comprehensive policy is to be formulated to control prices of food items. It should begin with technological intervention. There should be a regular flow of improved technologies to enhance production efficiency by reducing unit cost of production. In the present context, when yields are almost stagnating, imports of food commodities, though a benefit to consumers, will adversely affect producers. In such a scenario, producers may be encouraged to produce commodities those have high export

potential to fetch higher prices. Another important area that needs attention to control prices of food items is to improve marketing efficiency by reducing transaction costs, minimising intermediaries, reducing post-harvest handling, including wastage and transportation cost. It is high time to accord due attention to the production and marketing environment for controlling the prices of food items. Increasing investment in agricultural research and infrastructure development, and minimising intermediaries in the supply chain will facilitate the bringing down of production and marketing costs, thereby the prices of food items. Despite best efforts in improving the production and marketing environment if there is any shortfall of essential commodities, it should be met by imports. —The writer is director, National Centre for Agricultural Economics and Policy Research (NCAP), New

Delhi -- Conference on market dynamics of Rabi crops http://www.financialexpress.com/fe_full_story.php?content_id=150517 ASHOK B SHARMA COMMODITIES BUREAU Posted online: Tuesday, January 02, 2007 at 0156 hours IST NEW DELHI, JAN 1: To comprehensively explore market dynamics, trade experts are meeting in Delhi early this month to assess the situation of various Rabi (winter) crops in the country. A leading farm journal, Agriwatch with the support of the multi commodity exchange (MCX), ICICI Direct, NIAM, Agriculture and Processed Food Export Development Authority (APEDA), Adani Enterprise, Shakti Bhog, Zee Business, Business Line and Trade Associations is organizing the first national conference on Rabi

commodities on January 07, 2007. The conference is slated to discuss the prognosis of wheat, gram and mustard markets after the 2007 rabi harvest and address issues and challenges faced by these commodities in a rapidly changing trade environment. It would explore trade promotion and new business opportunities in India and abroad for wheat, gram and mustard. The conference would also discuss the use of post-harvest technology for these commodities. The conference will also deliberate on the ramifications of increased trading in these commodities on the futures exchanges. More than 600 persons, including leading traders, processors, top buyers, brokers, importers, exporters, roller flour-millers, dall millers, machinery manufacturers and government institutions, and marketing boards will participate in this national

conference.--------- Send free SMS to your Friends on Mobile from your Messenger. Download Now! http://messenger./download.php