Call For Global Sugar Trade Reforms + TRADE NEWS From India + NDC & Agriculture

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In This NEWS Bulletin ******************************** 1. ‘Reforms in global sugar trade may benefit developing nations’ On FARM SUBSIDIES & MARKET------ 2. Punjab CM disagrees with NDC panel’s report on crop subsidies - The report says subsidies result in market distortions and should be reviewed 3. India Plans Withdrawal Of Subsidies To Its Farm Sector - NATIONAL DEVELOPMENT COUNCIL MEET ON AGRICULTURE - Reduce fiscal aid to farm sector, says NDC panel On WHEAT IMPORTS --- 4. Govt cancels wheat tender, says prices too high OTHER NEWS ON NDC MEETING & AGRICULTURE

--- 5. Farm sector gets a Rs 25,000-cr booster dose 6. PM for state-specific agri plans, says sector hit by tech fatigue 7. Centre, states need to work in tandem for better results: FM 8. Govt launches food security mission for wheat, rice and pulses 9. Pawar banks on PPP model for growth -------------------------------- ‘Reforms in global sugar trade may benefit developing nations’ http://www.financialexpress.com/fe_full_story.php?content_id=166169 ASHOK B SHARMA Posted online:

Tuesday, June 05, 2007 at 0000 hours IST NEW DELHI, JUN 4: In the midst of distorted global market and falling prices of sugar, the low-cost producers like India, Brazil, Columbia, Guatemala, South Africa and Thailand are unable to reap the desired benefit. In this context, the US-based International Food Policy Research Institute (IFPRI) has called for reforms in global sugar trade so that the major producers in the developing world can stand to benefit. IFPRI is one of the 15 affiliated organisations of the Consultative Group on International Agricultural Research (CGIAR), dealing mostly on policy reforms. The IFPRI study done by its senior research fellow, David Orden noted that even after substantial sugar reform in the European Union, the global market continues to be depressed as the US policy continues to protect its sugar producers and processors from

competition by limiting imports and excluding world’s lower-cost producers from open access to the market. The EU sugar reforms began in 2006, after the sugar industry of Thailand, Brazil and Australia challenged Europe’s illegal cross-subsidisation and won the dispute the WTO Dispute Settlement Body. The limited reforms undertaken by EU caused an initial spurt in global prices to as much as $ 450 a tonne, but later it began showing a downward trend. The IFPRI study follows the recent appeal by the Global Alliance for Sugar Trade Reform and Liberalisation (GASTRL). The GASTRL is an industry alliance of 11 major producing countries including India, Australia, Brazil, Thailand, South Africa, Guatemala, Argentina and Honduras. The GASTRL met in Washington, last month and tried to impress upon US leaders and senators about the urgency for reforms in US sugar sector. ‘‘Global prices for white plantation sugar has fallen to around $ 300 a tonne. The GASTRL has taken up this issue. The distortion in global prices can e removed if the US withdraws its protectionist policy,’’ said the director of Indian Sugar Mills Association (ISMA), SL Jain. IFPRI study, however, hoped that if EU reforms proceeds and if the US corn sweetener and sugar markets becomes more integrated with Mexico under NAFTA, US would come under pressure to initiate sugar sector reforms.---------- Punjab CM disagrees with NDC panel’s report on crop subsidies The report says subsidies result in market distortions and should be reviewed http://www.financialexpress.com/fe_full_story.php?content_id=166072 ASHOK B SHARMA Posted online : Monday, June 4, 2007 at 0000 hours IST NEW DELHI, JUNE 3: Punjab, one of the major grain producing state in the country, has opposed the move for a reduction in fertiliser subsidy as this would affect the productivity of crops and earnings of small and marginal farmers. The recent report of the National Development Council’s sub-panel had suggested, “Fiscal support to agriculture, particularly subsidies that result in market distortions, resource use inefficiency and environment degradation should be reviewed and reduced so that more resources are available to support critical, albeit WTO permissible services research and extension, pests and disease control and marketing and promotion services, infrastructure development and agricultural

insurance.” Reacting to the NDC sub-panel’s suggestion the Punjab chief minister, Parkash Singh Badal told FE “It is a height of folly to term our farm subsidies as not compatible to the WTO norms. Our level of farm subsidies are negligible as compared to that in developed countries and do not distort global markets.” Badal, however, agreed on the need to improve soil fertility, conservation of groundwater which he said can be done through “introduction of a new technology.” Use of bio-fertilisers, organic manure and micro-nutrients can improve the situation. He said investments in research and education, marketing, infrastructure and farm insurance was much needed. “This does not mean that the existing subsidy should be reduced and diverted to these activities. The central government should think of making additional investments in these areas,”

he said Badal said that at his instance the NDC had to slightly modify the approach and resolved to initiate steps to restructure the fertiliser subsidy programme and its delivery to farmers. “We will resist any move for any cut in the existing farm subsidy”, he said Several expert studies have revealed that only a small portion of the fertiliser subsidy goes to the farmers as it is routed through fertiliser companies. Badal alleged every year, the availability of fertilisers, particularly phosphatic fertilisers remained as a problem during the sowing of wheat. The gap between indigenous production of fertilisers and the demand was increasing and the country was becoming more and more dependant on imports, he said and adding further said “The central government should monitor the

imports of decontrolled phosphatic fertilisers and make it available to farmers in time.” He said that the central government should adequately increase the minimum support price for wheat so that it can purchase wheat from farmers, instead of importing wheat at very high prices As the groundwater table has depleted in Punjab, it has appealed to the Union government to designate the state under “special category” and allow more than one Accelerated Irrigation Benefit Project (AIBP) in the state with 75% central grant or assistance. On the issue of farm credit, Punjab has suggested that the central government render additional 2% subvention to banks so that interest rate on crop loans would be reduced further down to around 4%. In cases where the short-term agricultural loans are converted into medium-term loans for crop damages exceeding 50% on account of natural calamities, the

central government should facilitate waiving of interests on farm loans. Nabard should increase refinance for short-term farm loans to cooperative banks from 40% to 70% and the interest rate on refinance should not exceed 2.5%.--------- India Plans Withdrawal Of Subsidies To Its Farm Sector NATIONAL DEVELOPMENT COUNCIL MEET ON AGRICULTURE Reduce fiscal aid to farm sector, says NDC panel http://www.financialexpress.com/fe_full_story.php?content_id=165507 ASHOK B SHARMA Posted online: Tuesday, May 29, 2007 at 0000 hours IST NEW DELHI, MAY 28: The National Development Council’s

sub-panel on agriculture has called for a review and subsequent reduction of fiscal support to the farm sector, particularly subsidies that result in market distortions, resource use efficiency and environment degradation. As an alternative, the sub-panel suggested the resources should be made available to support critical, albeit WTO permissible services like research and extension, pests and disease control, marketing and promotion services, infrastructure development and agricultural insurance. It suggested to the state governments to facilitate direct marketing of farmers’ produces by corporate houses, contract farming and setting up of markets in the private and cooperative sectors. It suggested setting up of a quasi-judicial mechanism to resolve disputes arising out of contract farming. The chief ministers and members of NDC are slated to deliberate on Tuesday the

recommendations of six working groups on agriculture with a view to ensure a annual growth rate of 4% and above in the farm sector. The NDC sub-panel deliberating on WTO issues also suggested that domestic food production should meet global sanitary and phytosanitary norms to ensure food safety. It called for identification of products that are critical for ensuring food security, livelihood and rural development, to take advantage of the flexibilities in terms of tariff cuts that would be provided to Special Products of developing countries in the WTO negotiations. An institutional mechanism should be put in place to take advantage of the new flexibilities being negotiated to safeguard vulnerable producers from a surge in imports or decline in global prices. Policy flexibilities and safeguard provisions for food and livelihood security and rural development should be meaningfully incorporated in various free trade agreements

(FTAs) under operation or being contemplated. The sub-panel also called for strict implementation of the Plant Varieties and Farmers’ Rights Act should be strictly implemented as this legislation is consistent with WTO obligations. NDC sub-panel deliberating on technology issues recommended creation of state-of-the-art national institutions for genomics and bio-informatics, molecular breeding, transgenics with a view to make India globally competitive in biotechnology. It suggested launch of an aggressive strategy for developing human capital for R & D in all fields of biotechnology.-------------------------------- Govt cancels wheat tender, says prices too high http://www.financialexpress.com/fe_full_story.php?content_id=165682 ASHOK B SHARMA Posted online : Thursday, May 31, 2007 at 0000 hours IST NEW DELHI, MAY 30: The government on Wednesday cancelled the tender floated by the State Trading Corporation of India (STC) for import of one million tonne wheat and said “the prices quoted by bidders were too high.” The government had earlier decided to import one million tonne wheat to build up its buffer stock and the STC floated a global tender on April 30, this year for import of the same quantity. The bids which were opened on May 21 found seven suppliers in the fray Cargill, Glencore International AG and Alfred E Toepfer International of Germany, Adani Global, Adani India on behalf of Archer Daniels Midlands of US, Rayas Trading and Concordia. The bidders

agreed to supply over one million tonne wheat in total. They quoted prices in the range of $267-302 per tonne on cost & freight (C & F) basis. Majority of the bidders quoted prices around $296 a tonne. The STC, after assessing the bids against quarantine norms, had recommended import of only 306,000 tonne wheat against a price of $ 263 a tonne, which included 180,000 tonne by Glencore and 106,000 tonne by Toepfer. “We had found only 306,000 tonne wheat suitable for imports, after assessing against quarantine norms and had recommended to the Union food ministry,” said a senior official in the STC. Union food ministry which placed the orders for imports through STC found the price quoted at $ 263 a tonne too high. “The price quoted is too high. If we import at this price the economic cost would be much higher than that of wheat procured from the farmers in the country.

Already an interested party has filed a writ petition in the Supreme Court against the government for importing wheat last year at price higher than the minimum support price for wheat,” said a senior official in the food ministry. According to food ministry sources, government would wait for the global prices to soften before floating a fresh tender for import. Government’s procurement of wheat from farmers has proceeded well this year. Out of the total procurement target of 15.1 million tonne, 10.4 million tonne has been purchased from farmers as per data available till Tuesday. Buoyed by the trend, the government has decided to extend the period for wheat procurement in Punjab and Haryana till June 15 and has offered a bonus of Rs 100 per tonne over and above the minimum support price.------- NATIONAL DEVELOPMENT COUNCIL Farm sector gets a Rs 25,000-cr booster dose http://www.financialexpress.com/fe_full_story.php?content_id=165599 ECONOMY BUREAU Posted online : Wednesday, May 30, 2007 at 0000 hours IST NEW DELHI, MAY 29: To boost the country’s ailing farm sector, Prime Minister Manmohan Singh on Tuesday announced a Rs 25,000-crore investment plan, to be executed over the next four years, While making his concluding remarks at the 53rd meeting of the National Development Council (NDC), Singh said, “The Centre will commit funds if states maintain their baseline levels of expenditure. This will ensure greater public investment in agriculture.” This move comes as the country’s agriculture sector, which employs over 60% of the population and accounts for 18.4% of GDP, has been stagnating due to low investment, yields, lack of credit inflow and faulty infrastructure. The sector grew at 1.8% during the Tenth Five Year Plan, against the targeted 4%. The government has set a 4% growth target for the sector for the Eleventh Plan period. Prime Minister also said that the Planning Commission and the agriculture ministry would finalise details of this programme in the next two months. The government is also worried over the low growth in the farm sector and stagnating food production. It has attributed the supply- side constrains in the farm sector as one of the main reason for spiraling prices of essential commodities. The new plan seeks to encourage states to come up with localised solutions for problems faced by the

agri-sector. Besides, a Food Security Mission would be announced to raise the production of wheat, rice and pulses and reduce the country’s dependence on imports of basic commodities, he said. Greener Future • Agriculture sector employs over 60% of the population and accounts for 18.4% of GDP• The sector grew at 1.8% during the Tenth Five Year Plan, against the targeted 4%• The agriculture ministry would finalise details of this programme in the next two months The funds will be released to the states on the basis of their comprehensive plans taking into account issues like agro-climatic conditions, natural resources and technological expertise of the states. The plans should also include livestock, poultry and fisheries. The state can initially draw up district level plans on the basis of which the state level plans can be prepared. The Centre has emphasised on state specific plans to address area specific issues in

the ailing farm sector and also so that no area in the agriculture and allied sector remain unattended. The idea of asking the states to evolve their own plans is also to give more flexibility to the states to design their own strategy and ask the Centre for funds which they can use as per their precise needs. The ACA will be operated by the Agriculture ministry and the money will be given over and above the existing centrally sponsored scheme funds to supplement state-specific strategies including special schemes for beneficiaries of land reforms.------- PM for state-specific agri plans, says sector hit by tech fatigue http://www.financialexpress.com/fe_full_story.php?content_id=165602 ECONOMY BUREAU Posted online : Wednesday, May 30, 2007 at 0000 hours IST NEW DELHI, MAY 29: Faced with the daunting tasks of reversing the deceleration in the farm sector, achieving the targeted 4% growth and ensuring food security, Prime Minister Manmohan Singh on Tuesday asked the states to pitch in and prepare state-specific agriculture plans. He said the National Development Council (NDC) would consider launching a food security mission for raising production of wheat, pulses and edible oil to contain the rising prices. While assuring financial assistance for the initiatives, the Prime Minister also that the state specific plan taking into account local needs and resources should be at the core of any agricultural revamp strategy. “They should build current baseline levels of production,

yields and investments and must have clear, tangible targets in terms of increase in agricultural productivity,’ he said. The Planning Commission will prepare an outline for a major programme for providing central support to states, which prepare such location specific plans. “I believe a program of this nature can provide the critical breakthrough we have so far been looking for and enable states to integrate all the various disciplines in farming - including irrigation—into a common umbrella with a focus on specific outcomes targeted at bridging the yield gaps,” he said. Quick Take • NDC will consider launching a food security mission to contain the rising prices• Planning Commission will prepare an outline for a major programme for providing support to states On subsidies Singh said, “We must reflect weather subsidies, though necessary, are being

delivered in he best possible manner. Are input subsidies better delivered directly to farmers or by subsidising the inputs itself? We need to question both the quantity and the manner in which the subsidies are delivered.” Agriculture being a state subject, Singh said most of the planning and implementation of strategies and programmes will be best done at the state level. Therefore state specific strategies should be prepared taking into account every state’s individual resources and capabilities and build on these for a strong and vibrant agriculture sector.-------- Centre, states need to work in tandem for better results: FM http://www.financialexpress.com/fe_full_story.php?content_id=165604 ECONOMY BUREAU Posted online : Wednesday, May 30, 2007 at 0000 hours IST NEW DELHI, MAY 29: Attributing the high inflation to spurt in prices of primary articles including food items, the government on Tuesday said there was consensus between Centre and the states on launching a mission to increase the production of wheat, rice and pulses. “It is in our common interest that we agree on a plan of action for central and state governments (for the proposed mission) and implement it without hindrance,” finance minister P Chidambaram said addressing a meeting of the 53rd National Development Council (NDC). Chidambaram also said, “I realise that when we launch the mission, there will be demand for more funds.... hence, I would support the proposal to provide additional resources and transfer the same

through the method of additional central assistance.” The success of the proposed mission would depend on the willing participation of states to the actions that fall within their areas of responsibility, he said. Recognising the different requirements of states, the finance minister supported the view that state-specific plans for agriculture should be developed. “Even a state-specific plan should be an aggregate of district specific plans, formulated for the districts in that state,” Chidambaram said. Each state should also ensure that its current level of expenditure on agriculture as a proportion of total state plan expenditure is maintained and additional resources are found by them from their own resources. The minister said the additional resources of the Central and state governments should be spent without wastage and corruption on irrigation, seeds, soil testing, better delivery of

fertiliser subsidy, modern markets and agricultural research and extension.--------- Govt launches food security mission for wheat, rice and pulses http://www.financialexpress.com/fe_full_story.php?content_id=165605 ECONOMY BUREAU Posted online : Wednesday, May 30, 2007 at 0000 hours IST NEW DELHI, MAY 29: Aimed at ensuring sustainable levels of food, the government on Tuesday announced the launch of a food security mission covering wheat, rice and pulses. The mission, to be covered under a central scheme, will endeavor to produce an additional eight million tonnes of wheat, 10 million tonne of rice and two million tonnes of pulses. The decision was taken at the meeting of the National Development Council (NDC) on Tuesday, which discussed the issue of food grains shortage faced by the country. Production of food grains have constantly depleted since 1991-95. After reaching a high of 207 kg per person per year (PPPY) during the period, availability of food grain decelerated to186 kg PPPY during 2004-07. In an attempt to reverse the deceleration in the crucial farm sector which has recorded just 1.8% growth against the targeted 4% in the Tenth Plan, the Centre, at the NDC meet, also decided to provide additional resources for irrigation projects through the Accelerated Irrigation Benefit Programme (AIBP). The funds will be given for use of modern techniques in irrigation methods and adoption of improved participatory irrigation management and command area development. Giving an impetus to agriculture

research, additional resources will be provided for National Strategic Research Fund. The fund will be given a governance and implementation structure appropriate to fund universities, CSIR labs and private institutions besides ICAR. Added funds will be handed out to support regionally focused research projects in state agriculture universities. The Centre and the states have agreed to undertake the initiatives in an attempt to achieve the targeted 4% growth in the sector in the Eleventh Plan. The Centre also plans to restructure the Rural Infrastructure Development Fund (RIDF) funding by NABARD and replace the present pattern of year by year fund allocation by state-wise indicative allocations for the entire Eleventh Plan which will keep in mind the needs of states with low rural credit deposit ratios. Steps will also be taken to restructure fertiliser subsidy and its delivery to farmers and shift to a system

that provides balanced plant nutrition. Initiatives will be taken for skill development in the farming communities including training of farmers in modern methods of agriculture. The states on their part will formulate district plans fully utilising the available resources from all existing schemes, including district level resources from schemes like Backward Regions Grants Fund and National Rural Employment Guarantee programme. Based on these district plans the states will have to prepare state agricultural plans aimed at achieving the state agri growth objectives. The states will also make special efforts to complete all projects taken under the AIBP without time and cost overruns. Accord highest priority to seed production to ensure adequate supply of quality seeds and enhance agri production. They will also have to expedite the implementation of the Vaidyanathan Committee

recommendations, sign MoUs if necessary and set monitorable deadlines to revamp the cooperative credit structure and ensure credit to farmers.--------- Pawar banks on PPP model for growth http://www.financialexpress.com/fe_full_story.php?content_id=165608 ECONOMY BUREAU Posted online : Wednesday, May 30, 2007 at 0000 hours IST NEW DELHI, MAY 29: Concerned over the increasing demand-supply gap of farm products, agriculture minister Sharad Pawar on Tuesday asked states to prepare their own plans to raise productivity. The state-specific agricultural plans should be prepared keeping in view the agro-climatic conditions, natural resource

management and technology, he said at the National Development Council (NDC) meeting here. Referring to demand-supply imbalance, the minister said food grain production growth rate has decelerated from above 2% in 1970s and 1980s to about one per cent, which was less than the population growth. To raise farm productivity, he said states should also integrate efforts under various farm sector schemes and programmes like National Rural Employment Guarantee scheme, minor irrigation projects and other rural development works. These efforts, he said, should be backed by an effective agricultural extension system, “which should not only provide assistance to farmers on crop related activities but animal resources development as well”. Pawar also urged states to encourage public-private partnership (PPP) model and create enabling environment for better marketing of farm

products. He emphasised amending the APMC Act, encouraging contract farming and reviving cooperative sector. Pawar said efforts were needed to increase production of wheat, rice and pulses to meet the demand which was likely to shoot up by 25 million tonnes by the end of the Eleventh Plan (2012). The government has setup various mission including National Horticulture Mission to support specific sectors of the farm sector. The government had also established the National Rainfed Area Authority and the National Fisheries Development Board. Subject to agreement with the states, the Planning Commission could be directed to prepare the outline of a major programme for providing central support to states, which prepare localised plans. The government also said that are institutional issues such as improving the quality of agricultural research and

making it more relevant to the actual needs of different regions and reforming the cooperative system by implementing the Vaidyanathan Committee recommendations on the sector.-----------------

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