BIO-FUEL Fuels Global Prices + UNCTAD's New Method To Discipline Trade + WHEAT IMPORT

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NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development ******************************** 1. BIO-FUEL crops push up prices; no gains for IIIrd World - Global Trade Report 2. UNCTAD suggests new technique to discipline global trade 3. Textile industry cautions govt on FTAs On India's WHEAT IMPORT 4. Wheat GoM meet put off as members cast doubt on prices (Proposed GoM after approval of 795,000 tonne wheat import) 5. Congress passes wheat import controversy buck to Pawar 6. Replace old wheat varieties: ICAR 7. Domestic floriculture market potential at Rs 10K crore 8. Unorganised Sector Bill to be introduced in Parliament soon --- BIO-FUEL crops push up prices; no gains for IIIrd World - Global Trade Report http://www.financialexpress.com/news/Biofuel-crops-push-up-prices-no-gains-for-IIIrd-World/215390/0 ASHOK B SHARMAPosted online: Sunday , September 09, 2007 at 2246 hrs IST Increase in global demand for bio-fuels has pushed up the prices of agriculture commodities. But the farmers in

the developing countries, including India, have not gained much. Despite a record global output of wheat, the prices shot up as India entered as an importer. The UNCTAD’s trade and development report-2007 has said that strong demand for bio-fuels was in response not only to high crude petroleum prices but also to the growing concerns about global climate change. Global prices of sugar, corn and vegetable oils, in particular, shot up as these are used for production of bio-diesel. In 2006 sugar prices increased by 49.4%, maize prices by 24.4% and that of palm oil by 13.3% The UNCTAD report has raised concerns over the competing use of land for production of food, animal feedstock and bio-fuels. Corn cultivation in US for

bio-fuel production has displaced soybean cultivation. The soybean prices rose sharply in mid-2006. The situation, in turn led to higher prices for animal feedstock and meat. The higher food prices can have dramatic consequences for food-importing developing countries, the report said. The report also raised concerns that bio-fuel crop cultivation may cause deforestation, water scarcity and biodiversity loss. It, however, suggested that a possible solution may be the extraction of bio-oil from tropical plants like, Jatropha which can be grown on “degraded” lands and therefore not compete with food crops. Analysing the terms of trade, the report said that in 2006 there was significant gains for oil and mineral exporting countries. Most vulnerable have been the oil-importing countries which export few

primary commodities. East Asia, South Asia and Africa suffered deterioration in the terms of trade. FAO has that the global cereal prices will remain high despite the record world cereal production. The International Grains Council in August 23,2007 had said that the grains prices shot up due to increase in wheat prices by $ 20 to $ 35 a tonne. Sharp increase in ocean freight rates further lifted the landed costs for importers. Global wheat output is estimated to be 607 million tonne, about 16 million tonne higher than in 2006. In this context, farmer leaders and several opposition parties have criticised the government’s recent decision to import 795,000 tonne wheat for maintaining buffer stock at prices ranging

between $ 385 to $ 398 a tonne on cost and freight basis. The average landed cost of imported wheat (excluding the handling and transportation costs) would work out to Rs 15,670 a tonne, while the government is paying the domestic farmer only Rs 8,500 a tonne for purchase of wheat. The critics have alleged that the global wheat prices started shooting up when India began importing wheat from February 2006. The prices shot up from $ 179 a tonne in February 2006 to $ 398 a tonne in September 2007. India's wheat output in 2007 has been at 74.89 million tonne, well above the consumption demand. ------------------------------- UNCTAD suggests new technique to discipline global

trade http://www.financialexpress.com/news/UNCTAD-suggests-new-technique-to-discipline-global-trade/215391/ ASHOK B SHARMAPosted online: Sunday , September 09, 2007 at 2248 hrs IST New Delhi, Sep 9 UNCTAD has added a new dimension for disciplining multilateral trade by a new code of conduct to prevent manipulation of exchange rate, wage rate, taxes or subsidies. It said that changes in the nominal exchange rate that deviate from fundamental

(such as inflation differentials) affect global trade in exactly the same way as do changes in tariffs and export subsidies. Consequently, such real exchange-rate changes have to be subject to multilateral oversight and negotiations. Reasons for the deviation from the fundamentals and the necessary size of the correction have to be identified by an international institution and enforced by a multilateral body, it said In its Trade and Development Report-2007, UNCTAD further said that such rules could help protect all trading partners against unjustified overall losses or gains from competitiveness and developing countries could systematically avoid falling into trap of overvaluation that has been one of the major impediments to prosperity. UNCTAD’s suggestion is relevant when negotiations on multilateral farm deal are already under way in Genava and the WTO has already initiated a formal investigation intoallegations by US and Mexico that China is unfairly subsidising exports tax breaks and other initiatives. Indian exporters have also complained that artificial exchange rate in China has given an added advantage to that country. The UNCTAD report has said that commodity exchanges in China and India are becoming major players in the global commodity trade. Even though interest in commodities as financial asset remained strong in 2006, there are some indications of a possible change in the attitude of financial investors vis-à-vis

commodities, reflected in the market correction of January 2007. It further said that China would continue to play a key role in commodity markets, not only from the demand side but also from the supply side. UNCTAD has suggested that developing countries should strengthen regional cooperation amongst themselves, but proceed carefully with regard to North-South bilateral preferential trade. It suggested that multilateral trade arrangement as a better option than FTAs and RTAs. The report noted that South Asia Association for Regional Cooperation (SAARC) conceived in 1985 has not been followed up by fast growth in regional trade. Trade flows may be driven not only by formal

agreements, but also by de facto regional networks. ----------------- Textile industry cautions govt on FTAs http://www.financialexpress.com/news/Textile-ind-cautions-govt-on-FTAs/215383/ ASHOK B SHARMAPosted online: Sunday , September 09, 2007 at 2238 hrs IST New Delhi, Sep 9 The Indian textile industry has cautioned the government to take a cautious approach while striking free trade agreements (FTAs) and bilateral

trade agreements, particularly with Asian countries, in the interests of the targeted growth of the industry. The Union textile ministry has estimated a market size of $115 billion by 2012, with the export target fixed at $55 billion and the domestic market size likely to grow to $60 billion. At present the market size for the Indian textile and apparel industry is about $52 billion, with exports amounting to $19.24 billion in 2006-07. If the 11th Plan export target of 60 billion is achieved by 2012, then India’s market share in world textiles trade would grow from 3% to 8%. “Both the targets for domestic market size and exports are achievable in time, provided the government creates an enabling environment through policy approach, and does not sacrifice the interests of the industry in bilateral and

multilateral trade negotiations,” said the secretary-general of the Confederation of Indian Textile Industries (CITI), DK Nair. He said that the temporary phenomena like upward movement of the Indian rupee vis-a-vis the US dollar can be effectively dealt with through some short-term measures. Nair’s note of caution is significant as India is eager to sign FTAs with Thailand and the ASEAN. The industry has already suggested to the government not to go for tariff reduction for textile products while signing FTAs and bilateral trade agreements with Asian neighbours. The WTO draft on non-agriculture market access (NAMA) released by Don Stephenson in July has already invited concerns for the industry. Indian textiles face

tough competition from China, Bangladesh, Pakistan, Laos, Vietnam, and Cambodia. One of the main reasons for China's competitiveness is the artificial exchange rate of its currency. “Some Asian countries procure cheap yarns and fabric from China and export garments and apparels at competitive prices,” said Nair. The textile secretary, AK Singh said that already an investment of Rs 60,000 crore (Rs 600,000 million) has been made and a further investment of Rs 1,50,600 crore (Rs 1,506,000 million) needs to be made for achieving the target and generating 12 million additional jobs. The industry, however, keeping an eye on the upcoming Union Budget wants reduction of excise duty on man-made fibres to $5, if not to zero, revamping of the Technology Upgradation Fund Scheme (TUFS), lowering of power tariff and

infrastructure costs, special fund for encouraging textile engineering industry, removal of excise duty on indigenously produced textile machinery and ban imports of second hand machinery. ----- Wheat GoM meet put off as members cast doubt on prices (Proposed GoM after approval of 795,000 tonne wheat import) http://www.financialexpress.com/news/Wheat-GoM-meet-put-off-as-members-cast-doubt-on-prices/214620/ ASHOK B SHARMAPosted online: Wednesday, September 05,

2007 at 2236 hrs IST New Delhi, Sep 5 Faced with stiff opposition from both the finance and commerce ministries against import of wheat at high prices, the group of ministers (GoM) headed by Pranab Mukherjee had to postpone its meeting scheduled on Wednesday. The GoM was slated to discuss floating a fresh global tender for import of wheat to replenish the country’s buffer stock. “Since wheat is not being imported to meet any immediate needs but only to build buffer stock for 2008, the ministries of finance and commerce have questioned such costly imports,” said a senior official. The GoM, which met earlier this week on Monday, had approved import of 795,000 tonne wheat from three trading houses at prices ranging between $385 and $395 a tonne on cost and freight basis as proposed by the State Trading Corporation of India. The negotiated prices are

more than double the $179 a tonne at which purchases were made early last year. Translated into Indian currency, the average import price would be Rs 15,670 a tonne while domestic wheat is available to millers at around Rs 12,000 a tonne. Wheat output in 2007 has been at a record high of 74.89 million tonne. In Monday’s meeting, finance minister P Chidambaram and commerce minister Kamal Nath raised objections over such costly imports when plenty of grain is available in the country. The decision to import was finalised after Pranab Mukherjee insisted that imports should done as the contracts would lapse after September 3, following which food and agriculture minister Sharad Pawar gave his consent from London. Pawar was in London on the occasion of the ODI cricket series between between India and England. He, however, back on Wednesday but left for Pune after the meeting was

postponed. The food ministry is, however, pushing for further imports to achieve the target of 5 million tonne import by this year. “We expect the global prices to come down after the harvest in the northern hemisphere, at least by November. This would be the appropriate time to float fresh global tenders,” said an official in the food ministry. --- Congress passes wheat import controversy buck to Pawar http://www.financialexpress.com/news/Congress-passes-wheat-import-controversy-buck-to-Pawar/214833/ Political BureauPosted online:

Thursday , September 06, 2007 at 2249 hrs IST New Delhi, Sep 6 Facing growing criticism from ‘Left, right and centre’ of the country’s political spectrum, both the ruling Congress and the government on Thursday attempted to divert queries on controversial wheat import to agriculture minister Sharad Pawar. Congress spokesperson Abhishek Manu Singhvi sought to justify the imports, saying these were long-term contracts that are being implemented now. When forced further to explain the party position on the issue, he said, “We will check with the agriculture minister.” Similarly, parliamentary affairs minister PR Dasmunsi said, “I am not competent to answer your queries. Ask the BCCI chief and agriculture minister Sharad Pawar.” At the outset, he said every import is done by STC (State Trading Corporation) and MMTC (Mines and Minerals Trading Corporation) and “whatever we do, we are

answerable to Parliament.” Meanwhile, stepping up the Opposition attack on the government over import of wheat at “sky-high” prices instead of purchasing it from domestic market, JD(U) demanded immediate withdrawl of the decision. “We will not allow the government to indulge in this nefarious game. We will oppose the imported wheat to enter Indian market and block it at Mundra port when it comes there. We will also burn the imported wheat,” JD(U) chief Sharad Yadav said. --------- Replace old wheat varieties: ICAR http://www.financialexpress.com/news/Replace-old-wheat-varieties-ICAR/214834/ ASHOK B SHARMAPosted online: Thursday , September 06, 2007 at 2250 hrs IST New Delhi, Sep 6 Faced with the challenge of increasing wheat production, the Indian Council of Agricultural Research (ICAR) has appealed to the farmers to replace some old wheat varieties with more promising ones. To the farmers in the north-western part of the country, ICAR has suggested to replace varieties like HD 2687, PBW 343, PBW 502 and WH 542 with the new variety PBW 550 developed by Punjab Agriculture University, Ludhiana. PBW 550 has high grain yield of 48 quintal per hectare and high degree of resistance to leaf rust and stripe rust. ICAR has suggested to farmers in Gujarat, Madhya Pradesh and Rajasthan to cultivate the improved wheat variety HI 1544 which yields 6.3% higher than GW 190, 8% higher than LoK-1

and has equally good yield as compared to GW 322 and GW 366. Another wheat variety, HD 2932 developed by Indian Agricultural Research Institute, New Delhi can be grown in Madhya Pradesh, Chhattisgarh, Gujarat, Kota and Udaipur in Rajasthan and in Jhansi in Uttar Pradesh. ICAR has also identified the late sown variety, WH 1021 variety for cultivation in the fertile irrigated conditions of north-west India. The nutritionally rich and highly resistant variety, VL 892 developed by Vivekanand Parvatiya Krishi Anusandhan Sansthan, Almora has been suggested for cultivation in the northern hilly regions. ICAR has also suggested growing HPW 251 (developed by CSK Himachal Pradesh Krishi Vishvavidyalaya) under rainfed early sown conditions in the northern hills. ICAR also claimed that new durum wheat variety, HI 8663 has high Beta-carotene can be grown under suitable conditions in

Karnataka and Maharashtra. This wheat is suitable for preparation of pasta. ------ Domestic floriculture market potential at Rs 10K crore http://www.financialexpress.com/news/Domestic-floriculture-mkt-potential-at-Rs-10K-crore/214947/ ASHOK B SHARMAPosted online: Friday , September 07, 2007 at 0059 hrs IST New Delhi, Sep 6 India’s domestic flower and plant market which is currently valued at over Rs 1000 crore (Rs 10,000 million) has the potentiality to grow to Rs 10,000 crore (Rs 100,000

million) in the next five years, according to a study conducted by Media Today group in collaboration with Indian Flowers and Ornamental Plants Welfare Association (iFlora). Floriculture exports are steadily on the rise from Rs 256 crore (Rs 2560 million) in 2003-04 to over Rs 400 crore (Rs 4000 million) in 2006-07 (data available till November 2006). Speaking to FE, iFlora president, S Jafar Naqvi said, “The government has taken some encouraging steps to boost the floriculture industry in the country. The National Horticulture Mission has been allocated Rs 1,150 crore (Rs 11,500 million) budgetary support for promotion of horticulture, including floriculture. But much needs to be done to expand the domestic market for floriculture.” He said that the study concluded that if the domestic market size increases to Rs 10,000 crore (Rs 100,000 million), it would provide millions of job, particularly to women.

Naqvi said that domestic demand for cut flowers and other floriculture products would increase with the expansion of organised retail and super market chains, coupled with the rising income of the middle class. “If the domestic players miss this opportunity, India may be flooded with imported floriculture products,” he said. Currently, the domestic consumption of cut flowers is growing at the rate of 30%, according to the study Flowers and herbs are grown in about 130,000 hectare area in the country in traditional pattern. “But we need to bring more areas under modern floriculture with controlled temperature, “ said Naqvi. He said that give an added impetus to the industry the Media Today group and iFlora would jointly organize the 3 rd International Flora Expo-2007 and the 2 nd International Landscape Expo-2007 from September 12 to 14, this year

in Delhi. Participants are expected from Holland, Australia, Russia, UAE, Japan, Malaysia, Taiwan, New Zealand, Germany, UK, Singapore. Major Indian player like Reliance, ITC, Tata Tea, Bharti group, AV Birla Big Apple, Mamdhari Fresh, Subhiksha, Shoppers’ Stop are also expected to participate. - Unorganised Sector Bill to be introduced in Parliament soon http://www.financialexpress.com/news/Unorganised-Sector-Bill-to-be-introduced-in-Parliament-soon/214622/ ASHOK B SHARMAPosted online: Wednesday, September

05, 2007 at 2238 hrs IST New Delhi, Sep 5 With the buzz of mid-term polls in the air, the government is expected to seek Cabinet clearance for its long-pending pension and social security scheme for the over 40-crore (400 million) unorganised sector workers, to woo voters and the Left parties. Labour minister Oscar Fernandes said the Bill, once cleared by the Cabinet, would be introduced in the current session of Parliament. The government has suddenly decided to introduce the Bill to benefit 93% of the country’s total workforce in the Cabinet, within a month of reconvening a group of ministers (GoM) to restructure the proposal. The Unorganised Sector Social Security Bill will offer death and disability benefits in case of accidents, health insurance benefits plus a pension scheme for the workers. The financial requirement for providing all the

social security benefits like pension and healthcare facilities to workers in the unorgansied sector will cost the government Rs 35,000-Rs 40,000 crore (Rs 350,000 to Rs 400,000 million). Some of the existing schemes aimed at ensuring social security to unorganised sector workers like beedi workers and construction workers would be integrated with the new schemes. The finance ministry had said that they would not provide any subsidy for launching the pension scheme. Trade unions are also unhappy about the Bill in its present form as it simply lists the enabling provisions for the unorganised sector workers, but has no specific details about implementation and modalities of payment-----

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