Weekly Report (First week April 2018)

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1 Weekly Report (First week April 2018) Commodity Outlook and Situation Analysis Project

2 Agriculture Ministry to push for farmers' MSP soon The agriculture ministry will soon move a Cabinet note seeking approval for a new policy that aims to rope in both states and private firms in procurement of other crops than wheat and paddy, for ensuring MSP to farmers, a senior government official said. The objective of the proposed policy is to improve the speed of response and effectiveness of procurement in cases when prices drop below the minimum support price (MSP). The ministry has proposed three models - Market Assurance Scheme (MAS), Price Deficiency Procurement Scheme (PDPS) and Private Procurement and Stockists Scheme after consultations with an informal group of ministers, headed by Home Minister Rajnath Singh, as well as with state governments. According to sources, the monitory implication of the proposed policy will run into thousands of crores if all three schemes are implemented by all states in all MSP notified crops. Also, the existing Price Support Scheme (PSS) and Market Intervention Scheme (MIS) will be discontinued once the new policy is in place, the sources added. It may be noted farmers are under distress due to fall in prices of most commodities below the MSP in view of bumper crop. India likely to pay cane growers to help sugar mills India is likely to provide financial support to cane farmers for produce sold to sugar mills, two government sources said, in a rare move to subsidise the industry which is reeling under a glut and struggling to export because of low global prices. India, the world s biggest sugar consumer, last month scrapped a 20 percent export tax and made it compulsory for mills to export at least 2 million tonnes of sugar. But mills said they would incur a loss of at least $150 a tonne because global prices were near a 2-1/2-year low. Prime Minister Narendra Modi s administration is likely to approve a proposal to pay around 55 rupees ($0.84) for every tonne of cane sold to the mills, two government sources said, seeking anonymity in line with government policy. Although India is not planning any direct incentive for sugar exports, rival suppliers such as Brazil, Australia and Thailand could still lodge complaints with the World Trade Organization (WTO), saying such support will help Indian industry to sell overseas.

3 Area under cotton may decline by more than 10% The area under cotton cultivation in India this year may shrink by 10-15% as farmers are expected to shift to soybean that gives better returns and because of the risk of pink bollworm attack, traders said. We think that the area under cotton may decline by more than 10%, declining from 123 lakh acres to 110 lakh acres," said Atul Ganatra, president Cotton Association of India. Some others said the drop from last time could be as much as 15%. Farmers' returns have declined as cotton productivity and quality were hit by the attack of the pink bollworm pest in Maharashtra, Telangana and Andhra Pradesh. At the same time, soybean prices have jumped to Rs 3,800 a quintal from Rs 2,800 in the past few months. Farmers are preferring soybean as it is more remunerative production cost is much lower than that of cotton. Soyabean prices are likely to remain firm in the short term as production in Argentina has declined to 40 million tonnes from 55 million tonnes. Cotton exports may touch 7 million bales The Cotton exports from the country are likely to touch seven million bales this marketing year started October 2017, up about 27% from the earlier estimate, due to a surge in demand, particularly from China, as Indian cotton is selling at discount. Indian cotton is trading at huge discount not seen in many years. A lot of export inquires are coming mainly because of the discounts, said Naveen Chaurasia, vice president at Olam Agro India Ltd, a Gurgaonheadquartered agricultural product exporter and distributor. ith Indian cotton selling at discounts of 7-10 cents per pound, there is demand for all qualities of cotton, traders said. Traders have exported more than 1.5 lakh bales of cotton to China during last 10 days as China took counter actions after the US imposed trade restrictions on the Asian giant.

4 India, Nepal to boost agricultural cooperation India and Nepal have agreed to give momentum to bilateral cooperation in agricultural sector for the benefit of farmers of both the nations, an official statement said. The Nepalese Prime Minister K P Sharma Oli is in India on a three-day visit, his first overseas tour after taking charge as Nepals PM for the second term. "Prime Ministers of India and Nepal (have) reaffirmed their resolve to promote cooperation in agricultural science and technology, agricultural production and agro-processing in line with the Memorandum of Understanding between the two countries for mutual benefit of farmers, consumers, scientific community as well as the private sector," the two countries said in a joint statement. India s PM Narendra Modi and his counter-part Oli agreed to give fresh momentum to bilateral cooperation in the agricultural sector and decided to launch a new partnership in agriculture, it said. Bengal dairy farmers to get an additional subsidy There is some good news for the Bengal dairy farmers. The state government has decided to give an additional subsidy of Rs 2 per litre (over and above the procurement price) to dairy farmers who sell milk to the government through cooperatives. At present the procurement price of milk is Rs 25 per litre. While this remains same, the additional subsidy amount will be directly transferred to the bank accounts of the dairy farmers. At present there are 1.2 lakh dairy farmers under the West Bengal Co-operative Milk Producer Association. Additionally, 10 lakh people indirectly going to benefit, if family members are taken into account. This move will result in an additional expenditure of about Rs 6.5 crore for the government. The amount has already been released by the state finance department. Red chilli export slackens as prices rise

5 Shipments of red chilli, the largest exported spice from India, have slackened as a shortfall in crop has led to an increase in prices. The crop will be an estimated 20% lower this year, said AP Murugan, director of exporting firm Paprika Oleos (India) Ltd. Last year, a record production had led to prices crashing as much as 50% compared to that a year ago. The current price range of Rs per kg is almost double that a year ago. As a result, exporters said, China has not bought as much chilli from India as it did last year. Chinese chilli crop has been large. Hence China s purchases from India will be limited to high-heat variety, unlike last year when they also bought medium-heat chillies from India because of low prices, Murugan said. With China buying Indian chilli in large quantities in recent years, annual exports from India exceeded 4 lakh tonnes and earnings topped Rs 5,000 crore. In , export volumes are expected to cross 5 lakh tonnes. However, the value may not show an increase since prices have plunged. Bengal West Bengal plans to export mangoes to Europe Mangoes from West Bengal will shortly find shelf space in Europe. The state government has initiated preparatory work to fill the shelves of malls in countries like the United Kingdom, Italy, France and others with the best of mangoes that are produced in Malda district. From June onwards, mango varieties like Himsagar, Lyangra, Fazli, Laxmanbhog and others are going to be exported to Europe. According to agicultural experts, production of mango this summer is expected to cross 400 metric tonnes. State agricultural department officials said that mangoes need to be carefully selected for exporting. "Each piece needs to weigh between 300 and 350 grams. There should be no marks on the bodies of the fruits and they should be ripe yet hard enough to withstand the pressure of packing and to remain fresh for a certain length of time," said the officials

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