US DRY BEAN COUNCIL REPORT JULY & AUGUST 2015 SHAKUN DALAL C-101 SOMVIHAR APRTMENTS SANGAM MARG, RK PURAM NEW DELHI-110022, INDIA PHONE: 91 11 26184324; CELL: 91 98 71222902 EMAILS:shakundalal@gmail.com shakundalal@hotmail.com 1
ACTIVITIES IN JULY & AUGUST 2015 Meeting with Indian dry bean importers to exchange market information Met with Indian dry bean importers in Delhi to exchange information relating to the general bean imports and other news related to import of pulses and beans. Contacted Indian pulse traders in and other institutions, companies for research survey work for USDBC report on Market possibilities for US beans in India. kept in touch via emails and phone calls with Indian pulse trade during the month of July & August 2015. Eight Newsletters were sent in these two month to importers, brokers, and wholesalers. kept in touch with Indian Pulse trade and IPGA for information on PPQ issues and market intelligence on Indian pulses market. Also kept in touch with few food manufacturers, retailers, & food service companies via emails. AGRICULTURAL SCENARIO IN INDIA KHARIF CROP PLANTING-2015 With 89% of sowing completed for kharif crops till August 21 st, around 1% more than the last years kharif crop. According to data released by the Agricultural Ministry on August 21 st, 2015, total kharif acreage estimated to be 93.84 million tones, against last year s 92.94 million tones at the same period. Pulses acreage continue to edge higher than during the corresponding period in 2014-2015. While area under pigeon peas is up marginally by 054%, sowing of black matpe is increased by 14% and mung beans by 18%. Higher sowing of black matpe in Madhya Pradesh(7%) and Uttar Pradesh (27%) is seenthan last year, similarily, Mung beans area has invreased in rajasthan (20%) and in Maharashtra by (38.2%) KARIF PULSES ACREAGE- (AREA SOWN IN MILLION HECTARES)) Crop 2015-2016 2014-2015 Change %Change ALL PULSES 10.195 9.257 9.39 10.14% Pigeon peas 3.329 3.311 0.38 00.54% Black Matpe 2,596 2.275 3.21 14.11% Mung beans 2.316 1.964 3.52 17.92% 2
Others* 1.954 1.707 SOURCE: Ministry Of Agriculture *Beans varieties are major part of other PRODUCTION, IMPORT, DEMAND & PRICE OF CHICKPEAS: Usually, chickpea prices start looking up around the month of October for two reasons, 1) starting of the sowing season for Rabi crops, 2) on set of Indian festivals, which carry on till November. This year chickpea prices are already on higher side by 40% and even in the month of August at INR 48,000 per metric tones, this is due to unseasonal rains and hailstorm. Chickpea production is pegged at 7.17 million MT by 4 th advance estimates by government during the month of August. However, according to trade sources, production may not have reached 5 million MT considering the unseasonal rains had damaged both the crop and yields. Earlier a month back, IPGA had announced estimated production was not more than 5.56 million MT. India imported 490,000 MT of chickpeas in 2015-2016 marketing year, which is 51.8% increase compared to last year. India imported total on 276,000 MT of chickpeas during 2013-2014. Chickpea prices are likely to firm up in coming months on short supply and expensive imports. Further more deficient monsoon forecast and pick up in festive demand may lift prices to INR 50,000 MT during October due to festivals and this demand will be met by imports, in fact till March / April 2016 till new crop will be harvested and come to the market. DEFICIT MONSOON & ITS EFFECT ON CROPS 2015 India s farm output and food inflation outlook, which looked promising last month after initial monsoon jitters, again face a serious weather threat as rainfall dipped sharply in August with no expectations at the moment of rainfall in September. The crop planted in the plains of Punjab, Hayana and Uttar Pradesh would not see any major impact as the region has better irrigation. The challenge would be for rain fed farms where farmers have planted pulses, oilseeds and coarse grains. Kharif food grain production may fall at 126.31 million MT from 128.69 million MT in 2013-2014 due to poor rains. Out of all kharif crops-pulses and oilseeds do not need much rains/water but they would suffer from extreme weather conditions. The over all rainfall remained deficit at 11 to 12%. The month of August was dry and it is expected to be the same during September and October. According to the weather man during November and December rainfall will be normal for most of the country. 3
PULSES NEWS FROM INDIA RETAIL DAL (PULSE) PRICES ON A BOIL2015 Pulses prices in India are increasing every month and it is actually on boil due to unseasonal rains in February and March 2015, erratic rainfall in July and August, besides weakening Indian currency which makes imports costlier. 70% average rise in retail pulses prices in India s main cities in August 2015 as compared to August 2014. This price hike is mainly because of weather induced supply shocks, first in March when un-seasonal rains flattened ripening crops, and the uneven monsoon rains from July to August. PRICE COMPARISON PIGEON PEAS DAL AUGUST 2014 & 2015 IN INR CITIES 2015 2014 % CHANGE DELHI 127 79 60.8% MUMBAI 130 77 68.8% CHENNAI 135 76 77.6% KOLKATA 135 70 92.9% 4
BANGALORE 135 75 80% PATNA 107 60 78.3% LUCKNOW 115 70 64.3% CHANDIGARH 99 75 32% SOURCE: DEPARTMENT OF CONSUMER AFFAIRS STYLE OF DISPLAY AT WHOLESALE MARKET WEAKENING INDIAN CURRENCY Weakening Indian currency against US Dollar is definitely making pulse imports costlier and it is not expected to gain strength in near future due to expectation of Fed rate increase in September GOVERNMENT POLICIES-AUGUST 2015 WHEAT IMPORT UNDER 10% DUTY India has imposed 10% duty on import of wheat till March 31 st, 2016 after 8 years. LABELLING OF IMPORTED FOODS-INDIA FSSAI's law on labeling of imported foods continues to impact businesses of importers, grocers and restaurateurs as they grapple with the revenue losses due to consignments of food products and raw material being held up at various entry points such as shipping and 5
airports, and awaiting clearance. Containers include products such as food ingredients, cooking oils, packaged food, pulses, processed foods, biscuits, frozen foods, seafood, vegetables, herbs, cheese, meat and sauces, estimated to be worth hundreds of crores. Moreover, there is a shortage of proper storage facilities at the ports, especially for items requiring cold storage. According to industry sources, 350 containers of fruits were stuck at different ports for the last two months and have rotted due to inadequate infrastructure. The Food Processing industry needs many ingredients and intermediaries such as gluten, potato pellets, cocoa powder, spices and herbs, but these have been blocked by FSSAI due to their stringent product approval process. The processing industry has lost more than INR 15,000 crore due to this. The delay is also because several lots lack adequate information about the products, as mandated by FSSAI. As per the food regulator's norms, manufacturers of packaged food items must, amongst other things, list the contents in English on the labeling, which must mention the ingredients used and their nutritional values. The producer's name, address and country of origin must also be mentioned, and in the format prescribed by FSSAI. FSSAI also insists that importers should not use stickers indicating details such as product type, price and nutritional value, and the manufacturing / producing company must print the product details on the packs that are to be shipped to India. Besides labeling, there are issues such as 100% sampling of containers of imported goods coming into the country, which leads to huge delays in clearance. There are delays in product approvals from FSSAI, which is clearing just 8 to 10 applications in a day, even as a backlog of over 11,000 applications await approval. Many restaurants have resorted to raising their prices by 30-40%. Restaurateurs that serve international dishes such as French, Japanese, etc., are specially affected because they use only imported raw materials (which cannot be replaced by Indian substitutes) so as to give authentic taste to their dishes. Prices of imported raw food materials have gone up by 30 to 40% due to the fluctuating dollar prices and shortages of ingredients due to delays in clearance at the ports. There is shortage of certain sauces and condiments, high quality lamb and fish. The average duty levied on food imports is as high as 50 to 60%. Detaining consignments at ports is affecting trade adversely, and forcing many importers to consider other business options. About 18 importers, unable to incur losses in sales, have shut shop. The Forum of Indian Food Importers (with over 400 members) has been making numerous representations to FSSAI to resolve the issues as soon as possible. The members feel that though they are aware of the regulations that have to be complied with, they should be kept informed about them as different countries have different regulatory requirements. Also, the regulations should be framed based on their feasibility, and FSSAI should clarify some regulations, and importers should be given time to implement the norms. Many products such as fruits, olives, beer, wine, spirits, chocolates, fresh meat, seafood, pasta-sauce, mayonnaise, candy, juices, chips, spices, soymilk, etc., have faced FSSAI's labeling orders. Recently, it was the importers of Canola oil who were asked by the regulator not to import the edible oil under the brand 6
name, and insisted that every container of Canola oil be labeled 'imported rapeseed-low erucic acid oil', and importers should print an ingredient list with 'edible vegetable oil' (not Canola oil) and include it in the label, as reported by TNN. Importers say it would be difficult for them to sell Canola oil with the label stating imported rapeseed-low erucic acid oil, as there are several examples in the Codex standards of edible oil, where the biological and technical term is different from the one used in the country. For example, Arachis oil (peanut oil, ground nut oil) is labeled groundnut oil. In a letter to FSSAI, FIFI has stated, "the term rapeseed oil, however, is most commonly associated with high erucic acid version. We would also like to add that Canola oil is not a term coined by importers to import cheap rapeseed oil and mislead the consumer by terming it Canola oil to make abnormal profits by giving it a fancy name." According to FIFI, FSSAI's insistence to follow the technical term alone, when the principle is not applied to any other oil, is discriminatory, severe and unjustified. FSSAI has not made any apparent move to revise the order, and the standoff has proved costly for importers as hundreds of containers of Canola oil have been detained across various ports, and they will incur heavy damages if the containers are not cleared soon as the product comes with an expiry date. FIFI has pointed out that Canola oil has been imported and sold in India since 2007 and is one of the largest selling oils in several countries, including US, Canada, Mexico, Australia, Japan, China and Pakistan. Protesting FIFI members state that the Mumbai, Delhi and Kolkata High Courts have reprimanded FSSAI for bringing the F&B trade to a halt without having the powers in their Act. On the flip side, FSSAI's move to enforce labeling standards is aimed at deterring poor quality or expired products being dumped in India, and to enforce some accountability. ECONOMIC SCENARIO-INDIA 1) A slow down in China, which has been the engine of global growth for nearly two decades has spread panic around the world. In Europe, problem of Greece and announcement from IMF about the slow growth of global economy. Definitely, India s economy has also been affected by global decline, yet hope of Indian economy still achieving at 7.5% is there with many benefits- 1) Better GDP growth prospects at 7% to 7.5%. 2) Inflation comfort-retail at 3.78% and wholesale at 4.1%. 3) Narrow Current Account deficit at 1.3% of GDP. 4) Domestic consumption expenditure % of GDP in India at 70.4% compared with China at 49.6%. Higher domestic consumption provides cushion to India s economy. There are many worries to tackle for the real growth in India- 1) Further rupee fall might hit export earning. 2) Export earnings are already falling since July 2015. 3) Corporate profitability at a 17-18 year low. 7