India's sugar exports are estimated to increase 15.38 per cent year-on-year to 7.5 million tonnes (MT) in the current marketing year 2021-22, on likely rise in demand for the Indian sweetener amid the possibility of a global deficit, industry body ISMA said on Friday. The country has physically exported 4.2 MT of sugar till February of the current marketing year, against the export contracts already undertaken for shipment of six million tonne, it said.

 

Sugar marketing year runs from October to September. India is the world's second-largest sugar producer after Brazil.

 

According to the Indian Sugar Mills Association (ISMA), "India will export 7.5 million tonne sugar in the current season, as against six million tonne estimated earlier."

 

Higher exports from India are possible as the International Sugar Organisation (ISO) in its report has indicated a global deficit of around 1.93 MT for the marketing year 2021-22 (October-September) and interest of exporters to buy more Indian sugar, it said.

 

Indian exporters are likely to ship another 1.2-1.3 MT in March, taking the total physical exports to 5.4-5.5 MT by then, it added.

 

Sharing the latest sugar production figures, ISMA said total production has reached 25.28 million tonne during the October-February period of the ongoing 2021-22 marketing year, up by 7.68 per cent from 23.48 million tonne of sugar in the year-ago period.

 

Sugar production in Uttar Pradesh, the country's top sugar-producing state, remained lower at 6.86 million tonnes during the October-February period of this marketing year, as against 7.42 million tonnes in the year-ago period.

 

However, sugar production in Maharashtra, the country's second-largest producing state, rose to 9.71 million tonnes from 8.48 million tonnes; while that in Karnataka, the country's third-largest producing state, rose to 5.08 million tonnes from 4.08 million tonnes in the said period.

 

Sugar production reached 7,93,000 tonnes in Gujarat and 4,53,000 tonnes in Tamil Nadu till February of the ongoing marketing year. The remaining states collectively produced 2.37 million tonnes in the said period, ISMA said in a statement.

 

ISMA said sugarcane availability in Maharashtra and Karnataka is higher than what was expected earlier. As a result, the production estimate for Maharashtra and Karnataka has been revised upward for this year, while not much change is expected in other states including Uttar Pradesh.

 

Consequently, the country's total sugar production estimate has been revised higher at 33.3 million tonnes for 2021-22 marketing year, considering diversion of 3.4 million tonnes of sugar equivalent to ethanol, it added.

 

The country is estimated to have a closing stock of 6.8 million tonnes at the end of September this year.

Indore: A push to agri processing, research and development ecosystem and upscaling Micro, Small and Medium Enterprises (MSME) will help Madhya Pradesh attract investments and industries in the state, said B Thiagarajan, chairman, Confederation of Indian Industry (CII) Western Region.

 

As Madhya Pradesh is preparing a new industrial and EV policy likely to be announced in April, Thiagarajan talking to TOI on the side lines of its MP annual session said, 'The conventional way of attracting investments by giving land won’t work much for MP. The state should boost agri processing and position itself as a research, development and innovation destination.'

 

A push to agri processing, research and development ecosystem and upscaling Micro, Small and Medium Enterprises (MSME) will help Madhya Pradesh attract investments and industries in the state, said B Thiagarajan, chairman, Confederation of Indian Industry (CII) Western Region.

 

As Madhya Pradesh is preparing a new industrial and EV policy likely to be announced in April, Thiagarajan talking to TOI on the side lines of its MP annual session said, 'The conventional way of attracting investments by giving land won’t work much for MP. The state should boost agri processing and position itself as a research, development and innovation destination.'

 

CII’s western region chairman stressed on the need to generate a talent pool in the state given the rapid pace of manufacturing across the country to fill the skill gap.

 

'There is going to be a talent shortage in quite a few areas like in manufacturing looking at the way it is expanding in India. Madhya Pradesh has a good quality of living and many good engineering and management colleges should work on creating talent,' said Thiagarajan.

 

Talking on the impact of the Ukraine war, CII’s western region chairman said the war will disrupt the supply chain hitting exports from India but may divert world orders to India and accelerate the pace of electric vehicles to reduce dependency on oil.

 

'Many export houses will not be able to export, business decisions will get delayed and containers may get stuck due to the war. But I am of the view that this will be temporary because it will end and may shift world demand to India as countries may reduce dependency on China and Russia,' said Thiagarajan.

 

He said like pandemic expedited health/medicine infrastructure and gave a push to digitalisation, the war will accelerate the pace of EV to reduce dependency on oil and shift to renewable sources of energy.

In the annual meeting of the western region, Animesh Jain and Shreyaskar Chaudhary were elected as the chairman and vice-chairman respectively for CII’s Madhya Pradesh State Council for the year 2022-23.

India’s exports of agricultural items and processed foods rose 23% year on year to $19,709 million during April-January 2021-22, indicating continued robustness of the segment in the country’s exports basket.

 

According to the Agricultural and Processed Food Products Export Development Authority (APEDA), rice exports during the first 10 months of the current fiscal year rose 12% to $7696 million compared to previous year. Rice contributes nearly 40% of India’s agri-export basket.

 

The value of the shipment of wheat, on the other hand, witnessed a surge by more than 387% to $1,742 million during the April-January 2021-22 period compared to the previous year. Volume-wise wheat exports rose to a record 6 MT from 1.3 MT of shipment in April-January 2020-21. Though India is not among the top 10 wheat exporters in the global trade, the growth rate of the country’s exports of this item is higher than that of Russia, Ukraine, and the US. Increased demand for wheat from South Asian countries, particularly Banglagesh, and its bumper domestic output led to the jump.

 

The exports target for products under the APEDA basket is set at $ 23,713 million for 2021-22. In 2020-21, exports of agricultural and processed food products were valued at $ 20,673 million.

 

India is likely to continue holding a major share of global rice trade in the current fiscal year, with an estimated shipment of 21 million tonne (MT), an increase of more than 24% from the previous financial year. The country’s rice exports in the current financial year is likely more than the combined exports of the next three largest exporters — Thailand, Vietnam and Pakistan

 

Meat, dairy and poultry products exports rose by more than 13% to $ 3,408 million in April-January 2021-22 compared to $ 3,005 million in the corresponding 10-month period of 2020-21.

 

Fruits and vegetables exports were up 16% to $ 1,207 million during April-January 2021-22 compared to the same period previous year.

 

The processed fruits and vegetables exports were up 11% to reach $ 1,269 million during the first 10 months of 2021-22 against $ 1,143 million in the corresponding period of the previous year.

 

“Our thrust has been on promoting exports of Geographical Indication (GI)-tagged products and products sourced from hilly states, while we continue to scout for new markets for exports,” M Angamuthu, chairman, APEDA, told FE. He said spike in exports has been achieved notwithstanding logistical challenges caused by the pandemic.

 

APEDA basket of products exclude marine products, tobacco, coffee and spices. It has taken several initiatives to promote GI-registered agricultural and processed food products in India by organising virtual buyer-seller meets with the major importing countries across the world. In order to ensure seamless quality certification of products to be exported, the export promotion body has recognised 220 labs across India to provide services of testing a wide range of products and exporters.

 

Angamuthu said APEDA has initiated registration of pack-houses for horticulture products to meet the quality requirements of the international market. Registration of export units for peanut shelling and grading and processing units, for instance, is to ensure quality adherence for the European Union and non-EU countries.

Karnataka government which is working all out to accelerate the growth of agriculture and allied sectors  has allocated  Rs 33,700 crore in 2022-23 fiscal in its Budget 22-23. The total Budget outlay is Rs.2,65,720 crore.

 

The state  government has now given a major fillip to the agriculture sector with the strengthening of the agriculture education infrastructure with setting up of agriculture college at Hagari at Ballari district and Athani, Belagavi district. Also, Dharwad Agri University to have a chair on farmers' welfare.

 

In his maiden Budget speech, Karnataka Chief Minister S R Bommai who holds the finance portfolio said that  the Krishi Yantradhaare scheme will be extended to all hoblis of the state. Mini food parks in all districts under PPP model will be soon coming up.

 

The government has set aside a Rs 500 crore fund given to Raitha Shakthi Yojana to help marginal farmers in terms of fuel cost for mechanised machines harvest crops. This will bring in farm efficiency and faster access to the markets.

 

Giving considerable attention  on agriculture and irrigation,  Bommai  said  an allocation of Rs 1,000 crore for Mekadatu project is sanctioned. In addition, Rs 500 crore have been allocated for farmer empowerment through energy project and purchasing of machinery for procurement of energy .

 

Three lakh farmers to get Rs 24,000 crore  as farm loans. Three lakh new farmers to benefit. Government will increase gau-shalas from 51 to 100 in the state.

 

And Rs 50 crore will be allotted for increasing the gau-shalas to preserve local varieties of cattle. The government said that  2,000 cattle to be distributed to farmers. Gau Mata Sahakari Sangha to also be set up in the state.

The agriculture sector employs directly or indirectly half of the total workforce but it contributes only 19.9% to the national GDP, while the services sector which includes only 20% of the workforce contributes 66.1% to the GDP (Economic Survey 2019-20). The soaring growth of agriculture due to Green Revolution has now given way to the growth in the industrial and services sectors. The contribution of agriculture sector has decreased from more than 50% of the GDP in the 1950s to 15.4% in 2015-2016 (Economic Survey).

 

Despite being the highest producer of various crops, Indian agriculture has lower yield potential, that is, the quantity of crop produced per unit of land as compared to the world’s top crop producing countries like China, Brazil, and USA. Even though India is the world’s second largest producer of rice but its yield potential/productivity is lower than of Brazil, China and USA. The same pattern is found in pulses of which India is the second highest producer in the world. Agricultural growth in India has been reasonably unstable over the past few decades, ranging from 5.8% in 2005-06 to 0.4% in 2009-10, 0.2% in 2014-2015 and 3.5% in March 2022 (Economic Survey 2019-20).

History of Agriculture in India

 

The British during the colonial period promoted more cash crops instead of food crops for their own profits. The decades of neglect of agriculture sector under colonial rule made it a major challenge for India after independence. To address the immediate food security issue, India imported food grains from US under PL-480 scheme 1956. Three million tonnes of grains were imported and ten million tonnes in 1966. Amidst US arm twisting and successive droughts, the then Indian PM Shri Lal Bahadur Shastri adopted food self sufficiency as his top policy priority. He gave the slogan of “Jai Jawan Jai Kisan” and launched the Green Revolution under the supervision of Indian geneticist MS Swaminathan which revolutionised Indian agriculture. Under the Green Revolution high yielding varieties (HYVs) of seeds were introduced in India for the first time. These HYV seeds were drought and pest resistant and required proper irrigation. Green revolution was first launched in Punjab, Haryana and Tamil Nadu because these regions had adequate irrigation facilities for crops like rice and wheat. Cash crops like cotton, oilseeds and jute were not included. This revolution focused on inland productivity. In order to increase farm production, the revolution also focused on developing the irrigation system and other productivity factors such as fertilisers, insecticides and weedicides and on promoting commercial farming modern machinery like tractors, harvesters and drillers.

 

The Green Revolution substantially increased the agricultural productivity of wheat and rice in India and from a food-deficient country India became a food-surplus country. Many farmers moved from subsistence farming to commercial farming.

 

Challenges in Indian agriculture

 

Despite record production of certain major agricultural produce and rise in export, Indian farm sector faces some challenges, such as, low crop yield/productivity, small land holdings, monsoon dependency, low share of exports in global market, lag in farm mechanisation, burden of loans, farmer suicide, inadequate storage facilities, absence of supply chain management, etc. All this puts a load on the already struggling industry, limiting its growth.

 

Dependence on monsoon

 

The growth of India’s agriculture has been dependent on monsoon and as a result it has been volatile. There is only 36% of irrigated land of the total agricultural land (World Bank data). Reliance on seasonal rainfall lowers productivity. Moreover, change in climatic conditions and erratic weather pattern such as cyclones and droughts can impact yields of agricultural crops.

Marginal land holdings

 

In India nearly 85% of agriculture land holding are small and marginal (<2 hectares). Raising farm productivity is critical for long term increase in farmers’ income in India, as land fragmentation means that many Indian farmers are having farming plots of such a small sizes that even doubling their incomes would leave them with meagre earnings.

 

Slower agricultural growth rate

 

The Ashok Dalwai Committee report on doubling farmers’ income estimated that it will require an agricultural growth rate of 10-11% per annum until 2022-2023. However, agricultural growth rate and farmers’ income growth rate has been stagnating and well below the required rate of growth.

Lack of mechanisation

 

In India majority of farming is done by conventional agricultural tools. According to the Census 2018-19, 76.5% of farmers have less than 2 ha of land (avg land holding 1.15 ha). This is another obstacle in the use of modern tools in agriculture.

 

Scarcity of capital

 

Due to absence of any well operated institutional mechanism, farmers are bound to take capital from money lenders, and because of the overwhelming dominance of money lenders they charge exorbitant rates of interest. This has socio-economic implications for farmers and they are bound to sell their land and fall in the debt trap.

 

Poor penetration of forward and backward linkages in agriculture

 

Food processing units need to have strong backward linkages with farmers, farmers’ producer organisations, self help groups, etc. Further, to be able to sell processed food, strong forward linkages are needed with the wholesalers, retailers, and exporters.

 

Inadequate storage facilities and transport connectivity

 

India has poor rural roads, which affect the timely supply of inputs and timely transfer of outputs from the farm. In other areas, regional floods, poor quality and inefficient farming practices, lack of cold storage, harvest spoilage causes 30% loss to the farmers’ produce. Because of absence of godowns and warehouses, farmers are forced to sell their produce at very low cost. According to the Parsee committee, lack of adequate storage facilities leads to 6.6% of food wastage. Absence of cold storage leads to 20% wastage of fruits and vegetables.

 

Issues related to subsidies

 

Agricultural subsidies were introduced to incentivise farmers to take up loans. Green Revolution subsidies also intended to reduce the cost of production for farmers and to check food price inflation and to protect consumers. However, today it has become apparent that subsidies are inflicting significant damage on different aspects of economy, e.g, subsidised urea has led to the massive overuse of nitrogenous fertilisers, leading to damaged soils and pollution of local water bodies. Similarly, power subsidies have not only led to an alarming overuse of ground water but also severely damaged the health of power distribution companies. Credit subsidies like loan waivers have weakened the Indian banking system (due to NPAs) having negative spillover effect on the economy. Output price subsidy in the form of minimum support price (MSP) basically applied only to a handful of crops, especially wheat and rice, that are produced by the government in a handful of states, resulting in excessive production of wheat and rice which has caused depletion of the groundwater table and soil quality deterioration.

 

Consumer oriented policies

 

Whenever there is a price rise in any agricultural commodity the government imposes restrictions on exports to protect Indian consumers. This creates hindrances for farmers in taking advantage of high prices in foreign markets. This coupled with the Essential Commodities Act (ECA) has meant lower private investment in export infrastructure such as warehouses and cold storage system. This lack of storage infrastructure has compelled farmers to go for distress sale.

Flawed agricultural marketing policies

 

Due to the restrictions imposed by the Agricultural Produce Market Committee Acts (APMCA) passed by various states, Indian farmers today can only sell their produce at the farm or local markets (haats) to village aggregators APMC mandis and to the government at MSP.

Government policies

 

Soil health card scheme: It was launched in 2015 to help farmers in deciding amount of fertilisers to be used.

 

To increase the area under irrigation, PMKSY (Pradhan Mantri Krishi Sinchai Yojana) was launched with an objective of “Har Khet Ko Pani” and to promote local rain harvest management.

The e-NAM programme was launched with the objective of One Nation One Market to provide pan-India access for farmers, rather than a dedicated local APMC market.

 

Crop diversification and better prices: PM AASHA (Pradhan Mantri Annadata Aaysanrak Shan Abhiyan) Yojana was launched to realise better prices in crop diversification. Oil seeds and copra was also included.

Agriculture export policy: Was launched in 2018 with a target of achieving 60 billion dollar worth of agricultural exports by 2022.

 

However, due to unawareness about the schemes and lack of supporting measures, most of the agricultural schemes are not implemented properly.

 

Action to be taken

 

Food processing sector: India is the second largest producer of fruits and vegetables in the world but hardly 2% of total produce is being processed. The development of food processing sector can increase shelf life of fruits and reduce wastage.

 

Export orientation: India’s agricultural export supply chain is poor as compared to other countries. According to the WTO trade statistics 2017, China holds 4.1% of world agri food exports, while India shares only 2.27% of it. Better transportation, storage facilities and branding will promote our crops.

Non-farming income: If any natural disaster happens, allied sectors such as dairy, cattle rearing, fisheries, etc, can provide alternative source of income to farmers.

 

Higher productivity: In order to increase productivity, technological intervention is a must. Precision farming or drip irrigation, drones and sensors can help to reduce the input costs of farming. Now it is high time to go for climatic-specific agriculture and collective farming which can boost agriculture production in the country.

 

Research and development: China spends 60% of agricultural GDP on R&D while India spends only 30% which is less than even Bangladesh’s 38%. That is why we have not seen any notable innovation in Indian agriculture after the Green Revolution. By agricultural research we can provide better inputs and increase farm production.

 

Crop diversification: In order to curb excessive dependence on a few crops, we have to go for crop diversification. We need to incentivise our farmers to grow coarse grains like millets. It helps the farmers against pest attacks and provides security also against weather aberrations. Farmers can adopt crops that require less water instead of water intensive crops.

 

Innovative agricultural practices

 

Aquaponics: Farmers must be encouraged to adopt innovative measures like aquaponics, which is a collective activity of aquaculture and agriculture that reduces the need of chemical fertilisers and hence saves the environment and also removes dependence on one crop.

 

Urban farming: Innovative measures such as plant scrappers can also be adopted which will promote urban agriculture, reducing the pressure on traditional farming and dependence on villages.

 

Biofuel: It is a renewable energy source that is derived from microbial plant and animal material. Ethanol, green diesel and bio diesel are biofuels that have a positive impact on farm income.

 

These techniques and practices are costly and demand expertise, so the government will have to play a major role in promoting these activities by incentivising people to adopt such practices.

Finally, agriculture being a state subject needs a collective approach of both central and state governments for its development.

The commerce ministry's arm APEDA on Friday said it is in the process of formulating a strategy to promote export of natural farming products, which holds huge potential in the global markets.

 

 

The Agricultural and Processed Food Products Export Development Authority (APEDA) is in consultation with the Ministry of Agriculture to develop the standards for production along with a certification system.

 

'Given that demand for natural products is growing and consumers demand greater quantities of foods, cosmetics and medicines that contain natural ingredients, APEDA is in process to formulate a strategy for promotion of export of natural farming products,' it said.

 

The adoption of natural farming is a win-win situation for farmers as recognition of these products will support farmers with premium prices and the value addition of such goods will yield more foreign exchange in the global market, it added.

 

APEDA has also taken several initiatives to sensitise growers, exporters, different state government officials and other stakeholders for harnessing the export potential of organic products and requirements under the National Programme for Organic Production (NPOP).

 

Finance Minister Nirmala Sitharaman in her Budget Speech stated that chemical-free natural farming will be promoted throughout the country, with a focus on farmers' lands in five-km-wide corridors along the River Ganga, at the first stage.

 

Natural farming is being practised in Andhra Pradesh, Himachal Pradesh and Gujarat.

 

'It is anticipated that the northeastern region and hill states can also be potential states for natural farming due to its typical farming practices with negligible application of farm inputs,' it said.

 

Natural or chemical-free farming is a method of cultivation in which farmyard manure, cow and buffalo dung, urine vermi-compost and other such natural ingredients are used for cultivating crops instead of urea, diammonium phosphate and other synthetic fertilisers and pesticides.

With wheat prices soaring to a record high of $13.50 a bushel (nearly $500 a tonne) on the Chicago Board of Trade on Friday, India is reaching out to exporters and countries that are looking for wheat supplies.

 

In addition, it is also looking to supply other agricultural commodities such as corn (maize) and rice, which are also witnessing a demand in view of the spike in wheat prices.

 

Trade analysts see India emerging as the 'food bowl' in Asia at least, besides meeting the immediate needs of other countries, particularly North Africa. In Asia, only India has stocks that can help meet needs of countries in the region.

 

Price up 60 per cent in a week

 

'We are getting enquiries from even countries such as Thailand for wheat supplies to meet food and feed requirements,' said M Madan Prakash, President, Agri Commodities Exporters Association. 

 

Wheat prices are up nearly 60 per cent since February 24 when Russia ordered its troops into Ukraine as the trader is worried over how long ports in both nations will remain shut due to this geopolitical crisis.

 

Benchmark wheat futures were quoted at $13.4 a bushel ($492.35 a tonne) on CBOT on Friday afternoon, more than double the price year-on-year. According to the International Grains Council, prices of wheat from major exporting nations are all ruling above $400 a tonne following the Russia-Ukraine standoff. 

 

Corn, rice competitive

Prices of corn are up by over 16 per cent and rice by six per cent over the past week, leaving India as the most competitive origin to supply these commodities. According to IGC, corn prices are currently ruling above $340 a tonne free-on-board from leading exporting nations, while five per cent broken white rice is quoted near $400. 

 

Indian prices for these commodities are far more competitive by about $20 a tonne. Besides, India enjoys freight advantage being nearer to the importing nation. 

 

Agricultural and Processed Food Products Export Development Authority (APEDA) Chairman M Angamuthu told BusinessLine that the authority, which supervises exports of agricultural commodities, is in touch with various countries. 

 

‘In touch with missions abroad’

 

'Export of wheat and corn will reach new heights in the days to come. We are in touch with Indian missions abroad too,' he said. 

 

Prakash said Vietnam and Thailand were seeking corn from India at prices higher than a week ago. 'But offer prices here too are rising for these. For example, wheat is now offered to us at Rs22,000 a tonne,' he said. 

 

The ACEA president also said APEDA officials had got in touch with exporters like him to find out if they need any help for shipments. 

 

Alerting mission is also for India to step in to meet food shortages in any of the countries, especially in Asia and Africa. During the Covid pandemic, India eased restrictions on the movement of agricultural products helping shipments of these commodities.

 

These shipments went a long way to fulfil the needs of the countries in need. With geopolitical tensions rising, agricultural exports are expected to meet the $23.7 billion target for the current fiscal. 

 

During the first nine months of the current fiscal, exports of major agricultural and processed products, promoted by APEDA increased by 23.81 per cent to $17.47 billion (Rs1,29,782 crore) from $14.11 billion in the year-ago period. 

 

Boon for Indian growers

 

Demand for wheat and corn exports are turning out to be a boon for Indian growers since prices in agricultural produce marketing committee (APMC) yards are increasing. In the case of wheat, prices are above the minimum support price (MSP) of Rs2,015 a quintal for the new crop arriving now. Corn prices are also hovering around the MSP level of Rs1,870 a quintal. 

 

In the last couple of weeks, exporters have signed deals to ship out one million tonnes of wheat and at least half a million tonnes of sugar as India turns competitive in the global agricultural market. 

 

Wheat prices have soared mainly since the Port of Odessa has suspended operations bringing all exports to a halt. This has left the global trade worried as Russia and Ukraine account for nearly 30 per cent of the total global exports. 

 

USDA projections

 

The closure of the Port of Odessa when the Russian troops are approaching Ukraine’s third-largest city compounded by dry weather in South America, trigger fears of a supply shortage. 

 

Though no one is sure about the shortage in supplies, the US Department of Agriculture has projected global wheat exports to increase to 208.45 million tonnes (mt) during the current season (August 2021-July 2022) from 198.75 mt last season. 

 

Of this, Russia (35 mt) and Ukraine (24 mt) are expected to account for nearly 30 per cent. The geopolitical crisis will mean that importing nations will have difficulty to scout for nearly 30 per cent of the wheat supplies that could be affected. 

 

The USDA has projected ending stocks dropping to 278.20 mt this season from 289.88 mt last season. India’s wheat stocks, too, are currently lower at about 26 mt compared with 29.54 mt a year ago.  

 

Also, sanctions against Russia, particularly the expulsion of some of its banks from the SWIFT ((Society for Worldwise Interbank Financial Telecommunication) system has left the traders worried if contracts could be gone through.

 

On the other hand, wheat prices are likely to remain elevated as inputs have gone up sharply with prices of fertilizers, fuel, seeds, insecticides and pesticides surging. 

The free trade agreement between India and the United Arab Emirates is a comprehensive deal that moves beyond a limited trade pact, said Thani Bin Ahmed Al Zeyoudi, the emirates’ minister of state for foreign trade. Besides commerce, the Comprehensive Economic Partnership Agreement (CEPA) could open the doors to the full range of financial, technological and human capital exchange, he told HT in an online interview. Edited excerpts:

 

When will the free trade agreement be operationalised?

 

The CEPA deal will now revert to each country’s legislative bodies for ratification, a process that we expect to conclude within the next three months. The agreement will enter into force two months after ratification by both countries. As such, we anticipate that businesses in both countries will be begin seeing the benefits of this new partnership in the second half of 2022.

 

What are the stages of operationalisation?

 

The agreement is comprehensive in nature and covers 18 chapters. Implementation of all chapters will begin immediately upon ratification of the agreement. Some sectors will see the removal of tariffs from day one, while other sectors will see tariffs reduced or phased out over time. The details of tariff concessions and the schedule will be published soon.

 

ow will the UAE gain from the trade pact? How will it help Indians living in the UAE?

 

It’s important to say at the outset that this CEPA has been structured for maximum advantage of both parties. In whatever way the UAE will benefit from the deal, we are confident India will too. The UAE’s motivation for entering into CEPA negotiations with India was clear: in the year we marked our golden jubilee, we revealed a bold series of initiatives to re-engineer our economy for the next 50 years of growth and opportunity.

 

In the short term, we are seeking to double the size of economy from AED1.4 trillion to AED3 trillion by 2030 and, as we emerge from the Covid-19 pandemic, strengthening and deepening our relationships with strategically important partners such as India is a key component of that goal. Our CEPA agenda is geared around accelerating free flow of goods, rebuilding supply chains, increasing trade volumes to and from the UAE, enhancing our status as a facilitator of global trade and accelerating investment and joint-venture opportunities.

 

The India-UAE CEPA achieves this by substantially removing or reducing tariffs, improving market access to the world’s fifth-largest economy, making companies in each country eligible for government procurement, and creating a platform for small and medium scale industries to collaborate and expand internationally.

 

The agreement will have a positive impact on the whole economy, providing opportunity for all citizens and residents of the UAE, of which Indian expatriates make up a sizeable portion. We are confident they will use their talents and connections to help realise the full potential of this new partnership.

 

As the name implies, this is a comprehensive deal, one that moves beyond a more limited free-trade agreement. Trade and commerce are obviously cornerstones of it, but we see the India-UAE CEPA as opening doors to the full range of capital exchange, whether that’s financial, technological, or human.

 

The two countries already enjoy deeply intertwined economic ties. The UAE’s investment in India is estimated to be around $14 billion, which means the UAE is India’s tenth largest source of foreign direct investment (FDI), with a strong focus on services, maritime industries, energy, infrastructure and real estate and development. India, for its part, has $8 billion worth of direct investment into the UAE, or 6% of the country’s total FDI.

 

We see CEPA opening the doors to further cooperation, adding to the multimillion dollar deals that have recently been secured in sectors such as digital services, logistics infrastructure, energy and food production and transport.

 

Strategic ties between the UAE and India continue to strengthen in several areas. In the food and agri-tech sector, for example, the UAE and India established a dedicated food corridor to secure food and perishable produce supply chains, especially in times of emergency. The UAE and India are also working closely together to support startups and cooperate in other areas such as climate action, innovation, and digitalisation.

 

Regarding FATF, the UAE takes money laundering extremely seriously, and we have been improving measures to meet global standards, including signing extradition treaty agreements with 33 countries including India. We have bolstered our financial intelligence unit and have created a register of corporate beneficial ownership to improve communication with international partners. Our recent UAE Good Delivery programme has also improved our governance of the gold sector, which is of particular importance to UAE-India trade.

 

In terms of the WTO, the UAE is fully committed to supporting the objectives of the WTO and we will continue working with member countries, including India, to continue driving consensus on critical issues and strengthening the multilateral trading system.

Indian Chamber of Commerce in association with Agricultural & Processed Food Products Export Development Authority (APEDA) organised programme on 'Export Promotional Marketing Development of Organic Food Products from North East' on at Hotel Saramati, Dimapur on the theme 'Governance for Growth', on Thursday.

 

According to a DIPR report, principal secretary & agriculture production commissioner (APC), Y. Kikheto Sema said the region was blessed with all agro-climatic conditions and huge prospects of organic farming.

 

He said that the North East region had a total area of 18.37 million, out of which 5.5 million Ha was cultivated land.Kikheto however said organic farming covered only 3%.

He mentioned that APEDA being the forerunner for the organic sector in the country, immense progress was made in the past few years along with ICC.

 

The APC informed that in organic AC market at Agri Expo, 235 MT i.e., 2.35 lakh kg of organic products of vegetables were sold within a year, post-pandemic.

 

Farmer Hostel of 120 capacity at Agri Expo would be completed by the end of 2022 or early part of 2023 he informed.

 

He also disclosed that ginger was one of the best and huge production in Nagaland and that the Spices Board of India and the department had set a pipeline for ginger auction in Dimapur.

Meanwhile, joint director, ICAR Research Complex, Dr. Dipjyoti Rajkhowa said North East state was gifted with enormous resources, fertile land and rich bio-diversity, however, due to remoteness, marginality and inaccessibility up till now, sustain resources for economic upliftment were not met.

 

He said there was a need for strategic change in policies and approachable activities as a concern of hilly eco-system.

 

The farmers are facing the challenges of doing everything manually, not being aware of marketing, storage, or packaging, he pointed out.

 

Dr. Dipjyoti Rajkhowa said another concern was certification mechanism, intervention of certification could export a large amount of production.

 

He mentioned that awareness should be of utmost strategy that needs to be implemented among educated youth and farmers.

 

During the technical session, resource persons were director, Department of Horticulture, Dr. E. Lotha; additional director, department of Agriculture, Nyenghong Phom; joint director, Industries & Commerce, Lipongse Thongtsar; joint director & HOO, MSME Di, ministry of MSME, Tali Longchar; senior field officer, Spices Board of India, Vevotalu Rhakho; senior marketing officer-in-charge (DMI), Tapash Bhattacharjee; regional head, Small Farmers Agri-Business Consortium, Santosh Das.

Representatives of state and union governments, FPOs, progressive farmers, food processing entrepreneurs consumer organisations, organised industry buyers and experts policymakers conducted a brainstorming session during the seminar-cum-buyer-seller meet.

Global wheat prices have surged to over $11 a bushel (over $400 a tonne), a 14-year-high, as shipments from Russia and Ukraine have been totally disrupted following the Kremlin’s invasion of Kyiv.

 

With the North Atlantic Treaty Organization members and their allies announcing sanctions against Russia since February 24 when the Putin administration turned aggressive, analysts see prices for the cereal elevated. 

 

Big global buyers are looking for wheat supplies and countries in the Middle East and North Africa (MENA) region fear the worst since they depend heavily on wheat supplies from both these nations. 

 

Why the surge

 

On Thursday, May wheat contracts on the Chicago Board of Trade were quoted at $11.35 a bushel ($417 a tonne). Prices have gone up by over seven per cent in the last 24 hours and 22.5 per cent in the past week. 

 

Wheat prices have increased due to a couple of reasons. First is the concern over the supply in MENA since the countries in the region have been affected by rising prices and the non-availability of foodgrain. 

 

Wheat has also gained since quite a few Russian banks have been expelled from the global SWIFT (Society for Worldwise Interbank Financial Telecommunication) as part of the sanctions against Russia for invading Ukraine. 

 

Grain traders fear that they will be unable to put through their transactions in view of the SWIFT development. Traders point to how Iran lost 30 per cent of its export earnings following such an expulsion by SWIFT. 

 

Black Sea shipments stalled

The other reason for the panic is that Russian troops are closing down on Port of Odessa, a chain of ports, in Ukraine. The port on the Black Sea coast has been temporarily shut with the US reporting that Russian ships are heading towards the third-largest city of Ukraine. 

 

'Total exports from the Black Sea have come to a halt. This is the reason for the panic reaction,' said a New Delhi-based trade analyst.

 

USDA projections

Reports said wheat buyers are turning to the US, South America and Europe for supplies, resulting in prices skyrocketing over the last couple of sessions. Some countries are considering building inventories, fearing the crisis may prolong for a while. 

 

The primary reason for the wheat market reaction is because Russia is the largest exporter of the foodgrain and together with Ukraine made up nearly 30 per cent of global exports during 2020-21.

 

According to the US Department of Agriculture, Russia exported 39.1 million tonnes (mt) and Ukraine 16.85 of the total 198.75 mt shipments in 2020-21. For the current marketing season (August 2021-July 2022), Russia’s exports are projected at 35 mt and Ukraine’s 24 mt of the global exports of 208.44 mt. 

 

Indian export prices

The Russia-Ukraine standoff has opened up opportunities for Indian wheat, particularly in the Asian region. It has also resulted in prices for wheat exports increasing by over 10 per cent in the past week since the Russian offensive.

 

'Indian FOB (free-on-board) price is around $335-340 a tonne,' said Rajnikanth Rai, Divisional Chief Executive, ITC Agri-Business.

 

'Wheat offers are at $340-350 FOB now,' said Nitin Gupta, Vice-President, Olam Agro India Ltd. 

 

A trading source told BusinessLine that of the Russia-Ukraine issue prolongs for a couple of weeks, Indian wheat prices would improve and be still the most competitive in the region. The source said Indian wheat is always discounted against Russian and Ukraine wheat by $10-15 a tonne. 

 

The current crisis has helped to shed the discount since demand has been coming from various Asian nations. 'Most of the shipments are going from Kandla to South Korea, the Philippines and in bits to West Asia,' a multinational trader said.

 

Till now, Indian exporters have signed close to one mt of wheat for shipments over the next two months since most of the countries in the Asian region are looking to meet their short-term requirements. 

 

'There is not much offering as arrivals of wheat (from the new crop) is still very low, though demand is good,' Rai said. The arrival of the new wheat crop, ready for harvest, has been delayed by 15-20 days due to cold weather in the growing regions.

 

Shipping costs to rise

The Delhi-based analyst said the current geopolitical situation will also result in all shipping-related charges from freight to insurance increasing. 'Meeting foodgrain demand is going to be a costly proposition for some of the countries depending on imports,' the analyst said, pointing out that the rise in crude oil prices will only aggravate the situation.

 

On Thursday, Brent crude oil looked to top $120 a barrel, rising by over five per cent to $119.08 a barrel. WTI crude oil crossed $115 to rule at $115.90. The rise in crude oil prices will result in fuel prices.

 

According to agricultural economists, higher crude oil prices historically have led to higher prices for foodgrain prices such as wheat since input costs increase with fuel inflation. 

 

India’s wheat exports are aided by prospects of a record production this year and ample stocks with the Food Corporation of India (FCI). According to the second advance estimates of the Ministry of Agriculture and Farmers’ Welfare, wheat production this year will likely be a record 111.32 mt against 109.59 mt last year. 

 

Record FCI buy targeted

 

As of February 1, FCI had 28.27 mt of wheat and including the new crop that has begun to arrive in some parts of the country, India should not have problems with meeting domestic demand. For this year, the Centre has targeted a record procurement of 44.4 million tonnes of wheat. 

 

In the domestic market, wheat prices are hovering near the minimum support price mark of Rs2,015 a quintal. In markets, in Uttar Pradesh’s Agra and Madhya Pradesh’s Ujjain, prices are ruling even higher. 

 

Traders say prices will continue to rule higher as long as sanctions against Russia remain in place. The current situation also gives Indian traders to go global by trading in Russian grain since India has not announced any sanctions against the Kremlin.