The Government of India is actively considering creating buffer stock for edible oil. The Government has shown positive inclination towards setting up buffer stocks of edible oil, given the steep price rise witnessed in the last three years.

 

According to edible oil traders, while holding talks with the Government on the situation that arose out of the price rise of edible oil, the traders have suggested the creation of buffer stocks in line with the buffer for food grains.

 

Shankar Thakkar, president of the All India Edible Oil Traders’ Association, has stated that creation of buffer stock was suggested to the Government to ease out the pressure put on domestic edible oil prices due to international causes like the Russia–Ukraine war or bad weather impacting the oil seed production.  

 

The edible oil traders say that the measures taken by the government to increase domestic production would take time to yield results and therefore to stabilise the prices, buffer stock was needed.  

 

Thakkar has said that to arrest the price rise, the Government can take immediate steps like asking the importers to sell edible oil on purchase price.

 

India imports 80% sunflower oil from Ukraine and Russia and both countries are now engaged in a military action. The supplies will be hit till the situation gets normal.

 

The prices of sunflower oil have already witnessed a steep rise ranging from 35-40%, soybean 30-35%, while palm oil has witnessed a rise of close to 25% in the recent past. The retail prices of these oils are also hovering between Rs 150 and 200 per litre.

 

The traders also reiterated their demand for removing the stock limit on edible oil to ease out the oil trade.

The Centre is planning to enhance the subsidy on 'natural farming' by 50 per cent by re-launching the scheme on a mission mode in select blocks without hampering the food security, a concern many experts have expressed amid its failure in Sri Lanka. Under the plan, now under consideration, one cluster (of 500 hectares), each in 1-2 blocks will be taken up to motivate farmers.

 

Bhartiya Prakritik Krishi Padhati (BPKP) was introduced as a sub-scheme of Paramparagat Krishi Vikas Yojana (PKVY) in 2020-21 under which the Centre releases about ?12,200/hectare for a period of three years for cluster formation, capacity building and continuous handholding. In the 2022-23 Budget both the BPKP and PKVY have been subsumed under Rashtriya Krishi Vikas Yojana (RKVY).

 

'The current assistance is too low to motivate farmers and Agriculture Minister Narendra Singh Tomar has agreed for enhancing it. It could be around ?18,000 per hectare under the revamped plan depending on the scale of the roll-out,' a source said. Though the plan is to cover 6,672 blocks in the country in phases over a period of time with at least one cluster each, initially the focus will be on those areas which have been practising natural farming and there is potential to achieve the target at the earliest, sources said.

 

Natural and organic

However, some experts have said that the assistance under natural farming should be at par with organic farming where farmers currently receive ?31,000-32,500 per hectare for three years.

 

'India has the first mover advantage in the label of ‘Natural’ in the global agricultural export market. This creates greater opportunities for us. The label of Natural in agriculture is larger and deeper than ‘Organic’ in view of social and economic benefits in addition to the Bharatiya concept,' said S Chandrasekaran, a foreign trade policy expert. The label of organic is matured and therefore, the financial assistance on natural farming should be equal to organic agriculture, he added.

 

'The financial assistance scheme of organic agriculture could be linked with Tracenet Certification Software of APEDA, as it contains comprehensive and practising farmers, in order to create efficient utilisation,' Chandrasekaran added.

 

Simultaneously, standards will be developed for crops produced through natural farming and promotion will be initiated with separate export-oriented branding different from organic products, the source said. Positioning is very important to get premium for produce of natural farming that will be one of the key motivators for the farmers, the source said.

 

Food security

 

On food security issue, the government officials said that there is no such threat as production will not drop in natural farming and the selection of crops like oilseeds and pulses will be rather beneficial for the country.

 

The current BPKP scheme emphasises on exclusion of all synthetic chemical inputs and promotes on-farm biomass recycling with major stress on biomass mulching, use of cow dung-urine formulations and plant based preparations, Tomar had said in a written reply in Lok Sabha last month.

 

Until now, government-assisted natural farming area has reached 4.09 lakh hectares for which ?49.81 crore has been disbursed in eight States including Andhra Pradesh, Madhya Pradesh, Chhattisgarh and Kerala.

 

Allocation under RKVY started during the UPA government, has been increased nearly three-fold to ?10,433 crore for 2022-23 from ?3,712.44 crore (BE) in current fiscal and the hike is over five-times from the revised estimate. The scheme allows flexibility to States to develop and implement their own plans and draw the Central funds. The revamped plan on natural farming may also allow States to disburse additional funds above the Central assistance from the RKVY budget, the source said.

 

According to a parliamentary standing committee report, about 290 districts account for consumption of 85 per cent of fertilisers used in the farm sector. While promoting organic and natural farming, the government may not touch these districts initially as they also contribute in the overall food production.

 

In January, the Sri Lankan government announced a compensation package of $200 million to rice farmers whose crops were affected by the ban on chemical fertilisers and the country had to shelve its plan to become the world’s first country to become 100-per cent organic after a food crisis.

Tunisia's state grains agency has issued an international tender to purchase about 75,000 tonnes of durum wheat, European traders said on Tuesday.

 

The grain can be sourced from optional origins. The deadline for submission of price offers in the tender is Wednesday, March 2.

 

The durum is sought in three consignments of 25,000 tonnes with shipment periods depending on the origin supplied.

 

Shipment is between April 1-20 if sourced from the Mediterranean region/south Europe, between March 25-April 15 if from West Europe or between March 20-April 10 if from the United States, Canada or South America.

 

Algeria’s state grains agency has also issued a tender to buy durum closing on Wednesday.

Indian wheat exporters have signed deals to export at least 5.5 lakh tonnes (lt) over the next couple of months as nations in South Asia, South-East Asia and West Asia are looking to New Delhi to meet their requirements for food and feed in view of the Ukraine-Russia crisis. 

 

'We have demand for Indian wheat from March-April. Our exporters have committed to ship 5.5 lakh tonnes. Both old and the new crop will be shipped out by exporters under these deals,' said Rajnikant Rai, Divisional Chief Executive, ITC Agri-Business.

 

Indian wheat is currently being quoted at $330 a tonne, up from $300 before Russia ordered its troops into Ukraine on February 24. 

 

Market volatile

 

'Russia and Ukraine make up 35-40 per cent of global wheat exports,' the ITC official said. 

 

According to FAOSTAT, Russia exported 37.26 million tonnes (mt) and Ukraine 18.06 mt of wheat of the total exports of 202.48 mt in 2020 by various countries, including India. 

 

'The wheat market is volatile with buyers and sellers in a wait and watch mode. But prices have increased by $15-20 a tonne after the Ukraine crisis deepened. India’s advantage is that no other origin has its new crop coming during this time of the year,' said Nitin Gupta, Vice-President, Olam Agro India Ltd. 

 

Wheat prices in the global market are ruling at a nine-year high with the rates swinging below and above $9 a bushel. On Tuesday, benchmark wheat futures on the Chicago Board of Trade was quoted at $9.75 a bushel or $358.24 (Rs27,150) a tonne. 

 

Korea buying for feed

'We have been witnessing good demand for Indian wheat over the last couple of months. We are also finding parity in shipping the grain,' said Mukesh Singh, Director, MuBala Agro.

 

ITC’s Rai said countries in South Asia, West Asia and even the Philippines in the South-East Asian region are buying Indian wheat. 'Even South Korea is buying Indian wheat for feed purposes,' he said. 

 

Olam’s Gupta said India could easily ship out 3-4 mt by June this year, particularly when 5-6 lt are being exported every month. 'In December, we exported close to one million tonnes,' he said. 

 

According to Agricultural and Processed Food Products Export Development Authority (APEDA) data, India exported 50.41 lt of wheat valued at $1.43 billion during the April-December period of the current fiscal compared with 10.69 lt valued at $278 billion lt in the year-ago period. 

 

Bangladesh, biggest buyer

Until November, exports were at 41.14 lt. While the per tonne realisation was $280 until November, it increased to $285 in December. Bangladesh bought 29.68 lt of Indian wheat in the first nine months of this fiscal, followed by Sri Lanka (4.04 lt), UAE (3.69 lt) and the Philippines (2.96 mt).

 

Higher wheat exports this year have helped growers with prices topping the minimum support price (MSP) of Rs1,975 a quintal announced for the 2021 rabi marketing season. This year, the MSP has been hiked to Rs2,015. 

 

'If the Ukraine-Russia standoff prolongs, Indian exports will gain. Both Ukraine and Russia too have a bumper wheat crop. But if the current situation continues, exports will be good until June-July,' Rai said. 

 

Record output

According to the second advance estimates of foodgrains for 2021-22 (July-June), wheat production is projected at a record 111.32 million tonnes against 109.59 million tonnes in 2020-21. 

 

'India’s wheat exports will be more in 2022 than last year in view of the current Ukraine-Russia problem,' said Gupta. 

 

'If the market is disturbed for, say, two months, India could turn out to be a huge supplier in West Asia and even ship to as far as Egypt,' said MuBala’s Mukesh.

 

Pramod Kumar, Vice-President, Roller Flour Mills Association of India, said domestic wheat prices have gained in view of higher exports. 'In the global market too, wheat prices are above our MSP,' he said. 

 

Freight heading north

Currently, the modal price or the rate at which most trades took place in Uttar Pradesh and Madhya Pradesh is between Rs1,900 and Rs2,000 a quintal. In markets such as Agra, prices are firmly above Rs2,000. But the problem for Indian exports will be that freight rates are also rising in view of the geopolitical crisis.

 

'If the Government can support transportation of wheat, we can certainly do well on the export front,' ITC’s Rai said. 

 

However, in view of the rise in wheat price the user industry has written to the Centre to suspend wheat shipments until the Ukraine-Russia crisis ends.

 

Though the crop is expected to be a record this year, arrivals have been delayed in view of the cold weather. 'Wheat harvest has been delayed by 15-20 days,' Rai said. 

 

Kumar said the quality of the wheat crop this year is good and any drop in the grain’s acreage will be made good by a better yield. 

 

'We will have to watch out for the weather over the next 30 days. If there is no rain, then we will have a good crop,' said Rai. 

 

Indian wheat exports are also aided by higher inventories with the Food Corporation of India (FCI). As of February 1, FCI had 28.27 mt of wheat with it against 31.83 mt during the same period a year ago. Currently, it is estimated at around 26 mt. 

The Indian Government's plan of creation of 10,000 new Farmer Producer Organisations (FPOs) across the country at an expenditure of Rs 6,865 crore is moving fast. Union Minister of Agriculture Narendra Tomar has said that the plan will help farmers in significantly reducing their cost of farming, as well as improving the quality of their products in line with global standards.

 

The Union Minister revealed this while addressing the FPO summit organised by CII & NCDEX in partnership with NABARD and NABCONS.

 

The FPO summit was aimed at bringing together all the stakeholders in the agri value-chain connected with FPOs on a common platform and showcasing how FPOs have been instrumental in impacting the entire agri value chain. Another area of focus of the summit was creating awareness on alternate market channels.

 

Dr G R Chintala, Chairman, NABARD, while addressing the inaugural session highlighted that while production increases, productivity remains a challenge and to overcome this challenge, FPOs need to leverage new technologies such as AI and Blockchain towards optimising collectivisation benefits.

 

Focussing on the importance of electronic market platforms for FPOs,  S K Mohanty, whole-time member, SEBI, mentioned that price exchange platforms enable FPOs towards better bargaining power through price risk management and should be leveraged as a market channel for better income levels.

 

On industries' contribution, Sanjiv Puri, chairman, CII National Council on Agriculture, and CMD, ITC Ltd, mentioned that CII’s FPO Business Service Unit is working towards empowering farmers through input linkage, market linkage and capacity building towards making value chains competitive, climate resilient and ensuring better qualities for better price realisation.

 

The sessions at the summit focussed on alternative market channels and other financing options along with infrastructure connect. The conference discussed a wide range of topics focussing on production related challenges, input marketing, alternate output market channels offered to FPOs and also how FPOs are mainstreaming the corporate decision making for input marketing as well as procurement.

 

P K Swain, Additional Secretary, Ministry of Agriculture, mentioned that the FPO model has the potential to enhance global trade of Indian GI products at competitive prices thus promoting exports and positioning India as a global trade leader.

 

Further experts also deliberated on the areas of concern in terms of financial literacy of the FPO members and the important policies and market forces for financial inclusion of the FPOs and how collective requirements from FPOs are shaping the need for on-farm infrastructure as well as other services.

Export demand for Indian wheat, corn and spices has shot up after Russia launched a military operation against Ukraine, forcing the international trade of agricultural commodities to shift sourcing to India since supplies from the two nations have come to a grinding halt.

 

'The prices of wheat at the Kandla port have increased from Rs2,200 per quintal to Rs2,350-2,400 per quintal in the last four days. With the FCI (Food Corporation of India) declaring that its upcoming tender this week will be the last one in March, we think that the prices of wheat and wheat products may increase further in the next fortnight,' said Sanjay Puri, former president of the Roller Flour Millers Association of India. 'The next crop will be harvested only after Baisakhi (April 13).'

 

Most of the wheat stock in India is held by the government agency FCI, which is not exporting the commodity. Wheat traders want the FCI to release more wheat into the market, which will help keep domestic prices under control, reduce excess stocks and also meet the export demand. However, the processing industry is worried. 'We will be requesting the government to immediately stop export of wheat from the country as the local prices have jumped from Rs21 per kg before the outbreak of the war to Rs24 per kg today (Tuesday). The export demand is so huge that if we do not stop exports, then the prices can increase further and may also lead to shortages in future,' said Anjani Agarwal, president, Roller Flour Millers Association.

 

Apart from wheat, demand for Indian corn has increased as buyers from India's neighbourhood shifted from Ukraine to India.

 

'Ukraine used to be a big exporter of non-GMO corn. Due to tensions in the Black Sea region and the high freight rates, now the demand for maize from South Asia will shift to India as no other origin can feed this demand,' said the head of an international trade consulting body, who did not wish to be identified. 'India's corn exports have been increasing for the past two years as supplies from Myanmar dwindled after the military coup in that country.'

 

Growing export of Indian corn has led to an increase in prices. Balram Yadav, managing director, Godrej Agrovet, said, 'The farm gate price of corn has increased from Rs19.50-20 per kg to Rs22 per kg. It may hover there or come down slightly by May.'

 

Prices of spices have also increased due to local shortages and strong global demand. 'Ukraine is one of the major exporters of coriander seeds. Coriander prices have increased about 30% during the past few months as the crop is smaller,' said Ashwin Nayak, founding chairman, Federation of Indian Spice Stakeholders. 'Now, we expect increased export demand for Indian coriander as supplies from the Black Sea region will be restricted.'

 

Jeera prices have jumped 25-30% in four months due to reduced production and geopolitical factors. India is now the only prominent jeera supplier as supplies from countries such as Afghanistan, Turkey and Syria have been disturbed due to geopolitical reasons.

 

Strong export demand for cotton, yarn, fabric, and readymade garments has made the local spinning mills consume more cotton. Millers said that an unprecedented increase of about 65% in domestic cotton prices from about Rs135 per kg in February 2021 to Rs219 per kg in February 2022 is posing a challenge to exporters in meeting their export commitments. To meet the strong export demand, the South Indian Mills Association has asked the government to allow import of 4 million bales of cotton. The poultry industry is gearing up to ensure that prices of soybean, which is used as chicken feed, remain under control.

The Director-General of Foreign Trade (DGFT) has decided to relax some provisions of foreign trade policy (FTP) to help importers bring in their moong cargoes contracted before February 11, in a move that could provide relief to a section of the pulses trade.

 

Last month, the Centre had amended the moong import policy by moving it from 'free' to 'restricted', a move that shocked importers.

 

Following representation from various entities, the DGFT has decided to relax the FTP provision to allow importers to ship in moong for fiscal 2021-22, subject to some conditions. The quantity eligible for import would be proportionate to the amount paid prior to February 11, 2022, as advance. If the advance payment had been made in full for the entire contracted quantity, then the eligibility would be for the entire contracted quantity. 'If there is a partial payment, quantity admissible for import shall be limited to the quantity in proportion to the advance payments made,' DGFT said in a trade notice issued on Monday.

 

DGFT said the import contracts should have been entered into prior to February 11 with payments made. Details of such contracts have to be registered before March 15 at the jurisdictional regional offices of additional DGFT in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad and Ludhiana.

 

Trade sources, following the change in moong bean import policy early last month, had indicated that cargoes of upto 50,000 tonnes were getting prepared to be shipped to India before March 31 from origins such as Myanmar.

 

India’s moong imports during the April-September period of the current fiscal were valued at $76.9 million against $77.14 million in the entire f2020-21 fiscal.

 

As per the Second Advance Estimates, moong production in India during 2021-22 is expected to be 3.06 million tonnes, including 2 million tonnes in kharif and 1.06 million tonnes in rabi season.

The grape export from Nashik has gathered momentum, and in the last one month, over 36,000 metric tonne (MT) of grapes have been exported to European countries.

 

According to the state agriculture department, the grape export is expected to continue till April-end. Of 36,000 MT, around 23,624 MT have been exported to the Netherlands, 1,918 MT to Germany, 1,835 MT to Poland and 1,625 MT to the UK among others.

 

During the same period last year, the district had exported over 1 lakh MT of grapes. According to Manik Patil, the director of the Grape Exporters Association of India (GEAI), the grape harvest has been delayed this year by around three-four weeks due to a delay in the pruning of vineyards.

'It takes around three months for the fruit to grow for the harvest after the pruning. Usually, pruning of the vineyards is over by October, and the harvest begins in December. But considering the unseasonal rains expected in December from the past two years, the grape farmers delayed their harvest this year, which also delayed the grape export,' said Patil.

 

Nashik district had exported 1.29 lakh tonnes of grapes during the last grape season.

Patil said that the district will touch last year’s grape export figure by April-end this year. He said the grape farmers and exporters are facing several challenges this year. The freight charges have doubled this year from 4,000 USD to 8,000 USD per container.

 

Moreover, packaging material prices have also increased by 30%. Total 32,952 farmers have registered 20,100 hectares of vineyards for the current grape harvest season 2021-22 (December-April) with the state government.

Pritam Singh, who farms on 110 acres, including some land taken on lease, at Urlana Khurd village of Haryana’s Panipat district, has just sold his harvest of Basmati rice varieties — PB 1121 and PB 1509 — at the local mandi at Rs 3,800 and Rs 3,500 a quintal, respectively.

 

Both the varieties, developed by the Indian Agricultural Research Institute (IARI), Pusa, Delhi, fetch farmers like Singh financial benefits in the range of Rs 25,000 to Rs 30,000 per acre, after taking into account cost of cultivation as well as lease rental for the land.

 

'Since the introduction of high-yielding varieties like PB1121 and PB1509, the production as well as quality in terms of size of the Basmati rice grain increased thus bringing economic benefits to us,' Singh told FE.

 

Singh said prior to the introduction of these two varieties, the yield of traditional varieties was in the range of 12 –13 quintal per acre, while the PB1121 and PB1509 varieties have an average yield of 24 quintal and 26 quintal per acre, respectively.

While the high-yielding and larger-grained PB1121 variety was certified as Basmati rice in 2008, the PB1509, which takes fewer weeks for maturity, was released in 2013.

 

Two Basmati rice varieties developed by IARI have contributed 70% of the total value of cumulative exports of long-grain aromatic rice from India worth Rs 2.38 lakh crore between 2010 and 2019, thus bringing benefit to farmers. India exported on an average 3.74 million tonne (mt) of Basmati rice annually during the stated period, of total production of around 5 mt.

 

According to an analysis by IARI of the economic value accrued because of Basmati rice, Rs 1.66 lakh crore worth of export earnings between 2010 and 2019 was from the shipment of PB1121 and PB1509 rice varieties, while domestic sales were to the tune of Rs 51,501 crore in the same period.

 

After deducting the cost of production, the IARI assessment has stated that Rs 1.34 lakh crore has been accrued as earnings to estimated 10 lakh farmers in Punjab, Haryana, Himachal Pradesh, Uttarakhand, parts of Uttar Pradesh and Jammu & Kashmir, who grow two varieties of aromatic and long grained rice.

 

'Improved Basmati varieties have brought prosperity to millions of Basmati farmers by improving their standards of living, better education for children and best health care for family members,' Ashok Kumar Singh, director, IARI, told FE.

 

During 2010-2019, annually, Basmati rice was grown in 18.34 lakh hectares on an average, out of which PB11121 and PB1509 was grown in 67% and 10% of the area, respectively. The rest of the varieties grown by farmers include PB1, PB6 and PB1718, which are also developed by IARI.

 

ajor export destinations of India’s Basmati rice include Saudi Arabia, Iran, Iraq, Yemen and the UAE, besides some European countries. India exported Basmati rice worth Rs 29,849 crore ($4018 million) in 2020-21.

 

Recently, IARI has released improved varieties PB1847, PB1885 and PB1886; these are improved varieties with inbuilt resistance to bacterial blight and blast diseases. 'These varieties would reduce the use of pesticides significantly in basmati cultivation,' Ranjith Kumar Ellur, scientist, rice section, division of genetics, IARI, said.

The General Authority For Supply Commodities (GASC) announced - on behalf of the Ministry of Supply and Internal Trade - a new international tender to import wheat.

 

In a statement on Saturday, the authority said that shipments are scheduled on April 13-26.

 

Earlier, Minister of Supply and Internal Trade Ali el Moselhi said the strategic stockpile of wheat in Egypt is enough for more than four months.