COMMODITY OUTLOOK AND SITUATION ANALYSIS Weekly Report 09 to 15 February, 2020
COMMODITY OUTLOOK AND SITUATION
ANALYSIS
Weekly Report 09 to 15 February, 2020
After wheat, rice, govt targets to make India surplus in pulses
After wheat and rice, the government targets to make the country surplus in pulses, catering
to demand from other countries, agriculture minister Narendra Singh Tomar has said.
However, the ambitious target can be achieved when the
productivity of pulses is raised, which is still below pre-Green
Revolution levels, he added. Stating that India is almost on
the path to become self-sufficient in pulses, Tomar said: “As
of now, maximum of the domestic requirement is being met
in India itself. We will further boost pulses production and will also help in meeting the global
demand.” The country had produced 23.4 million tonne of pulses during 2018-19 crop year
(July-June), against annual domestic demand of about 27 million tonne. Production of pulses
was recorded 25.4 million tonne in 2017-18 and the output dropped last year due to crop
damage in Maharashtra and Karnataka. Speaking at a conference on pulses, Niti Aayog
member Ramesh Chand said there is a need to improve yield level of pulses which at present
is lower than pre-Green Revolution days of 1965. He suggested strengthening the research
and development for improving productivity, reorientation of trade policies and increase in
private investment to achieve the target. Identification of pulses that suit different crop
sequence will also help in raising output, Chand said, adding that more number of people are
becoming vegan across the world. The yield of tur was 656 kg/hectare in 2015-16 against an
all-time record of 867 kg/hectare in 1956-57. However, the all-India average yield of all
pulses is 841 kg/hectare, which is more than the pre-1965 levels (520 kg). Still, India is way
below the world’s highest of 5,537 kg/ hectare in Australia. Even Madhya Pradesh, which has
the highest productivity among all states, has an average yield of 1,084 kg in all pulses
combined, according to the Commission for Agricultural Costs & Prices (CACP). Tomar said
that the government has taken a number of initiatives including hike in the minimum
support prices (MSPs) and creation of buffer stock of pulses to support farmers. He also said
that pulses are becoming necessary not only in India but also in other countries. Between
2010 and 2015, the pulses production was 16-19 million tonne and there was a huge demand
for imports. Countries like Myanmar, Canada and Malawi had in fact started growing pulses
only for the purpose of selling to India. This crop year, the government targets 26.30 million
tonne pulses output.
Cotton, Yarn, Rajma Trade with China Comes to a Halt
Trade shutdown has led to 4% fall in cotton and yarn prices, while lack of rajma imports
pushed up domestic prices by 8%
New Delhi:Cotton and yarn prices have fallen by 4% while rajma prices have increased by
8% in the past 10 days due to market uncertainty after the outbreak of coronavirus in China.
Prices are expected to remain volatile in the
short-term before a clear picture emerges,
industry bodies and traders said. As per industry
estimates, India annually imports 50% of its
rajma requirement from China. Meanwhile, 25%
of its annual export of cotton and cotton yarn is to
China. “There has been an 8% increase in rajma
prices to $1,100 a tonne in the global market due to no shipment from the Port of Dalian in
China. The shutdown continues and 300 containers of 24 tonne for India are stuck at the
port. In the domestic market, prices will increase in a month’s time, once the cargo reaches
India,” said Pradeep Kumar Runwal of Bherulal Radhe Shyam Bhandari firm — a rajma
importer based out of Naya Bazaar in New Delhi. Cotton yarn prices have fallen 3-4% to
₹185-200 for export quality 30s carded yarn in the past 10 days, said exporters. Similarly,
cotton prices have fallen 4% to ₹39,500 per candy of 356 kg. India’s total cotton yarn exports
to China are 1,100-1,200 million kg out of the total production of 4,100 million kg. “There
has been a sentimental correction due the shutdown in China. We will get to know the real
impact this week or by next week,” said Sanjay Jain, MD, TT Limited. Jain added that everyone
was holding purchases as buyers expect prices to fall. “With the halt in exports to China, we
have not seen any increase in demand from Bangladesh and Vietnam. Everyone is waiting
and watching the situation,” he said. Mahesh Sharda, president of Indian Cotton Association,
said the virus outbreak in China along with the Chinese New Year holidays has disturbed
global markets for the next fortnight, and they expect clarity on export orders only by mid-
February. Cotton shipments of over three lakh bales of 170 kg each have been delayed in the
past two weeks, said Sharda, adding that the effect of the coronavirus has been partial.
However, if the virus is not contained it will influence botton cotton and yarn prices, he said.
“The markets are going to remain dull with weak demand from the biggest buyer in the
world. Buyers in China have requested for delay in shipments,” said Sharda. The companies
are in touch with Chinese traders and said that even though some offices were expected to
open on Monday, they have been told that there will be delay of 1-2 weeks. Runwal said
traders in China have told them that rajma shipment will begin by February 17. “If there is a
delay after that then it’s a matter of concern as the current shipments were for February-
March delivery,” said Runwal. He said that the daily consumption of rajma in the country was
eight containers, out of which six were from China. Prices of rajma have remained stable in
the wholesale and retail market, said traders. In Mumbai’s wholesale market, rajma prices
were ₹80-81a kg and in Delhi it was ₹83-84 a kg.
Farmer Producer Organisations set for a major fillip in State
Government has decided to offer a host of concessions and incentives to them.
Tamil Nadu: The State government is planning to promote
Farmer Producer Organisations (FPOs) in a big way. As a
measure of its commitment towards FPOs, the government has
decided to offer a host of concessions and incentives to them. It
will also act as a facilitator, according to the State
government’s policy document on FPOs, which was
released by Chief Minister Edappadi K. Palaniswami in
Salem on Sunday. Last year, Deputy Chief Minister O.
Panneerselvam, who holds the Finance portfolio,
announced during his Budget speech that the government
will come out with a policy document. Among the sops
being offered to FPOs are portions of unutilised land in
State Horticulture Farms for vegetable seed production.
Organic farming will be promoted through FPOs, and they
will be able to avail themselves of incentives for organic conversion, inputs and on-farm
infrastructure. Installation of solar pumpsets on the common land of the bodies will be
prioritised. Explaining the importance of the policy document, a senior official in the
Department of Agricultural Marketing and Agri Business said it had spelt out the intention
of the State government to support farmers by promoting and assisting FPOs. Till now,
support from the State government had come only through the schemes of the Union
government, the Small Farmers’ Agribusiness Consortium and the National Bank for
Agriculture and Rural Development (NABARD), the official noted. As only a few FPOs are able
to make use of institutional financing through non-banking financial companies, the
document spells out how the organisations can get assured, adequate and affordable
financing through various measures, such as the credit guarantee scheme, the interest
subvention scheme and mezzanine financing. An exhaustive account of various concessions
available to FPOs has been given in the document. “There had been a lot of ambiguity in this
regard, which made farmers run from pillar to post,” the official said. More importantly, the
document is a “rallying point” for farmers and FPOs to know what is due to them. “So far,
there has been no official statement regarding the locus standi of FPOs in the government
policy space,” the official noted.
NCDEX maintains leadership position in agri-derivatives
The National Commodity & Derivatives Exchange (NCDEX) has stated that it has maintained
its leadership position in January with its performance in the
agri-commodities segment. The exchange led the agri-
derivatives market in India across number of contracts, open
interest in value and traded value. Reflecting 72% of total
market share, the exchange registered monthly total value of
Rs 37,699 crore and ADTV of Rs 1,639 crore in agri-
commodities futures segment. The average Open Interest stood at Rs 4,203 crore, reflecting
81% of total Open Interest in agri futures market. Kapil Dev, EVP Business, NCDEX said, “Due
to dynamic demand-supply scenario, crop failures and global market dimensions, agri
commodities are volatile in nature and hence create price risk for value chain participants.
We are happy that we are able to offer the best products on our trading platform to all our
market participants. Our endeavour is to keep adding innovative instruments and products
that make the exchange an inclusive platform, helping value chain participants to grow in
the agri-ecosystem.” Soyaoil emerged as the top traded commodity in the futures contract
on the exchange with 127.20% year-on-year growth with total traded value of Rs 11,048
crore. The exchange had facilitated delivery of 42,453 tonne commodities in January 2020.
The total traded volume in options segment stood at Rs 0.14 crore with notional turnover of
Rs 28.40 crore. “With increased participation of farmers over the years, we have been able
to onboard 258 FPOs which has extended our reach to 5,23,901 farmer base across the
country. This has resulted into 33,899 tonne of commodities being traded by 98 FPOs, in 17
agri-commodities, on NCDEX platform till January 2020”, Kapil added.
Pulses farming and the context of food system transformation
in India
Even as the world celebrated February 10 as the World Pulses Day, the crop remains an
enigma in India, notwithstanding the record 25 million tonnes produced last year. The story
of pulses’ production and consumption in India has
historically been marked by dwindling output and
recurrent shortages. Even though India is the largest
producer and consumer of pulses—25% of global
production and 27% of consumption—domestic
production has not been able to meet the growing
demand. Every year, until 2018, 2-6 million tonnes were imported from Canada, Myanmar,
Australia and African countries to meet domestic demand. Even with imports there has been
a trend of declining per capita availability of pulses—from 62.19 gm/capita/day in 1961, to
39.45 gm/capita/day in 2013. Ironically, the sliding performance of pulses in India began
with the Green Revolution. India became self-sufficient in wheat and rice, but pulses lagged
behind, literally crowded out by cereals. Production of rice and wheat, respectively, went up
by over 225% (to 106 million tonnes) and 808% (to 95 million tonnes) in 2013-14 compared
to 1960-61. But pulses grew merely 47% (to 18.5 million tonnes from 12.5 million tonnes),
despite various schemes such as the National Food Security Mission (NSFM) and the
Integrated Scheme on Oilseeds, Pulses, Oil palm & Maize (ISOPOM). Inter alia, pulses seem
to be suffering from the ‘Air India syndrome’—the responsibility rests with the government
and the private sector is absent. Various factors can be attributed to its lacklustre
performance. First, even with a conservative estimate, more than 80% pulses production is
in rain-fed conditions and mainly grown as a residual crop on marginal lands. Poor
availability of quality seeds, lack of market infrastructure and ineffective procurement add
to farmers’ woes and increase price volatility. For instance, between 2012-13 and 2014-15,
procurement of pulses was negligible (1-4% of production of pulses) compared to 28-30%
of cereals; this forced farmers to sell their crop at a loss, as per a report by the Commission
for Agricultural Costs and Prices, 2015.
While there are a number of issues with the pulses sector, there are fixes, too. In our research
to assess the impact of pulses promotion in the states of Bihar, Uttar Pradesh and Odisha, we
undertook different evaluation protocols to examine the sector in India owing to its unique
characteristics and its position in the cereal-dominated cropping complex. The study
internalises the fact that pulses comprise a whole portfolio not only in consumption with
limited substitutability (chickpea isn’t used in sambar, for instance), but in production as
well. The study suggests that for promoting pulses, government schemes should look at the
inherent heterogeneity within pulses and the intricacies in the larger cropping complex. We
need to look beyond area, production and yield performance of the crop—the APY fixation.
Adoption of technology or even the crop itself is often a discontinuous and non-linear
process in pulses. Identifying this feature, our research tries to assess the characteristics of
farmers who adopt pulses and investigates the tenure of their adoption. Effectively, we look
into the microcosm of the larger ecosystem of pulses at the macro level by gauging the cases
of adoption, dis-adoption and, at times, flickering adoption. We find that intricacies of pulses
are reflected in farmers’ strategic waiting—farmers wait and watch results of other farmers
who cultivate pulses—before deciding on pulses themselves. This wait is even after access
to free, improved seeds. Also, being a heterogeneous set of crops, the external environment
may differ across pulses and on that basis impinging upon farmers’ choices. Who, then, are
the takers of pulses and accompanying technology upgrade that we intervened with? Our
study emphasises access to technology, credit (Kisan Credit Card), effective access to social
safety net programmes like PDS, caste, landholdings, ownership of livestock and awareness
about nutritional benefits bear on adoption as well as dis-adoption of pulses by farmers.
Households with expecting mothers were more likely to cultivate pulses, even if it was on a
small piece of land, reflecting possibly some nutrition consciousness. An important finding
that speaks of the larger issue with regard to pulses’ standing in the cereal complex is that
farmers with access to irrigation shifted towards cultivation of cereals and, therefore, the
irrigation enigma needs to prioritised in case of pulses. As far as the prospects of pulses are
concerned, there is a need to look beyond the binary and take the tenure of adoption and
even dis-adoption seriously. Programmes that assume compliance by implementing a
pulses-centric intervention and not accounting for the larger ecosystem around pulses in the
cropping system are bound to produce below-average results. Also, the heterogeneity across
farmers and across pulses needs to be taken seriously. Our findings show that the role of
risks, adoption of pulses or supply responses have to figure in the risk premium. A small
change in price will not make a large difference in terms of adoption (acreage and
intensification) as pulses are a risky crop. Pulses need to be incorporated into the cereal
farming complex and understood from the context of food system transformation in India
where secondary processed pulses might lead the way forward.
Wholesale inflation at 8-month high; here’s how Coronavirus
impact may fix things in February
After retail inflation rose to a six-year high, wholesale prices
too surged in January, beating estimates. WPI-based
wholesale inflation for the month of January 2020 was
recorded at 3.1 per cent, an eight-month high, as against
CNBC-TV18 poll of 2.90 per cent. The inflation hit 3.1 per cent
last time in April 2019. It stood at 2.59 per cent for the previous month and 2.76 per cent
during the corresponding month of last year. The retail inflation, released by the government
earlier this week, rose to 7.59 per cent in January, much above the RBI’s comfort range,
mainly owing to surging vegetable and food prices. In the final bi-monthly policy for FY20,
the RBI kept the interest rates unchanged, while keeping an accommodative stance. The
central bank had projected the inflation to rise further in the first half of 2020. The food
articles index fell by 1 percent to 160.8 (provisional) as against 162.5 (provisional) for the
last month on account of the lower price of fruits and vegetables, tea, arhar, beef and buffalo
meat, among others. The inflation in food articles slowed to 11.5 per cent as against 13.24
per cent in December. In onion, inflation came down to 293.3 per cent from 455.8 per cent.
In potato, it was 87.8 per cent as against 45% in December. However, prices of maize, barley,
egg, wheat, poultry chicken and condiments and spices, mutton and milk surged. The higher
prices of crude also moved up the index for crude petroleum and natural gas. “Higher
customs duties would push up the inflation related to imports to some extent going forward.
However, the impact of the spread of the coronavirus on risk sentiment and commodity
prices, including crude oil, is expected to exert a substantial moderation on the wholesale
inflation in February 2020”, Aditi Nayar, Principal Economist, ICRA, said.
Rabi cereal output to rise by 4.52% in 2019-20, NBHC
Corp estimates
Hanish Kumar Sinha, Head — Research & Development, NBHC
said the wheat area is expected to increase by 12.03% to 334.4
lakh hectare and its production is expected to improve by
9.01% to 1114 lakh tonne. The National Bulk Handling
Corporation (NBHC), which has come out with its first rabi
crop estimates for 2019-20, said the total rabi cereals production for 2019-20 is expected to
increase by 4.52% to 1,342.3 lakh tonne from 1,284.3 lakh tonne in 2018-19. Hanish Kumar
Sinha, Head — Research & Development, NBHC said the wheat area is expected to increase
by 12.03% to 334.4 lakh hectare and its production is expected to improve by 9.01% to 1114
lakh tonne. The rabi rice acreage is recorded lower by 23.24% at 26.1 lakh hectare against
34 lakh hectare last year and its production is expected to decrease significantly by 27.96%
to 103 lakh tonne from 142.9 lakh tonne in last year owing to marginal shift in farmers’ focus
to pulses and wheat. The total coarse cereals production is expected to increase by 4.92% to
125.4 lakh tonne in 2019-20. There is an increase in production of jowar (24.3 lakh tonne),
maize (82.8 lakh tonne) and barley (18.3 lakh tonne). The jowar acreage improved
significantly by 19.12% while the acreage of maize and barley are expected to show a
marginal surge of 6.45% and 6.85%, respectively. According to Kumar, moong acreage is
expected to decline significantly by 26.32% to 5.6 lakh hectare from 7.6 lakh hectare in last
year and production is expected to decline by 26.38% to 3.8 lakh tonne from 5.1 lakh tonne
last year. Urad acreage is expected to decline by 21.44% to 7.4 lakh hectare from 9.4 lakh
hectare last year and production is expected to decrease by 20.17% to 5.6 lakh tonne from 7
lakh tonne last year. Overall, the pulses acreage is expected to increase by 1.86% to 159.2
lakh hectare from 156.3 lakh hectare last year and the production is expected to decline by
2.47% at 151.7 lakh tonne even as gram acreage and production are likely to increase by
10.14% (106.4 lakh hectare) and 7.90 % (109.3 lakh hectare), respectively. However, total
oilseeds acreage is expected to decline marginally by 0.87% at 79.7 lakh hectare from 80.4
lakh hectare last year and production is expected to decline by 7.39% to 101.7 lakh tonne
from 109.8 lakh tonne last year. Mustard acreage is expected to decline by 0.29% to 69.2
lakh hectare and its production is expected to decline by 6.92% to 86.9 lakh tonne from 93.4
lakh tonne last year. Groundnut and sunflower production is estimated to be lower by 8.87%
(11.2 lakh tonne) and 39.24% (0.8 lakh tonne), respectively.
Commodity picks: 10 February, 2020
Mustard seed
Prices at the benchmark Jaipur market are at Rs 4,317 per
quintal. For the week ahead, prices are expected to head
towards Rs 4,260 per quintal. Huge stocks with NAFED and
aggressive selling by the agency coupled with upcoming
new crop arrival to keep prices under pressure.
Wheat
Wheat prices in Indore are trading at Rs 2,170 per quintal. Prices are expected to trade lower
to Rs 2,100 per quintal following record wheat production estimates for upcoming season
and ample stocks across the value chain.
Bee-keeping a source of additional income for farmers in
Bargur Hills
Rearing honey bees in wooden boxes has not only started
providing regular additional income to farmers in Bargur
Hills, but also helped in increasing agriculture and
horticulture productivity. Around 80% of the land is rain-
fed in the hill area where ragi, maize, French beans and other
millets are produced and stored by the farmers for consumption. Hence, to provide
additional income to the farmers with small investments, ICAR - Krishi Vigyan Kendra,
MYRADA at Gobichettipalayam here, started training them on bee-keeping and provided 210
boxes, so far, to them. Wooden boxes that have many frames are placed in farms and 100
drones and one queen bee is let into each frame which create their own honeycomb fetching
one kg of honey in 30 to 40 days worth Rs. 500. “The cost of bees alone comes around Rs.
250 to Rs. 300 and there are no other expenses,” said Appaiyaa (55), a farmer in
Thamaraikarai involved in bee-keeping for the past one year. He said that currently he had
three boxes placed in the backyard of his house with which he was getting Rs. 1,100 to Rs.
1,500 per month regularly. Another farmer, Channappan (50), said that honeycomb was
removed and without destroying it, honey was extracted and again placed in the box so that
bees reconstructed it in three to four days and filled it with honey. P. Alagesan, Senior
Scientist and Head, KVK-MYRADA, said that bees helped in cross pollination and increased
yield by 15% for farmers. He said that training was provided to farmers to alleviate the fear
of sting as rearing helped in regular income generation without much investment.
“Awareness level on bee-keeping should increase as it is a profitable one, besides bees play
a vital part of forest ecosystem and more farmers should take it up,” he added.
Source: Verbatim reproduced from different sources