Fight over Minimum Support Price

Minimum support prices fixed by the government continue to be a matter of debate for some right reasons.

Sugarcane farmers are asking for increase in the SMP (statutory minimum price) for sugarcane. Their logic: MSP of wheat and other crops has been increased by about 37% which that of sugarcane remains the same. Very valid point as the cost of cultivating has not remain same and has grown in more or less the same proportion to that of wheat and other crops.

MSP of cotton has also been in lime lite ever since they were declared just before the economic slowdown began. Private players are no longer ready to pay the MSP, which is very high according to them. CCI (Cotton Corporation of India) had to come in fill the gap in the supply-demand equation to keep the MSP alive. This is the reason why CCI has been able to procure lots of cotton.

Several people have raised their voice about the ways in which MSP prices ought to be fixed. Here is the link to the article in Businessline by Sharad Joshi.

My take: Its best to leave the prices to be fixed by market forces.

Cotton blues and Soil degradation

1. As reported on this blog earlier, farmers are finding it difficult to sell cotton at MSP fixed by the government. Farmers who are in desperate need of money are selling for whatever they are getting as it is impossible for the CCI to go in every nook and corner of the country. Government, however, is doing its part of bailout announcements. This time it is mulling a bailout package for the cotton industry.

2. Some news from Karnataka agriculture: Sugarcane growers are cribbing on getting lesser prices than fixed by government. One of the ministers says that 40 percent of Karnataka's soil is degraded. The noted soil scientist J. C. Katyal, who is also the Vice-Chancellor of the Choudhary Charan Singh Agricultural University (Haryana), said the root of the problem has been traced to degradation of soil quality. If the soil lacks any nutrients, the agricultural produce grown on it will also suffer from nutrient deficiency and ditto with people who eat these produce, he said.

Food Security, Lending to Food Processing

1. This article in Taipei Times is puzzling - it points out that countries like Ukraine and Argentina have great potential for farming but are not reaping the benefits because of government meddling in exports and price-fixing. What beats me is that it blames that "Governments such as China, India and Vietnam fail to realize that restricting exports leads farmers to invest and produce less".

2. From BusineessLine: In a bid to bail out the food processing industry from the current financial crisis, the Government has allocated Rs 1,000 crore to the National Bank for Agriculture and Rural Development (Nabard). It will utilise the fund to refinance banks that lend to the food processing sector.

3. According to United Nations’ Food and Agriculture Organization, the current financial crisis will adversely affect agricultural sectors in many countries, including India and other developing countries. Lower international commodity prices have not yet translated into lower domestic food prices in most low-income countries, it added. The FAO report further noted that world agriculture was facing serious long-term issues and challenges that need to be urgently addressed. These include land and water constraints, low investments in rural infrastructure and agricultural research, expensive agricultural inputs relative to farm-gate prices and little adaptation to climate change.

Government policies, PDS and B2B meeting

1. A call for change in Government policy in agriculture in Indian Express. There should be more emphasis on investments in marketing and processing infrastructure, on expanding and modernizing the trading centers and on increasing the rural connectivity.

2. According to this article, "to give entry to various giant grain corporations, the Indian government slowly and systematically weakened its Public Distribution System (PDS) by slowing down grain procurement, especially wheat". This is leading to food crisis, specially for the people below poverty line.

3. B2B meetings for Agriculture and Food processing in India - The Bangalore Chamber of Industry and Commerce (BCIC), in partnership with BCI - global leader of B2B meetings and professional events - will be setting up a first international trade show dedicated to agriculture machinery and food processing on March 4-6, 2009 and fully contribute to this process.

The show will combine a 3 day exhibition for Indian and international companies to showcase their products and capabilities and a matchmaking service to facilitate contacts. They will feature their technologies for agriculture and food processing.

Contract farming, Private investments and low MSPs

1. RCF (Rashtriya Chemicals and Fertilizers) is planning to get into contract farming and green house businesses by leveraging its customer network and land holding. The company plans to build a network of at least 1,000 farmers to grow flowers, fruits and vegetables. Recently similar announcement was made by Bayer CropScience.

2. Contract farming verses cooperative farming - what is the difference. My guess is that in former, some corporate guy takes over farm land from small farmers or bound them by the contract, while in the later one, farmers unite and make a society like Amul and sow and sell the produce together.

3. Farmers are unhappy with the low MSP fixed by government. The input costs have risen much faster that the final output. Some comparative numbers with 1966 are given. According to Mahendra Singh Tikait, farmers' leader, fair price for wheat should be rs 3000/quintal and for sugarcane it should be Rs 250 a quintal.

God's own crop, CCI to buy cotton and Agri-sector alliance

1. Millets are getting the charm back again after finding the way in Indian supermarkets and increasingly becoming part of urban diet. Decant herald carries an interesting article on Millets like jowar, bajra, ragi etc, which are also called "God's own crop"

2. Cotton Corporation of India (CCI) has assured Punjab government that it would purchase maximum quantity of cotton from the mandis in the state so that the farmers could get remunerative price of their produce.

3. Indian commerce minister Kamal Nath calls for alliance among developing nations in Agriculture sector to fight against the subsidies provided by rich nations.

Agriculture growth, useless MSP and Australian wheat

1. The Hindu Businessline writes about slow growth in agriculture. Agricultural policies are to be blamed.

2. Farmers are not benefiting in spite of high MSP prices as open market prices fall much lower. Manipulative actions by traders also hit the profitability.

3. Indian mills can have custom grown wheat from Australia and enter into contract farming and long term agreements. South India flour mills, in particular, prefer Australian wheat not only for its quality but also due to logistical advantage.

Conservation agriculture, FDI in agriculture and Agri-entrpreneurs

1. Business standard covers this interesting story on new farming techniques to improve land productivity as well as to reverse the climate change. Suggestions include rice-wheat cropping sequence, zero tillage agriculture, raised bed planting, laser land-lavelling and drip irrigation.

2. It is surprising to hear the suggestion coming from a minister to get foreign investment in agriculture. The food processing minister says that it is the "next sunrise sector".

3. Interesting story covered by ET on Agri-entrepreneurs. It covers various ventures like Satnam Agri Products by Mandip Singh producing premium potato chips, Minchy brand on wines by Girish Minocha and Pawas Canning by Hemant Desai exporting mango pulp to Japan. It also covers Nisarg Nirman Agro Products growing and selling exotic fruits to five start hotels, Jalbindu Agri Tech by Rahul Gala growing and selling dates using high echnology and "Best Roses" by Kumar Patel.

Stuck in the moment

A post dedicated to things which see no light at the end of tunnel.

1. Talks at WTO never seem to end. Agriculture negotiations resumed at the World Trade Organisation (WTO) on Thursday, but comments from diplomats showed it would be difficult to bridge gaps.

2. Tussle between farmers and SEZs continue. If SEZs go tlhrough farmers loose their land and livelihood, if they dont industrialization suffers.

3. A government official says that 4% growth in agriculture is needed to sustain economic growth of 8%. What is government doing to make it possible?

Updates: Netafim, Bihar floods, Trade pacts and Pusa1121

1. Netafim, the world’s largest provider of smart water solutions for agriculture, inaugurates its second plant in Chennai, India. "Netafim™, an Israel based Agri-Business pioneer and the world’s largest provider of smart water solutions for agriculture, has been delivering innovative solutions that increase crop yields and preserve water resources. Netafim™ is active in over 110 countries across 5 continents, employing over 2600 employees, has more than 35 subsidiaries and 13 manufacturing facilities in 11 countries."

2. Bihar floods have led to losses worth more that 150 crores. Business-standard carried this story. Worst affected are the crops like paddy and maize and also pulses, vegetables and banana.

3. India is pushing on talks involving free trade of goods, services and investments with Japan and South Korea. Parallel talks are also going on with Thailand in similar lines.

4. Conflicts surrounding Pusa rise continues. Limited exports of Pusa rice has been allowed. Although it has not been provided the new definition of basmati rice in spite of meeting the necessary requirements.

Rice output, new hybrid mustard and ASEAN FTA

1. Rice output to be low because of floods, but premium category output go up -
Floods to cap India summer rice output at '07 level
Reuters India - Mumbai,India
... some floods in Punjab and Haryana states," Agriculture Commissioner NB Singh told Reuters. The two states produce nearly half of India's rice and wheat. ...
India's premium rice production up, farmers eye exports
Reuters India - Mumbai,India
This year it is more than 10 per cent," Gurdial Singh, joint director of agriculture, told Reuters. Officials say India is set to buy record quantities of ...

2. Folks at NRC develop new hybrid seed for mustard -
India develops hybrid mustard seed, better yield expected
Thaindian.com - Bangkok,Bangkok,Thailand
NRC is an affiliate of India’s premier farm research body, the Indian Council of Agriculture Research (ICAR). The Delhi-headquartered ICAR under the ...

3. ASEAN concludes free trade deal with India: ministers
AFP -
SINGAPORE (AFP) — Southeast Asian nations have concluded a deal for free trade in goods with India, ministers said Thursday, in a development hailed as a ...

Today's Links

1. Global pulses prices climb on Indian imports
Reuters India - Mumbai,India
By Rajendra Jadhav MUMBAI, Aug 25 (Reuters) - Large tenders for pulses imports floated by India to augment supply in the festival season have pushed up ...

2. India firm over sectoral tariffs
Business Standard - Mumbai,Maharashtra,India
The strategy of developing countries, including India, is to first get their concerns on protection of their agriculture sectors addressed, after which they ...

3. Left behind: Debt relief brings little respite for India’s farmer
Financial Times - London,England,UK
The mathematics behind the crisis in India’s agricultural sector are simple. Agriculture’s contribution to GDP fell from 42 per cent in 1970 to half that by ...

4. Organic Farming
By rajkumar
Arresting the decline of soil organic matter is the most potent weapon in fighting against unabated soil degradation and imperilled sustainability of agriculture in tropical regions of India, particularly those under the influence of ...

Today's Links

India may outpace Brazil in sugar production
Commodity Online - Kochi,Kerala,India
The Union Agriculture Ministry sources said, the sugar production has been fairly good. Even in 2007, the country produced 275 lakh tonnes of sugar while ...

Wastewater often used in urban agriculture: study
AFP -
The practice was being used on 20 million hectares (almost 50 million acres) of land, especially in Asian countries like China, India and Vietnam, ...

Leaving WTO would leave India without support: Pawar
MorungExpress - Dimapur,Assam,India
New Delhi, August 15 (Agencies): Agriculture Minister Sharad Pawar has rejected a suggestion that India should step out of the World Trade Organisation ...

Indian Agriculture business or service????
By mkalyan6484
India is 2nd largest agriculture producer but still we don't have sufficient amount to feed our people. Why??? Because everything is exported, without giving a thought for people of our country. Is profit is only important goal for all ...

India oilseeds rise tracking weak rupee, CBOT
Reuters India - Mumbai,India
India is import-dependent for edible oils and imports palm oil and soyoil derived from soybean. A weak rupee makes imports expensive. ...


`Farmers worse off than lowest-paid babus`
Reuters India - Mumbai,India