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