Commodity prices and world scenario; The world of biotechnology; Indian agriculture and the budget

Commodity prices and world scenario

The Indian coarse grain (Corn and Sorghum) prices are somewhat stable, but the supplies are tight. Indicative prices for some varieties at Mandi’s were:

Corn

Hybrid Yellow Variety: Rs.4600 ($106) per MT
Kesari: Rs.6150 ($141) per MT
Local: Rs.5655 ($130) per MT
Yellow: Rs.4960 ($137) per MT

The above prices are for Mandi delivery.

The prices in US are going up. Corn deliveries in May 05 closed at $2.17 per bushel ($85.41 per MT) in CBOT, averaging about $100 – 102 FOB price from US Gulf, a little higher than last week. The price for July delivery was $2.242 per bushel ($88.24 per MT).

As per the USDA baseline data projections for 2014, US will dominate the world corn market and its share is expected to grow to nearly 73 percent by the end of the decade. Argentina will be the second largest exporter as its economy will expand and investments will be more and corn area will also increase. China’s corn exports will decline and it will become a net importer by 2007/08. There will be some regional differences within China as Northern China will be corn surplus and southern china corn deficient. Non EU eastern European countries will also be in the market, because of higher investment in agriculture and increased economic openness.

Growth in coarse grains trade will be strongly linked to expansion of livestock activities in regions unable to meet their own forage/feed needs, particularly North Africa, the Middle East, and East/Southeast Asia.

World coarse grain trade is expected to grow by about 29 million tons during the decade. About two-thirds of global supply is used as animal feed, although industrial uses such as starch, ethanol, and malt production are increasing. Food use of coarse grains, concentrated in parts of Latin America, Africa, and Asia, has generally declined as consumers shift consumption toward wheat, rice, and other foods as their incomes rise.

The world of biotechnology

This week saw hectic activity in the agri-biotech sector world over.

Brazil' congress voted this week and approved the law which will legalize the sale of biotech seeds in the largest country in Latin America. The law clears the way for rules to be set that would allow companies to sell genetically modified seeds in Brazil.

The modified seeds were banned in Brazil, but their use has been widespread for years by Brazilian farmers who use cloned or smuggled versions of the Monsanto’s popular Roundup Ready seeds (soybean) to cut production costs.

In India, The Genetic Engineering Approval Committee (GEAC) approved commercial cultivation of six new varieties of genetically-modified (GM) Bt cotton hybrids for the northern region by Maharashtra Hybrid Seeds Company Ltd (Mahyco), Rasi Seeds Private Ltd and Ankur Seeds.

The new varieties include MRC-6301 and MRC-6304 of Mahyco, RCH-134 and RCH-138 of Rasi Seeds and Ankur-651 and Ankur-2534 of Ankur Seeds.

A total of 10 Bt cotton hybrids are now approved for commercial cultivation in India. The first varieties to be approved were Mech-162, Mech-184 and Mech-12 of MAHYCO in 2002. In 2003, RCH-2 of Rasi Seeds was approved. The above approvals were for cultivation in Central and Southern India, while some of the varieties did find way to North India and were sown in 2004.

The new varieties can now be sown by cotton growers of Punjab, Haryana and Rajasthan in Kharif season of 2005.

Within Europe, Germany has also approved cultivation of biotech corn and it is expected that in 2005 more farmers will grow GM corn.

The German genetech law, which came into effect in February 2005, requires farmers to report the exact location of GMO fields, field size and the GMO trait to a national public register, the Standortregister. It is expected that about 1000 hectares of land will be under biotech corn in 2005, significantly up from 300 hectares in 2004.

Since there are no GMO varieties yet approved for planting in Germany, seed producers have to source seeds from those approved for use in Spain. Based on the German seed law requirement, seed producers need to obtain a marketing permit for these Spanish varieties from the German Federal Seeds Register (BSA), which is under the supervision of the Federal Ministry of Consumer Protection, Food and Agriculture (BMVEL). The permission was finally granted on 24 Feb 2005.

Spain is the only country in the European Union to grow GMO maize commercially and production of the pest-proof crop is growing rapidly. Spain's farmers want all the biotech they can lay their hands on.

In 2004, 60,000 hectares was under biotech corn out of the total of 480,000 hectares, as per the estimates given by farmers union.

As per the farmers, the biotech seeds cost 10 to 15 percent more than conventional seeds, the higher prices gives better profit and saves money and effort on pesticides.

Nearly all maize grown in Spain is for animal feed and there is no price difference between GMO and conventional maize.

The U S Grains Council in an effort to provide information about biotechnology and create awareness about biotechnology has produced streaming videos, which highlight the realities of the U.S. grain handling system and how this system interacts with the widespread use of biotechnology and genetically modified production tools.

The videos can be seen using the following links

Biotechnology, Politics & the Public
http://www.grains.org/grains/galleries/videos/Politics.wmv

Biotechnology & Hunger: Feast or Famine?
http://www.grains.org/grains/galleries/videos/HungerRevised.wmv

Biotechnology & Nutrition: Safe or Toxic?
http://www.grains.org/grains/galleries/videos/Nutrition.wmv

Biotechnology & the Environment: Transgenes Out of the Box
http://www.grains.org/grains/galleries/videos/Environment.wmv

Biotechnology & Farmers: Do They Really Want It?
http://www.grains.org/grains/galleries/videos/Farmers.wmv

Indian agriculture and the budget

While the budget was announced in the Parliament on Feb 28, 2005, it seems Agriculture was one sector which did not receive any benefit directly. Some quick takes:

1. The income tax rates have been aligned and reduced; it will make more money available for spending which will give a boost to the retail sector. Duty on Fast Moving Consumer Goods (FMGG) has been brought down, making imported goods cheaper.
2. Horticulture mission proposed: Fruits, vegetables, flowers are perishable commodities and India loses more due to lack of infrastructure. Rs.6300 million ($144 million) are allocated for the mission.
3. Agriculture diversification will be a focus and policies will be drafted for fruits, vegetables, flowers, dairy, poultry and fishery development.
4. Development and strengthening of agriculture marketing infrastructure grading and standardization. Aim is to introduce large investment from private, cooperative sector and setting up agri markets, marketing infrastructure and support services such as grading and standardization and quality certification. Assistance for National Agricultural Bank for Rural Development (NABARD) and National Co-op Dev Corporation (NCDC) will be made available. Rs.720 million ($16.55 mill) allocated.
5. Export subsidy on food grains very small. No export of food grain possible.
6. Increase is excise duty of molasses to Rs.1000 per ton ($22.98 per ton). This will adversely affect the cattle feed industry and increase cost of production of cattle feeds. Also for those buying molasses for manufacture of ethanol, it will be an expensive input, thus increasing the cost of ethanol.
7. Custom duty of molasses and ethyl alcohol reduced from 15% to 10%.
8. Custom duty on refrigerated vans reduced from 15% to 10%.
9. Duties of agri commodities have not been changed.

If you some comments and are willing to share the same with our readers, do send the same to us.

Regards
Amit Sachdev
Representative
U S Grains Council
India
E mail: bluecross303@gmail.com