Agriculture production in India scaled down
The latest reports from Ministry of Agriculture further reiterate the fact, Agriculture production is going down and not up. The fourth estimates for agriculture production released on July 08, 2005 indicate a dismal situation. The total food grain production of the country from July 2004 – June 2005 has been lowered to 204.61 MMT against the 3rd estimates of 210.44 MMT and 225.10 MMT of target fixed.
The production estimates of various food grains like wheat, rice, coarse cereals, and pulses have all been lowered. In case of coarse cereals, the production is estimates at 33.92 MMT as against 34.28 MMT in the 3rd estimate and 38.12 MMT reported for last year (2003-04), loss of about 11% over year. The target for coarse cereals was fixed at 36.80 MMT for the year 2004-05 and the second production estimates were to 31.88 MMT.
On maize the target was fixed at 15.08 MMT for 2004-05 and the second production estimates were lowered to 13.58 MMT. The industry estimates the total production of maize at 12.2 – 12.6 MMT while several of the government departments still stick by the figure of 15 MMT for 2004-05.
On wheat a similar situation has arisen. The target was fixed at 79.50 MMT for the year 2004-05 and the second production estimates put the production level at 73.3 MMT. In the fourth estimates the production has been brought down to 72 MMT for the year 2004-05, which is lower than the last year estimates of 72.11 MMT. The trade and industry estimates the production of wheat at around 70 MMT for the year 2004-05.
The big questions are, which figures are correct? Who has his ears to the ground, government or the industry? How are these estimates made?
Maize prices again scale up in India
While the departments may indicate a high production of maize in India, the prices indicate another story. Some price indications are
Yellow: Rs.5700 ($131) per MT at the Market yard
Local: Rs.6170 ($142) per MT at the Market yard
Red: Rs.6655 ($153) per MT at Market yard
The future prices have also shown an upward trend. Some indicative prices are as under:
July – Rs.5635 ($130) per MT, Aug Rs.5715 ($131) per MT. Prices for October are lower to Rs.5530 ($137) while for Dec are again up to Rs.5700 ($131)per MT. The spot prices in Nizamabad are reported at Rs.5665 ($130).
If the production is so high (15 MMT as targeted) and demand has been put at 13.19 MMT and exports have been lower than last year, there should be surplus. Only surplus has been reported in Karnataka as it did get a bumper crop, but in all other states the production was much lower than anticipated and the area covered was also much less. Due to lower rains the production was effected.
The seed industry estimates the area coverage to be at 6.3 Million hectares and at an average production of 1.95 tons / hac the production is estimated at 12.28 MMT (a simple calculation). If the production is estimated at 15 MMT (as targeted) and the productivity estimated at 1.95 tons per hac, the area coverage is 7.69 million hac. The questions, Was so much area covered under maize?. To plant 7.69 million hectares, was the seed available or sold in the market?
The increased prices and availability issues affect the profitability of the projects using maize as a major ingredient – poultry and starch industry. With such high costs of inputs, it becomes difficult for the industry to be competitive in the world market. While India can be a supplier of good quality poultry meat and value added products to many destinations, the increased cost of production does not give Indian products any advantage. There have been discussions with Japan to supply chicken as India is free of bird flu. The big question will be Indian’s competitiveness in the world market due to surges in ingredient prices.
Scope of increased use of biofuels up
With the price of crude touching $62 per barrel in the world markets, more and more countries will be looking at use of biofuels to lower than dependence on foreign oil.
In the recent tour of Europe, the U S Grains Council (USGC) and National Corn Growers Association (NCGA) leaders were able to have an insight on the EU biofuels policy. The EU has set a goal to have 2 percent of their transportation fuel be biofuel by the end of 2005. By 2010, the EU hopes biofuels will represent 5.75 percent of their transportation fuel.
With the inflation going up in India to 4.14% due to increased petrol and diesel prices, GOI will need to scale up its commitment to use biofuels in the Indian transport sector. Due to the increase in diesel prices the vegetable prices have increased by 7% in the week of review. Other commodity prices will also increases, putting the burden on the common man.
If you need more information on topics related to biotechnology, ethanol and food safety please feel free to contact me.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
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