Commodity prices on a high
Bajra (Perl Millet): The last two weeks have seen an upswing in the prices of Pearl Millet of all varieties. The maximum price quoted was Rs.7134 ($164) per MT. In all states the prices are going up except in Karnataka and Rajasthan where prices down due to increased availability in the market. The last prices quoted were Rs.5000 ($115) per MT and Rs.6050 ($139) per MT respectively.
Sorghum (Jowar): The prices have again shown an upward trend for all varieties, with yellow sorghum being traded at Rs.9950 ($229) per MT. In all the state markets the sorghum prices are much above Rs.8700 ($200) per MT mark except in Karnataka where the trade prices is close to the Minimum Support Price (MSP) of Rs.5250 ($121) per MT or a little higher.
Maize (Corn): In the last two weeks, the prices have again increased and yellow maize reach a high of Rs.6790 ($156) per MT. In Gujarat the prices were the highest and maize was trading at Rs.6700 ($154) per MT. On Friday the prices for Deshi Red and Kesari (bright yellow) varieties were reported to be Rs.6000 ($138) per MT and Rs.6775 ($156) per MT.
On the spot market, maize is available from Davangere (Karnataka) at Rs.5500 ($126) while from Nizamabad (Andhra Pradesh) it is available at Rs.5840 ($134) per MT.
Barley: Barley prices are also showing an upward trend and reached peak of Rs.6830 ($157) per MT for a variety, while in Uttar Pradesh, barley was traded at an average price of Rs.7090 ($163) per MT.
In US the prices are also going up due to hot weather in the Midwest (Corn growing belt). CBOT closed at $2.334 per bushel ($91.88 per MT. In Europe, countries like France have adopted water rationing due to extreme weather conditions. Framers have been advised not to minimum water and plant only those crops which will be able to take water strees. Crop production is likely to be severely effected in Europe this season.
Production estimates for commodities
Bajra (Pearl Millet): In 2004-05, government of India estimates the production to be close to 6.46 MMT, a little lower than 2003-04 production estimates of 6.56 MMT from almost 9.00 million hectares of land. Based in the trend-line approach, the production of Barja is expected to be similar, but the land area is expected to go down in coming years. The yield is expected to be higher and grow due to introduction of new hybrids.
Sorghum (Jowar): 2004-05 production of Sorghum is expected to be 7.53 MMT, which is about 34% lower than the production in 1993-94 (11.41 MMT). Based on the analysis, it is expected that the sorghum production will be steadily declining and also the land under Sorghum will also be down. The yield is expected to remain at 800 kgs/hac level unless some new hybrids are introduced.
Maize: As per the 2nd estimates the maize production in 2004-05 was expected to be 13.58 MMT, while the target was fixed at 15 MMT. The Industry is of the opinion that the production is close to 12.2 – 12.6 MMT, almost a difference of 1 MMT. Based on the trend line analysis, the land under corn is expected to remain same at about 6 – 6.6 Mill hac. The maize demand in 2010 is expected to be 16.65 MMT, while some analysts believe that India will be able to produce 15 MMT, some are of opinion that the production will be 16.95 MMT by 2010. The increase in corn production will be due to increased productivity due to new genetics and replacement of local cultivars and OPV with hybrid corn varieties.
Reports of Ministry of Agriculture for sowing in 2005-06 indicate a mixed bag. Until July 19, 2005, reports suggests that pulses are the most effected and the coverage is only 64% of last year. In case of rice the coverage is about 74%, while in Coarse Cereals the coverage is higher than last year (104%). In Sugarcane also the coverage is higher than last year (109%), while in oilseeds the coverage is only 83% of last year.
Can changes in retailing food sow changes in buying? (From meatingplace.com
Jon Hauptman, vice president of Barrington, Illinois based consulting company was a presenter at the National Chicken Council's 2005 Chicken Marketing Seminar. As per him, "Everybody is looking to get into the food business and success and even survival depends on standing out in the very crowded marketplace."
At the seminar he provided nine retail trends that are key for the chicken industry —or any food industry, for that matter — to watch and need to be watched.
1. Decline outings for food purchases: Data from US reveals that the supermarket trips per households are going down. As per ACNielsen, the trips per household have dropped from 85 in 1998 to 70 in 2004. The reason is the outings to specialized stores to buy food rather than traditional grocery store.
2. Supply Chain efficiency a solid recipe for success: Wal-Mart achieved $12 billion in growth last year alone, nit because of size alone, but also because of supply chain innovations and bringing down costs to a large extent. Suppliers will need to increase their own supply chain efficiency in order to stay in the market place.
3. Economies of scale need to go with the local needs: The economies of scale in some cases have not brought expected cost savings. Retailers will need to take a more localized approach, concentrating on filling local consumers' unique needs. "One needs to have the finger on the pulse of the local market needs in order to do well”, he said.
4. Retailers organizing around need states (instead of demographics): Currently supermarkets are not the No. 1 choice to satisfy any of those need states like budget buying, smart stock up for a family. Customers might visit other retailers to fulfil these need states. However, there is any opportunity for chicken processors, among other food companies, to help supermarkets develop various programs to fill those needs, especially because supermarkets have the potential to stand out in the perishables category.
5. Leaders will extend their reach with new store formats and offerings: With wellness being the key mantra, the format is saleable. The phenomenon offers a lot of chances for innovation, particularly with perishables. As a result, he said, poultry companies must support such new concepts with the right products, innovative merchandising and creative promotions that fit each specific format. "One size will not fit all in the retail environment going forward," Hauptman said.
6. Value proposition of retail winners extends well beyond product and price: It is important that the retailer involves local communities as traditional form of advertising seems less effective. Stores themselves will need to become communication vehicles. Consequently, according to Hauptman, retailers are seeking vendor partners that can help them give back to the community as well as address consumers' health and wellness concerns.
7. Retailers becoming sophisticated marketers: Retailers are starting to use strategies such as leveraging loyalty-card marketing data to offer consumers targeted discounts. Hauptman encouraged poultry processors to look for parallel opportunities with their own offerings. "Maybe there are some value-added chicken products that could become signature items," he suggested.
8. Pricing is the hot topic: Retailers are refocusing on strengthening their price image and making sophisticated pricing decisions, Hauptman said, and they want help from suppliers in terms of setting optimal prices. "A topic that might have been taboo before when you were calling on your retailers may not be taboo today," he said.
9. Retailers focused on optimizing the box: The trend now in the food retail industry is toward smaller stores and aisle management. Retailers do not manage a category any more, but shelf space, where decisions like whether space for a product should grow, where extra space should come from, the costs of making shelf changes and the related return on investment. Processors, Hauptman advised, must help their retail customers appreciate the true value their products can offer.
He encouraged all of the poultry processors work closely with retail customers to help them better understand and serve their customers. For every one of these trends, there are corresponding opportunities for the poultry industry and we in India are also seeing the changes as food stores come up across the country and the Processors in India also need to think out of the box and change the way business is done. It will help all in the supply chain, the farmers, the processors, retailers and of course the customer. It is must that the processors and the retailer work together to understand customer needs and make products available as per the requirements.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
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