COMMODITY OUTLOOK AND SITUATION ANALYSIS

Weekly Report 21- 27 July, 2019

Pulses Export Falls on Drought-like Condition

New Delhi: Pulses exports are down 59% in the first two months of financial

year 2019-20 to 28,962 tonnes as compared to last year during same period.

In the last fiscal, India overall exported 2.7 lakh tonnes of pulses — up by more

than 50% from 1.80 lakh tonnes in 2017-18.

“Production of pulses this year is down 8.7% from last year’s record

production of 25.42 million

tonnes to 23.22 million tonnes.

This was primarily due to

drought-like conditions in pulse-

producing areas of Maharashtra,

Gujarat and Karnataka,” said an

agriculture department official.

Due to low production, prices of pulses are ruling high in domestic market.

As per the data of the consumer affairs department, retail prices of tur dal is

in the range of ₹81-87 a kg as against ₹72-77 a kg during February this year.

The government, last year, didn’t import pulses due to a record stock. But

this year, the government has announced import of 4 lakh tonnes this year.

“The global prices are also down this year. As against last year’s average

price of $974 (₹68,000) a tonne, pulses price at international markets ruled

at $913 (₹63,900) per tonne during April-May. Traders find it more profitable

buying in local markets,” said a consumer affairs department official.

The exports of Basmati, however, have shown a healthy growth of 16% with

better realisation. According to APEDA, the nodal agency for promotion of

food exports, the exports of Basmati rice has gone up to 8.64 lakh tonnes in

the first two months of this fiscal as compared to 2018-19 when the exports

were 7.45 lakh tonnes during this period. The realisation was also higher with

robust demands. Last year, the average global prices during this period were

$819 per tonne which have gone up to $932 a tonne. “With demands coming

from the Gulf nations, traders expect a fruitful year for Basmati exports,” the

official said. India exported record 45 lakh tonnes of basmati last year earning

a forex of over ₹30,000 crore.

India rice exports could hit 7-year low on weak

demand, higher prices

India's rice exports are likely to fall to their lowest level in seven years,

industry officials say, as weak demand from African countries weighs and

shippers absorb the absence of government incentives that supported

previous sales. Lower shipments from India will

help rivals such as Vietnam and Myanmar in

raising their exports, according to Indian

exporters, but could also force Prime Minister

Narendra Modi's government to increase buying

from farmers, even as it struggles to liquidate last year's stocks.

"Inventories have been piled up in Africa," said Nitin Gupta, vice president for

Olam India's rice business. "A lot of Indian demand has been diverted to

Myanmar and China as Indian prices are out of parity." The south Asian

country could export 10 to 11 million tonnes of rice in the fiscal year 2019/20

that started on April 1, Gupta said. India exported 11.95 million tonnes of rice

in 2018/19 through March 31, down 7.2% from the previous 12 months, even

though the country provided incentives for exports of non-basmati rice for

four months.

The country exports non-basmati rice to mainly Bangladesh, Nepal, Benin

and Senegal, and premier basmati rice to Iran, Saudi Arabia and Iraq. In

basmati rice exports, India competes with Pakistan, while in non-basmati rice

exports rivals are Thailand, Vietnam and Myanmar. The government

incentives for exports were temporary and discontinued on March 25, said B

V Krishna Rao, president of the Rice Exporters Association (REA). "The

incentive needs to be restored quickly," he said, "otherwise there could be

huge drop in the exports this year."

India's rice exports in April-May fell 30% from a year ago to 1.58 million

tonnes as shipments of non-basmati rice fell more than 50% to 711,837

tonnes, according to data compiled by Agricultural and Processed Food

Products Export Development Authority. Shipments of white rice from India

have nearly stopped altogether as Vietnam and Myanmar are offering more

than $30 per tonne discount over Indian prices, said Gupta.

In parboiled rice, India has been trying to compete with Thailand but

couldn't reduce export prices due to higher paddy, or unhusked rice, prices,

said Himanshu Agarwal, executive director at Satyam Balajee, India's biggest

rice exporter. Paddy buying by central and state governments have lifted

prices in the open market, making it difficult for exporters to compete

profitably in the world market, said Agarwal.

The central state of Chhattisgarh, a leading rice producer, raised the

minimum paddy buying price to 2,500 rupees ($36.20) per 100 kg in 2018,

from 1,750 rupees - a 43% jump. Indian exporters said the aggressive

liquidation of old stocks by China, the world's biggest rice producer, has also

hit Indian exports. "China is exporting a huge amount of old rice to African

markets. Africa being a major client, volumes have significantly dropped from

India," said Agarwal.

Delhi: Tomato prices surge up to Rs 80 per kg as

monsoon disrupts supply

NEW DELHI [INDIA]: Tomato prices in the retail markets of Delhi have shot

up to Rs 60-80 per kg following incessant

rains and flood-like situation in key

supplier states across the country. In

most retail stores and vegetable markets

across the city, prices of tomato have

gone up to Rs 80 per kilo against the

usual rate of around Rs 20-30 per kilo. According to vegetable sellers of

Paharganj Mandi, the prices of other vegetables such as ladyfinger, bottle

guard and onion have too witnessed a hike and they are likely to increase

further if the situation does not come under control in next one month. At

present, coriander, which is used to garnish delicacies, is being sold at Rs 250

per kg.

"The hike in prices has affected the supply of tomatoes. Those who used

to buy 3 kg tomatoes are now buying only 1 kg. They are being sold at Rs 25

per kg in the wholesale market from the usual rate of Rs 10-15 kg per kg.

Also, tomato transportation has become costlier due to conditions of roads

owing to bad weather and rains," Shyam Sunder Singh, a vegetable seller in

Paharganj, told ANI. Delhi gets a supply of tomatoes largely from Madhya

Pradesh, Maharashtra, Himachal Pradesh and parts of western Uttar

Pradesh. Tomato crops have been damaged and adversely affected due to

floods and heavy rains in these states. "At present, tomatoes are being

supplied from Bengaluru. The city supplies good quality of tomatoes but at

higher prices. As demand is more and supply is less, the prices have

witnessed a sudden increase. Shimla will soon start the supply of tomatoes

and it would take one or two months for the prices to settle down," another

vegetable seller said.

Agri commodities recover from June dip on reports of

rain deficiency

After falling initially on normal monsoon forecast, prices of agri

commodities bounced back in July after the Indian Meteorological

Department (MD) reported nearly 17 per cent of rainfall deficiency so far this

season. Barring maize, which faces acute

shortage due to lower output last year,

prices of all other kharif crops had

declined by up to 8 per cent in June. In

July, however, there was significant

recovery following reports of massive

crop damage in major growing states such as Maharashtra, Assam, Bihar,

Uttar Pradesh and part of Gujarat, Madhya Pradesh and Uttar Pradesh.

This year, a three-week delay in the onset of monsoon impacted

most early sown crops badly. That was followed by uneven distribution of

rainfall, with fears of a repeat of last year’s drought in Maharashtra, while

Assam, Bihar and Uttar Pradesh faced floods. “Price movement in agri

commodities are based on the progress of the monsoon rainfall, as their

demand-supply fundamentals remain intact. Farmers monitor the actual

rainfall to take sowing decisions. The current price movement can solely be

attributed to the variations in rainfall,” said Madan Sabnavis, Chief

Economist, CARE Ratings.

The delay in the onset of the seasonal rainfall has become a usual

phenomenon. Hence, the precipitation in June is no longer a matter of

concern for farmers. Actual rainfall in July and August, however, continues to

remain crucial for kharif sowing of agri commodities, and their germination

and growth for harvesting in September–October. Maize prices continued to

remain firm on supply scarcity, following which the government recently

allowed import of 400,000 tonnes to meet poultry-sector demand.

Interestingly, farmers have switched

to sowing high-yielding and short-

duration seeds to minimise impact of

rainfall deviation. “Consequently, it

is premature to estimate a decline in

kharif output this year despite

monsoon deficiency. Most farmers

across major soybean growing states

like Maharashtra and Madhya

Pradesh have reported their leaves growing pale, which may eventually force

plants to die in weeks. This has caused a serious concern for farmers this

kharif season,” said Ajay Kedia, Managing Director, Kedia Commodity.

Last year, large quantities of kharif and rabi crops were damaged due to

deficient monsoon during both seasons, rendering farmers clueless this

sowing season.

Data compiled by the Ministry of Agriculture showed that the total area

covered under kharif sowing stands at 60.9 million hectares (ha) so far this

season, down seven per cent from the same period last year. Many

agriculturists have advised farmers to sow less water-guzzling crops such as

paddy and sugarcane, and switch to short-duration, water resistant crops like

pulses and oilseeds. Despite this, kharif output this year is likley to match that

of last year, when India had produced 142.75 million tonnes of food grains

even with a nine per cent deficit in monsoon.

“The state government has pushed farmers to sow maize as a substitute

to paddy. This may not yield the desired results immediately, as the minimum

support price (MSP) is too low and there is no assured buyback of the crop,”

said Kedia. Paddy could be sown till August-end. Since IMD has forecast

better monsoon for August and September, hopes are still alive for paddy

farmers.

Potato prices drop 10-11% in UP, Bengal

KOLKATA: A 10-11% drop in potato prices in Uttar Pradesh and West

Bengal due to oversupply has forced cold-storage facility owners in these

states to seek restructuring of their loans worth Rs.200 crore, which they

failed to repay due to losses incurred last

year. UP and Bengal are the leading producers

of the tuber in the country, with crop sizes of

15.5 million tonnes and 10 million tonnes,

respectively. While cold storage facilities in UP have so far been able to

offload only 16% of the 11.5 million tonnes of potatoes they hold, those in

Bengal have offloaded about 26% of their 6.5-million tonne potato

stock. With no signs of prices picking up anytime soon, the operators of cold

storage facilities in these two states have approached the Reserve Bank of

India to restructure their loans. Patit Paban De, former president of West

Bengal Cold Storage Association, said, “Last year, potato prices crashed and

we were unable to repay the loan. Hence, a major portion of the refinance

loan became a non-performing asset (NPA) due to the accumulated loss.” De

added that “prices had improved a bit in May and June but have again fallen

by 10%. Other states are also sending potatoes to Bengal which is pushing

down prices.”

The owner of a cold storage unit in Agra, said, “Cold storages in UP are facing

the same problem like Bengal. We have also approached banks to restructure

our loans.” Agra-based Rajesh Goyal, secretary of Federation of Cold Storage

Associations of India, said, “Rains have brought down movement of potatoes

across the state and also to the neighbouring regions. Consumption has

dropped by 10% in the month of July and there is abundant stock in the cold

storages. This has pushed down prices. The crop, which was selling at Rs.9

per kg a month ago, is now fetching a price of Rs.8 a kg.” According to Goyal,

the sentiment in the market is turning weak with the new sowing season

drawing near. India has a potato stock of 24 million tonnes, which is enough

to meet the domestic requirement. The next sowing season begins in

November.

Agricultural items likely in PPI basket

New Delhi: India is likely to include

agricultural items in the planned

producer price index (PPI) basket,

breaking from the common practice in

most OECD countries, to get a better

picture of farm-gate prices as

well. The first meeting of the Ramesh Chand-led working group on the

planned index will be held next week where the issue will be taken up. “The

idea of introducing producer price index is that it will capture better the

prices received by farmers,” Chand told ET.

In the meeting, the group is expected to set up a few sub-committees to work

on the base year of WPI, and the basket for PPI. “We hope to submit our

recom-mendations in two months,” Chand added. PPI measures the average

change over time in the selling prices received by domestic producers. The

prices included in PPI are from the first commercial transaction for many

products and some services. This is seen as a better index than the wholesale

price index (WPI). PPI will eventually replace WPI. The government is of the

view that in India’s case, given significant presence of agricultural items (both

food articles and non-food articles), it is essential that the new index includes

agricultural items in it.

Auroville to host seed festival

Event brings together organic farmers, agriculturists from districts of T.N.

The annual seed festival hosted in Auroville that promotes sharing of

traditional knowledge and sustainable farming practices gets under way here

on Saturday. The third Auroville seed festival hosted by the Sustainable

Livelihood Institute (SLI), a joint

venture between Auroville Foundation

and the Tamil Nadu Rural Livelihood

Mission, gets under way at the

Auroville Village Action Group grounds,

Irumbai panchayat.

The event, which brings together seed savers (those who conserve and

multiply traditional seeds, including rare varieties) organic farmers and

agriculturists from neighbouring districts of Tamil Nadu, has been growing

organically with each passing year. The festival will display, and facilitate

exchange of diverse seeds, particularly traditional ones, that are conserved

in situ by farmers apart from sales of organic food produce, talks and

discussions on farming related subjects.

“The growing emphasis of the last two years had indicated that there is a need

for farmers to exchange seeds regularly,” said Sathyaraj, coordinator of the

seed festival from SLI. SLI has been offering courses on sustainable

agriculture for more than four years to leaders from across the State of Tamil

Nadu and several other states as well. Apart from over 100 seed varieties on

display and over 35 stalls, there will also be students activity corner, parallel

sessions on farm-based education and medicinal plant conservation this

year.

On the eve of the seed festival, SLI is also co-hosting a State-level

consultative seminar on “Building Eco-system for Farmer Producer

Organisations in Tamil Nadu” along with Centre for Social Innovation &

Entrepreneurship, IIT Madras. “Tamil Nadu’s policy on Farmer Producer

Organisations and Organic Farming are long overdue, we hope to capture the

diverse stakeholder’s voice on what needs to go into such a policy and

present the same to the government,” said Ramasubramanian, former SLI

Director and facilitator of the seminars scheduled for July 25 and 26. Further

information is available by e-mail at programme@tnavsli.in or on calling +91

413 262 2333.