Karnataka to regulate cultivation, production, processing of oil palm

A bill to provide for the regulation of cultivation, production and processing of oil palm and related matters was passed in the Karnataka Legislative Assembly on Wednesday providing for constitution of a price fixation committee, among other things.

Piloting The Karnataka Oil Palm (Regulation of Cultivation, Production and Processing) Bill, 2013, Minister for Agriculture Marketing and Horticulture Shamanoor Shivashankarappa said since fresh fruit bunches of oil palm have to be processed within 24 hours of plucking to extract oil, a close coordination between the grower and processor is necessary.

The bill provides for assuring the grower sale of his produce and payment for sale of such produce, constitution of a project management team to take measures regarding development of oil palm cultivation through implementation of programme of oil palm development, and a price fixation committee to ensure the grower reasonable price for oil palm fresh fruit bunches.

It also provides for appointment of Oil Palm Commissioner to coordinate activities of oil palm growers and the industries engaged in processing oil palm, and declaration of factory zone for the purpose of ensuring regular supply of fresh oil palm fruit bunches to the factory situated in the zone.

In addition to registration of oil palm growers,the bill provides for payment of compensation to oil palm growers by entrepreneur on account of failure to buy oil palm fresh fruit bunches by the entrepreneur or occupier of factory.

It was noted that in order to meet the growing demand for edible oils, oil palm was identified as a suitable crop for cultivation in the country in view of its high oil yielding capacity.

Karnataka is one of the states wherein the oil palm project has been taken up with the Government of India assistance.

Onion the national bellwether

India: Onion the national bellwether

India’s perennial battle with inflation is enshrined in a humble staple: the onion. On July 15, the nation’s commerce ministry reported that the price of onions had shot up 114 percent since June 2012. Consumer price inflation rose 9.9 percent in the 12 months through June—the biggest jump among the BRIC nations. It was 6.7 percent in Brazil, 6.9 percent in Russia, and just 2.7 percent in China.

Rising prices for food—which makes up slightly more than half of the consumer index—are the main culprit. Other staples, tomatoes for instance, have also registered large price jumps. But it’s the onion that’s the national bellwether. The vegetable is a key ingredient in the Mughal cuisine of much of the country. Annual per-capita consumption stood at 18.1 lb. in 2009, a bit under the 20 lb. per year in the US, according to figures supplied by the National Onion Association, a Colorado-based trade group. India is the world’s No. 2 producer of the vegetable after China.

Onions have played an outsized role in Indian politics, too. The Congress Party won national elections in 1980 after turning the high price of onions into a campaign issue. In 1998, the rival Bharatiya Janata Party lost control of the capital, New Delhi, when a shortage of onions sent prices soaring. “Higher onion prices create a huge negative sentiment, especially for the poor, as they are a significant part of the consumption basket,” says N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy in New Delhi.

Inflation “is a regressive tax, and it hurts the poor the most,” said Duvvuri Subbarao, who heads the Reserve Bank of India, during a speech in London on July 17. Unfortunately for India’s poor, there’s little Subbarao can do to tame the price of onions—or any other foodstuff. Between 2010 and 2012, India’s central bank raised interest rates by almost four percentage points, and has lowered them only slightly since the beginning of this year.

There are several reasons food inflation in India has proven resistant to traditional macroeconomic fixes. As people become richer in India, they’re starting to consume fewer cereals, like wheat, and more vitamin- and protein-rich foods, like onions and chicken. That’s why prices for nongrains have been rising faster than those of grains for several years now. Yet even though demand for perishables is growing, there remains no way for the government to stockpile reserves for lean years, as it does with grains.

Indians’ tastes may be changing, but the way they grow their food is not. Small plots and outdated farming practices have kept onion production static for years. Yields average 14.2 metric tons per hectare, compared with 22 metric tons per hectare in China, according to India’s National Horticulture Board. Unable to afford irrigation systems, Indian peasants entrust their livelihoods to the monsoons. Too much rain, rather than too little, has been the problem in recent years. In 2010 output of onions in the top producing states of Maharashtra, Gujarat, and Karnataka dropped by 20 percent after two wet years, creating what economists came to call the onion crisis.

Infrastructure is another problem. India has proven adept, over the last two decades, at moving people to its cities. It’s not nearly as good at getting vegetables to urban markets. According to a 2011 paper by the Reserve Bank, about 40 percent of India’s fruit and vegetables rot before they’re sold.

While heavy rains are a factor in this year’s onion price spike, Ramdev, a vegetable vendor in Vashi who would only give his first name, suspects the many middlemen are taking advantage of the shortage by jacking up prices. “It’s beyond my understanding why onion prices have gone up so much,” he says. “This is something unusual.” Following in the footsteps of previous administrations, the government is considering a temporary ban on onion exports. That would be a quick fix - and much cheaper than having to improve roads, shorten supply chains, or build climate-controlled warehouses. For that, India’s housewives will have to wait.

Potash Split Prompts India’s Biggest Buyer to Seek Lower Price

India’s biggest potash importer will seek to renegotiate prices for the crop nutrient after suppliers suspended a venture controlling almost half of global exports.

“We will ask for a suitable reduction in the price” before the current contract expires, said P.S. Gahlaut, managing director of Indian Potash Ltd. The company had contracted to buy 1 million metric tons from a marketing venture between Russia’s OAO Uralkali and Belarus at an average $400 to $410 a ton until March 31. Half of that has already been supplied, Gahlaut said.

The $20 billion global market for potash is set to become freely traded for the first time in eight years after Uralkali said this week it decided to end production restrictions that underpinned global prices. It will no longer sell potash through Belarusian Potash Co., the Minsk-based marketing company it established in 2005 with rival miner Belaruskali. The venture controlled about 40 percent of global potash exports.

“There is oversupply of potash and it’s putting pressure on prices,” said Gilad Alper, a senior analyst at Tel Aviv-based Excellence Nessuah Brokerage Ltd. “Uralkali reached a conclusion that the market is not going to rebalance any time soon and it’s better just to let prices drop so that they can start selling volume.”

Uralkali declined to comment. The company said July 30 it had started talks with clients worldwide to arrange new contracts without Belarusian Potash. Global potash prices may fall below $300 a ton after the change in trading policy, it said. Filipp Gritskov, a Belarusian Potash spokesman, declined to comment on any renegotiation of prices with Indian Potash.

Untenable Contracts

“If prices fall to this level the contracts will become untenable,” Gahlaut said today by telephone. “As long as there is no cartel it suits India. We will renegotiate with all our suppliers to get the best price.”

Indian Potash will hold talks on new contracts with Uralkali and renegotiate the existing agreement with Belarusian Potash, he said.

Buyers in India, which imports all its potash needs, have contracted to purchase 3.5 million tons in the year through March, according to Gahlaut. New Delhi-based Indian Potash has arranged to buy more than 60 percent of the total.

Potash is a fertilizer ingredient that strengthens plant roots and improves their resistance to drought. It’s used in India to increase yields of fruits, vegetables, sugar cane, tea and coffee.

Lower Costs

“Potash consumption in the country will definitely go up by at least 10 percent if prices decline,” said Sopan Kanchan, president of the Confederation of Indian Horticulture, a group of about 200,000 farmers. “It will reduce costs for farmers. Potash is a very important element in agriculture.”

Uralkali’s break with Belarusian Potash followed the Belarus government’s decision to cancel the group’s exclusive right to export the nation’s potash. It also came after record crop prices last year failed to translate into higher fertilizer charges, Uralkali Chief Executive Officer Vladislav Baumgertner said this week.

“We are expecting potash consumption to rise in markets where farmers are price-sensitive, above all in India, Southeast Asia and China,” Baumgertner said by e-mail on July 30.

The other group dominating the market is Canpotex Ltd., which since 1972 has exported potash for Canada’s Potash Corp. of Saskatchewan Inc. (POT) and Agrium Inc. (AGU), and Plymouth, Minnesota-based Mosaic Co. (MOS)

The end of the Russia-Belarus marketing venture “is going to reduce the effectiveness of Canpotex,” Excellence Nessuah’s Alper said. “They are going to have a much harder time in controlling prices and regulating volumes.”

Fruits of research expected to enter supply chain soon

With the food inflation going over the top, the average consumer is becoming more budget-conscious, as well as laying stress on quality of items he buys. But with agriculture and horticulture technologies yet to reach the farmer, the buyer is yet to get the bang for his buck.

“We can buy only half a kilo of apples as they are pricey. Instead of two apples a week, I can consume only one a week, but I make sure the fruit is blemish-free. Why should I get rotten apples when I pay more,” says bank employee Tirumaleshwar Bhat.

With a series of festivals lined up—starting from Nagarapanchami on August 11, followed by Janmashtami, Ganesh Chaturthi, Dasara, Diwali and Christmas at the end of the year—the new fruit season has already started badly for the consumer and the prices will only go up till December, say the merchants. The quality of fruits for the price they pay appears to be on the top of the minds of the consumer.

Indian consumer market in the recent times has undergone behavioural changes to a large extent. “This is basically due to the high cost of living compounded by inflation. I am not surprised that the consumer is now more conscious of quality to ensure that he is not squandering his hard-earned money for buying sub-standard goods,” Prof GV Joshi, former head of the department of economics, Mangalore University, told dna.

According to Prof Joshi, the serious imperfections in the market can be corrected only by minimising the wastage by improving the quality of market chain right from production to the plate of the consumer.

A silent revolution towards educating the horticulturist has already begun, the Indian Institute of Horticultural Research at Hessaraghatta, near Bangalore, has researched several products that will provide value of money to consumers.

“Most of our horticulturists follow primitive method of harvesting. They go by the size  (of the produce), their instincts and field practices when it comes to fruits like sapota (chikoo), pomegranate, custard apple and several types of mangoes. The density of the fruit is not measured scientifically, often resulting in early plucking, which leads to rotting of fruit, or substandard pulp, in-charge director and head of the fruit crop division of the IIHR Dr R Chitiraichelvan told dna.

He said researchers at the IIHR were looking at developing an electronic device in collaboration with the Indian Institute of Technology, Madras.  

“With the increase in quality awareness among consumers, market dynamics have also changed. The IIHR has developed several post-harvest processes to improve the shelf life of the fruits without sacrificing the quality,” IN Doreyappa Gowda, senior scientist at the post-harvest division of IIHR, said. “One of the processes we have launched is hurdle processing, which helps arrest physiological loss of weight by slowing down process of multiplication of micro-organism activity in the fruit.”

But farmers complain that all those technology advancements and knowledge is yet to reach them. “Till then, high prices or not, consumer cannot expect quality of product from his fruit from his vendor,” said Bharamesh, a Papaya grower of Chitradurga.

Imported fruits posing challenges to domestic growers

Agriculture Minister Sharad Pawar expressed concern that imported fruits like apples and kiwis are posing a major challenge to domestic growers and emphasised the need to strengthen supply side infrastructure to ensure locally produced fruits compete with imported ones. He said their is a need to implement the recommendations of the Saumita Chaudhuri report on cold chain development for reducing post-harvest losses and improve farmers income.

"We need to attach importance to cold chain infrastructure and implement the recommendations of the Saumitra Chaudhuri report so that we can effectively compete with supply chain for imported apples, pears, grapes, kiwis and cherries which is posing a major challenge to domestic growers," Pawar said addressing the National Horticulture Conference here. 

Although there is a pan India market for kiwis from Arunachal Pradesh, cherries from Jammu and Kashmir, pears from Punjab and grapes from Maharashtra, government need to address concerns of growers -- from planting material to post harvest management and issues of logistics and price discovery.

Noting that the challenge before the government is to ensure adequate income to farmers, Pawar said: "The only way we can have equitable and inclusive growth is when small farmers can save enough to invest in newer production technologies. If we do not make farming remunerative, we will not be able to retain the interest of younger generation." The targeted 4 per cent farm growth could be achieved in 12th Five Year Plan (2012-17) from high-value agriculture, of which horticulture is an important segment, he noted. Stating that India has a long way to go in establishing a robust cold chain system from farm to fork, he asked his horticulture officials to look at some technologies relevant to India and identify more 'origin-destination routes' for movement of horticulture produce.

Also, he asked if integrated projects could be taken up on cold chain in production clusters with linkages to consumption centres and how the centre can work closely with state governments and growers associations. With likely rise in demand for vegetables and fruits, Pawar said there is a need to further enhance production these items as demand is expected grow with higher income, urbanisation and changing food habits.

Currently, productivity of horticulture crops is lower in India as compared to other countries and the yield gaps need to be address in the current plan period itself. He also asked state governments to take adequate measures to address the impact of climate change on horticulture crops. India is the second largest producer of vegetables and fruits in the world.

Yield of Basmati rice declines

The per acre yield of Basmati rice has declined to 32 from 48 maunds per acre during the past five years, while India has developed seeds that produced over 50 maunds per acre. According to sources in the Pakistan Agriculture Research Council (PARC), Pakistan is not among the top 10 rice producing countries, but still fourth leading rice exporter. 

Pakistan annually produces 6.5 million tons of rice, which include 1.5 million tons of highly aromatic, premium quality super basmati and rest 5.0 million tons is long grain rice (PK-386, Irri-6, KS-282, and Hybrid). This makes Pakistan world's 13th largest rice producing nation. As wheat is considered staple food of Pakistan, hence a modest quantity of rice 2.5 million tonnes is locally consumed, therefore sparing 4.0 million tonnes of rice to export, which makes Pakistan 4th largest exporter of rice after India, Vietnam & Thailand and captures a significant segment of almost 15 percent of the global rice trade. 

The major segment of our Basmati exports is destined to gulf region countries including UAE, Oman, Qatar, Kuwait, KSA and Iran, while the long grain is destined for countries like Kenya, Madagascar, Mozambique, Malaysia and China which is a recently developed market. 

The potential of total export capacity of rice sector is as high that each grain is exported that left after local consumption. In 2012-2013 Pakistan produced 6 million tons and 3.5 million tons was exported during the year. "Basmati rice itself is a brand image of Pakistan throughout the globe as it is being exported to around 70 destinations inclusive of those where our counsellors/ambassadors are not present. Presence of our Aromatic Basmati, in absence of our embassies, acts as an ambassador of Pakistan and signifies the enriched diverse cultural heritage of Pakistan. Sources said that lack of Research and Development (R&D) is the major reason behind decrease in exports and creates bottleneck for our production. 

High hopes for bumper kharif crop this year

With the monsoon arriving early and the state receiving rains at regular intervals, kharif sowing has been advancing at a faster pace, raising hopes of a bumper production this year. Plantation of crop varieties including cereals, pulses and oil seeds have covered 27% more areas this season compared to last year as of July 30, according to the data of the department of agriculture.

Of the total area of close to 16 million hectares, sowing has been completed in 65% of the targeted acreage or more than 10 million hectares. While the overall average area under cultivation looks encouraging, there are still concerns in certain divisions where the rainfall has been below trend, affecting sowing plans of the farmers.