Posts Tagged ‘FCI’

MINIMUM SUPPORT PRICE…… “The Farmer’s Armor”

MSP is a part of agricultural pricing policy of the central government. It is considered as a form of market intervention and also as one of the supportive measures (safety nets) to the agricultural producers.

In the phase of liberalization, MSP has a strong linkage to the market. In this situation, three important aspects deserve attention:

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(i) insulating the farm producers against the unwarranted fluctuations in prices, provoked by higher production and the international price variations and

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(ii) creation of an incentive structure for the farm producers in order to direct the allocation of resources towards desired crops and

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(iii) insulating consumers against sharp price rise, which may have been created by monsoon failure or even by vested interest by creating artificial scarcity. The focus is to providing remunerative prices for the cultivators.

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ROLE OF CACP

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The Commission on Agricultural Costs and Prices (CACP) discusses the price situation of various commodities with the representatives of the State government and various stakeholders to declare the prices of any agricultural product. The CACP while recommending MSPs takes into account factors such as cost of production, change in prices of inputs, demand and supply, market price trends and cost of living among other factors. MSP is determined by the principle of full cost of production that includes the rental value of land, an imputed value of family labor and returns to farmers.

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In fixing the support prices, CACP relies on the cost concept which covers all items of expenses of cultivation including in that the imputed value of inputs owned by farmers such as rental value of owned land and interest on fixed capital. Some of the important cost concepts used by CACP are the C2 and C3 costs.

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C2 cost includes all actual expenses in cash and kind incurred in production by actual owner plus rent paid for leased land plus imputed value of family labour plus interest on value of owned capital assets (excluding land) plus rental value of owned land (net of land revenue). Now, C3 cost is derived as: Cost C2 + 10 percent of cost C2 to account for managerial remuneration to the farmer.

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Costs of production are calculated both on per quintal and per hectare basis. Since cost variations are large over States, CACP recommends that MSP should be considered on the basis of C2 cost.

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Role of FCI

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On behalf of the Central Government, Food Corporation of India (FCI) along with State Governments and their agencies responsible for procurement of agri product on MSP fixed by CACP. But FCI procure the commodities from such states where production of any specific product is surplus. The main areas for procurement of wheat and rice are the surplus states like Punjab, Haryana, and some parts of Uttar Pradesh for both crops and Andhra Pradesh for rice. This has led two kinds of problems. One, growing buffer stock with FCI and our go-down are overflowing stocks of food grains, but, at the same time some parts of the country reported starvation. Second rest part of country producing these commodities doesn’t access the advantage of MSP.

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Farmers of those states do not fully get the benefit of the support price. This has created serious imbalances in demand and supply of principal crops in the country.

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Similarly, the country has been facing large shortages of pulses and edible oils .

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Latest Development

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The Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh, increased the minimum support price (per quintal): Arhar-Rs. 3,000, Moong-Rs. 3,170, Urad- Rs. 2,900, Paddy (common variety) Rs.1,000, and for grade A at Rs.1,030, Groundnut- Rs.2,300, Sunflower-Rs. 2,350, Niger seed Rs. 2,450,Soyabean (black)- Rs.1,400, Soyabean (yellow)- Rs.1440 and sesame- Rs.2900, Jowar (hybrid), bajra andmaize, the minimum support price has been raised by Rs. 40 and fixed at Rs. 880. MSPs of Jowar (Hybrid), Bajra and Maize each have been raised by Rs. 40 per quintal and fixed at Rs.880 per quintal.

Conclusion

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The policy has a favorable impact on farm income and has led to an economic growth. The implementation of Minimum Support Prices (MSP) has played an important role in meeting the ultimate goal of improving the agricultural production and the welfare of the agricultural community. Presently, 25 major crops are covered under the minimum support price program. Thus now MSP is oriented to crop diversification which had not encouraged earlier. Our policy makers are trying to effective implementation of MSP in all over the country.

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BUDGET OUTCOMES COMMODITIES :)

·Finance minster reaffirms commitment to introduce GST along with DTC in April, 2011. 🙂

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·A Nutrient Based Subsidy policy for the fertiliser sector has since been approved by the Government and will become effective from April 1, 2010.

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·To extend the green revolution to the eastern region of the country & propose to provide Rs.400 crore for this initiative.

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·Propose to organize 60,000 “pulses and oil seed villages” in rain-fed areas during 2010-11 and provide an integrated intervention for water harvesting, watershed management and soil health, to enhance the productivity of the dry land farming areas.

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·Propose an allocation of Rs.200 crore for launching this climate resilient agriculture initiative.

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·FCI has been hiring godowns from private parties for a guaranteed period of 5 years. This period is now being extended to 7 years.

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·Targets set for agriculture credit flow has been raised to Rs.3,75,000 crore from Rs.3,25,000 crore in the current year.

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·Propose to extend by six months the period for repayment of the loan amount by farmers from December 31, 2009 to June 30, 2010.

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·Provided an additional one per cent interest subvention as an incentive to those farmers who repay their short term crop loans as per schedule.

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·External Commercial Borrowings will henceforth be available for cold storage or cold room facility.

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·Customs duty on silver raised to 1,500 rupees from 1,000 rupees per kg.

Stay Tuned for More updates :)

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Food Inflation Rose for the Second Week on the Trot

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Food Inflation Rises for the Second Week

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Food inflation rises for the second week

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Annual food inflation rose for the second week on the trot, affirming RBI’s fears of a spill over into other commodities and services and mounting pressure on the government to take more measures to arrest prices.

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Annual inflation in food articles rose to 17.56 per cent for the week ended January 23 from 17.4 per cent in the previous week, partly due to a poor harvest after the worst monsoon in nearly three decades, according to data released by the commerce ministry on Thursday.

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While prices of wheat, pulses and vegetables have increased, cereals and rice have become cheaper.

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Fuel price inflation, in tandem with global oil prices, increased to 5.88 per cent from 5.7 per cent in the previous week, spurred by a spike in light diesel oil and furnace oil prices.

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The wider inflation, as measured by the wholesale price index (WPI), has already risen to 7.31 per cent for December, forcing RBI to raise its forecast to 8.5 per cent for the fiscal year-end.

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🙂

In Other major Commodities Update, there is a news of Centre approving the largest quantity of wheat under its open market sale scheme (OMSS) for bulk buyers to consumers in the North zone and India’s corn exports could drop by 60 %in the year.

🙂

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Nod for salve of 4.4 Lt wheat in North:

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The Centre has approved the largest quantity of wheat amounting to 4.43 lakh tonne under its open market sale scheme (OMSS) for bulk buyers to consumers in the North zone.

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Sources said, for bulk consumers in South zone around 2,01,000 tonne of wheat has been approved by the government for sale from Food Corporation of India (FCI) godowns till now.

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While for East zone, largely comprising of states like West Bengal, Orrisa and Bihar, around 63,900 tonne of wheat has been approved.

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Almost 1,07,000 tonne of wheat has been approved for sale in West zone of the country and 9,500 tonne has been approved for North-Eastern states.

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Of the 8.4 lakh tonne of wheat, approved in total, almost 77% amounting to around 6.36 lakh tonne has been lifted by bulk consumers till Wednesday.

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🙂

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Corn exports likely to decline 60% this year:

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India’s corn exports could drop by 60 % in the year to September due to a poor domestic crop, quality issues, lower global prices and good crop prospects overseas, traders and industry officials said on Thursday.

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Likely exports are between 1.0-1.3 million tonne due to late harvests because of the drought and rising domestic demand, Amit Sachdev, India representative of the US Grains Council said.

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🙂

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Govt Sells 0.3 Million Tonne Wheat in Open Market

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Govt Sells 0.3 Million Tonne Wheat in Open Market

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Govt Sells 0.3 mt Wheat in Open Mkt:

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The government’s move to sell excess wheat stocks to bulk buyers for reducing retail price of wheat and wheat flour finally taken off after months of delay.

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Private bulk buyers have purchased 0.3 million tonne (mt) of wheat under the Open Market Sale Scheme (OMSS) from Food Corporation of India (FCI), till now.

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It marks a substantial amount given that less than 50,000 tonne were bought by bulk users ever since the scheme was launched in October 2009.

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Besides this, another 0.54 million tonne of wheat has been approved for sale to bulk users by the high-level committee set up to oversee the sale of government wheat.

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In Other major Commodities Updates we can read about Government officials lauding BT cotton for generating higher yeild.

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Govt official lauds Bt cotton:

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Genetically modified cotton — commonly termed Bt cotton has been a blessing, according to a senior government official.

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The country has generated an additional income of Rs 10,000 crore to Rs 12,000 crore annually because of its higher yield, J N Singh, joint secretary in the Union textiles ministry, told Business Standard.

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According to official figures, 80 per cent of the overall cotton crop is from Bt seeds.

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The area under Bt cotton has been growing between four and five per cent a year, more so in region with irrigation facilities.

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Bt cotton is, however, unlikely to replace conventional cotton completely, especially in rain-fed regions like Vidarbha, Singh added.

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🙂

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Cashew Kernel Exports Decline to 1,07,496 Metric Tonnes

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Cashew Kernel Exports Decline to 1,07,496 Metric Tonnes

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Cashew kernel exports decline 4% in 2009

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India’s cashew kernel exports have showed an overall drop of a marginal 4 per cent to 1,07,496 metric tonnes during the calendar year 2009 compared to the previous year.

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During the period January to December 2009, the value of kernel exports was marginally lower by 2.2 per cent to Rs 2,869 crore as against the year ago period.

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The drop in exports was mainly attributed to a sharp rise in domestic consumption.

The exporters had to draw down to meet the domestic demand than export commitments.

The local consumption is pegged at around 1,30,000 tonnes for the year.

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According to Kochi based Cashew Export Promotion Council of India (CEPCI), the unit value realization was up by 2 per cent to Rs 266.87 per kg in the export market during 2009.

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🙂

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In Other major Commodities Updates we have news on the Govt Plans to buy 280 lakh tone of rice for central pool.

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Govt plans to buy 2.8 cr tonne of rice for central pool

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The government hopes to buy 280 lakh tonne of rice for the Central Pool during the ongoing 2009-10 marketing season, more than earlier target of 260 lakh tonne, even as the grain production this year is expected to be lower by 13 million tonne.

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According to the latest official data, total rice purchases by the Food Corporation of India (FCI) and state agencies stand at 178.30 lakh tonne as on Thursday, slightly below 182 lakh tonne procured in the same period of the 2008-09 season.

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The country’s rice production from the current Kharif season is estimated to be lower at 71.45 million tonne, compared with 84.58 million tonne in the last year season.

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🙂

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Rice Procurement Tops 16 Million Tonne

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Rice Procurement Tops 16 Million Tonne

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Rice Procurement Tops 16 Million Tonne :

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Rice procurement by Food Corporation of India (FCI) and state agencies for 2009-10 crop marketing year has surpassed 16 million tonne and was estimated at 16.3 million tonne as on Tuesday.

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This year, as usual Punjab and Haryana have contributed bulk of the total procurement with around 9.25 million tonne and 1.80 million tonne to the central pool.

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The procurement in other key rice growing states such as Chhattisgarh (1.43 million tonne), Andhra Pradesh (1.10 million tonne) and Uttar Pradesh (1.53 million tonne) have also picked up pace in the last few weeks.

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🙂

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In Other major Commodities Updates, we have news about coffee exports globally dipping 7.8% and the retail prices of Jaggery getting costlier.

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Global coffee exports dip 7.8% in Oct-Nov:

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Coffee exports globally have fallen 7.8 per cent to 13.4 million bags (1 bag= 60 kg) in the first two months of the 2009-10 crop year.

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In India, exports have risen over 20 per cent to 516,000 bags in the same period, the International Coffee Organisation (ICO) has said.

The coffee year runs from October to September.

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Global coffee export figures remained bleak due to a sharp fall in shipments from Brazil, the world’s largest coffee producer.

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During the October-November period, overseas sale of coffee bean from Brazil dipped 11.11 per cent to 5.34 million bags from 6.01 million bags in the corresponding period last year.

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🙂

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Jaggery to get costlier on festive demand:

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Retail prices of jaggery, one of the key ingredients used by south Indians in their Pongal/Sankranthi celebrations is set to become costlier and are likely to touch Rs 40-44 per kg as against Rs 37-38 per kg at present.

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Jaggery prices in the key southern states of Andhra Pradesh and Karnataka have already gone up between 4% and 12% during the last one month.

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🙂

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Centre released Rs.361 crore to the States

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Centre released Rs.361 crore to the States

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Centre releases Rs. 361 crore to States :

The Centre on Tuesday released to the State Rs.361 crore as its share of the 2008 kharif crop insurance.

Minister N. Raghuveera Reddy said the State and Central governments had sanctioned Rs.800 cr. under the crop insurance scheme claimed by 7.5 lakh farmers.

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Out of which, the State already released its share of Rs.356 crore a month back.

The distribution process of the released funds would be completed in two-three days.

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🙂

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In Other major Commodities Updates, we can read about the stories of flour mills across the country buying of wheat from government under OMSS via electronic auction process on NCDEX Spot Exchange and on NSEL.

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Also we will read of the story related to NCDEX, which is set to launch online spot trading in Rajasthan soon.

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Flour mills to buy wheat from govt through e-auction:

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Come January and flour mills across the country will start buying wheat from government under open market sales scheme (OMSS) via electronic auction process on NCDEX Spot Exchange and National Spot Exchange (NSEL).

State-owned Food Corporation of India (FCI) has decided to use electronic trading platform of both the bourses to offer wheat under OMSS.

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Under OMSS, FCI has offered 1.5 million tonnes wheat in the first tranche in four states — Delhi, Haryana, Karnataka, and Andhra Pradesh.

The minimum quantity has been fixed at 100 tonnes and then in multiples of 10 tonnes.

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🙂

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NCDEX to start online spot trading in Rajasthan:

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NCDEX Spot Exchange (NSPOT), a spot trading arm of the country’s largest agri commodities futures trading platform, National Commodity and Derivatives Exchange (NCDEX), is all set to launch online spot  trading in Rajasthan soon.

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The exchange has already got permission from the state government to launch spot trading in rapeseed/mustardseed, chana and guarseed in the state.

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With this, the exchange has secured permission to set up Spot exchanges in the states of Gujarat, Karnataka, Maharashtra, Haryana, Bihar, Rajasthan and Kerala.

It also has APMC cess paid contracts in Madhya Pradesh.

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🙂

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