Indians least impacted by the current global food crisis: PM

International agencies are warning of an impending food crisis worldwide. The PM has assured the Left parties that food grain procurement has been increased and with a normal monsoon expected, agricultural production should be good. Inflation continues to be high. RBI is expected to tighten money supply.

Chillibreeze Business Research Team

Government Policy & Infrastructure
Economy
Sector Specific – Telecom
Banking & Finance
Power
Steel
Cement
International
Agriculture

Government policy & Infrastructure

House panel suggests interest free loans to farmers

Farmers who have cleared their debts within the period covered by the Rs 60,000-crore loan waiver scheme should be provided interest-free loans for three years, suggested a Parliamentary committee.

In addition to interest subvention, the panel has recommended agricultural loans at interest rate of 4 per cent if indebtedness of farmers to moneylenders cannot be covered by the debt waiver scheme.

"Banks may give loans at 4 per cent per annum to the farmers to redeem their debts to moneylenders and the government may give interest submission (subvention) to compensate the banks," the committee, headed by Ram Gopal Yadav, stated.

The committee has further said that the debt waiver scheme should invariably be accompanied by appropriate efforts that enable farmers consolidate the gains from the relief.

The report said farmers benefited from the scheme should be given subsidised and good quality seed and fertiliser to produce enough marketable surplus to sustain themselves from next season onwards.
April 28th, 2008
Source: Economic Times

Trai suggests hiking FDI in news channels

In a move that, if implemented, would further liberalise the sector, broadcast regulator Trai today recommended raising the foreign investment limit in news channels and FM radio to 49 per cent.

"The authority recommends that the foreign investment limit for news and current affairs channels in the uplinking guidelines may be increased from 26 per cent to 49 per cent," the regulator said in its recommendations on foreign investment limit for the broadcasting sector.

Trai has, however, maintained status quo in case of uplinking of non-news TV channels and downlinking of TV channels at 100 per cent foreign investment limit.
The regulator said any change in the foreign investment limit for TV broadcasters would necessitate revisiting the recommendation of the authority on such cap for FM radio for the sake of consistency.

The current limit of foreign investment is 20 per cent in FM radio services.
According to the regulator, those that wanted the existing limit of 26 per cent to continue, said this is a sensitive sector involving national security and image, so status quo should be maintained and should be capped at 26 per cent.

The better way to ensure that subversive content is not broadcast through TV channels is by having proper content monitoring and regulation through content code, instead of using foreign investment limits as the tool for this purpose, Trai said.

In the carriage services, Trai has proposed hike in the limits of foreign investment for cable networks from 49 per cent to 74 per cent.
The regulator has recommended that the total foreign investment, including FDI for HITS (Headend in the Sky), should be 74 per cent. There is no policy till date over this form of carriage services. HITS is an alternate distribution platform. In teleport (Hub), mobile television and Direct to Home companies also, the total foreign investment should be 74 per cent, Trai suggested.

April 26th, 2008
Source: Business Standard

Ministry intervenes to end NTPC-Chhattisgarh govt feud

An ongoing dispute over water between a young state and power generation giant has left the country short by 1,000 mega watts of power.
NTPC’s Sipat 2980 MW (capacity on completion) super thermal power plant in Chattisgarh would have been first of its kind to use the supercritical steam technology that operates at high pressures and temperatures, improving efficiency, reducing fuel consumption and greenhouse gas emissions such as carbon dioxide.

At Sipat 2x500 MW units are ready but because of NTPC’s ongoing water dispute with Chattisgarhh government both these have an uncertain future.

Had these two plants been commissioned power shortages of Western region states including Maharashtra, Goa, Madhya Pradesh and Chattisgarh would heve been met. Incidentally barring Goa the other states are critically short of power.

NTPC claims Chattisgarh is denying them the promised quantity of water to run the supercritical steam turbines, but the state government claims it had committed water from Hasdeo River from its Bango dam. However, NTPC claims it has neither drawn water in four years nor has it has it paid dues amounting to Rs 2.16 crore for water that the state government had allocated NTPC.

Chattisgarhh says it asked NTPC to draw water for its units from Mahanadi River, which is barely 50 kilometers from the project site, but NTPC is not keen, as drawing water from the river will entail an additional expense of Rs 150 crores for laying the pipeline.
April 26th, 2008
Source: Hindustan Times

Strict norms on the anvil for cable operators

Mandatory submission of PAN number by a cable operator, disclosure of exact cable susbcribers in a area and an area-wise mandatory licence for the large cable distribution companies are some of the key suggestions made by various the cable and broadcasting industry.

These suggestions are in response to a consultation paper issued by the Telecom Regulatory Authority of India (Trai), that is also the broadcast regulator, on the restructuring of cable services.

If accepted, the entire structure of cable services in the country will undergo a major overhaul as currently the cable services have least regulations. According to the Trai paper, currently any citizen can become a cable operator by depositing Rs 500 in the head Post office. Also, there are no guidelines on the minimum qualifications for becoming a cable operator.

Backing a licence-based MSO system in the country, the newly formed cable distribution company DEN said that the Government may consider issuing licenses to MSOs on circle basis, similar to radio/telecom, and imposing new and more detailed registration formalities.

Even the leading sports broadcaster ESPN Software India said that Trai should adopt auctioning of cable licences for different cities and towns. "While doing so the Authority should categorize all the existing cities and towns etc. and then should fix a minimum number of licences for said categories," ESPN said in its response.

On its part Zee Network and WWIL (the cable arm of Zee Group) suggested a mandatory use of registeration number for each of the cable operators, MSOs and the customers. 
However ORTEL Communications, a regional MSO suggested that there was no need for a separate registration of MSOs and local cable operators as both are providing cable TV services either directly or through smaller operators or a combination of both.
April 25th, 2008
Source: Business Standard

Centre gives nod to construction of airports for private use

The Central Government today approved the proposal of the Civil Aviation Ministry regarding construction of private airports, airstrips and helipads for private use.

All proposals for such constructions will now be decided by the ministry or Directorate General of Civil Aviation (DGCA), based upon security clearance through the Home Affairs Ministry, without placing such matters for the consideration of the Cabinet.

This decision of the Government will be immediately implemented.

Relevant guidelines and regulations will be suitably amended to provide for security clearance through the Home Affairs Ministry.

This step will not only substantially liberalize the procedure for construction of private airports, airstrips and helipads for private use, but also greatly reduce the burden on other operational airports, improving connectivity to far flung locations without compromising on safety or public interest, said a government release.
April 25th, 2008
Source: Economic Times

Economy

PM hopeful of higher grains procurement

The Prime Minister, Dr Manmohan Singh, on Friday assured the Left parties that the Government was taking all necessary steps to ensure that the recent increase in inflation is reversed.

At a meeting with the Left party leaders, the Prime Minister said that despite an extremely difficult global situation, with global food, commodity and oil prices rising, the Government has been able to ensure that Indians were among the least impacted in the developing world.

The Prime Minister said that the Government is confident of increasing procurement of foodgrains and had already increased the minimum support prices. Dr Singh said that indications were of improved food production this year, which would further contribute to increased food procurement.

The Prime Minister expressed confidence that a normal monsoon was expected this year which should further increase agricultural production.

He urged all the political parties to eschew the temptation of politicising the misery of the people and warned against creating an environment of scarcity which would only encourage speculators and hoarders.

At the meeting, the Left parties suggested that the Government strengthen the public distribution system by universalising it and restore the cut in foodgrain allocation to the States under the PDS.

The delegation also called for curbs on procurement of foodgrains from farmers by private companies and traders and a ban on futures trading in 25 agricultural commodities as had been proposed the Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution.
April 26th, 2008
Source: The Hindubusinessline

Rising input, interest costs eat into India Inc’s profits

Rising input and interest costs seem to have squeezed Corporate India’s profit margins in the last quarter of fiscal 2007-08. Companies have been able to post much higher revenues, but their profits are growing at a significantly lower rate. The net profit of the first 170 companies that disclosed their fourth quarter result as on April 23 (from A and B categories of BSE-listed companies) has grown by 18.3 per cent compared with a more robust 23.5 per cent for the corresponding period of the previous year. Revenue for these companies grew by a whopping 31.7 per cent, which is up by 10 percentage points over the previous year’s growth figure.

According to Mirae Asset Management head of equity Gopal Agrawal, “The results are on expected lines and we expected pressure on profits as a result of the higher base that companies are currently operating at and higher input costs. The cost of funds has also gone up for companies. We are expecting the profit growth for this quarter to be around 16-18 per cent.”

These are in line with the forecasts made for the quarter but are early days for the larger trend on the results, feels SBI Funds Management chief investment officer Sanjay Sinha. “To take a call on the trend of results in the middle of a results season might be misleading at times. Still, by and large the results are on expected lines. In fact, the forecasts made were more sober and the actual figures are better than those expectations.”
Manufacturing companies, especially those operating in the cement and auto industries, have seen their profits shrinking more. “The cement companies have been under pressure from rising coal prices that have gone up from $60 to $130 and have not been able to increase their prices in the same proportion, resulting in slower growth of profits,” explained Agrawal.

While on the one hand this is what the industry expected for the quarter, the factors that have led to this revision in profitability growth seem to be hampering the expectations of the growth in corporate profits in the medium to long term. “With GDP numbers getting revised and the pressure likely to be there on companies from high oil prices and raw material prices, a revision in medium to long-term profitability growth seems likely,” concluded Agrawal
April 25th, 2008
Source: Indian Express

Inflation up again at 7.33% on higher food prices

Inflation rate grew by a faster 7.33 per cent in the week ended April 12 from 7.14 per cent in the previous week, on higher prices of food items, including jaggery and fish.
The price rise is expected to prompt Reserve Bank of India to further tighten money supply in its annual credit policy slated to be announced on April 29.
RBI has already increased CRR, the mandatory amount that banks keep with the central bank, by 0.5 per cent to check money supply. The hike will come into effect in two tranches on April 26 and May 10.

The annual rate of inflation, which dipped from a 40- month high of 7.41 per cent to 7.14 for week ended April 5, again rose despite a host of measures announced by the government to control prices. Inflation for the corresponding period last year was at 6.34 per cent.

The prices of certain essential commodities like vegetables, cereals, pulses and edible oils, however, softened during the week.
April 25th, 2008
Source: Indian Express

India's forex reserves at $313.534 bn on Apr 18

India's foreign exchange rose to a record $313.534 billion on April 18, from $312.367 billion a week earlier, the central bank said in its weekly statistical supplement on Friday.

The central bank said foreign currency assets, expressed in dollar terms, included the effect of appreciation or depreciation of other currencies held in its reserves such as the euro, pound sterling and yen

April 25th, 2008
Source: Economic Times

Sector Specific

Telecom

GSM operators pitch for faster 3G rollout

GSM operators on Friday made a strong pitch for the quick introduction of third generation services in the country even as the Communications Ministry said that spectrum issues related to 3G services would be resolved soon.

Speaking at seminar organised by the Cellular Operators Association of India, Mr Rob Conway, CEO and Board Member of the GSMA, commented: “It is essential that additional spectrum is released to mobile operators in India as soon as possible, so that users can enjoy the myriad of benefits derived from Mobile Broadband services, which are live today in more than 73 countries.”

Mr Sunil Mittal, CMD, Bharti Airtel Ltd, in his opening remarks said that “India represented the finest example of public-private partnership and how telecom has benefited society.”

3G Mobile Broadband services are taking off exponentially in the rest of the world. As of April 2008, there are over 168 networks in 73 countries that have opted for mobile broadband (HSPA).

As of March 2008, there are more than 32 million mobile broadband (HSPA) connections worldwide, a ten-fold increase in the last one-year alone. This is forecast to grow to 700 million by 2012. The Communication and IT Minister, Mr A. Raja, said, “India cannot afford to be isolated from the 3G wave that is sweeping the rest of the world. Spectrum is the raw material for mobile services. It is a limited and scarce natural resource.
April 26th, 2008
Source: The Hindubusinessline

TRAI rejects DoT's proposal on foreign players' entry in 3G

Telecom regulator TRAI on Friday rejected Department of Telecom's proposal to reconsider allowing foreign players to offer 3G telecom services, saying existing players would be able to roll out network faster.

"As the existing licensees have already made huge investments in the infrastructure and their systems are in place, therefore, they will be in a better position to deliver 3G services efficiently at low incremental cost," TRAI said in its views on Permitting New Entity for 3G Services.

With the number of service providers going up to 13-14 in each circle, the regulator said there would be sufficient competition to ensure that the spectrum is priced competitively, discourage cartelisation and offer services that are acceptable in terms of quality and price.

DoT, in its letter earlier this month, had asked TRAI to also include other prospective operators with foreign partners who fulfill the conditions for getting Unified Access Service (UAS) licenses.

"The Authority firmly believes that in the interest of the growth of Indian telecom sector, the entry of this kind must be strongly discouraged," TRAI said.

Earlier during the day, Telecom Minister A Raja had said that DoT would issue new guidelines for 3G mobile services and allocation of spectrum for the prospective bidders.

April 25th, 2008
Source: Economic Times

TRAI rejects DoT's proposal on foreign players' entry in 3G

Telecom regulator TRAI on Friday rejected Department of Telecom's proposal to reconsider allowing foreign players to offer 3G telecom services, saying existing players would be able to roll out network faster.

"As the existing licensees have already made huge investments in the infrastructure and their systems are in place, therefore, they will be in a better position to deliver 3G services efficiently at low incremental cost," TRAI said in its views on Permitting New Entity for 3G Services.

With the number of service providers going up to 13-14 in each circle, the regulator said there would be sufficient competition to ensure that the spectrum is priced competitively, discourage cartelisation and offer services that are acceptable in terms of quality and price.

DoT, in its letter earlier this month, had asked TRAI to also include other prospective operators with foreign partners who fulfill the conditions for getting Unified Access Service (UAS) licenses.

Earlier during the day, Telecom Minister A Raja had said that DoT would issue new guidelines for 3G mobile services and allocation of spectrum for the prospective bidders.

April 25th, 2008
Source: Economic Times

Power

PM dedicates hydel plant in J&K to nation

The Prime Minister, Dr Manmohan Singh, on Saturday dedicated the 390-MW Dulhasti hydel power project in Jammu and Kashmir to the nation. Built on the River Chenab in the newly created Kishtwar district, the foundation stone for the National Hydroelectric Power Corporation’s project was laid 25 years ago.

When the foundation stone for the project was laid on April 19, 1983, its cost was estimated at Rs 183 crore, but was finally completed last year at an investment of Rs 5,228 crore.

The main components of the Dulhasti power station are a 65-metre high and 186 metre long concrete gravity dam across the River Chenab, a 10.5-km long Head Race Tunnel, an underground Power House with three generating units of 130 MW each, and a 7.46-m diameter and 307 metre long Tail Race Tunnel.

The annual electricity generation from the Power Station is 1,907 million units in a 90 per cent dependable year. The Power Station is providing peaking power to Northern Grid, with major beneficiary States being Jammu and Kashmir, Punjab, Haryana, Uttar Pradesh, Uttarakhand, Rajasthan, Delhi and Chandigarh.

The first unit of 130 MW was successfully synchronised on February 28, 2007, followed by the second unit on March 18, 2007, and the third on March 26 last year.
April 27th, 2008
Source: The Hindubusinessline

Himachal puts brakes on Brakel’s 480 mw project

The Himachal Pradesh government has put brakes on the 480 mega watt Jangi Topan and Thopan Powari power project allotted to Brakel Corporation N V of the Netherlands in December 2006 calling for more information from the company to be sure of its credentials.
The company had deposited the first installment of upfront premium and has been served show cause notices thrice for non-payment of the balance. The total upfront premium stood at Rs 173.42 crore. In a letter to Brakel, the state asked it to deposit the amount immediately and also stick to the timeframe for completion of project as agreed when the project was awarded.
When contacted, Himachal Pradesh chief minister, Prem Kumar Dhumal told The Indian Express, “It is true that we have not awarded the project to Brakel Corporation so far. We have asked them to prove the credentials of M/s Brakel Kinnaur Power Private Limited that is actually executing this project for the allottee company. We have “Deam Gesterkamp, director, Brackel Corporation NV, said, “We have received a letter from the Himachal Pradesh government. We will do everything to oblige the government to go ahead with this project. I think that we can complete the project within the set time frame.”
The state had invited bids for these two projects in October 2005. There were two stages of selection process including Pre-qualification and financial bids. After about one year of tedious process, the state allotted these to Brakel in December 2006. The company had to deposit 50 per cent of quoted upfront premium after issue of award letter. It said the payment was delayed since foreign companies need RBI approval to bring in funds.
April 26th, 2008
Source: The Hindubusinessline

Banking & Finance

Rs 2,000 cr risk capital fund for MSME in two months

The Rs 2,000-crore risk capital announced in the Budget for small and medium industries from Small Industries Development Bank of India (SIDBI) is likely to be in place in the next one to two months.

"SIDBI is preparing the modalities for the risk fund in association with the Union Finance ministry and it is likely to be in place in the next one to two months," Additional Secretary and Development Commissioner in MSME ministry Jawhar Sircar said.

Asked about major highlights of risk capital, Sircar said, "there are several views going around like capital restructuring for sick SMEs, support to expansion, and equity infusion to share risk, but it will be finalised soon."

The MSME sector was left out in the current spell due to lack of barcoding which is mandatory for products in large stores and malls, Sircar said.

"We are trying to attract industry associations to set up IPR facilation centre. The government is to share a substantial part of the total cost. We intend to have 40 IPR centres in the next four years," he added.

Under the technology upgradation programme for revitalising the sector, the MSME ministry would also introduce case incubator scheme with a Rs 80 crore corpus and Rs 84.99 crore for quality certification.

April 27th, 2008
Source: Economic Times

Rates may stay unchanged

The Reserve Bank of India (RBI) is likely to keep key policy rates unchanged in the next week?s annual policy as a part of a strategy to balance growth and inflation.
Sources close to the development said the stance could only change if the Wholesale Price Index-based inflation is way above the 7 per cent mark when data are released tomorrow.

In such a situation, the central bank may have to raise the reverse repo rate by 25 basis points in order to signal an upward trend in short-term rates.
But it is likely to leave the repo rate unchanged since it affects long-term interest rates and may jeopardise future growth.

The move may serve the purpose of tightening liquidity in the short run. Reverse repo is the rate at which RBI absorbs surplus funds from the system, while repo is the rate at which it infuses liquidity back into the system.
At a time when inflation is ruling over 7 per cent, subdued growth poses a major challenge for policymakers.
April 25th, 2008
Source: Business Standard

RBI to consider controls on working capital credit by banks

In a bid to tame mounting inflationary pressures, the Reserve Bank of India is likely to revisit selective credit controls to supplement monetary measures already in place, say banking sources familiar with the development.

Some discussions on the measures have already been conducted, the sources said. Bankers expect the measures to be introduced in the lean season Credit Policy to be announced next week.

This is largely in view of the speed at which inflation has shot past the 7 per cent mark on a year- on-year basis, well above the RBI’s target of 5 per cent.

Selective credit controls mechanisms were used during the 1980s and imply choking of credit availability to certain sectors sensitive to inflation.

The RBI then had laid down inventory norms for a whole range of commodities, netting out supplier credits against inventories the percentage of bank credit etc. for estimating the quantum of credit that a business was entitled to avail itself from the banking industry.

That the RBI was not averse to using harsh measures to battle inflation was amply demonstrated in last weekend’s 50 basis points hike in the cash reserve ratio.
April 25th, 2008
Source: The Hindubusinessline

Steel

Futures trade in steel may be banned, says government

The government is contemplating a ban on futures trading in iron and steel. This will be in addition to a host of tax incentives to bring down the price of steel in the country.
The rise in steel prices had contributed around 25 per cent to the recent jump in the wholesale inflation rate, a government official said.

In addition, the government is likely to ban futures trading in almost all major farm goods. A source in the government said steel might also be classified as an essential commodity. Steel was taken off the list last year.
Sources said the finance ministry representative had observed during the latest inter-ministerial meeting on inflation last week that steel contributed to 25 per cent of the recent inflation in the country.

Besides banning futures trade, the government is lining up a host of fiscal incentives for steel producers. These include lowering or removing the import duty on mild steel and raw material from 5 per cent to nil, and reduction of the excise duty on all steel items from 14 per cent to 8 per cent.

Allaying fears of the mining and commerce ministries that raising the export duty would hurt the mining industry, the finance ministry observed that “in spite of the imposition of an export duty on iron ore last year, there is no reduction in the volume of exports. On the other hand, revenue collection from iron ore exports has shown substantial improvement”.
April 26th, 2008
Source: Hindustan Times

Cement

Govt to import more cement if required

The Government on Saturday said it would import more cement, if necessary, to address the demand-supply mismatch in the domestic market and check any rise in prices.
"We have allowed cement import and already a substantial amount of 1.3 lakh tonnes has arrived in the country from Pakistan. If further imports are necessary to address the demand-supply mismatch, it will be done," Mr Ashwani Kumar, Minister of State for Industry said on the sidelines of a FICCI seminar here.

Mr Kumar, however, did not give the quantum of cement that would be imported. Trading firm MMTC is one of the firms designated to import the building material. Besides looking at ways to increase the domestic production capacity of cement, Mr Kumar said the Government is engaging with cement producers to ensure there is no cartelisation in the sector.

"While companies can make profits, profiteering will not be allowed," he said. The Government had banned cement exports to boost domestic supplies and keep a check on rising prices.

Earlier, speaking at the FICCI seminar on intellectual property, Mr Kumar said the Government has allocated Rs 320 crore for modernisation and further strengthening of the intellectual property offices in the country.

He further said, the Indian patent office has been conferred the status of an International Searching Authority and an International Preliminary Examination Authority by the World Intellectual Property Organisation.

With this, India joins the club of only 15 other such offices across the world. Patent filing in the country has grown from 5,000 in 2000 to over 35,000 in 2007-08, while the number of patents granted too has increased from 1911 in 2005 to 15,261 in the last fiscal, Mr Kumar said. - PTI
April 26th, 2008
Source: The Hindubusinessline

International

Iran to discuss pipeline with India, Pakistan

Iranian President Mahmoud Ahmadinejad visits India and Pakistan this week for talks on issues including longstanding plans for a pipeline to supply Iranian gas to the two Asian states, an Iranian official said on Sunday.

The three countries have discussed the pipeline for years. They have agreed in principle on a pricing formula but India dropped out of talks in mid-2007, saying it first wanted to resolve issues with Pakistan such as transit fees.

India and Pakistan said on Friday they were just days or weeks away from finalising terms on the cross-border pipeline. Iran and Pakistan had previously said they would go ahead with the project without India if necessary.

The $7.6 billion project has been dubbed the "Pipeline for Peace and Progress" because of the mutual benefits it will bring to India and Pakistan, two countries that have fought three wars since they were divided by the partition of India in 1947.

The nuclear-armed rivals are both desperate to tie up future energy supplies to fuel their fast growing economies.

The United States has tried to discourage India and Pakistan from any deal with Iran in the past because of Tehran's suspected ambitions to build nuclear arms. Iran denies any such ambitions.

The pipeline would initially transport 60 million cubic metres of gas (2.2 billion cubic feet) daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cubic metres.

April 27th, 2008
Source: Economic Times

Number of cell phone users in China hit 574 million by the end of March

Chinese state media says the country has 574 million cell phone users, equal to about 44 percent of its population.

The official Xinhua News Agency says the number of mobile phone users at the end of March grew by 27.3 million since the end of 2007, as fixed-line users switched to mobile services because of lower rates.

It quoted the Ministry of Industry and Information as saying Saturday China's fixed-line operators lost 4.4 million subscribers in the first quarter, leaving 361 million fixed-line users. China has 1.3 billion people

April 26th, 2008
Source: Economic Times

Agriculture

Wheat production likely to rise 7%

In line with expectation, world wheat production in 2008-09 is forecast to expand 7 per cent to register a new high while dwindling stocks are set to show an upturn as forecast production is likely to exceed forecast consumption by a good margin.

No wonder, the world wheat market has taken cognisance of this positive development as a result of which forward prices have begun to ease rapidly. On the Chicago Board of Trade, wheat futures prices have collapsed given generally improved supply prospect. Speculators have begun to rapidly liquidate their long position.

In its latest grain market report, the London-based International Grains Council (IGC) has forecast global wheat production in 2008-09 at a record 645 million tonnes (mt), up 41 mt from the previous year. This could well be one of the biggest yearly increases in production in recent years.

Consumption, on the other hand, is projected to rise to 630 mt (611mt) because of anticipated increase in food and feed demand encouraged by lower prices. World stocks, according to IGC, may recover to 128 mt (114 mt). Inventory with five major exporting countries is set to rise by 10 mt to 37 mt.

Indian wheat harvest is in full swing and market arrivals are heavy. According to the Agriculture Ministry, the crop size has set a new record of 76.8 mt.

Procurement by the governmental parastatal Food Corporation of India is at a steady pace, raising hopes of meeting and possibly exceeding the 15 million tons target. This has sent a clear signal to the world market that India may not be a buyer of wheat – not until six months from now, in any case.

Theoretically, India can become a wheat exporter this year as there will be price parity. However, given the price sensitivity and political compulsions, wheat export ban is most unlikely to be lifted.
April 26th, 2008
Source: The Hindubusinessline

Tobacco prices touch record Rs 110 a kg

Tobacco prices are continuing to rule high in the Andhra Pradesh auctions. For the first time, Virginia tobacco fetched a record Rs 110.40 a kg on Thursday on the Koyyalagudem auction floor in West Godavari district. The district produces the best tobacco in the State.

So far, 94.5 million kgs of tobacco has been sold on the auction floors in the State at an average price of Rs 77.25 a kg as against last year’s average price of Rs 47.50 a kg by this time. Still, roughly 60 million kgs of tobacco remains to be sold in the State. According to rough estimates, the farmers have got an incremental income of Rs 285 crore more this year than the same time last year.

Admitting that the farmers are getting very good prices this season, Dr Y. Sivaji, President of the Andhra Pradesh Virginia Tobacco Growers’ Association, said that certain factors in the international market triggered the price rise on the auction floor. “The drastic slump in production in Zimbabwe from a level of 250 million kgs to 60 milion kgs, due to racial unrest in that country, is one of the major factors for the price rise. There has been production slump in Brazil by 70 million kgs or so and besides that China is no longer able to dump in the international market at lesser prices, as it has joined the WTO. There are no carryover stocks in India or anywhere else in the world,” he said.

The trade is attempting to depress prices by forming into syndicates and imposing a ceiling price. Such attempts should be foiled by farmers and they should get an average price of $2 a kg on the floors.

April 25th, 2008
Source: The Hindubusinessline