Keep a Watch on Food Inflation the Latest Inflation Readings Based on the Wholesale Price Index and the Consumer Price Index Are a Cause for Concern

20.08.2016

Keep a watch on food inflation The latest inflation readings based on the Wholesale Price Index and the Consumer Price Index are a cause for concern. While the annual gain in wholesale prices hit a 23- month high of 3.55 per cent in July, retail inflation quickened past the Centre’s new Monetary Policy Framework’s upper limit for tolerance to 6.07 per cent. Food costs — a key component in both indices — were the main culprit. Inflation in the food category of the CPI accelerated to 8 per cent, and in the case of the WPI surged to a 31-month high of 11.8 per cent. Some economists and the Reserve Bank of India have pointed to the forecast of normal rainfall this year, and the improvement in sowing on the back of the steady progress of the monsoon, as clear indicators that the outlook for supply can only improve going forward. It would, however, be worthwhile to consider some of the risks attached to these assumptions. For one, any beneficial monsoon impact on the predominantly agrarian rural economy is bound to result in an uptick in rural wages, and by extension demand-side consumption pressures. According to a January 2016 International Monetary Fund working paper on ‘Understanding India’s Food Inflation: the Role of Demand and Supply Factors’, rising real rural incomes have had the largest impact on food inflation. This is particularly so as the large weight on food in household expenditure has meant that robust real income growth has tended to translate into substantial demand-side pressures that far outpace the supply-side gains. This stickiness of food costs can undermine the steady gains in the fight against price gains, a battle that must be fought since inflation ultimately ends up being a tax on the poor.

If the economy is to maintain the current growth impetus at a time when global demand is still fairly lacklustre, it will be essential that domestic consumption continues to be a key engine of economic momentum. It is precisely this consumption demand that will get a fillip from the increased salary and pension payouts that the government will make as part of the implementation of the Seventh Pay Commission’s recommendations and the One Rank One Pension plan. The Centre will have its task cut out in maintaining fiscal discipline if it is to ensure that increased expenditure from its side doesn’t end up fanning inflation expectations at a time when monetary authorities are already grappling with the challenge of containing the food costs-led price gains. And with Prime Minister Narendra Modi having categorically backed the 4 per cent retail inflation target in his Independence Day speech this week, the political stakes to keep price gains under check couldn’t get higher.

Farmers welcome special samba package Chief Minister Jayalalithaa’s surprise announcement on the floor of the Assembly of extending a samba special package has come in for appreciation among the delta farmers. Though the farmers are keeping their fingers crossed on the availability of adequate water for seeing through the samba paddy crop, the mainstay on over eight lakh acres in Thanjavur, Tiruvarur and Nagapattinam district, the State Government’s support is seen as “very encouraging”. Also noticeable is the commendation being extended to farmers to go in for direct sowing, rather than the regular transplantation after raising nurseries, taking into account the ground realities. Sections of farmers see in the samba package a push for a paradigm shift in the cultivating pattern for paddy, and a good sign in that.

This is probably the best response under the prevailing situation, points out the general secretary of the Tamil Nadu Cauvery Delta Farmers' Welfare Association Mannargudi S. Ranganathan. He adds that the package thrust on direct sowing is noteworthy as the practice was tried out with reasonable success in the Kottur, Mannargudi blocks of Tiruvarur district over the past several years and could be easily replicated elsewhere. The component on weedicide application support is also a good thought but could be enhanced a little, he says.

Importantly, Karnataka could see reason in our genuine demand for water and could release a healthy discharge when the demand peaks and couple with proper precipitation the package could be a real booster for those who take up samba paddy cultivation under difficult circumstances, observes Mr. Ranganathan.

“We welcome the samba package and it will be of definite use to those who dare to go in for samba paddy cultivation,” says general secretary of the Federation of Farmers' Associations of Cauvery Delta Arupathy P. Kalyanam. The package is aimed at encouraging direct sowing taking the ground realities into account. However, we would like Chief Minister Jayalalithaa to increase the financial assistance for ploughing from the proposed Rs. 500 per acre to Rs. 2,000 per acre. Also, the State government could consider constituting farmer-inclusive panels at the district level to monitor the disbursal of package benefits to the beneficiaries. Many farmers were yet to receive the kuruvai package benefits and stumbling blocks remain in smooth disbursal of funds to the farmers, Mr. Kalyanam observes.

The samba package embodies a positive thought and planning to prepare the farming community in the delta to go in for direct sowing, feels general secretary of the Consortium of Cauvery Delta Farmers V. Sathyanarayanan. When delta farmers were feeling depressed on samba prospects the package has come as a motivation and we thank the Chief Minister for that, he adds.

Industry calls for steps to boost cotton sector

Stakeholders of the cotton sector called for efforts that will give a boost to cotton production and will benefit the farmers and the industry.

Speaking here on Friday at the inaugural of the two-day conference on “Indian Cotton Scenario in the Current Context 2016-2017” organised by the Indian Cotton Federation (ICF) jointly with the Indian Cotton Association (ICAL), Rakesh Rathi, president of ICAL, said India needs better real time data on cotton. All cotton bales pressed in the country should have a digital mark and should be registered. India has the largest area under cotton but its yield is lower. Regional cotton associations should focus on extension services to educate farmers and should also take up programmes that will help collect real time data, he said.

According to M. Senthil Kumar, chairman of Southern India Mills’ Association, India is losing on cotton acreage, productivity, and quality in the last two seasons. Textile mills in the south are apprehensive that the country might become a net importer of cotton and the mills might not get cotton at the right time even at high price. “We need united efforts to make the Government work on the white gold,” he said.

Dhiren N. Sheth, president of Cotton Association of India, said the cotton sector needs a system such as direct transfer of benefits for farmers. In the case of GM technology, the country is in cross roads. “All segments of the cotton sector should sit with the Government and the seed industry to thrash out issues,” he said.

The industry also needs to address problems related to irrigation, storage in peak season, infrastructure at ports, etc. President of South Indian Spinners Association K. Thirunavukkarasu said cotton farmers, ginners and spinners are not happy though the country had a good crop for the last two years. “Efforts are needed to save the cotton sector,” he said. B.K. Krishnaraj Vanavarayar, chairman of Bharatiya Vidya Bhavan, pointed out that economic growth should be inclusive. The aim of the country should be holistic human development. Be it those in the industry, trade, or agriculture, the focus should be making the country strong.

Kuruvai cultivation underway

Farmers of Thuraiyur and Uppliyapuram blocks are busy taking up kuruvai paddy cultivation with optimum utilisation of available water.

Farmers of a number of villages including Erakudi, Pachaperumalpatti, Puliyancholai, Koppampati have started raising the ‘kuruvai’ crop this season.

M. Chandrasekaran (48) of Maruthai village said that he had raised the ‘kuruvai’ utilising the water available in the tank. He was confident of harvesting a good yield from his land. Most of the farmers have raised Co-51 variety.

According to Agriculture Department sources, about 968 hectares had been brought under ‘kuruvai’ crop in Uppilliyapuram and Thuraiyur blocks.

Many of the farmers in the area have also raised ‘navarai’ crop. Most farmers preferred Co-51 as the yield was about ten per cent over the ADT-43 variety, a usual crop raised by them. Another advantage of Co-51 was it was a non-lodging variety.

Agriculture Department officials said that about 4,880 hectares had been brought under kuruvai cultivation crop this season in the district, including 968 hectares in the Uppilliyapuram and Thuraiyur blocks.

The Agriculture Department was keeping a close monitoring of the cultivation practices being adopted by farmers in the district and guiding them properly for registering good yield, an official told The Hindu on Friday.

Solar power harnessed for value addition The Thottiyam Banana Growers’ Group has started using its solar dryer for producing value-added products of vegetables, horticultural crops and greens.

The company had installed the solar dryer originally for producing value-added banana products, particularly banana chocolates and banana powder.

The company now supplies dried tomato, coriander and bitter gourd and even exports some quantity. The process of drying helps lengthen the shelf life of the vegetables. “There has been a growing demand for the quality and value-added horticultural crops and we have been marketing the same to a number of foreign countries particularly Dubai and Gulf countries,” says Manikutti Subramanian, Managing Director of the Group.

Dheenadhayalan, working partner, said that what started on an experimental basis with banana has given a new dimension to the company. The company was marketing these products through an agent. “We do not have license or permit for exporting these products to foreign countries and we rely on the agent,” he said.

Mr. Manikutti Subramanian said that the solar drying of the horticultural crops is adopted when prices of vegetables are less. "For example, when the price of tomato is less, we make a bulk purchase of the produce and dry it,” he said. The dried produce is sold when the price appreciates.

“In fact a large number of hotel owners and restaurant managers rely on us to when prices of the vegetables shoots up,” he said.

Farmers urged to share water to protect groundnut crop

Civil Supplies Minister Paritala Sunita has appealed to farmers to come forward to share their water with other farmers to save the groundnut crop in the district.

Speaking to the media, she said already more than 69,000 farmers in the district had expressed their willingness to share water from their underground borewells and over- ground farm ponds with their neighbours paving the way for use of rain guns to draw water and give the groundnut crop a protective wetting.

Mrs. Sunita, who visited a farm near Raptadu village of the district, where a rain gun was being used, said that close to 3,507 rain guns were brought to the district to ensure that not a single acre of groundnut crop dried up due to hot weather.

“We are monitoring crop conditions using a software application. It has been identified that crop in close to 3,550 hectares is wilting due to heat and long dry spell. We have already given a protective wetting in 838 hectares using water from farm ponds," district Collector Kona Sasidhar told reporters. The remaining area would also be covered soon, the Collector added.

The Chief Minister had granted 4,606 rain guns to the district of which 3,507 have been brought and being used.

Free service

He assured all groundnut farmers that their crop would receive two protective wettings automatically if they were found wilting basing on the seniority of the date of sowing of each farmer. Farmers needn't pay anything, except when diesel is used.

‘State’s record in foodgrain output unprecedented’ Pegging foodgrain production in 2015-16 at 130.63 lakh tonnes, an unprecedented achievement, the State government has said it has ushered in an agricultural renaissance, overcoming several constraints in the agricultural sector.

According to the policy note tabled in the Assembly on Friday, the government’s efforts accelerated growth in agriculture production and the initiatives introduced by it have set in a definite path to usher in second green revolution in the State, surpassing 100 lakh tonnes of foodgrain production in 2011-12, 2013-14 and 2014-15. Needless to say, the fourth advance estimates for the foodgrain production during 2015-16 has been pegged at 130.63 lakh tonnes, which has never been achieved before, said R. Doraikannu, Agriculture Minister.

In the last five years, the State surpassed 100 lakh tonnes four times. For 2016-17, the State has set a target of 147.80 lakh tonnes. The vision was to double agriculture production and triple the farmers’ income, he said.

In the last five years, 11,880 villages were covered by the System of Rice Intensification (SRI) as a whole village concept and 27.20 lakh acres were brought under this technology, which helped it get a yield of 4,429 kg of paddy per hectare, he said, adding that this year 3,000 more villages were being covered by SRI. In the Budget Speech 2016-2017, it was announced that the Tamil Nadu Agricultural Produce (Regulation) Act 1987 will be amended for improving the marketing of agricultural produce. In order to implement National Agriculture Market, amendments are required in the existing Tamil Nadu Agricultural Marketing (Regulation) Act 1987 to include e-Trading, single point levy of market fee, unified single licence, private market, direct wholesale market, contract farming and a farmers consumer market.

For the promotion of NAM, 100 Regulated Markets are selected on the basis of commodity arrival for availing financial assistance for hardware. Assaying equipment under the central scheme for promotion of NAM through Agri-Tech Infrastructure Fund (ATIF) is under progress, the Minister said.

A special scheme for the establishment of supply chain management for fruits, vegetables and perishables in 10 districts at a cost of Rs.398.75 crore was being taken up. Administrative sanction had been obtained for the project and preliminary work initiated in all the districts, Mr. Doraikannu said.

‘Pipeline method’

In an attempt to reduce wastage of water during the irrigation of paddy, the State government would launch ‘pipeline method’ in over 61,640 acres on a pilot-basis at a cost of Rs. 1.58 crore. It would be implemented in Cuddalore district. Subsidy would be given to farmers to encourage high density mango cultivation on about 2,750 acres.

AAP levels graft charges against Maharashtra minister Arjun Khotkar

Aam Aadmi Party (AAP) on Wednesday alleged a Rs 525-crore scam in Jalna Agricultural Produce Market Committee (APMC) under the chairmanship of Maharashtra Minister Arjun Khotkar, who rejected the charge. Addressing a press conference here, AAP national spokesperson Preeti Sharma Menon accused the Shiv Sena leader of “looting” Jalna APMC and treating it like his fiefdom. As Chairman of the APMC since the last nine years, Khotkar ran the committee like his private empire and made huge profits illegally, she said and demanded his ouster from the Council of Ministers, where he was inducted last month. Menon alleged there was a scam of Rs 525 crore in the APMC, where ‘galas’ (shops) were sold, leased and sub-leased illegally. She said galas were sold with inflated price and alleged nepotism in their ownership.”Out of 1,500 galas, 250 are illegally owned by Khotkar’s 40 relatives and his business partners in the two markets of APMC.” “The real value of the galas comes to around Rs 600 crore, but only Rs 75 crore went to the APMC and the rest Rs 525 crore was pocketed by Khotkar and his cronies,” the AAP leader said. Menon said figures and information provided by her were based on replies received from authorities concerned in response to RTI applications filed by her. Showing a few purported sting operations to the media persons, she claimed the entire APMC market, where farm commodities were sold by traders, was riddled with corruption. She said, “flouting all rules, the galas are used to stock and sell non-agricultural items like steel, pipes, furniture, automobiles, textiles.” The APMC market in Purana Monda area, which is called Arjun Khotkar Business Centre (AKBC), boasts of a string of textile showrooms, the AAP leader said. Besides the financial scam, APMC also violated audit norms, she said.

Branded ragi in the offing

Hyderabad, August 19: The International Crops Research Institute for the Semi-Arid Tropics (Icrisat), Indian Institute of Millets Research (IIMR) and the Karnataka government will form a consortium along with other stakeholders to promote millets. The consortium will work on product development and build a brand for Karnataka ragi (finger millet).

“There is a need to change the image of millets. Make them more modern and create a buzz around them. Developing appropriate consumer products is a key component to achieve this. They are highly nutritious and have health benefits, use less water and have high drought tolerance and increasing their market value benefits farmers,” David Bergvinson, Director-General of Icrisat, has said.

At a workshop held here on Friday, representatives from these entities discussed the challenges that hindered consumption of millets in the country.

“Millets are good from multiple points of view. So far our efforts have focused on the supply side and there has been considerable success in increasing yields and more resilient varieties. But I feel the demand side has hardly been touched at all, said Krishna Byre Gowda, Karnataka Minister for Agriculture.

ICRISAT, IIMR, Karnataka govt to promote millets

HYDERABAD, AUG 20: The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT), Indian Institute of Millets Research (IIMR) and the Karnataka Government will form a consortium along with other stakeholders to promote millets.

The consortium will work on product development and build a brand for Karnataka ragi (finger millet).

At a workshop held here on Friday, representatives from these entities discussed the challenges that hindered the consumption of millets in the country. They felt that consumers did not view millets as a modern product.

“Awareness of health benefits is limited to niche markets. Lack of grading and standards of millets too is a challenge,” the stakeholders felt.

Millets suit well for the rain-fed areas and can withstand temperatures as high as 64 °C. The short-duration crop (60 days) consumes much less water than long duration crop such as wheat. For one, finger millet and pearl millet would require just 350 mm of water, sugarcane requires 2,100 mm and rice 1,250 mm. The stakeholders agreed to work on an action plan that would include forming a public private consortium of partners. A more detailed road map will be planned over the next few months.

“Millets are good from multiple points of view. So far, our efforts have focused on the supply side and there has been considerable success in increasing yields and more resilient varieties. But I feel the demand side has hardly been touched at all,’’ Krishna Byre Gowda, Karnataka Minister for Agriculture, told reporters after the meeting.

“There are many reasons why millets are not a regular product in the consumer basket. One of the reasons is the fact that not many processing technologies have been developed yet,” B Dayakar Rao, Principal Scientist at IIMR, said.

Soya, maize, redgram cut into Telangana’s cotton area

Hyderabad, August 19: Acreage of pulses and coarse grains have gained significantly in Telangana in the ongoing kharif season, while that of the main crops — paddy and cotton — have suffered.

The area under coarse grains (ragi, jowar, maize) has gone up to 6.21 lakh hectares (lh) as against the season normal of 5.58 lh.

Pulses emerge winner

The area under pulses too has gone up to 6 lh from the season normal of 4 lh.

The area under redgram, soyabean and maize has gone up significantly as farmers have begun to look at alternatives to cotton. The redgram area almost doubled to 4 lh from the as-on-date average of 2.29 lh.

The State grows the pulse crop on 2.60 lh on an average in the season. The greengram area went up to 1.50 lh from the season average area of 1 lh.

The maize area went up to 5.63 lakh hectares from the season average area of 4.91 lh. The soya area has breached the 3-lakh-hectares mark against the average area of 2 lh.

“There is still scope for more sowing in pulses and coarse grains. We expect a dip in the cotton area. It might end up a shade lower than season normal of 17 lh,” an official of the Agriculture Department has said.

Cotton area wilts The cotton area in Telangana, one of the top cotton growing States, generally overshoots the average area.

But this year, the government has begun a campaign well before the season, asking the farmers to go slow on cotton and go to soyabean and maize instead.

The government said cotton prices could fall this year in international market and could impact the prospects of farmers here.

Despite good spread of rains after a gap of 3-4 years, farmers sowed cotton only on 12.10 lh as on August 17.

They would have covered 15.22 lh by now.

“The reduction in area is a result of the government advisory,” the official claimed.

Kharif sowing continues to be robust on favourable monsoon

New Delhi, August 19: Good monsoon rains so far this year has ensured that kharif sowing not just surpassed last year’s average by a considerable margin but may reach last five years’ average ‘normal area’ before the end of the month.

Total acreage of kharif crops till August 19 touched 992.76 lakh hectares (lh), which is 5.77 per cent higher than 938.57 lh in the comparablew period last year, according to data released by the Agriculture Ministry on Friday. Sowing in the kharif season this year has already reached 93.43 per cent of the normal area of 1062.50 lakh hectares (average of the total area sown in the last five kharif seasons).

“Sowing has been healthy with acreage under most crops, led by pulses, showing an increase. We expect the normal sowing area to be reached by the end of the month,” an official in the Agriculture Ministry told BusinessLine .

Since the monsoon arrived more than a week late this June, sowing is expected to continue in the beginning of September as well, the official added.

While planting of rice, pulses, coarse cereals and oilseed has increased this year compared to last kharif, sowing of cash crops such as cotton, sugarcane and jute have declined.

The 38.43 per cent increase in pulses acreage to 136.04 lh is largely attributed to the increase in prices, while cotton acreage is down 12.45 per cent to 101.54 lakh hectares due to incidences of white-fly attack.

The sowing figures have been compiled by the Agriculture Ministry based on data supplied by States.

The favourable South-West monsoon this year promising a good crop comes after two subsequent years of drought.

Villgro funds agri start-up GRoboMac

Chennai, August 19: Villgro, which incubates and invests in social enterprises, has made a seed investment in agri start-up Green Robot Machinery Pvt Ltd (GRoboMac), which is developing a robot to pick cotton.

GRoboMac’s product is in the development stage and Manohar Sambandam, Founding Partner and CEO, hopes to give one out for field testing in March 2017 and have a product for sale six months after that.

He told BusinessLine that the proof-of-concept model of the robot, which will detect, locate and pick the cotton pods, was ready in April 2014. He has been working on building the product, integrating 3D vision capabilities to detect and locate the cotton and robotic arms to pick the cotton pods. GRoboMac’s products will be targeted at large farmers or those companies that are into Farming as a Service (FaaS), for them to buy and rent it out to smaller cotton farmers who will not be able to afford to buy a machine for use in their fields.

A physics graduate from Madras Christian College, Chennai, and an engineering graduate from Indian Institute of Science, Bengaluru, Sambandam had a long career in the semi-conductor industry.

He said he had decided to quit his job when he turned 50, which he did. “I was not sure what I was going to do,” he said. About eight years ago, he bought about 12.5 acres in Nannilam in Tiruvarur district of Tamil Nadu, where he grew cotton. That was when he realised that it was difficult to get workers to pick the cotton pods, giving him the idea to solve this problem for cotton growers in the country.

According to a press release from Villgro, GRoboMac will not only get seed funding from Villgro, but will also be incubated and mentored by senior advisors.

Sambandam, now 53 years old, founded GRoboMac in 2014. The venture had won a competition conducted by Qualcomm in April 2016, under which it got $10,000 as prize money.

According to the Villgro release, GRoboMac represents the kind of enterprise that it is excited about — an entrepreneur with an understanding of the sector and one who is committed to creating an impact.

The release said the agricultural start-up space has been seeing more entrants who are trying to address problems faced by small and marginal farmers. Another company incubated by Villgro, Flybird Innovations, recently received funding from a group of investors and incubators. Flybird is developing an affordable, smart irrigation-controller to help small farmers micro-irrigate their crops.

Villgro, the release said, has been working with partners such as Rianta Capital’s Artha Initiative to bring more investment and incubation support to social enterprises. Villgro, Artha Venture Challenge and a-IDEA of NAARM-TBI are collaborating to co-incubate and co-invest in agri-enterprises that can be scaled up and be of benefit to small and marginal farmers.

Skymet lowers monsoon forecast to 'normal'

Private weather forecasting agency Skymet has lowered its 2016 southwest monsoon forecast to 100 per cent of the Long Period Average (LPA), which is ‘normal’, down from its April forecast of 105 per cent of the LPA.

Both forecasts were with a model error of plus or minus four per cent. Skymet said the forecast was revised downward as August has been drier than expected. Rain this month is expected to be around 92 per cent of the LPA, against the earlier forecast of it being 108 per cent. The LPA for August is 261 millimetres (26.1 cm).

However, this isn’t expected to impact the kharif harvest, as crop sowing is almost complete and residual moisture in the soil is adequate.

Skymet said September would be much better and “we expect it to end at 111 per cent of the LPA”.

The agency came into the reckoning after it correctly predicted the 2009 drought, the worst in three decades. However, it went woefully wrong last year when it forecast a ‘normal’ monsoon, while the country suffered a second year of drought.

This year, it had predicted the four-month season would see enough rain to be 105 per cent of the LPA. The LPA for the full-year is the average rain over 1951 to 2001, estimated to be 887 mm. Skymet said the monsoon started on a slow note in June and picked up a strong pace in July, among the best in the past decade. Rain in August also started on a bright pace and the cumulative countrywide rain reached 103 per cent in the first week and maintained the surplus status till August 12. After which, these have considerably reduced along the west coast and peninsular India. As of Thursday, as mentioned earlier, the cumulative countrywide monsoon rain was 100 per cent of the LPA.