Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 150
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Code Context


        trigger_error($message, E_USER_DEPRECATED);

    }
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 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php.'
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deprecationWarning - CORE/src/Core/functions.php, line 311
Cake\Http\ServerRequest::offsetGet() - CORE/src/Http/ServerRequest.php, line 2421
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Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Http\Runner::run() - CORE/src/Http/Runner.php, line 51
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Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 151
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Code Context


        trigger_error($message, E_USER_DEPRECATED);

    }
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 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php.'
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deprecationWarning - CORE/src/Core/functions.php, line 311
Cake\Http\ServerRequest::offsetGet() - CORE/src/Http/ServerRequest.php, line 2421
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Cake\Controller\Controller::invokeAction() - CORE/src/Controller/Controller.php, line 610
Cake\Http\ActionDispatcher::_invoke() - CORE/src/Http/ActionDispatcher.php, line 120
Cake\Http\ActionDispatcher::dispatch() - CORE/src/Http/ActionDispatcher.php, line 94
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Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
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Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Error\Middleware\ErrorHandlerMiddleware::__invoke() - CORE/src/Error/Middleware/ErrorHandlerMiddleware.php, line 96
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Http\Runner::run() - CORE/src/Http/Runner.php, line 51
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Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Code Context
            if (Configure::read('debug')) {

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        LATEST NEWS UPDATES | Getting India’s agri support maths wrong -Tejinder Narang    </title>
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-The Financial Express


The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%


In a report titled &quot;India's Agricultural Exports Climbs To Record High&quot; (click here to access), the US Department..."/>
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-The Financial Express


The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%


In a report titled &quot;India's Agricultural Exports Climbs To Record High&quot; (click here to access), the US Department..." />
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                            <div align="justify">-The Financial Express</div><p align="justify"><em>The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%</em></p><p align="justify">In a report titled &quot;India's Agricultural Exports Climbs To Record High&quot; (<a href="http://www.fas.usda.gov/data/india-s-agricultural-exports-climb-record-high" title="http://www.fas.usda.gov/data/india-s-agricultural-exports-climb-record-high">click here</a> to access), the US Department of Agriculture (USDA) speaks of a steep ascent in Indian agro exports-from $5 billion in 2003 to $39 billion in 2013. This may be flattering, but the facts and figures cited by the USDA are debatable while its conclusions are less than credible. </p><p align="justify"><img src="https://im4change.in/siteadmin/tinymce/uploaded/Trade.png" alt="Trade" width="450" height="158" /> </p><p align="justify">It states that &quot;one of the drivers behind India's export growth has been the dramatic growth in government support provided to agriculture, particularly for wheat and rice&quot;. The truth is that during 2003 to 2011, government support-through Food Corporation of India (FCI)-was highly erratic, as the accompanying figure shows.</p><p align="justify">In 2003-05, FCI exported 3 million tonnes (mt) of non-basmati rice and about 8 mt of wheat. Thereafter, FCI withdrew from exports. In the next two years-2005-07-all basmati (aromatic) and non-basmati rice exports originated from private holdings. In 2006-08, FCI &quot;imported&quot; 7.2 mt of wheat. Effective from October 2007, the government prohibited non-basmati rice and wheat shipments on a pan-India basis though basmati deliveries continued.</p><p align="justify">From September 2011, wheat and non- basmati rice exports were revived unconditionally. It is grossly erroneous to label such go-stop-go policy interventions between 2003 and 2011 as government &quot;support&quot;.</p><p align="justify">The upsurge in rice exports after 2011 is attributable to India-Iran rupee payment agreement; higher yield per hectare of hybrid varieties; India's virtual monopoly in basmati exports; Thailand over-pricing its paddy procurement; China's rice import form Vietnam leading to firming up of prices and other factors. An &quot;arm's-length approach&quot; is the only support accorded by the government in the rise in rice exports.</p><p align="justify">The USDA believes that the higher MSP in the last six years for rice (increased by 75%) and wheat (raised by 40%) led to higher procurement and the subsequent releases of stocked grains in the domestic market caused the prices to fall &quot;making Indian supplies more competitive&quot;. On the contrary, higher government purchases led to inflationary pressures in the domestic market, making exports non-competitive. More important, rice was never released or auctioned in the domestic market but supplied only to targeted beneficiaries under the public distribution system.</p><p align="justify">The USDA's tabulation of data to arrive at $85 billion as the Indian government's support to agriculture is questionable. It covers capital and revenue expenditure on rural development (roads, drainages, etc); major and minor irrigation; agro research; financial institutions' support; export promotion boards; soil and water conservation; forestry/wild life/animal husbandry, etc. These add up to an &quot;extra&quot; $47 billion and do not constitute subsidies to farmers or traders by any stretch of imagination!</p><p align="justify">If the intention is to allege trade distortion by India through subsidies, then the USDA should have also included the &quot;establishment cost&quot; of India's meteorological departments for weather reporting, the ministries of food, agriculture, commerce, finance, customs, all state governments' departments of food and civil supplies corporations. There is no end to such wild collation of data to justify a pre-conceived hypothesis.</p><p align="justify">Reasonable calculations of support can include funding for FCI, fertiliser, power and state bonuses. This amounts to $38 billion (or R2.2 lakh crore)-about 13% of the agro GDP of $284 billion and certainly not 29% projected by the USDA.</p><p align="justify">The USDA incorrectly holds that wheat exports by the government are &quot;at prices below acquisition and transport costs&quot;. The government (FCI) action on wheat was from 2012 onwards only. Both, the government and the private sector, are competing for contracts. In 2012-13, wheat shipments were about 6.5 mt-of which 3.5 mt was from the open market and the rest from FCI. The average fob realisation in 2012-13 was $310/mt.</p><p align="justify">Acquisition cost of FCI includes local taxes while grains are purchased at MSP. The existing government policy is that taxes are not exportable. Local taxes are reimbursed to private exporters also. FCI cannot burden exports with local taxes too. Taking 2012-13 MSP/mt of R12,850 and the shortest route as per railway freight calculator, from Indore (Madhya Pradesh) to Kandla port (Gandhidham station) of R990/mt along with port handling of R500/mt, the total cost works out to R4,340/mt. At dollar-to-rupee conversion rate of R54.40 (from 2012-13), the export price is $264/mt fob, while FCI realised about $310/mt fob. The USDA has again erred. Private trade, too, could make wheat shipments at prices discovered through FCI/PSUs tenders when overseas market were at a peak and not when values had bottomed out, as is the case now.</p><p align="justify">The export of cotton, soyameal, guargum, corn, buffalo meat and &quot;other products&quot; like tea, coffee, spices are completely market-driven and pushed by the private sector players. Currently, there is a sharp decline in wheat, corn, soyameal, cotton, sugar export. Had there been any effective government support, the situation could have been very different.</p><p align="justify">Brazil exports of about 20 mt corn, 29 mt sugar, 38 mt soyabean, 15 mt of soyameal while India exports 4 mt of corn, 1.5-2 mt sugar, no soyabean and 4 mt soyameal. India's lead in percentage growth projected by the USDA gives a distorted picture when compared in absolute terms. Therefore, its report definitely needs substantial correction in selecting relevant data, its tabulation and conclusions.</p><p align="justify">&nbsp;</p><p align="justify"><em>The author is a grains trade analyst</em></p>                                                           
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    <br><a href="http://www.financialexpress.com/news/column-getting-india-s-agri-support-maths-wrong/1289142/0" class="re" target="_blank">The Financial Express, 15 September, 2014, http://www.financialexpress.com/news/column-getting-india-s-agri-support-maths-wrong/1289142/0</a><div class="clear"></div>
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        LATEST NEWS UPDATES | Getting India’s agri support maths wrong -Tejinder Narang    </title>
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-The Financial Express


The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%


In a report titled &quot;India's Agricultural Exports Climbs To Record High&quot; (click here to access), the US Department..."/>
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-The Financial Express


The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%


In a report titled &quot;India's Agricultural Exports Climbs To Record High&quot; (click here to access), the US Department..." />
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    <h1 class="cat-box-title">Getting India’s agri support maths wrong -Tejinder Narang</h1>
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                            <div align="justify">-The Financial Express</div><p align="justify"><em>The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%</em></p><p align="justify">In a report titled &quot;India's Agricultural Exports Climbs To Record High&quot; (<a href="http://www.fas.usda.gov/data/india-s-agricultural-exports-climb-record-high" title="http://www.fas.usda.gov/data/india-s-agricultural-exports-climb-record-high">click here</a> to access), the US Department of Agriculture (USDA) speaks of a steep ascent in Indian agro exports-from $5 billion in 2003 to $39 billion in 2013. This may be flattering, but the facts and figures cited by the USDA are debatable while its conclusions are less than credible. </p><p align="justify"><img src="https://im4change.in/siteadmin/tinymce/uploaded/Trade.png" alt="Trade" width="450" height="158" /> </p><p align="justify">It states that &quot;one of the drivers behind India's export growth has been the dramatic growth in government support provided to agriculture, particularly for wheat and rice&quot;. The truth is that during 2003 to 2011, government support-through Food Corporation of India (FCI)-was highly erratic, as the accompanying figure shows.</p><p align="justify">In 2003-05, FCI exported 3 million tonnes (mt) of non-basmati rice and about 8 mt of wheat. Thereafter, FCI withdrew from exports. In the next two years-2005-07-all basmati (aromatic) and non-basmati rice exports originated from private holdings. In 2006-08, FCI &quot;imported&quot; 7.2 mt of wheat. Effective from October 2007, the government prohibited non-basmati rice and wheat shipments on a pan-India basis though basmati deliveries continued.</p><p align="justify">From September 2011, wheat and non- basmati rice exports were revived unconditionally. It is grossly erroneous to label such go-stop-go policy interventions between 2003 and 2011 as government &quot;support&quot;.</p><p align="justify">The upsurge in rice exports after 2011 is attributable to India-Iran rupee payment agreement; higher yield per hectare of hybrid varieties; India's virtual monopoly in basmati exports; Thailand over-pricing its paddy procurement; China's rice import form Vietnam leading to firming up of prices and other factors. An &quot;arm's-length approach&quot; is the only support accorded by the government in the rise in rice exports.</p><p align="justify">The USDA believes that the higher MSP in the last six years for rice (increased by 75%) and wheat (raised by 40%) led to higher procurement and the subsequent releases of stocked grains in the domestic market caused the prices to fall &quot;making Indian supplies more competitive&quot;. On the contrary, higher government purchases led to inflationary pressures in the domestic market, making exports non-competitive. More important, rice was never released or auctioned in the domestic market but supplied only to targeted beneficiaries under the public distribution system.</p><p align="justify">The USDA's tabulation of data to arrive at $85 billion as the Indian government's support to agriculture is questionable. It covers capital and revenue expenditure on rural development (roads, drainages, etc); major and minor irrigation; agro research; financial institutions' support; export promotion boards; soil and water conservation; forestry/wild life/animal husbandry, etc. These add up to an &quot;extra&quot; $47 billion and do not constitute subsidies to farmers or traders by any stretch of imagination!</p><p align="justify">If the intention is to allege trade distortion by India through subsidies, then the USDA should have also included the &quot;establishment cost&quot; of India's meteorological departments for weather reporting, the ministries of food, agriculture, commerce, finance, customs, all state governments' departments of food and civil supplies corporations. There is no end to such wild collation of data to justify a pre-conceived hypothesis.</p><p align="justify">Reasonable calculations of support can include funding for FCI, fertiliser, power and state bonuses. This amounts to $38 billion (or R2.2 lakh crore)-about 13% of the agro GDP of $284 billion and certainly not 29% projected by the USDA.</p><p align="justify">The USDA incorrectly holds that wheat exports by the government are &quot;at prices below acquisition and transport costs&quot;. The government (FCI) action on wheat was from 2012 onwards only. Both, the government and the private sector, are competing for contracts. In 2012-13, wheat shipments were about 6.5 mt-of which 3.5 mt was from the open market and the rest from FCI. The average fob realisation in 2012-13 was $310/mt.</p><p align="justify">Acquisition cost of FCI includes local taxes while grains are purchased at MSP. The existing government policy is that taxes are not exportable. Local taxes are reimbursed to private exporters also. FCI cannot burden exports with local taxes too. Taking 2012-13 MSP/mt of R12,850 and the shortest route as per railway freight calculator, from Indore (Madhya Pradesh) to Kandla port (Gandhidham station) of R990/mt along with port handling of R500/mt, the total cost works out to R4,340/mt. At dollar-to-rupee conversion rate of R54.40 (from 2012-13), the export price is $264/mt fob, while FCI realised about $310/mt fob. The USDA has again erred. Private trade, too, could make wheat shipments at prices discovered through FCI/PSUs tenders when overseas market were at a peak and not when values had bottomed out, as is the case now.</p><p align="justify">The export of cotton, soyameal, guargum, corn, buffalo meat and &quot;other products&quot; like tea, coffee, spices are completely market-driven and pushed by the private sector players. Currently, there is a sharp decline in wheat, corn, soyameal, cotton, sugar export. Had there been any effective government support, the situation could have been very different.</p><p align="justify">Brazil exports of about 20 mt corn, 29 mt sugar, 38 mt soyabean, 15 mt of soyameal while India exports 4 mt of corn, 1.5-2 mt sugar, no soyabean and 4 mt soyameal. India's lead in percentage growth projected by the USDA gives a distorted picture when compared in absolute terms. Therefore, its report definitely needs substantial correction in selecting relevant data, its tabulation and conclusions.</p><p align="justify">&nbsp;</p><p align="justify"><em>The author is a grains trade analyst</em></p>                                                           
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    <br><a href="http://www.financialexpress.com/news/column-getting-india-s-agri-support-maths-wrong/1289142/0" class="re" target="_blank">The Financial Express, 15 September, 2014, http://www.financialexpress.com/news/column-getting-india-s-agri-support-maths-wrong/1289142/0</a><div class="clear"></div>
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        LATEST NEWS UPDATES | Getting India’s agri support maths wrong -Tejinder Narang    </title>
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-The Financial Express


The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%


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-The Financial Express


The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%


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                            <div align="justify">-The Financial Express</div><p align="justify"><em>The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13%</em></p><p align="justify">In a report titled &quot;India's Agricultural Exports Climbs To Record High&quot; (<a href="http://www.fas.usda.gov/data/india-s-agricultural-exports-climb-record-high" title="http://www.fas.usda.gov/data/india-s-agricultural-exports-climb-record-high">click here</a> to access), the US Department of Agriculture (USDA) speaks of a steep ascent in Indian agro exports-from $5 billion in 2003 to $39 billion in 2013. This may be flattering, but the facts and figures cited by the USDA are debatable while its conclusions are less than credible. </p><p align="justify"><img src="https://im4change.in/siteadmin/tinymce/uploaded/Trade.png" alt="Trade" width="450" height="158" /> </p><p align="justify">It states that &quot;one of the drivers behind India's export growth has been the dramatic growth in government support provided to agriculture, particularly for wheat and rice&quot;. The truth is that during 2003 to 2011, government support-through Food Corporation of India (FCI)-was highly erratic, as the accompanying figure shows.</p><p align="justify">In 2003-05, FCI exported 3 million tonnes (mt) of non-basmati rice and about 8 mt of wheat. Thereafter, FCI withdrew from exports. In the next two years-2005-07-all basmati (aromatic) and non-basmati rice exports originated from private holdings. In 2006-08, FCI &quot;imported&quot; 7.2 mt of wheat. Effective from October 2007, the government prohibited non-basmati rice and wheat shipments on a pan-India basis though basmati deliveries continued.</p><p align="justify">From September 2011, wheat and non- basmati rice exports were revived unconditionally. It is grossly erroneous to label such go-stop-go policy interventions between 2003 and 2011 as government &quot;support&quot;.</p><p align="justify">The upsurge in rice exports after 2011 is attributable to India-Iran rupee payment agreement; higher yield per hectare of hybrid varieties; India's virtual monopoly in basmati exports; Thailand over-pricing its paddy procurement; China's rice import form Vietnam leading to firming up of prices and other factors. An &quot;arm's-length approach&quot; is the only support accorded by the government in the rise in rice exports.</p><p align="justify">The USDA believes that the higher MSP in the last six years for rice (increased by 75%) and wheat (raised by 40%) led to higher procurement and the subsequent releases of stocked grains in the domestic market caused the prices to fall &quot;making Indian supplies more competitive&quot;. On the contrary, higher government purchases led to inflationary pressures in the domestic market, making exports non-competitive. More important, rice was never released or auctioned in the domestic market but supplied only to targeted beneficiaries under the public distribution system.</p><p align="justify">The USDA's tabulation of data to arrive at $85 billion as the Indian government's support to agriculture is questionable. It covers capital and revenue expenditure on rural development (roads, drainages, etc); major and minor irrigation; agro research; financial institutions' support; export promotion boards; soil and water conservation; forestry/wild life/animal husbandry, etc. These add up to an &quot;extra&quot; $47 billion and do not constitute subsidies to farmers or traders by any stretch of imagination!</p><p align="justify">If the intention is to allege trade distortion by India through subsidies, then the USDA should have also included the &quot;establishment cost&quot; of India's meteorological departments for weather reporting, the ministries of food, agriculture, commerce, finance, customs, all state governments' departments of food and civil supplies corporations. There is no end to such wild collation of data to justify a pre-conceived hypothesis.</p><p align="justify">Reasonable calculations of support can include funding for FCI, fertiliser, power and state bonuses. This amounts to $38 billion (or R2.2 lakh crore)-about 13% of the agro GDP of $284 billion and certainly not 29% projected by the USDA.</p><p align="justify">The USDA incorrectly holds that wheat exports by the government are &quot;at prices below acquisition and transport costs&quot;. The government (FCI) action on wheat was from 2012 onwards only. Both, the government and the private sector, are competing for contracts. In 2012-13, wheat shipments were about 6.5 mt-of which 3.5 mt was from the open market and the rest from FCI. The average fob realisation in 2012-13 was $310/mt.</p><p align="justify">Acquisition cost of FCI includes local taxes while grains are purchased at MSP. The existing government policy is that taxes are not exportable. Local taxes are reimbursed to private exporters also. FCI cannot burden exports with local taxes too. Taking 2012-13 MSP/mt of R12,850 and the shortest route as per railway freight calculator, from Indore (Madhya Pradesh) to Kandla port (Gandhidham station) of R990/mt along with port handling of R500/mt, the total cost works out to R4,340/mt. At dollar-to-rupee conversion rate of R54.40 (from 2012-13), the export price is $264/mt fob, while FCI realised about $310/mt fob. The USDA has again erred. Private trade, too, could make wheat shipments at prices discovered through FCI/PSUs tenders when overseas market were at a peak and not when values had bottomed out, as is the case now.</p><p align="justify">The export of cotton, soyameal, guargum, corn, buffalo meat and &quot;other products&quot; like tea, coffee, spices are completely market-driven and pushed by the private sector players. Currently, there is a sharp decline in wheat, corn, soyameal, cotton, sugar export. Had there been any effective government support, the situation could have been very different.</p><p align="justify">Brazil exports of about 20 mt corn, 29 mt sugar, 38 mt soyabean, 15 mt of soyameal while India exports 4 mt of corn, 1.5-2 mt sugar, no soyabean and 4 mt soyameal. India's lead in percentage growth projected by the USDA gives a distorted picture when compared in absolute terms. Therefore, its report definitely needs substantial correction in selecting relevant data, its tabulation and conclusions.</p><p align="justify">&nbsp;</p><p align="justify"><em>The author is a grains trade analyst</em></p>                                                           
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    <br><a href="http://www.financialexpress.com/news/column-getting-india-s-agri-support-maths-wrong/1289142/0" class="re" target="_blank">The Financial Express, 15 September, 2014, http://www.financialexpress.com/news/column-getting-india-s-agri-support-maths-wrong/1289142/0</a><div class="clear"></div>
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Home हिन्दी

Getting India’s agri support maths wrong -Tejinder Narang

Published on Sep 16, 2014   Modified on Sep 16, 2014

-The Financial Express The USDA projection of 29% of agri GDP is faulty as it counts rural development expenditure also, it is only 13% In a report titled "India's Agricultural Exports Climbs To Record High" (click here to access), the US Department of Agriculture (USDA) speaks of a steep ascent in Indian agro exports-from $5 billion in 2003 to $39 billion in 2013. This may be flattering, but the facts and figures cited by the USDA are debatable while its conclusions are less than credible. It states that "one of the drivers behind India's export growth has been the dramatic growth in government support provided to agriculture, particularly for wheat and rice". The truth is that during 2003 to 2011, government support-through Food Corporation of India (FCI)-was highly erratic, as the accompanying figure shows. In 2003-05, FCI exported 3 million tonnes (mt) of non-basmati rice and about 8 mt of wheat. Thereafter, FCI withdrew from exports. In the next two years-2005-07-all basmati (aromatic) and non-basmati rice exports originated from private holdings. In 2006-08, FCI "imported" 7.2 mt of wheat. Effective from October 2007, the government prohibited non-basmati rice and wheat shipments on a pan-India basis though basmati deliveries continued. From September 2011, wheat and non- basmati rice exports were revived unconditionally. It is grossly erroneous to label such go-stop-go policy interventions between 2003 and 2011 as government "support". The upsurge in rice exports after 2011 is attributable to India-Iran rupee payment agreement; higher yield per hectare of hybrid varieties; India's virtual monopoly in basmati exports; Thailand over-pricing its paddy procurement; China's rice import form Vietnam leading to firming up of prices and other factors. An "arm's-length approach" is the only support accorded by the government in the rise in rice exports. The USDA believes that the higher MSP in the last six years for rice (increased by 75%) and wheat (raised by 40%) led to higher procurement and the subsequent releases of stocked grains in the domestic market caused the prices to fall "making Indian supplies more competitive". On the contrary, higher government purchases led to inflationary pressures in the domestic market, making exports non-competitive. More important, rice was never released or auctioned in the domestic market but supplied only to targeted beneficiaries under the public distribution system. The USDA's tabulation of data to arrive at $85 billion as the Indian government's support to agriculture is questionable. It covers capital and revenue expenditure on rural development (roads, drainages, etc); major and minor irrigation; agro research; financial institutions' support; export promotion boards; soil and water conservation; forestry/wild life/animal husbandry, etc. These add up to an "extra" $47 billion and do not constitute subsidies to farmers or traders by any stretch of imagination! If the intention is to allege trade distortion by India through subsidies, then the USDA should have also included the "establishment cost" of India's meteorological departments for weather reporting, the ministries of food, agriculture, commerce, finance, customs, all state governments' departments of food and civil supplies corporations. There is no end to such wild collation of data to justify a pre-conceived hypothesis. Reasonable calculations of support can include funding for FCI, fertiliser, power and state bonuses. This amounts to $38 billion (or R2.2 lakh crore)-about 13% of the agro GDP of $284 billion and certainly not 29% projected by the USDA. The USDA incorrectly holds that wheat exports by the government are "at prices below acquisition and transport costs". The government (FCI) action on wheat was from 2012 onwards only. Both, the government and the private sector, are competing for contracts. In 2012-13, wheat shipments were about 6.5 mt-of which 3.5 mt was from the open market and the rest from FCI. The average fob realisation in 2012-13 was $310/mt. Acquisition cost of FCI includes local taxes while grains are purchased at MSP. The existing government policy is that taxes are not exportable. Local taxes are reimbursed to private exporters also. FCI cannot burden exports with local taxes too. Taking 2012-13 MSP/mt of R12,850 and the shortest route as per railway freight calculator, from Indore (Madhya Pradesh) to Kandla port (Gandhidham station) of R990/mt along with port handling of R500/mt, the total cost works out to R4,340/mt. At dollar-to-rupee conversion rate of R54.40 (from 2012-13), the export price is $264/mt fob, while FCI realised about $310/mt fob. The USDA has again erred. Private trade, too, could make wheat shipments at prices discovered through FCI/PSUs tenders when overseas market were at a peak and not when values had bottomed out, as is the case now. The export of cotton, soyameal, guargum, corn, buffalo meat and "other products" like tea, coffee, spices are completely market-driven and pushed by the private sector players. Currently, there is a sharp decline in wheat, corn, soyameal, cotton, sugar export. Had there been any effective government support, the situation could have been very different. Brazil exports of about 20 mt corn, 29 mt sugar, 38 mt soyabean, 15 mt of soyameal while India exports 4 mt of corn, 1.5-2 mt sugar, no soyabean and 4 mt soyameal. India's lead in percentage growth projected by the USDA gives a distorted picture when compared in absolute terms. Therefore, its report definitely needs substantial correction in selecting relevant data, its tabulation and conclusions.   The author is a grains trade analyst

The Financial Express, 15 September, 2014, http://www.financialexpress.com/news/column-getting-india-s-agri-support-maths-wrong/1289142/0

Tagged with: Agriculture farming Trade

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