Wednesday, 10 July 2019

MSP help for 2% of Agri produce in India.

e National Agricultural Market(eNAM) and it played the role in marketing of farmers produce in India

As per the Dalwai Committee Report 2017-18 (Volume IV), there are close to 29,547 marketing points. Of these, 22% or 6,615, are regulated markets under the APMC and 22,932 are regional periodical markets (RPMs). On an average, a farmer gets a regulated market in the radius of about 12 km and a RPM in a radius of about 7 kms. Out of these 6,615 markets, the NAM scheme aimed to bring 585 markets (i.e. 9%) on its e-market platform by the end of financial year 2017-18. Quite commendably, as on March 2018, all targeted mandis, i.e., 585 that are in 16 states and 2 UTs, (Chandigarh and Puducherry), have been integrated with the NAM-platform.

But, these 585 mandis brought only 90.5 lakh farmers onto the platform, which is less than 7% of the 14 crore Indian farmers. Close to 17 MMTs of quantity worth Rs 42,265 crore (cumulative since platform’s inception), is reported to have been traded on the platform. But, this value is only about 2% of India’s total value of agricultural output.
Salute to the Government for helping farmers for giving MSP to 2% of Agricultural produce of India.

Monday, 15 April 2019

Comments on article "Bold promises to reform agri-markets missing from BJP, Congress manifestoes"

By: Ashok Gulati | Published: April 15, 2019 4:46 AM

If India achieves a 4-5% growth in agri-GDP on a sustainable basis, it would need to export aggressively lest it creates a glut at home, adversely affecting farmers’ incomes.

Bold promises to reform agri-markets was what was expected from parties’ manifestoes, and while the Congress’s plans lack a fiscal roadmap, theBJP’s is silent altogether.

By Ashok Gulati & Ritika Juneja
The festival of democracy started with the first phase of polling on April 11, 2019. Ideally, it should be celebrated like Holi, forgetting past enmity and embracing each other with love. But, unfortunately, it is being fought like a battle of Kurukshetra in the Mahabharata epic. All weapons of politics—saam, daam, dand, bhed—are being used. Saam reaches for accord with other parties, daam uses money power to buy votes, dand uses CBI to raid camps of opponents, and bhed divides voters on caste/ religious lines. Voters are in a quandary as political parties are promising the moon in their manifestoes. Voters know most of these promises will be forgotten once the elections are over. Yet, one must look at these, since they reflect the best of their intentions. We examine some of these with respect to farmers and the poor, normally agri-labourers. Given that the full list is like a laundry list, we focus only on the big ticket promises.

BJP’s Sankalp Patra (manifesto) promises to double farmers’ income by 2022-23, a reiteration of its promise made in 2016. Under that heading, it lists 29 promises/schemes. The most notable one is the PM Kisan (Pradhan Mantri Kisan Samman Nidhi Yojana), which will be extended to all farm families. It promises to give each farm family Rs 6,000 per year. With an estimated 14.6 crore farm families as per the 2015-16 survey, this would cost about Rs 87,600 crore per annum. This may be the largest direct income support (DIS) scheme by the government of India (GoI). But, as the NABARD survey on financial inclusion showed, average farmer household income was Rs 8,931 per month in 2015-16, which by now must have crossed Rs 10,000 per month (or Rs 120,000 per annum) in nominal terms, after adjusting for inflation. So, a support of Rs 6,000 per year is a meagre 5% support. Doubling of farmers’ income surely requires much more than this DIS.
The Dalwai Committee set up by the Modi government in 2016 had made it clear that the promise to double farmers’ income was made in real terms with the base year of 2015-16. It calculated that it would need 10.4% growth per annum in real terms from 2016-17 to 2022-23 to double farmers’ real incomes. The past record of growth in real incomes of farmers during 2002-03 to 2015-16 shows that they increased at 3.7% per annum, and this growth follows the growth in agri-GDP very closely. Modi’s government’s five-year record of agri-GDP is pretty low at 2.9% per annum. This means that for the remaining 4 years, the growth in farmers’ real incomes has to be almost 15% per annum. This is next to impossible given the existing set of policies. No wonder the Congress party calls it a Modi government’s jumla.
We feel that if India achieves a 4-5% growth in agri-GDP on a sustainable basis, it would need to export aggressively lest it creates a glut at home which will then adversely impact farmers’ incomes. But the Modi government’s record on agri-exports is most pathetic. From a peak of about $43 billion in agri-exports in 2013-14 that it inherited from UPA-2, till date, its exports have remained below that peak, meaning a negative growth through the five years of the Modi government. This is one major reason behind farm distress.
What one was expecting from the main political parties was bold promises to reform agri-markets. But the BJP manifesto is quite silent on this. In that sense, the Congress manifesto scores better by explicitly promising to reform the Essential Commodities Act, repealing APMC, freeing up exports, etc. How they will do it is yet to be seen, but at least the thinking and its intent is in the right direction. Also, Congress promises Rs 72,000 per year to the bottom 20% of families under its NYAY (Nyuntam Aay Yojana) scheme, which may include many small and marginal farmers, tenants, and agri-labourers. It is likely to cost the fisc Rs 3.6 lakh crore, almost four times what PM-Kisan of BJP will cost. Obviously, everyone is asking where this money will come from. That is not spelt out in the manifesto. But since the Congress manifesto also gives a time frame under which it will be implemented, it seems serious about it.
In both cases, it is clear that India is on the road to a major shift in policy towards direct income support (DIS), triggered by Telangana’s Rythu Bandhu and followed by Odisha’s KALIA. This move towards DIS can be a tectonic shift in policy if it subsumes at least the food and fertiliser subsidies and, if possible, the power subsidies at state level. Currently, the food subsidy is Rs 1.84 lakh crore with pending bills of FCI at Rs 1.3 lakh crore as on April 1, 2019. Fertiliser subsidy is Rs 75,000 crore with pending bills of about Rs 30,000 crore. If all these are merged and given as DIS to identified beneficiaries, that would be the wisest move by whichever party comes to power. Incidentally, much of this was recommended to the Modi government way back in 2015 by the Shanta Kumar panel report, a high powered committee set up by the Modi government itself. Maybe it is time to pick it up and implement it.
There are many other promises. BJP, for example, promises zero-interest loans to farmers of up to Rs 1 lakh. The trouble with such schemes is that they lead to a massive diversion of agri-loans to non-agri-purposes. Modi government had made a big move in revamping crop insurance in 2016, but its rollout suffered several teething problems. The test of the existing scheme would be a drought year, but making it voluntary now may shrink its coverage. Then there is a promise of investing massive amounts in agriculture (Rs 25 lakh crore) without much details. Such promises remain vague and meaningless. But who cares, it is time to see the dance of democracy.

Above article says that " if India achieves a 4-5%growth in Agri GDP for doubling farmers income by 2022-23,it would need to export aggressively" is really not a good advise because sustaining a population of 130 billion alone is not a joke.India has always thrieved and sustained good food availability to its mammoth population for the last so many years was only possible because of its conservative food policies to keep sufficient buffer food grain stocks even for the possible drought year.So India has to keep buffe from the surplus/ so called glut only.Otherwise a food war would be possible where the wheat and rice would be sold in not less than 100 Rs kg.
Moreover, does the writer think that the aggressive Agri export will really benefit the farmer?
No the policymakers always do not make calculations by logic as they go only by mathematical calculations.As the profit of the exports will go to middle man only and not to the real farmers. And thus has been the tragedy of India that elimination of the middle man had not been made possible so far in India.
Before we embark upon aggressive export let us first  make the agr trade free within India and facilitate direct sales by the farmers. APMC laws have lived their life. APMC should be a facility provider and not mandatory. This has to be coupled with increase in withholding capacity of farmers by easy short term finance against produce and sufficient warehousing.



Saturday, 23 February 2019

Farmers main difficulty not allowing him to become rich

Agriculture in India contributes 17 percent to Rs150 trillion economy,has remained relatively untouched by reforms with growth rates averaging below three percent over as many decades. Lack of technology, inefficient markets and small landholdings combined with insufficient storage and logistics facilities along with the fact that available storage infrastructures are far away from the field farms, have worsened to multiple challenges.

About a quarter Indian farmers live below the official poverty line, while 52 percent of farming households are indebted in spite of guaranteed prices for crop purchases by the federal government on at least three crops -- wheat, rice and cotton.

The agricultural sector plays a pivotal role in the growth and development of the Indian economy. It fulfils the food and nutrition requirements of 1.3 billion Indians as well as creates employment opportunities for the majority of the population.
A clear indication of growth can be seen in increased investor activity in the Agritech start-up space.  2018 saw a investment in Indian agriculture, which is a 21per cent increase from the previous year. While this demonstrates progression, the sector still struggles behind in certain segments such as storage and supply chain management. With this growing demand, there is a need for agri-entrepreneurs to employ innovative models and solve the problems in this sector such as dissemination of information, farm management, capital availability, farm mechanization, improved cultivars, environment-friendly pesticides and fertilizers and agricultural supply chain. There are various segments lacking development, which open up opportunities for entrepreneurs:

Traditional methods are still used by farmers today, driven by experiences, which are not practical today. With the development and integration of new equipment, practices and types of seeds, these tasks can be handled with much more efficiency. The available data could be utilized and worked on to benefit cultivation across the board.

Lack of correct tools and machines can lead to a lot more damage than anticipated, but it may not be affordable by many farmers. This can be rectified by agro-dealers who can offer rental services of farm machinery. Knowledge of machinery and its appropriate utilization is another invaluable service that should be provided to farmers.

After harvesting of crops, processing, cleaning and packaging must be executed before the crop becomes fit for human consumption. This is a necessary step that cannot be done without the right tools. The profits are greatly amplified by pre post-harvest processing.
Infrastructure: The quality of produce is enhanced with improved transport facilities. It helps create a market for agricultural produce and facilitates interaction among geographical regions. Over 35% of produce is often damaged and rendered wasteful due to lack of proper storage and transportation. Therefore, proper stacking and transportation is a dire necessity of the time.
With the growing demand and advancement in technology, there is a constant need for the development of new methods and seeds in the agricultural industry. This can only be done through research and development. Farmers can access these researches to overcome issues like seed problems, crop sustainability, pests and diseases etc. Research can also ensure the development of quality and environment-friendly agrochemicals.
Every stage in the value chain is important and dependent on one another to function properly and every stage is profitable. With the current challenges and opportunities prevalent in our country, entrepreneurship can provide innovative solutions to solve some of the critical issues in the agricultural sector.
For further queries about Warehousing facilities and technical details, kindly approach us.

www.drarorawarehousing.co.in

Thursday, 21 February 2019

increasing demand for quality warehousing spaces in India.

Increasing industrial investments in manufacturing (near Chennai) and IT investments (in Bangalore and other southern cities) are expected to drive the growth of retailing especially in south India, thus pushing the demand for modern warehouse space. In addition, the increasing relationships of logistics players–DHL, FedEx, Gati, with retail companies–Celio, Pantaloons, Future Group, Danone, are increasing the demand for quality warehousing spaces in India.

The retail segment also demands the highest quality of service from logistics solution providers. Global benchmarks are being increasingly applied to retail operations in India. Not only do logistics service providers require breadth of transportation network but also expertise in storage and value-added services to cater to such a dynamic market.Food retailing has also gained importance in the recent past. India’s food retail sector, worth around ` 3.1 trillion is expected to more than double, to ` 6.7 trillion by 2025, riding on the emerging organised retail as well as the change in consumption patterns along with fast-changing demographics and habits. As food products are perishable, there arises the need for temperature-controlled warehousing and transportation services, thus opening up investment opportunitiesin cold storages for multinational companies and private equity firms.Apart from foods retailing, the changing spending patterns in rural areas have also been attracting retailers to establish their bases in there. As rural areas do not have well-developed infrastructure, retailers are investing in cold storages and customised warehouses nearer to the farms and manufacturing places to avoid damage during transportation and to reduce costs.
Therefore, there is unimaginable scope of warehousing in retail and the retail in food items including processed foods,clothes, consumables, electronic goods, pharmaceuticals, auto- parts,as is evident from the data of increased sales recently through online retail business on B2B and B2C.

Sunday, 10 February 2019

Incressing global need for cold storage

From 2017 the global need for cold storage space increased dramatically, driven by growth in the world’s population, increased varieties of perishable commodities and the global consumer demand for fresh produce year-round.  And these factors are pushing occupancy rates at cold-storage facilities to an all-time high. During this period the big players are also starting to build just-in-time inventories.  Furthermore, with the growth of world population now standing at 7 billion people and with approx.12.5% of the world land estimated to be under cultivation, the annual global food production (animal & seafood) reached to an estimated level of 6.8 billion tons during 2014-15. The FAO estimates that by the year 2050, food production will have to increase globally by 70% (about 4400 million tons) to feed an additional 2.3 billion people. Our global population are said to need over 1850 million product tons of cold storage facilities for all kinds of food products. During 2016 the IARW estimated that global cold storage capacity for 52 countries reported that approx. 600 million cubic meters of global refrigerated warehouse space have been constructed & commissioned – mainly public refrigerated warehouse facilities (private refrigerated facilities are not considered significant).  From the above , India (population 1260 million) surpassed the US and had biggest cold storage capacity in the world with 131 million cubic meter space (USA had 115 million, China 78 million, Brazil 16 million & Indonesia 12 million cubic meter space).

It is estimated that every second, 66 tons of food products are either lost or thrown away, according to a recent report by the Boston Consulting Group. This amount translates into 1.7 billion tons of food a year, 
that is about one fourth of the food produced across the world. While this huge amount of food is lost between the farm and the fork, the United Nations Food and Agriculture Organization (FAO) says over ten percent of the world's population are suffering from chronic undernourishment.

With the fact that the nutritional energy (calorie content) of our produced food seems in excess of those required to feed the world population,  it is hoped that with the infrastructure of road construction and the emergence of additional refrigerated vehicles such as vans , trucks semi-trailers & 40 ft trailers  (all of  which are desperately being sought by China & India for a combined fleet of 500,000 vehicles) together with recruiting of many qualified drivers & system repair technicians , storage & logistics;  the tragic global malnutrition phenomena (which now account to over one billion) is anticipated to be significantly minimized by  contribution to addressing the issue of undernourishment,  particularly in the deprived sectors of the world.

Refrigeration inhibits the development of bacteria and toxic pathogens, reduces the need for chemical preservatives in food thus preventing food borne diseases.  According to WHO within 50 years a substantial decrease of stomach cancer was achieved due to application of cold chain industries.
Besides cold storage increases rhe shelf life of all the vegetable,fruits,poultry dairy and meat products besides some grocery items and pharmaceutical products.
Therefore now the time has come when almost many products will be used for consumption which come from the cold storage.

Wednesday, 6 February 2019

Strategies to be devised to increase the registration of warehouse for issue of NWRs

1.The regulations are for day to day activities of warehousing business and need modification up gradation from time to time and Government approval procedure takes lengthy time to solve the issues at proper time, for which Government approval is not necessary. The WDRA shall be empowered to make regulations by its own for which no approval of central Government shall be necessary.

2 The confidence level of the depositors for keeping their goods in privately owned warehouses registered with WDRA is very low, due to which the owners also do not find any initiative for getting their warehouses registered. It was discussed that there is no comfort level in getting the registration done, because recoveries due to losses is very uncertain as the punishment provisions provided in the WDR Act, 2007 are off course deterrent to such losses but there is no solution for grievances of the depositors and Banks for recovery of their losses which are not covered under any insurance policies.
Therefore Authority has to devise some preventive methods to eliminate chances of losses such as to ascertain good background and good track history of the owner/Warehouseman or by appointing some outsourced agencies who can work as collateral Managers also of such warehouse which are registered by WDRA, or by taking help of state Govt. appointed licensing authorities whose basic duty also is to ensure fair and proper running of warehouses before granting them the licenses for warehousing. This will bring confidence amongst depositors and Banks.

3  Besides, The Act shall provide penalty and punishments for the registered warehouses for violating the provisions of the Act but surprisingly there is no punishment/penalty for unregistered warehouses violating   the same provisions of the Act. This non inclusion of punishment/penalty for unregistered warehouse is a like an incentive for violating all norms and regulations of the Act and getting scot free.

4  The Act shall provide provision for indemnity fund.
The indemnity fund is a type of insurance program that protects the farmer from loss of value should the grain be destroyed or damaged beyond its economic value while in storage. Without the indemnity protection, the risk of storing the grain for sale at a future time might be too high. The indemnity fund shall give a financial support system for the recovery of loss to the depositors/beneficial owners in the event of any failure of the warehouseman to deliver the goods or pay compensation as per its commitment, because the Act provides for punishments including recovery but which may take years for the metropolitan court to decide.  Besides recoveries are also not possible in certain cases like bankruptcy and other reasons such as force measures and natural losses due to moisture driage etc.

Therefore, the Act shall provide provision of some corpus fund which may be in the name of indemnity fund to mitigate financial risks which cannot be recovered under any circumstances but are protected under various provisions of the Act by the Government.  This will protect integrity of NWR system and therefore NWR issued by a warehouseman  under the Act will be a “good title”

5. WDRA shall have judicial status with powers to settle disputes of all types in different warehousing activities to be notified.

6The registration of warehouses shall be in the name of warehouseman along with the name of owner and name of company, to have more clarity on the part of fixation of responsibility.

7 The Act shall include provisions for indemnity fund to mitigate financial risk of stake holders i.e. depositor, banker, financer, holder of warehouse receipt in whose name the depositor has endorsed.

8.The activities of logistics and supply chain management shall also be covered under the preview of WDRA.

9. The clarity is required for getting the registration done by a warehouseman for a part of the warehouse in the form of minimum one compartment/shed/godown.

10.Scope of offences and penalties may be broadened by way of notification of authorizing WDRA nominated officer to seal a godown which shall be duly protected by police.

11. The scope of WDRA shall also be broadened in formulating various standards, code of practices, designs and standardization of all procedures of different activities pertaining to all warehousing activities. 

12.The section 43, 44 and 45 prescribes punishments of imprisonment up to three years but does not empower WDRA to recover the damages/losses under the Act.

13. Provision shall be there in the Act to include banker and endorse, as their right to verify physical condition /physical presence of the stock along with the value mentioned in NWR to increase the comfort level.

14.Norms of storage losses due to natural driage shall be included in the Act for various commodities.

15. Provision shall be there in the Act to include the condition that the endorsement done by the depositor shall be immediately informed along with name and address of endorsee.

16. The WDRA role shall be as a regulator to ascertain that all activities of warehousing in India are in accordance of the norms and procedures prescribed by WDRA and to deal with the matters accordingly.

17.Min.of Finance May issue guidelines to all banking regulators and financial institutions to devise attractive schemes for popularising NWRs

18. WDRA in consultation with MEA ,RBI and NABARD may make regulations for making rating of warehouses based on proposed standards which may result into reflecting different level of confidence of different registered warehouses.

19. Banks may be advised to prioritise loans to WDRA registered warehouses,for which Banks may be empowered at local branch level to reduce rate of interest 2-3%,depending upon ratings as per the said regulations laid down.

20. All APMCs,local warehousing license issuing authorities may also be given space in the regulation making process.

21 Example  of MP Govt, may be followed by other state govts.to give priority to WDRA registerd warehouses,wherein more % of share to owners of warehouses is given which are registered with WDRA,in storage of govt.procured food grains.

22.  The FMC had issued circular dated 30.08.2013 for the mandatory registration of Exchange-accredited warehouses with the WDRA, accordingly the WDRA has been receiving following feedback for doing registration of  exchange accredited warehouses:-
Since the failure of the warehouse receipt system appears to be one of the main reasons for the crisis in the NSEL, the mandatory registration provides an opportunity and a challenge to the WDRA to establish a regulatory mechanism for oversight and integrity of the warehouse management system as follows:-
  AWherever not full but part of the warehouse is required by the Exchange, the WDRA should protect the interest of other depositors, and look into the warehouse as a whole.
In devising the mechanism and the framework, the WDRA should study all the lessons learnt from the NSEL and provide safeguards to prevent recurrences.

   B“Fit and proper conditions” for WSPs should be worked out and specified by the WDRA.

   C.The WDRA should specify comprehensive norms for insurance as mandated under the W(D&R) Act.The WDRA should evolve suitable norms on capitalisation, ownership, financial adequacy, etc. of the WSPs.

    D The WDRA should revisit the norms for the infrastructure, maintenance and quality standards for the Exchange-accredited warehouses.
   E.The WDRA should also work out a financial support system for the recovery of loss to the depositors/beneficial owners in the event of any failure of the WSP to deliver the goods or pay compensation as per its commitment.
     F. A robust ongoing inspection system should be put in place.in which the regulations may be formed for allowing ex/retired employees of different warehousing organisations after taking security deposit of some amount say Rs5 lakhs in the form of Bank guarantee or Bank FD so that most of the intelligent and devoted and highly experienced persons with integrity and devotions could be utilised in the nation's interest as the present appointed agencies are totally having no background and experience of warehousing and rather they are exploiting the same manpower which is proposed in this request.This action will enhance the fiscal trust of the financial institutions if the no of such inspecting persons are appointed to the tune of 100 in nos,so that each and every warehouse is inspected at least once in a quarter to boost the confidence of all the stake holders. Govt may sanction a budget on this account exclusively for the inspections of registered warehouses,as the preventive strategies are always healthy for the health of the warehousing ecosystem rather than taking curative treatments after the system becomes sick and if not treated in time then it may die also.

Wednesday, 23 January 2019

The bottom line and the bottom of the pyramid

Creating sustainable for-profit  businesses that target people at the bottom of the income pyramid is a topic of growing interest to development finance institutions, private investors, and local entrepreneurs to support poverty reduction through private sector business opportunities.

With increasing focus on this lower income segment, companies both large and small have started to recognize that there is a large market potential represented by the base of the income pyramid.

For multilateral development banks, like ADB, this is an important way to mobilize and engage the private sector to achieve poverty alleviation and reduce income inequalities in developing countries.

The good news is that the Asia and Pacific region is already demonstrating how innovative, inclusive finance can make a difference, but much more can be done. In India, for example, the government has prioritized financial inclusion and, as a result, great strides have been made in opening bank accounts for millions of the previously unbanked.

Banks and non-banking financial companies such as IFMR Holdings have developed business models that have as their core business strategy a target of financing lower income people. IFMR Capital innovatively works to mobilize capital markets funding for microfinance institutions, which traditionally have limited access to this financing base.  

Other successful examples of bottom-of-the-pyramid funding are being seen in Central Asia through the Access Microfinance Holding network and through the pioneering work of the Kashf Foundation in Pakistan.

Mountain Hazelnuts, an agribusiness firm, has been a pioneer of bottom-of-the-pyramid solutions in Bhutan. It grows and exports hazelnuts to the People’s Republic of China, where it has found a niche in capturing the increasing demand for higher-end agricultural products from the Chinese market. At the same time, it is increasing livelihoods for thousands or rural workers – mostly women.

Of course, these solutions do not happen without finance. Leading global banks such as Credit Suisse see that bottom-of-the-pyramid investments can be good business. But the market is far from saturated. With over 2 billion consumers spread across developing Asia, the opportunities are limitless for financial institutions that take the time to understand their clients and develop the kind of innovative solutions that can serve this underserved market.

Modi Govt is now trying the same idea for achieving political gain by investing in the rural india,as the interim budget on 1st Feb 2019 provision for farming & agriculture can be anything between 11 lakh crore to 15 lakh crore.
My suggestion to the govt is that it should utilize and spend money mostly of investment in nature for the rural upliftment to touch the bottom of the heart of the bottom line of the pyramid to get the ballot support from the rural masses, because other methods such as MSP,Loan waiver and other schemes may not be attractive to the masses because these all schemes are reaching  only to 20% to 30 % of the rural masses. Besides rural population has many other non farmer and non farming labours. Who will take care about their grievances? They also form a great chunk of rural population.
Regards,
DR N K ARORA