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India Agribusiness Report Q3 2009Published by: Business Monitor International Published: Jun. 19, 2009 - 60 Pages Table of Contents
AbstractIn BMI's India Agribusiness Report for Q3 2009 we introduce the new Soybean Outlook. Production ofsoybean has grown rapidly over the past two decades, expanding from less than 2mn tonnes at the end ofthe 1980s to more than 10mn in 2008. This has been driven by both rising demand for soybean oil forfood use and meal for animal feed. India is now able to annually export a significant quantity of soybeanmeal, but is reliant on imports for more than a third of annual soybean oil consumption. While we expectsoybean production to fall this year owing to poor weather conditions, over our forecast period to 2013we see production continuing to grow rapidly. This will be driven by strong growth in the domesticlivestock sector and the livestock sectors in other countries in the region, notably China.The run up to May's general election - won by the Congress Party led by Rahul Ghandi - loomed overagricultural policy through the final quarter of 2008 and the first quarter of this year. The national andstate governments were unwilling to put forward any policies that could see them lose favour with therural masses. This has seen generous market support prices put in place when market prices were high lastyear. Market prices have since fallen fast and are now below the support prices for wheat, rice, corn and cottonamong other commodities. Government procurement of crops has also been moving swiftly, as policymakers are keen to buy enough produce at the support prices to keep farmers happy. This has led toseverely increased grain stocks. After wheat procurement got underway in April and May, stocks can beexpected to only get higher and there are concerns about where the Food Corporation of India will be ableto store its burgeoning reserves. Another policy arguably influenced by the election is the continuation of the export bans of wheat andnon-basmati rice and the high minimum export price for basmati rice. With stocks high and large harvestsof both rice and wheat forecast for 2009, traders are calling for the bans to be repealed. With domesticprices having already fallen considerably and supplies aplenty, the need for the ban seems to have passed. Exporters also want to see the minimum export price for basmati to be brought down to US$900/tonneinstead of the current US$1,100 to make Indian exports more competitive as market conditions worsenowing to flagging demand for premium rice as the world economy slows. The government, however, wasunwilling to heed the calls for the export market to be opened up, presumably unwilling to risk any priceshocks, however minor, in the months before the vote. How will the election benefit agriculture? Well both major parties, Congress and the BJP, touted farmerfriendlypolicies in their campaigns. Both promised heavily subsidised wheat and rice for families livingbelow the poverty line. For farmers, the parties' policy lines sound fairly similar. Both promised debtrelief and increased crop insurance schemes to guarantee acceptable prices for farmers produce. Now wecan only wait and see as to whether Congress delivers. Get Full Details About This Report >> |
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