NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development
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1. 'US elections will give a verdict on Iraq' says Richard C. Holbrooke
2. BIO-FUELs caused food price rise: UN ESCAP
3. Market manipulation cause of commodity price rise: experts
4. Brazil calls for greater bilateral trade with India
5. GoM to discuss duty cut on soya oil
6. SAFTA to have positive impact for South Asia: ADB-UNCTAD
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'US elections will give a verdict on Iraq'
ASHOK B SHARMA
Posted online: Saturday , March 29, 2008 at 1829 hrs IST
Posted online: Saturday , March 29, 2008 at 1829 hrs IST
New Delhi, March 28: "The situation in Tibet is likely to escalate further and the US elections this year will in large part be a referendum on Iraq," said Richard C. Holbrooke, president, The Asia Society and Vice Chairman of Perseus LLC, and one of America's best known foreign policy analysts, at a session organized by Aspen India Institute here on Friday.
He refused to elaborate much on the Tibet situation. But he said: "US needs China and India to fight climate change."
Holbrooke is a former UN Ambassador to the United Nations and former member of President Bill Clinton's cabinet, has had a ring-side view of US foreign policy for many decades. Among his many achievements was scripting the 1995 Dayton peace agreement that ended the war in Bosnia.
The US policy on Iraq is where the fundamental difference lies between the Republican and Democratic presidential candidates in this year's US elections, according to him. He described Republican Presidential Candidate John McCain as 'Bush plus' on Iraq, while subtly different from other policies of the Bush administration. Holbrooke's other big prediction was that the war in Afghanistan will be the longest war in American history, longer than the 14-year Vietnam conflict, and this will affect India.
Holbrooke also said "Afghanistan is the big cauldron which will bubble and determine US relations with South Asia." A Vietnam veteran, he predicted that this war, already in its 7th year, will continue for the next decade. His reason was that on one hand, the Taliban does not have the strength, capability or ideology to win as 'one cannot build a revolution through fear, there needs to be a positive element.' On the other hand, in his opinion, the Afghan 'Government can't win because they are too weak and filled with corruption.' He added that the drug culture – more than 90% of the world's drugs come from Afghanistan according to him – and the unsolved issues with Pakistan further undermine any chance of success in this war. India, he said, will have to play a crucial role. All three presidential candidates have declared their support for the war in Afghanistan, he pointed out.
In Pakistan, Holbrooke saw the end of the military era and the beginning of a democratic era. He also believed that the India-US nuclear deal would eventually be approved by both sides. He also felt that India and China should be a part of the G8 group of countries, and that India, Japan, and Germany should be members of the UN Security Council.
Holbrooke, by his admission a Democrat and close friend of the Clintons, severely criticised the Iraq invasion, calling it the biggest mistake of the George W. Bush administration. "The important thing to remember is that not a single reason for going to Iraq proved to be correct," he said. The eight years of inaction on the issue of climate change was the second biggest mistake of the George W Bush administration, according to him. He added that he hoped that the next US President would work with China on climate change on a bilateral basis, as the world's two worst polluters.
Earlier, while introducing him to the audience, L Brooks Entwistle of Goldman Sachs (India) said that Holbrooke read out a line from his book, written more than a decade ago, " History is unpredictable… there will be other Bosnias in our lives." In this session, Holbrooke emphasized that sentiment, saying " The US, whether we like it or not, will always be called on to deal with great crises in the world because that's our responsibility."...
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Bio-fuels caused food price rise: UN ESCAP
ASHOK B SHARMA
Posted online: Sunday , March 30, 2008 at 1911 hrs IST
Posted online: Sunday , March 30, 2008 at 1911 hrs IST
New Delhi, March 30: The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its recent annual survey report for the region has cautioned that the global food prices would remain high and held bio-fuel programme responsible for the same.
"With grains and oil seeds the key feedstocks for bio-fuels, the oil price rise exerted by a strong push on agriculture commodity prices in 2007 which enjoyed their best performance for almost 30 years. As oil hit $100 per barrel in January 2008, soybean prices jumped to a 34-year high, corn prices approached their recent 11-year high, wheat prices were just below their recent all-time high, rapeseed prices rose to record highs and palm oil futures hit a historic high," the report said.
Not only ESCAP but UNCTAD, other UN agencies and OECD in their earlier reports had also held the bio-fuel programme responsible for the rise in global food prices.
ESCAP noted that for many countries in the region, food prices were a bigger inflationary concern than oil prices. "Food price inflation hits low-income households, so governments may need to target the poor with food stamps and cash," it said
As the march towards bio-fuels seems apparently unstoppable, the ESCAP report said that the region needed to prepare for imported inflation through higher food prices ."Governments need to carefully consider the impact of bio-fuels on the poor," it said.
In a box item in the report entitled – Bio-fuels : Friend or foe of the poor ? – it said that as per some projections, global demand for bio-fuel could rise from 10 billion gallons in 2005 to 25 billion gallons in 2010 or 20% rise per year. The United Nations projects that bio-fuels will be "one of the main drivers" of projected food price hikes of 20% to 50% by 2016. Higher food prices will most hurt the urban poor and the rural poor who are net food consumers, for whom food is usually the biggest expenditure item.
The box item, however, documented some potentials of bio-fuel programme for reducing poverty like farmers benefiting from higher demand for agricultural products (which has not yet occurred), increase in number of jobs and Markets for small farmers, environmental benefits (which is also controversial in many cases).
By saying "sugarcane for ethanol has become more attractive for developing countries farmers" the box failed to distinguish between the ethanol programme and the controversial bio-fuel programme. Ethanol is largely produced from molasses, a byproduct of sugar. Molasses is either picked up by the breweries or used in production of ethanol. This practice of producing ethanol is non-controversial as it does not compromise with food security and is totally different in essence from today's bio-fuel programme, involving grains, oil seeds which has created food security problems.
Another thing, which the box item suggested, is that bio-fuels can hold down oil prices. This, however, has not happed. Rather on the contrary high oil prices have impacted bio-fuel prices and bio-fuel programme in turn impacted food prices.
The ESCAP report-2008 also said that rapid rise in food prices in 2007 was partly due to droughts in Australia, flooding in China and dry weather in Europe.
ESCAP urged the Asia-Pacific region to take the lead in mitigating and adapting to the global threat posed by climate change, both in international negotiations and in the application of new technologies to reduce greenhouse gas emissions. It urged the governments integrate their macro-economic, social and environmental policies to fully address the impact of climate change.
The ESCAP survey report called for removal of energy subsidies, currently valued at $250 billion a year globally, but specially applied in Asia-Pacific. It suggested a range of specific measures for promoting "green growth" like taxing older, less efficient vehicles, offering tax incentives to Companies that invest in newer and cleaner technologies, lowering taxes on low-energy consumption lights and introducing more graded user charges on electricity.
In the area of land-use emissions, the ESCAP survey noted the cases due to deforestation, which accounted for 17% GHG emission in the region. In south and east Asia, 28,000 sq kilometer were lost each due to deforestation it said.
The survey suggested that develop country producers selling products in Asia should go "carbon neutral" and induce demand for clean development mechanism (CDM) projects in the region....
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Market manipulation cause of commodity price rise: experts
ASHOK B SHARMA
Posted online: Monday , March 31, 2008 at 1945 hrs IST
Posted online: Monday , March 31, 2008 at 1945 hrs IST
New Delhi, Mar 30 Rising prices of essential commodities have invited concerns for the government. The inflation rate measured by point-to-point movement in the wholesale price index peaked to a 13-month high of 6.68% for the week ended March 15, 2008. For the previous week it was 5.92%.
The rise in prices is a global phenomena too and some believe that the international situation has impacted the domestic situation, as the country's economy is being increasingly aligned to the global economy. Mismanagement in the supply-demand chain and the increase in broad money supply are the causes for inflation in prices, experts say.
According to the report of the International Grain Council (IGC) of March 28, global grain and oilseed Markets experienced another volatile month, with the exception of rice, prices showed no consistent trend. Global financial turmoil often overrode supply fundamentals, leading to frequent and unpredictable price swings, which also affected other commodities. Continued strength in crude oil prices and further dollar weakness had an impact. Ocean freight rates initially strengthened further before moving down on reports of possible reduced industrial activity in China ahead of the Olympic Games.
Global wheat prices were above $440 a tonne on March 27, after peaking to over $520 a tonne. IGC forecasts that global grain output in 2008 would be 1,694 tonne, an increase of 32 million tonne.
World wheat production would be at 646 million tonne, an increase of 42 million tonne over the previous year, due to a 2.5% increase in area under cultivation. Global prices of maize were around $240 a tonne by March 27. IGC forecasts global maize output to decline by 20 million tonne to 748 million tonne, while barley output would increase 10% to 148 million tonne.
According to estimates, India has achieved record grain production of 219.32 million in 2007-08, including 94.08 million tonne rice, 74.81 million tonne wheat, 36.09 million tonne coarse cereals, and 14.34 million tonne pulses. Cotton output is estimated at 23.38 million bales of 170 kg each, an all-time record. Oilseeds output is estimated at 27.16 million tonne.
Experts believe that the market manipulation is the cause for rising prices. At the global level there are few players who dictate the prices.
Does the farmer benefit from the price rise ? The payments made by the the Canadian Wheat Board show that the farmers were paid between $ 260 to $ 284 a tonne for various qualities of non-durum wheat, while the global price for wheat peaked to over $ 520 a tonne. In India farmers were paid Rs 850 a quintal while wheat was imported at Rs 1650 a quintal. ...
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Brazil calls for greater bilateral trade with India
ASHOK B SHARMA
Posted online: Wednesday, March 26, 2008 at 1914 hrs IST
Posted online: Wednesday, March 26, 2008 at 1914 hrs IST
New Delhi, March 26: Brazil has decided to make its exports of soybean oil and products cheaper by reducing its taxes and levies on production. Soybean oil is one of the major item exported by Brazil to India apart from copper and iron and steel manufactured products.
"In the backdrop of the rising global prices, we are thinking of reducing our taxes and levies on the production of soybean products for maintaining our exports," said the visiting Brazilian Minister of Development, Industry and Foreign Trade, Miguel Jorge.
India imports both refined soybean oil and degummed soybean oil. In 2006-07 (oil year November-October) India imported about 11,120 tonne refined soybean oil and 1,3322,920 tonne degummed soybean oil. Imports of refined soybean oil was higher in 2005-06, 2004-05 and 2003-04 being respectivelt at 20,457 tonne, 25,003 tonne and 15,324 tonne.
Similarly imports of degummed soybean oil was higher in 2005-06 and 2004-05 being respectively at 1,703,360 tonne and 2,001,745 tonne.
Soybean oil is a small part of the total vegetable oils import of around 4 to 5 million tonne, it has the potentiality to rise in near future. India has already allowed imports of soybean oil extracted from genetically modified (GM) seeds without being labeled, despite strong opposition from the anti-GM lobby.
Owing to a surge in demand, international prices of edible oils continued to exhibit a sharp and steady upward trend in recent months. For instance, the international price of crude palm oil (FoB Malaysia) increased from $ 770 per tonne in the last week of August, 2007 to about $ 1220 a tonne in the last week of February, 2008. During the same period, the international price of sunflower oil (CIF Rotterdam) increased from $ 947 to $ 1695 a tonne – an increase of about 79%.
India has made tariff cuts on a range of vegetable oils from time to time keeping in pace with the rising prices. It has also maintained a low tariff value for imports of vegetable oils. The duty on soybean oil is already low due to the low WTO bound tariff rate at 45%
According to the Solvent Extractors Association of India in the last four months, global prices have substantially increased and practically doubled in last one year. However this has had no impact on flow of imported vegetable oil into India.
Jorge said, "We would like to boost trade and investment opportunities between two our two countries. India and Brazil are among the top 10 economies and we are both fighting in the WTO in the interests of the developing world."
Jorge is leading a strong business delegation to India.
Asia represents 20% of Brazilian foreign trade, about $ 43.7 billion and the region is responsible for the recent surge in Brazilian exports. India represents only 1% of Brazilian trade flow.
"In 2007 on a year-on-year basis, our bilateral trade with India increased by 30% amounting to $ 3.1 billion. We need to accelerate our trade so that the target of $ 10 billion is reached by 2010," Jorge said.
In 2007, Brazil's exports to India was valued at $ 957.9 million and India's exports to Brazil was valued at $ 2,164.9 million. Diesel was responsible for 50% of India's exports to Brazil.
Stressing on the need to diversify the export-import basket, Jorge said, "Brazil would also like to export electric and electronic products, food, machine and equipment, transport materials and many other value-added products."
On being questioned about the possibility of a free trade agreement between India and Brazil, he said : "If there should be a FTA between India, it should be with the Mercosur group. We are a part of the Mercosur group. Already the proposal for preferential trade agreement (PTA) with India is under the consideration for ratification by member countries."...
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GoM to discuss duty cut on soya oil
ASHOK B SHARMA
Posted online: Saturday , March 29, 2008 at 2316 hrs IST
Posted online: Saturday , March 29, 2008 at 2316 hrs IST
New Delhi, Mar 28 The empowered group of ministers (eGoM) on prices headed by the external affairs minister, Pranab Mukherjee, is slated to meet on April 2 to deliberate on the issue of reduction of duty on soyabean oils.
At present, the effective duty on soyabean oil is 45%. The government has recently slashed the effective duty on a wide range of vegetable oils with a view to facilitate cheap imports in the backdrop of the rising prices of essential commodities. The tariff duty on soyabean oil was not reduced in this exercise. The tariff vales of all vegetable oils have remained unchanged.
The Brazilian minister of development, industry and foreign trade, Miguel Jorge, who was recently in Delhi, had advised India to make tariff cut on soyabean oil. He said that Brazil would take steps to reduce taxes and levies on production of soyabean products to make them cheaper for exports.
In an exercise to keep prices under check in the election year, the government begun discoursing exports of about 50 items including steel, non-basmati rice, cement, manganese, ferro chromes by withdrawing the DEPB benefits. Exports of vegetable oils have been banned. The minimum export price of Basmati rice has been raised to Rs 1100 a tonne and that of non-Basmati rice to Rs 1000 a tonne. The Union cabinet is also slated to consider extension of DEPB benefits on other exportable commodities for a year more.
The apex body of the vegetable oil industry, Central Organisation for Oil Industry and Trade (COOIT) has expressed dissatisfaction over the government's decision to cut tariffs on vegetable oils. "The effective duty on crude oil at today's prices works out to only about 8% because of freezing of tariff values at August 2006 level, which is very low indeed and it will help the exporting countries, to the detriment of farmers and consumers in India specially at the time when rapeseed/mustard crop is under harvest," said COOIT chairman Davish Jain.
He furthers said, "It has been our experience in the past that the advantage of duty cut is taken by the exporting countries, rather than the consumers and this time also, exporting countries have jacked up the crude palm oil (CPO) prices by $80 per tonne in the last two days negating the anticipated benefit to our consumers as a result of reduction in duty. In the process, the government has also lost considerable amount of revenue from import duties."
However, the Indian Vanaspati Producers' Association (IVPA) has welcomed the decision to slash tariff on CPO to 20%. CPO is used by the industry for producing hydrogenated oil (vanaspati)....
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SAFTA to have positive impact for S Asia: ADB-UNCTAD
ASHOK B SHARMA
Posted online: Saturday , March 29, 2008 at 1907 hrs IST
Posted online: Saturday , March 29, 2008 at 1907 hrs IST
New Delhi, March 28 The study conducted by the Asian Development Bank and UNCTAD-India has observed that the full implementation of the South Asia Free Trade Agreement (SAFTA) would contribute to stronger economic growth in the region. While there would be losses in some sector in the region, there would be gains in other sectors – the net effect on economic output being positive.
The agreement on SAFTA was signed on January 6,2004 during the 12th summit of the South Asia Association for Regional Cooperation (SAARC) in Islamabad. SAFTA came into force on January 1, 2006 in a limited way.
Currently, the sensitive lists of products, rules of origin, technical assistance as well as a mechanism for compensation of revenue loss for least developed member states are under negotiation. It is proposed to have a complete trade liberalization programme by 2016.
The study suggested that in order to maximize welfare gains, it would be important to give flexibilities to protect employment intensive manufacturing sectors in the smaller least developed countries (LDCs) in the region. The adoption of a transparent and effective regional safeguard mechanism for agriculture products could help to take care of sensitivities in the farm sector that were bound to exist, it said.
Much higher gains for the region can be secured, the study said if SAFTA would be simultaneously implemented with measures to reduce transaction costs and create more efficient regional transportation and infrastructure networks. Increasing the scope for intra regional trade in energy, improving road, rail and air links within the region, building modern customs and border crossings, developing sophisticated telecommunications links like optic fibre were vital to this endeavour, it said.
Using the CGE modeling, the study said that the welfare gains for Bangladesh would be one of the highest for South Asian countries, which may be attributable to complete liberalization of high MFN tariffs which generates consumption benefits for both user industries as well as household consumers.
Bangladesh also can increase in global exports by a very significant 4.31% by 2016 on account of SAFTA. Export gains for Bangladesh in SAFTA market in phase-I of liberalization (2008-09) would be significant (38.08% to South Asia), but not as high as the peak export growths to SAFTA seen by other countries.
The ADB-UNCTAD study said that the lack of strong export growth in Bangladesh may be attributed to India's sensitive list, but if a situation of full liberalization where all countries liberalise tariffs even on sensitive list items were considered, Bangladesh would not make any significant regional export gains.
A disaggregated look shows that Bangladesh's wearing apparel sector would grow by 6% due implementation of the second phase of SAFTA. Its global exports of wearing apparel would increase by $ 500 million, out of which $ 6 million would be to South Asian countries. SAFTA would induce a relocalisation of output with major production increase in wearing apparel ( 5.5%) and leather sector (3%), leading to an increase in employment. Bangladesh's output in chemicals, rubber and plastics would rise by 2%, while its global exports would go up by 10% - an indication of Bangladesh emerging as a competitive producer in chemicals, pharma plastics and ceramics.
Regarding India, the study said that a full SAFTA would help it to nearly double its exports to South Asia, but the export gains would be limited to a few agriculture commodities and auto sector. India can gain significantly in exports of poultry and sugar. Pakistan would be the main market for Indian sugar exports. India's highest output gains would be in poultry sector (over 100%). In sugar sector output gains would be 1.33% and the auto sector would grow by one to 4%, with its regional exports expected to increase by 10% to 40%. India's global wearing apparel output would decline by 2.5% and its imports would increase by 7%, due to increased competitiveness of Bangladesh.
In 2008-09, India's exports to South Asia would increase by 3.41% and its exports to other countries by 0.09%, while its global imports would increase by 0.11% on account of the implementation of the first phase of SAFTA. By 2016 India's total output would increase by 0.08%, its exports to South Asia would increase by 90.44%, its exports to other countries would increase by 1.19% and its global imports would increase by 1.68%.
For Pakistan a full SAFTA would double its exports to South Asia and would have good results on its important employment intensive agriculture sectors like wheat, horticulture, poultry and other food products. It output in textile sector would increase by 0.5%, but would lose out in wearing apparel and leather sectors. Pakistan lose in sugar sector due to increased imports from India.
In 2008-09, Pakistan's total output would increase by 0.01%, its exports to South Asia would increase by 5.52%, its exports to other countries would increase by 0.17% and its global imports would increase by 0.19%. By 2016, Pakistan's total output would increase by 0.02%, its exports to South Asia would increase by 102.41%, its exports to other countries would increase by 0.77% and its global imports would increase by 1.54%.
According to the ADB-UNCTAD study more than 60% of the increase in exports to the region by India and Pakistan would be directed to Bangladesh. More than 50% of Pakistan's gains from SAFTA would be from increased exports to Bangladesh in textiles alone.
Sri Lanka would not gain much in the first phase of SAFTA implementation as it already has close to free access to the Indian market and other countries in the region have not committed substantial liberalization vis-à-vis Sri Lanka in the first phase.
"Sri Lanka's gains are more improved in the second phase, when all countries participate fully and remove their negative lists. The increase in output in vegetable oils corroborates empirical evidence of duty structures that favour manufacture of edible oils. The textiles sector which contributes to about 5% of the total output in Sri Lanka sees a growth of about 4%. While relative changes in some of the products are quite high, their absolute outputs are quite low compared to the total output of the Sri Lankan Economy. Negative employment and output effects are seen for wearing apparel and some agricultural products," the study said.
In 2008-09, Sri Lanka's total output would increase by 0.1%, its exports to South Asia would increase by 2.52%, its exports to other countries would increase by 0.05% and its global imports would increase by 0.14%. In 2006, Sri Lanka's total output would increase by 0.55%, its exports to South Asia would increase by 58.78%, its exports to other countries would increase by 0.72% and its global imports would increase by 1.98%.
The ADB-UNCTAD study has grouped Afghanistan, Bhutan, Maldives and Nepal together as ABMN countries and said that though these countries get zero duty access to the developing countries in the region by 2009, its gains were limited on account of its inability to access agricultural products Markets, blocked by sensitive lists of developing countries. However with completed liberalization in 2016, there would be gains for the ABMN group in agriculture and primary commodities
A full SAFTA would be beneficial to the ABMN group as its employment intensive agriculture and forestry sector accounted for 50% of the domestic output. However the manufacturing sectors in ABMN were uncompetitive and would suffer output and employment loss, the study said and added that these countries might want to preserve its sensitive list flexibility for a longer period, particularly in apparel.
The ADB-UNCTAD study entitled – Quantification of Benefits from Regional Cooperation in South Asia – has also worked out the welfare benefits and revenue loss in different countries in the region on account of the full implementation of SAFTA. It has also worked out the impact of SAFTA on inward foreign direct investments, transport facilitation and trade in services. ...
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