NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development ------------------------------------------ 1. India Inc for fertilizer jv in Syria, DTAA signed On FOOD SECURITY - BIO-FUEL - COMMODITY MARKET 2. Rome meet fails to define the cause of current food crisis 3. ICRISAT welcomes world leaders' commitment to raise farm funding 4. Daimler estimates cost of biofuel production at Rs 30k per hectare 5. Assocham projects 30% growth for commexes by '10 6. India, Canada strike S&T cooperation @$ 17 mn 7. Several projects in dryland areas yet to be completed --------------------------------------------- India Inc for fertilizer jv in Syria, DTAA signed ASHOK B SHARMA
Posted online: Wednesday, June 18, 2008 at 2024 hrs IST New Delhi, June 18: India has proposed to explore the rich rock phosphate deposits in Syria to meet its needs for phosphate fertilizers. Syria has large reserves of rock phosphates which can be exploited for production of di-amonium phosphates (DAP) used as a fertilizer in agriculture. A joint Syria-India Business Council is likely to step up soon for identifying areas of investment cooperation between the two countries. The forum will include at least 20 representatives from the industry on each side and suggest to the governments of both the countries. India and Syria also signed a revised Double Taxation Avoidance Agreement (DTAA) The visiting Syrian president, Bashar Al Assad Who Assad is leading a strong business delegation consisting of representatives from manufacturing, medical industry, cosmetics and healthcare, computer equipment, electrical appliances and cables, hotels-pipeline industry, food and agro processing sectors has called for bilateral trade and investment cooperation. Speaking at an interaction with the Indian industry on Wednesday Assad said : "I invite you to explore opportunities for joint ventures and other collaboration in major areas, including infrastructure development, energy production and mineral processing as well as IT education and training opportunities." The interaction was jointly organized by three apex India industry bodies – CII, FICCI and Assocham. Assad is leading a strong business delegation consisting of representatives from manufacturing, food processing, olive oil sectors. The former director-general of Fertiliser Association of India (FAI), Pratap Narain, who is now the chairman emeritus of Sun International Ltd, said : "it is a good opportunity for Indian industry to enter into joint ventures for production of DAP in Syria. We produced only 2.7 million tonne DAP against our annual needs of 7.5 million tonne. This is because there is no adequate rock phosphate in the country. It would be better if we enter into joint ventures in countries like Syria which have rich deposits of rock phosphates." China is one of the major exporter of DAP to India and with a view to discourage export of this fertilizer it has recently imposed an export tax of 135%. The global price of DAP is now averaging around $ 1350 a tonne. India has a sound base for production of urea (nitrogen) fertilizer and produces about 20 million tonne and imports about 7 million tonne to meet its annual needs. Global urea price is ranging around $ 800 a tonne. India imports total needs of 4.2 million tonne MoP as it is not produced in the country. MoP price is around $ 625 a tonne. The president of the Federation of Syrian Chambers of Commerce, Rafeb Shallah invited Indian participation for development of roads and infrastructure in Syria. He said that development cooperation between the two countries was more important and bilateral trade can follow as a byproduct of such a cooperation. Indian public sector, Oil and Natural Gas Commission is already engaged in oil and gas exploration in Syria. The Indian minister of state for external affairs, E Ahamed informed that in January, this year India and Syria signed an agreement for cooperation in mineral exploration, infrastructure, railways, roadways, ports, power generation and IT sector. India and Syria also signed a revised Double Taxation Avoidance Agreement (DTAA) on Wednesday for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income. The agreement was signed by the Indian minister for external affairs, Pranab Mukherjee and by Syrian minister for Economy and trade, Amer Husni Lutfi. This agreement has revised an earlier one notified on June 25,1985 and will cover all taxes imposed on total income or on elements of income, including taxes on gains from alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises. The DTAA provides that business profits may be taxed in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Permanent establishment includes especially - a branch, factory, place of management, sales outlet. Profits of a building site, construction, assembly or installation projects may be taxed in the state of source if the site, project or activities continue in that state for 270 days or more. Profits from the furnishing of services including consultancy services may also be taxed in the state of source if activities of this nature continue within that state for more than a period of 183 days within any 12-month period. Profits derived by an enterprise from the operation of ships or aircraft in international traffic shall be taxable in the country of residence of the enterprise. The agreement provides for a maximum rate of tax to be charged in the country of source on dividends at 5 % of the gross amount of dividends if the beneficial owner of the dividends is a company which holds at least 10% of the share capital of the company paying the dividends and 10% of the gross amount of dividends in all other cases. The agreement further provides for maximum rate of taxation in the source state at 10% in the case of interest and royalties. Capital gains from the sale of shares may be taxed in the country of source. Besides, the agreement incorporates provisions for exchange of information between tax authorities of the two countries and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries. The revised DTAA incorporates improvements over the existing DTAA by including anti-abuse provisions and providing for source based taxation of capital gains from alienation of shares. This agreement will provide further impetus to the economic ties between India and Syria by facilitating mutual economic cooperation as well as stimulating the flow of investment, technology and services between the two countries.... ----------------------------------------- Rome meet fails to define the cause of current food crisis ASHOK B SHARMA
Posted online: Wednesday, June 18, 2008 at 1938 hrs IST Global food prices are expected to rise further as world leaders failed to take concrete actions to reverse the trend. The recent dip in wheat prices by between $10 and $80 a tonne and the weakening of rice export quotations are not enough indications to bring cheer. This appears temporary and is driven primarily by the reports of a good harvest and favourable outlook for the next crop. Maize prices remaining volatile in the background of the continued strengthening in the global energy market and further increase in ocean freight rates, however, raise concerns about the futures market behaviour. The International Grain Council's projection of the increase in global wheat production to 650 mt in 2008-09, up by 46 mt over the previous year and increase in carryover stocks to 131 mt may bring in some confidence to meet the projected demand of 632 mt. But this expectation may be short-lived. According to International Grain Council (IGC) the increased global grain supplies will almost entirely be absorbed by the rising use, especially to make ethanol. More wheat and barley will be used for feed in the place of maize and sorghum, which would be used more for producing bio-fuel. The world's total grain production is projected to increase to 1,712 mt and the IGC taking into account the alternate uses of grains has increased the consumption demand to 1,714 mt. More serious concern is the projected fall in global maize production by 14 mt. It would be 763 mt against the consumption demand of 786 mt. Industrial uses of maize, particularly for ethanol will total 199 mt, up by 30 mt over last year. Earlier, the IGC projections, however suggested that use of grains to make ethanol would rise by 31% to 124 mt. The IGC report of May 30, 2008 noted: "World ethanol output continues to increase, the rate of expansion likely to slow only slightly in 2008-09, despite reduced credit availability, high plant construction costs and strong grain Markets. Soaring crude oil prices will support the profitability of the industry regardless of official production incentives." It is unfortunate that in the high-level conference on world food security that concluded in Rome on June 5, the world leaders failed to clearly define the causes of the current food crisis and formulate concrete measures to contain it. The impact of bio-fuel programme was on the agenda and the estimates of its impact on food security was earlier provided by the International Monetary Fund which said that it contributed 15% to 30% to food price increases. The International Food Policy Research Institute (IFPRI) has estimated that bio-fuel programme contributed 30% to global food price rise. The UN secretary-general, Ban Ki-moon's call for international guidelines for bio-fuel production was not taken up seriously. Rather, Brazil and the US came out aggressively against those tried to link bio-fuel programme with the present food crisis. The Brazilian president, Lulz Inacio Lula da Silva said: "It is frightening to see attempts to draw a cause-and-effect relationship between bio-fuels and the rise of food prices. It offends me to see fingers pointed out against clean energy from bio-fuels, fingers soiled with oil and coal." Brazil now ranks second in ethanol production next to the US. It has produced fuel ethanol on a large-scale for more than 30 years from molasses and subsequently from sugarcane juice. Brazilian experience on use of ethanol blended gasoline dates back to 1930s, but it was in 1975 that Brazilian Alcohol Programme (PROALCOOL) was created aiming at partially displacing gasoline in private transport. The programme was initially heavily subsidised by the government. Later in the 1990s, subsidies were reduced after the deregulation of the sugar industry. Recently, Brazil launched a programme for extracting oil from crops to be used as bio-fuel. Equally aggressive was the US in the UN food security summit. The US agriculture secretary, Ed Schafer strongly defended the bio-fuel programme and said it contributed only 2% to 5% to a predicted 43% rise in food prices. Apart from the bio-fuel programme which has diverted food crops for fuel and in some places the non-food crops have displaced food crops from cultivation, there are other factors like manipulation and holding of stocks by a few corporate houses in trade which have contributed to the food crisis. The food summit failed to formulate measures for controlling the activities of these few players. The subprime crisis, meltdown in the global equity market, monetisation of financing and liberal interest rate caused a shift in investment to commodity Markets. There is ample evidence of the boom in global commodity Markets that helped a few players corner huge profits. The net income of Monsanto for three months ending February 2008 more than doubled to $1.12 billion from $543 million in the same period in 2007. Its profits increased from $1.44 billion to $2.22 billion. Cargill's net income soared by 86% from $543 million to $1.030 billion and that of Archer Daniels Midland soared by 42% from $363 million to $517 million. Index-fund investment in grain and meat increased almost five-fold to over $47 billion in the past year according to the Chicago-based AgResearch Co.
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ICRISAT welcomes world leaders' commitment to raise farm funding ASHOK B SHARMA
Posted online: Monday , June 16, 2008 at 2029 hrs IST New Delhi, Jun 15 The Hyderabad-based International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) has hailed the world leaders commitment to significantly raise investment in agriculture. Referring to a positive outcome of recently concluded World Food Summit, the ICRISAT director-general, William D Dar said, "One very important outcome of the summit is the strong affirmation of all countries for the need for significant investment in agriculture which includes the call for the doubling of investment in international agricultural research". All governments, he said recognised the need to significantly increase food production and to empower and provide support to small farmers to boost their productivity. We support this policy declaration as agriculture has really been neglected for so long hence the global food crisis today, he said. Dar, however, pointed out some grey areas in the food summit declaration. One was on export bans and other trade distorting measures which continues to contribute to and exacerbates the crisis, he said. According to him the summit only recognised this as a problem but no action was taken to vacate export bans. IFPRI studies shows that elimination of export bans would stabilize grain price fluctuations, reduce price levels by as much as 30 percent, and enhance the efficiency of agricultural production. Both ICRISAT and IFPRI are affiliated institutions of the Consultative Group on International Agricultural Research (CGIAR). The World Food Summit convened by the UN Food and Agriculture Organisation discussed food security, climate change and bio-fuel The second grey area in the declaration, according to Dar was on biofuels. "The summit recognised only the challenges and opportunities of biofuels. They should have distinguished more forcefully between smart and non-smart types of bio-fuels. Corn is not a smart bio-ethanol crop, much more in developing countries because of its implications to food security. Smart bio-ethanol crops like sweet sorghum should be further developed, promoted and commercialized because it also ensures food and environmental security, " he said. Dar called for strong actions by governments to put up new and or enhance existing safety nets for poor people who are the most vulnerable among the population. "We should also build up long term resilience of poor people to crisis like global warming, droughts, typhoons, floods and many others. Mitigation on and adaptation with climate change must be given high priority attention and investment as this will have great impact in agriculture and the poor," he said. According to Dar the summit could have been more successful if the world leaders were clear as to who would be responsible for implementation and monitoring. "This has been the case before and food production stagnated or declined, and poverty and hunger continued to escalate in spite of having targets like that of the millennium development goals (MDGs). We know that the developed countries have started to make their commitments and pledges including international organisations which is a welcome development and but we need to do more. The developing countries must do the same, put up the needed policy support, and give the highest priority and investment to their agriculture sector. There should be a new way of doing things to address the global food crisis. The billion poor people of the world, being very vulnerable will continue to suffer because of soaring food prices if we don`t do it right. The world today must act as one now," he said.... ------------------------------------------ Daimler estimates cost of biofuel production at Rs 30k per hectare ASHOK B SHARMA
Posted online: Monday , June 16, 2008 at 2031 hrs IST New Delhi, Jun 15 The automobile giant Daimler has estimated that the cost of bio-fuel production from Jatropha Curcus at Rs 30,000 per hectare, without involving any element of subsidy. It has tested the use of 100% bio-fuel in trial runs of 5,900 km across the country, including high altitudes in the Mercedes-Benz C Class C 220 CDI. According to a project agreement signed with the Council for Scientific and Industrial Research (CSIR), Daimler initiated Jatropha Curcus plantation in 10-hectare land in Bhavnagar in Gujarat and in 20-hectare land near Gopalpur in Orissa. Along with Daimler, the project partners were the Central Salt and Marine Chemicals Research Institute, MB India, Hohenheim University, and DAG (R&D). Speaking to FE, the head of corporate affairs of Mercedes-Benz India, Subhas Kadlaskar said, "The entire cost of bio-fuel production from farming to transesterification of Jatropha oil to bio-fuel would work out to Rs 30,000 per hectare. We had cultivated Jatropha on eroded soils." He said Jatropha can grow on poor degraded soils and ensure a reasonable production of seeds with very little inputs. Time taken for nut yield is between two to five years based on soil and rainfall conditions. The seed kernels contain about 60% oil. Jatropha plantation can give results for 30 years. Another plant that closely demonstrates similar aspects is Pongamia. According to the field trials, the seed yield was 2 to 3.2 tonne per hectare. It can be raised to 4 tonne per hectare, said Kadlaskar. He did not deny that Jatropha causes soil acidity and pest problems. In some cases nutrient consumption may be more. The oil cake after treatment can be used as an organic fertiliser The trial run with 100% bio-fuel showed complete consumption, low particulate emissions, complete engine performance, comparable mileage. It met the Euro III emission standard. Though hydrocarbon and nitrogen oxide emissions were comparable to that of fossil diesel, carbon monoxide emissionswere observed to increase. Storage stability of the bio-diesel needs further study. Power loss was observed at high altitude (Khardung La in Ladakh 18380 ft) which was due to scarcity of oxygen.
-------------------------------------- Assocham projects 30% growth for commexes by '10 ASHOK B SHARMA
Posted online: Monday , June 16, 2008 at 2131 hrs IST New Delhi, Jun 15 One of the apex industry body, Assocham has estimated that Indian commodity market would grow at a steady speed of about 30% by 2010 and touch a volume of Rs.74,156,13 crore. Commodity market in the country has already expanded by 50 times in a span of 5 years from Rs.66530 crore in 2002 to Rs.3,3753,36 crore in 2007. In 2003, the size of commodity market was Rs 129,364 crore which increased by 341% to be at Rs.571759 crore in 2004. In 2005, the growth in commodities trade was by 276% pushing up the market size to Rs.2,155,122 crore. However, in 2006, though the commodities trade increased to Rs.2,739,340 crore, it could register year on year growth of 27% over the previous year. In 2007, the market size increased to Rs.33,753,36 crore and registered a growth of 23%. The Assocham study further said that the growth in commodities derivatives trading which was at massive level in the last five years would now grow by about 30% to reach projected level of Rs.7415613 crore in next 2 years. The turnover as proportion to GDP of commodity trade increased from 4.7% in 2004 to 20% in 2007 and is expected to go up many folds since commodity Markets would remain friendly to its subscribers, according to Assocham The daily average volume of trade in commodities exchanges by December 2007 was over Rs.12,000 crore. Gold, silver and crude recorded the highest turnover in MCX while in NCDEX, soya oil, guar seed and soyabean and in NMCE pepper, rubber and raw jute were the most actively traded commodities on an average. This trend would continue, the Assocham study observed. The study advocated that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains. This reflects upon the views and expectations of a wide section of investors related to that commodity. It provides an effective platform for price-risk management for all segments of players ranging from producers, traders, processors, exporters/importers and the end-users of a commodity. The delivery and settlement procedure differs for each commodity in terms of quality implications, place of delivery, options, penalties and margins, and are defined comprehensively by the exchanges. Members of an exchange can perform and clear transactions in only those contracts which are exchange specified and approved by the Forward Market Commission (FMC). Assocham urged that the institutional and policy-level issues associated with commodity exchanges have to be addressed by the government in coordination with the FMC with a view to pave the way for a significant expansion and further development of the commodity futures Markets. The major problems like infrastructure, trading system, broking community, controlled market, integration of regional and national exchanges as also integration of spot and futures Markets should be addressed.... ----------------------------------------- India, Canada strike S&T cooperation @$ 17 mn ASHOK B SHARMA
Posted online: Monday , June 16, 2008 at 1819 hrs IST New Delhi, June 16: A new partnership between India and Canada in researches in science and technology is in the offing. A deal to this effect was signed between the Indian science and technology minister Kapil Sibal and the Canadian minister for foreign affairs, international trade and Pacific Gateway, David Emerson in Ottawa on Sunday, involving research initiatives also by Companies on both sides valued at more than $ 17 million. A new research partnership initiative with the department of biotechnology in India was also launched. According to a press release issued by the Confederation of Indian Industries (CII), eight of the initiatives would be joint research projects while the other two initiatives would be partnership development activities (PDAs). PDA initiatives would foster joint activities aimed at generating new or expanded research and technology-based partnerships between countries and may include such activities as scientific seminars, conferences, symposia and workshops, and activities that involve exchanges of scientists, technical experts and academics. All the projects would be co-funded by the Canadian Government's International Science and Technology Partnerships Program to be delivered through the Global Innovation and Technology Alliance (GITA), jointly promoted by Indian science and technology ministry and CII and its counterpart in Canada - International Science & Technology Partnerships Canada (ISTP Canada). ISTP Canada and its Canadian partners are awarding $3.82 million to co-fund the Canadian side of these projects. The remaining funding is provided by GITA on the Indian side. Among the eight identified joint research projects are - a project for providing quantitative methodology for integrating acoustic emission into the tank bottom maintenance management program for the oil and gas industry, in situ repair of ocular tissues to restore or improve sight, mobile asset application to achieve pollution control in vehicles, design and development of an aircraft integrated development environment tool for a new generation regional transport aircraft, next generation interoperable geo-portal (iGP) solution for the emerging spatial data infrastructure (SDI) market, rapid diagnostics to improve animal health, bio-fuels for aviation and indigenisation of broadband over power line technology to connect adjoining villages in India using existing power.
------------------------------------------- Several projects in dryland areas yet to be completed ASHOK B SHARMA
Posted online: Monday , June 16, 2008 at 2221 hrs IST New Delhi, June 15 : Farming in dryland areas is a gamble with the monsoon. Out of the total crop area in the country approximating to 190.91 million hectare, net irrigated area is only 58.54 million hectare, while gross irrigated area is about 79.51 million hectare. According to recent official farm statistics, the area irrigated in more than one season is only 20.97 million hectare and the area sown more than once is 49.59 million hectare. The figures show the untapped potential for India agriculture. With the climate change factor inducing regional weather variability, the problems of dryland farmers have become more acute. Dryland areas are spread across all states in the country. However, the government through its schemes has planned to develop 12,03, 863 sq km dryland area in the country– 7,45,914 sq km in 16 states under the the Drought Prone Area Programme (DPAP) and 4,57,949 square km in seven states under the Desert Development Programme (DDP). DPAP is being implemented in Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand and West Bengal, covering 972 blocks in 185 districts. Since the inception of the scheme in 1995-96 till January 31, 2008 about 27,439 projects covering an area of 13.7195 million hectare have been sanctioned and Rs 2,739.84 crore was released. Under the funding pattern the state governments bear 25% of the total investment. Since April 2000, an uniform cost norm of Rs 6,000 per hectare has been introduced. Against the budgeted provision of Rs 370 crore for DPAP in 2007-08, Rs 285.26 crore was released till January 31, 2008. Keeping the huge on-going liability in view, no new projects were sanctioned in the year. However during 2007-08 about 121 projects were completed. The DDP being implemented in Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka and Rajasthan covering an area 4,57,949 sq km in 235 blocks in 40 districts. The scheme includes hot arid non-sandy areas, hot arid sandy areas and cold arid areas. The Centre bears 75% of the cost of the project and funds are released directly district rural development agencies (DRDAs) or zilla parishads. Since 1995-96 till January 2008, about 15,746 projects covering an area of 7.873 million hectare was sanctioned and Rs 2,060.17 crore was released by the Centre. Against a budgeted provision of Rs 260 crore for DDP in 2007-08, Rs 222.18 crore was sanctioned, but no new projects was approved as the on-going projects were yet to be completed. The implementation of the government's two major schemes for dryland areas show that many sanctioned projects are yet to be completed and have overshot the timeframe. Mid-term evaluations conducted by independent agencies show some success stories in pocket areas, but more needs to be done to improve the lot of dryland farmers. Indebtedness of dryland farmers have increased leading to cases of suicides. Recognising the situation the government has recently come out with a Rs 71,680 crore debt waiver scheme for farmers across the country. But the farmers in dryland areas have little to benefit as the scheme has limited the beneficiaries to one to two hectare holding. Resource poor farmers in dryland areas have unproductive landholdings of larger size and their loan size is much larger than Rs 20,000 as estimated by the government. In fact the loan waiver scheme has made no special provision for dryland areas. However, the dryland farmers can benefit from waiver of investment loans on livestock and poultry, if attempts are made to target the resource poor farmers in these areas.... --------------------------- | 
