The "bitter" sugar-For consumers it is sweeter!

It is said rightly that only crying babies get attention from mothers and this applies to real life situations also when those seeking the attention always cry hoarse to get the same! Latest example is the sugar industry in India which is raising a huge hue and cry regarding the dire straits it is in because its inability to stand up to the challenges of price global melt down that is happening now. Though India is one of the largest sugar producing countries in the world, it is always Brazil that calls the shots in the sugar market because of its large cultivation area under sugarcane. This is understandable because this country has an agenda different from that of India as its mandated policy of alcohol blending with fossil fuels to the extent of 15% calls for huge production of ethanol from sugarcane which is being done directly from sugarcane juice itself rather than through the molasses route. This gives it a flexibility to switch the product mix depending on the market conditions. Due to its sustained efforts to expand sugarcane cultivation it extended the acreage by deforesting thousands of acres of forest land which in the end analysis might not turn out to be prudent because of its impact on climate changes. Any how at present it is enjoying an advantage in sugar production and it is true that a glut like situation has developed resulting significant price depression in the global sugar market. Here is a commentary on this development on which Indian sugar industry feels threatened.

"The apex body of Indian sugar industry red flagged "challenging situation" for the sector due to falling prices of the sweeteners, excess production and tightening of lending by banks that is forcing millers to sell at cheaper rates for generating cash-flow. The industry also expressed its fear of Brazil producing more sugar than ethanol because of falling crude price, which may make the situation worse for them. Raising the fear from Brazil, which could have serious implications on the international price of the sweetener, Indian Sugar Mills Association (ISMA) president A Vellayan said, "On the international front, due to the steep fall in oil prices, there is clear possibility that what might happen in Brazil is the shift from ethanol to sugar production. With the Brazilian currency falling, the price of Brazilian sugar will be so cheap that it will threaten to come into India and despite the import duty, it will be cheaper than Indian sugar."  He said government must take all possible steps to ensure that no quantity of sugar gets imported. "That's why we are demanding 40% increase in import duty and extending the subsidy for export of raw sugar so that we can export our raw sugar before the prices fall further," Vellyan said. Brazil is the biggest producer of sugar and ethanol as well."  

Added to the production glut, Brazilian currency is also depreciating making its sugar cheaper than that of India. Whether the government of India will listen to the Association and put restrictive controls on sugar imports or increase the import duty remains to be seen. Sugar scenario in India is very complex and no single step by the government can restore stability to the sugar trade.Farmers are encouraged to go in for sugarcane cultivation by providing irrigation facilities and imposing minimum support prices at which sugar mills must buy the cane from the farmers. Also there are still some controls on release of sugar by the mills in the open market , the so called "free sugar" because of government's need to buy sugar at low prices to feed the public distribution system in the country. Thus sugar may be bitter for the mills at present because of declining prices but consumers should have no complains at getting sugar at cheaper prices! However how this distorted conditions will work out for the farmers as well as the industry in the long run must concern the government which has tied itself into knots through short sighted policies during the last 5 decades.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

IS THE FOOD GRAIN POLICY OF GOI IN SHAMBLES? APPARENTLY SO!

The food glut scare is giving no sleep to the babus in Delhi who are running helter skelter to find a way to manage the grain stocks, old as well as new, now being procured without inviting Supreme Court wrath or consumer backlash. As there are no long term policies in place governing agricultural production and export, the dynamics of grain flow change from day to day. If exports are allowed to day, it could be banned tomorrow when there are some protests from the people. The crop pattern in the country also is highly skewed with water guzzling crops like Sugarcane, Banana and wineyard grapes getting preference in water utilization policies pursued during the last few years. Immediate concern is whether surplus food grains over and above that is required for domestic consumption between the harvests as well as for food security, reported to be sufficient to feed half the population for an year, can be safely exported without causing any price distortion in the market place. Some experts feel that it is safe to export a predetermined quantity of grains as a part of a long term export policy with flexibility to increase whenever there is too much of a surplus. However a timid government with the 2014 election uncertainties staring at it, does not seem to have the courage to open up grain export for earning valuable foreign exchange. Here is a take on this issue which is a "hot potato" for Delhi to handle comfortably! 

"India should adopt an 'open' policy for food grains exports so that small farmers are benefited from prevailing higher global food prices, Shenggen Fan, Director General, International Food Policy Research Institute (IFPRI) on Friday said. India must also reduce rising food subsidy by 'better' targeting of Public Distribution System, Fan observed. "At present the PDS is not well targeted which is leading to pilferage of food grains. By reducing food subsidy, more financial resources could be allocated for research and development in agriculture," Fan told FE. "India being the biggest the rice exporter must have an open export policy for increasing farm income realistion ," Fan commented. India has emerged as the world's biggest rice exporter in 2012 surpassing Thailand with shipment of around 10 million tonnes after a four year old ban on rice exports were lifted in 2011. He said China may increase the volume of rice import from India in coming years because of rise in cost of farm production. China's total rice import was 2-3 million tonnes from Vietnam and India last year. "It is just a beginning and China's rice import from India could enhance in the coming years with cost of labour, water and land increasing. Also, it is cheaper to import food grains from India instead of providing subsidies to farmers," Fan, the head of the key global think tank observed India has a huge food grain stocks – mostly rice and wheat, due to bumper production last year. The rice and wheat output was reported at record 104.32 million tonnes and 93.90 million tonnes, respectively. Due to US drought, the global food prices are expected to higher and volatile during the year, He said due to uncertainty in supplies of wheat, corn and other crop because of drought in many parts of the world is expected to keep supplies situation 'volatile'. "We need stability in higher food prices as because of lack market access small farmers have not been able to take advantage of the prices," Fan said while predicting that global food prices during the year will be 'high and volatile'. On level of poverty in Asian countries like India and China, Fan observed, "The region as a whole is not on track in meeting the millennium development goal (MDG) of cutting the rate of undernourishment by half between 1990 and 2015." "India accounts for some 217 million or a quarter of all undernourished people globally. As a result, India is likely to miss the MDG target," he said. Calling for hiking investment in the agricultural research, Fan observed that agricultural spending in research and development generally has the largest positive effects on growth and poverty reduction. "For each unit of local currency spent on the agricultural R&D, on average 11 local currency units are returned. For every rupee invested in agri-research in India,Rs 13.5 is returned," a IFPRI study has stated. "Indian government should increase investment in agriculture, rural infrastructure and education as these have high payoffs in terms of raising smallholder farmers' productivity and incomes," Fan noted."

Is it not remarkable that Indian farmer has not failed the country in spite of enormous odds faced by him with severe water scarcity and limited support from the governments at the Center as well in the states and this year also a bumper harvest is predicted? Scores of farmers are starving and committing suicide with a sickening regularity because of many socio-economic reasons and the farm operations are increasingly becoming economically unviable with too many uncertainties. The small land holdings in the hands of small and marginal farmers cannot be expected to generate adequate cash for meeting the daily necessities of life for them. Cooperative model for integrated development of land does not seem to be working except in the case industrial crops like Sugarcane and Banana, that too monopolized by big land holders with powerful political connections. Under these circumstances Government must encourage exports in a big way and utilize the earnings for improving the lots of the poor farmers of India.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

IS THE FOOD GRAIN POLICY OF GOI IN SHAMBLES? APPARENTLY SO!

Many international experts believe that India has reached a tipping point as far decision making is concerned and if GOI does not face the daunting task of addressing the grain surplus on its hands, future governments and the nation will have to pay a heavy price for shirking the responsibility. Shockingly the very fear GOI is having regarding food inflation if massive export is allowed right now is going to haunt it later because locking up the grains under unsafe conditions and starving the market can lead to only sharp increase in prices which is already being experienced by the middle class population most of whom will have to depend on free market grains for their day to day sustenance. With the general election due any times now, sooner this policy jam is removed better it will be for the country at large. Here is some critical commentary on this vexatious issue now being faced by the country.   

"India should adopt an 'open' policy for food grains exports so that small farmers are benefited from prevailing higher global food prices, Shenggen Fan, Director General, International Food Policy Research Institute (IFPRI) on Friday said. India must also reduce rising food subsidy by 'better' targeting of Public Distribution System, Fan observed. "At present the PDS is not well targeted which is leading to pilferage of food grains. By reducing food subsidy, more financial resources could be allocated for research and development in agriculture," Fan told FE. "India being the biggest the rice exporter must have an open export policy for increasing farm income realistion ," Fan commented. India has emerged as the world's biggest rice exporter in 2012 surpassing Thailand with shipment of around 10 million tonnes after a four year old ban on rice exports were lifted in 2011. He said China may increase the volume of rice import from India in coming years because of rise in cost of farm production. China's total rice import was 2-3 million tonnes from Vietnam and India last year. "It is just a beginning and China's rice import from India could enhance in the coming years with cost of labour, water and land increasing. Also, it is cheaper to import food grains from India instead of providing subsidies to farmers," Fan, the head of the key global think tank observed India has a huge food grain stocks – mostly rice and wheat, due to bumper production last year. The rice and wheat output was reported at record 104.32 million tonnes and 93.90 million tonnes, respectively. Due to US drought, the global food prices are expected to higher and volatile during the year, He said due to uncertainty in supplies of wheat, corn and other crop because of drought in many parts of the world is expected to keep supplies situation 'volatile'. "We need stability in higher food prices as because of lack market access small farmers have not been able to take advantage of the prices," Fan said while predicting that global food prices during the year will be 'high and volatile'.On level of poverty in Asian countries like India and China, Fan observed, "The region as a whole is not on track in meeting the millennium development goal (MDG) of cutting the rate of undernourishment by half between 1990 and 2015." "India accounts for some 217 million or a quarter of all undernourished people globally. As a result, India is likely to miss the MDG target," he said. Calling for hiking investment in the agricultural research, Fan observed that agricultural spending in research and development generally has the largest positive effects on growth and poverty reduction. "For each unit of local currency spent on the agricultural R&D, on average 11 local currency units are returned. For every rupee invested in agri-research in India,Rs 13.5 is returned," a IFPRI study has stated. "Indian government should increase investment in agriculture, rural infrastructure and education as these have high payoffs in terms of raising smallholder farmers' productivity and incomes," Fan noted. 

The argument that India must invest more on agricultural research is well reasoned one and to add to this it may be appropriate that more focus is made on pulses and oil seeds, both in tremendous short supply currently. According to dispassionate observers GOI's obsession with crops like cereals, sugarcane and other crops, ignoring the precarious situation vis-a-vis pules and oil seeds can further exacerbate the food security problem in the coming years. A population fed on a predominantly carbohydrate diet cannot be expected to be healthy as per present nutritional norms. It is time GOI addresses these issues without losing further time and take a long term agricultural policy decision based on domestic food needs and export potential for commodities in which the country has excelled itself.  

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

SKIM MILK POWDER-A NEGLECTED COMMODITY

Way back in 1950s, 1960s and 1970s, milk was a shortage commodity priced heavily as it was being imported. Skim Milk Powder (SMP) being donated by charity organizations abroad invariably found its way to the market at some what lower prices. In fact many hotels used to depend on such illegal powder supply to stay in business as the then production was grossly insufficient to meet the demand. Under the Operation Flood program, pioneered by late Dr V Kurien was supposed to have overcome the milk shortage and it is another story that India went on to become the top milk producing country in the world. With many dairying units coming up in the cooperative and private sectors, milk availability, 24/7 became a reality. Under such a condition it is not understandable why there should be shortage of milk powder in the country in recent years? The frantic efforts being made by the down stream users of milk powder in stocking this precious commodity, as being reported in the media, provide a sad reading about the working of Indian dairy sector. Here is a take on this issue.  

'Food, beverage, milk and ice cream companies, from NestleBSE -0.60 % to Vadilal, have started purchasing skimmed milk powder (SMP) six months in advance to beat the shortage that usually hits the market in summer. Current prices are 10% to 15% cheaper than the previous year at Rs 140 a kg owing to a huge stock in the country. However, with international prices firming, the domestic players expect to see prices being bullish in the coming days.  "Compared to the previous year the prices are cheaper by 10%. We have started making small purchases," says Rajesh Gandhi, MD, Vadilal IndustriesBSE -4.12 %. The icecream manufacturer whose peak capacity reaches 3.75 lakh litre in summer is set to procure 1,700 tonne SMP in the coming months. The SMP prices have fallen to Rs 140 a kg from Rs 160 a kg in the month of February this year.  As per the industry estimate there is close to 80,000 tonne of SMP lying with both milk co-operatives likeMother Dairy, Gujarat Co-Operative Milk Marketing Federation (GCMMF) and Karnataka Co-operative Milk Producers' Federation and private players like Sterling Agro, VRS Foods, Bhole Baba, HatsunBSE 1.58 %and so on. Apart from milk co-operatives, major SMP purchasers include companies such as GlaxoSmithKline India, Nestle, Cadbury, ITCBSE -0.09 % and Parle. "With prices moderate compared to the previous year, the purchases have begun in advance, though we anticipate a hike in the coming days," says Mayank Shah, group product manager Parle Products. Parle-G is the glucose biscuit brand from the country's largest biscuit manufacturer Parle Product. On Thursday, the Animal Husbandry & Dairy Department while reviewing the stock position in the country, felt that there were ample stock in the country. "Unlike the previous year we don't need to import SMP this year," says Rajni Sekhri Sibal, Joint Secretary in Union Agriculture Ministry's Department of Animal Husbandry and Dairying. Rajni added that with SMP prices gaining by 3.9% on Wednesday at the Fonterra's Global Dairy Trade online auction at $3,449 a tonne, the domestic prices might firm. The Rs 11,668-crore Gujarat Co-Operative Milk Marketing Federation (GCMMF) that markets dairy products under Amul brand is getting orders of over 2,000-3,000 tonne of SMP per month from Pakistan, Afghanistan, Bangladesh and other middle-eastern countries, unlike 2011 when exports were banned said GCMFF, MD, RS Sodhi".

Considering that value added products from milk are limited in range and volume, why there should be panic in the market is not understandable. After all there is no restriction on the price or import of milk powder and those needing it can always get it from any where in the world. It is unfortunate that the powder sold in the market to bulk buyers at Rs 140-150 per kg is offered in the market to retail consumers at double this price. To further fleece the consumer many companies are selling skim milk powder blended with powdered sugar at prices even higher, ostensibly as coffee whiteners. As for the consumer milk powder can be a valuable raw material for making fluid milk as well as other traditional products if available at affordable prices. After all one should not forget that milk powder is made from surplus milk when supply is more than the requirement and most dairy units in the country reconstitute it into fluid milk for sale during summer season when there is supposed to be a production dip. There is no two opinion that skim milk powder must be made more affordable and offered to the consumer at reasonable prices either through the milk distribution net work or in retail shops. It should not be forgotten that for a predominantly vegetarian population milk is the major source of good quality protein and a host of other vital nutrients like calcium. 

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

WELL DONE VIETNAM!-NEW SAFETY MEASURES FOR CONSUMER PROTECTION

Who does not know the human sufferings in Vietnam during the much hated War involving the United States and the Communists which ended eventually after the fleeing of Americans and their cohorts from Saigon in 1975. It is remarkable that this tiny country could recover from the trauma associated with the war and be counted as an economic power house on its own in such a short time. That the country had to start from the scratch to build a viable nation respected by the international community has not deterred it from taking up programs that could uplift the economic well being of its war battered people. It is amazing that Vietnam has one of the fastest growing economies in the world to day and it is the topmost exporter of Cashew nuts and Pepper while its rice exports are next only to the world leader Thailand. Recent news that Vietnam has put in place a rigorous food safety regime to protect its people can bode well for their future, domestically as well as internationally. Here is a take on this emerging development in Vietnam.  

"Under a newly-issued circular from the Ministry of Agriculture and Rural Development which will take effect from September 3, all products and by-products from animals including heads, tails, legs, skin, grease and edible innards must be sold within eight hours at room temperature. Meat products stored from 0-5 Celsius degrees can be sold within 72 hours while by-products in the same conditions have 24 hours to be sold. The measures include a requirement for legal slaughter checking and quarantine stamps on products. A ban on the use of preservatives on raw products and by-products was also included. Butchers and all others involved in slaughtering and transport are required to have a certificate issued by a medical unit from district levels. Last month, there were 16 food poisoning cases nationwide affecting 531 people. Two deaths were reported. In total, some 2,400 people suffered food poisoning, including 16 deaths, in the first seven months of the year".

The new food regulation concerning the safety of products and by-products of meat industry speaks well of the intention of the country not to compromise on the health of its citizens. Contrast this with the situation obtaining in India where the meat industry, catering to domestic consumers, is literally in tatters with no serious monitoring or regulation of its activities. It is common to see carcasses hanging openly on road side vending kiosks, exposed totally to the dust and grime raised by the fast plying automobiles, three wheeler and two wheeler vehicles spewing toxic fumes copiously. Low temperature storage is rarely resorted to and the meat cuts offered must be one of the most contaminated foods in the world. Most of the thousands of slaughter houses run in civic areas are filthy and nauseating and how the consumers are putting up with such conditions is a mystery. Probably the prevalent practice of over cooking the meat once brought home, is thought to be a factor that is responsible for very few safety related episodes in India. Vietnam with less than 100 million population and a per capita income of hardly $ 3500 (PPP) has done exceedingly well in the area of food safety measured by any yardstick, leaving behind its giant fellow Asian countries like China and India.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

POLICY PARALYSIS-IMPACT ON FARM FRONT

The present government in India is being criticized by many dispassionate observers for not taking right decisions at right time on many issues leading to distortions in the development of the country. This situation often described as "policy paralysis" can have long term consequences on the orderly progress of the nation affecting the lives of the 1.2 billion plus people inhabiting the country. There is no unanimity within the government itself as reflected by the divergent views expressed by the ministers on many issues that concern the nation. Latest to come to the fore is regarding the export policy which is causing lot of heart burns among some sections of farming community. Whether it is the wheat, sugar or cotton, government invariably takes long time to decide what to do with the surpluses putting every body involved in unnecessary suspense, some time causing economic losses in the process.  Recent open letter by the Agri Minister to the Prime Minister criticizing some of his own colleagues is a classical example of such a policy paralysis whereas what is needed is a dynamism to address the issue promptly before any damage is done. Here is a take on this episode which could have been avoided if there is a vibrant government sensitive to the needs of the country. 

"Irked by curbs on milk, cotton and sugar exports, Agriculture Minister Sharad Pawar has shot off a letter to Prime Minister Manmohan Singh stating that the government's policies are hurting farmers who are being asked to subsidise the industry. Pawar wrote to the Prime Minister yesterday, a day after group of ministers disallowed cotton export beyond 13 million bales for the current marketing year. He strongly criticised Food Ministry headed by KV Thomas and the Textile Ministry under the charge of Anand Sharma for the policies which are "ambivalent" and go against farmers. Describing restriction on cotton exports as "retrograde", the NCP chief said: "Indian cotton farmers should not be asked to bear the burden of subsidising the textile mills. "Compromising the interest of small cotton farmers to benefit the textile magnates is indeed a travesty of justice. Moreover, it defies logic to permit the consumer of cotton (textile industry) to dictate terms to cotton producer...". Similarly, he said the "negative approach" of the Food Department in allowing sugar exports has led to heavy losses in export earnings which could have been used to clear cane arrears to farmers that have crossed Rs8,000 crore. Pawar told the Prime Minister, "On numerous occasions I have discussed with you the need to have farmer-centric agriculture policy...On each of these occasions, I have found you in consonance with these ideas. "However, despite this our government has time and again taken decision which go against the interest of the farming community and adversely impacts its growth and stability". High input cost and low realisation from his produce has pushed the farmer into a corner where he fights for his survival, he said, underscoring the need for a free trade regime to ensure a remunerative prices to farmers".

Whether farmer or consumer is supreme is a question that must be haunting the government as any action taken in agricultural front should be equitable to both. Inordinately high prices paid to the farmer can have negative consequences on the consumer in the form of high food inflation making the lives of many poor citizens miserable. Similarly unduly favoring the consumers by depressing the prices of agri commodities will have disastrous impact on the agri front affecting the production and availability adversely. Free trade regime as is being talked about is ideal but if agri production is affected by drought or other reasons, the market conditions can get distorted because of mismatch between demand and supply. Whether any responsible government in India which depends on rain Gods too frequently to come up with normal agri production can adopt such a model is doubtful. Unless a stable and dynamic export policy regime is put in place both farmers and consumers are bound to suffer. When taking decisions the impact of the same on the domestic front should not be ignored. While cotton and sugar are commodities which can be left to the free market forces, more care is needed when it comes to milk and food grains, prices of which in the domestic market should not be allowed to be distorted due to excessive exports.  

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

SPICE EXPORTS-STIFFENING INTERNATIONAL SAFETY NORMS

India's dominance in world trade in spices appears to be in danger if the industry does not rise to the challenges posed by new and more stringent quality and safety regulations which are being implemented by many buyer countries. According to the spice industry rejection rates of Indian shipments of spices are becoming alarming and considering that safety is of paramount importance, especially in Japan, Europe and the US, there should not be any surprise if these countries start clamping down on imports from India. The conventional attitude that buyers have no choice but come to India is no more relevant to day and if urgent pro-active steps are not taken to streamline many of the present industrial practices with more stress on safety, there are countries like Indonesia, Vietnam, China and some countries in Africa ready to step in to satisfy the spice needs of the world sooner than later. Here is a commentary on the subject which is an eye opener for spice industry for taking steps for self correction.    

"Indian spice traders and producers are facing challenges like food safety, sustainability and traceability. Food safety regulations are affecting spice exports especially to the countries like Germany, France, England, Japan and Australia. India is biggest producer and exporter of spices in the world. As the regulations varies from country-to-country, it is becoming hard to maintain all the required standards. According to reports, the total export of spices from India during the current financial year, up to November 2011, is 351,900 tonnes valued at Rs 6,209.08 crore. But considering the volumes, the export shows a decline of five per cent in the current year as compared to the previous year. The spices exports for the financial year 2011-12 is fixed at 500,000 tonnes valuing Rs 6,500 crore. The countries that import the maximum of spice products from India are Malaysia for chilli and coriander, USA for pepper, celery, spice oils and oleo resins, China for mint products, Saudi Arabia for cardamom, UAE for turmeric, Bangladesh for ginger and garlic, Pakistan for cardamom large and fennel, UK for cumin, Japan for fenugreek, Nigeria for curry powders and Nepal for other seed spices. Geemon Korah, CEO, Kancor Ingredients Ltd said, "These regulations are badly hitting our export markets. Therefore sustainability is a major issue. The maximum containers are rejected from European countries, Japan and Australia. We are largest exporter of chilli and ginger to these countries." "India is the largest producer, consumer and exporter of spices in the world today, contributing about 48 per cent of the world's requirement of spices. As the global demand for spices is spurring up, it throws up several challenges, mainly for food sustainability, traceability and safety standards. These are not just issues, but threats that can affect the very existence of the spice industry in the country," said A Jayathilak, chairman, Spices Board of India",

There is no point in blaming the buying countries for stiffening the safety standards because increasing knowledge about food contamination and its fatal consequences are forcing the whole world to do that for preventing food poisoning among their population due to imported foods. The Fenugreek "episode" in Europe last year for which imported sprouts from Egypt were blamed brought new focus on this issue and many importing countries are taking measures to prevent repeat of such incidences in future. If India has been caught in this "whirlpool", the country has to blame itself for the situation. No doubt Spices Board is doing a reasonably good job in disciplining the export trade but unless there is an unwavering commitment to quality and safety by the industry, the exports are bound to suffer in the long run.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

   

THE "OVER JEALOUS" BABUS-GUAR GUM EXPORT TO BE HIT

It is true that in Europe many member countries are scared by the increasing incidences of food safety breeches and the consumers want the EU to take more stringent preventive steps to arrest the trend. Against such a background they cannot be blamed if the safety bar is raised continuously which may not be liked by the countries exporting foods to this region. Latest instance is regarding the pesticide residue in Guar Gum, a food additive used mainly for viscosity modification and improvement textural properties in processed foods and beverages. Already there is a scare regarding the presence of Dioxin in imported foods and now comes the news that pesticide residues are also found in imported Guar Gum products beyond permissible limits. However, over reaction by exporting countries can only harm their exports as being demonstrated by the recent stipulation by Indian authorities not to allow export of Guar Gum unless it is free from pesticide residues like PCP. What is the provocation for this new stipulation is not clear. Is it based on technical evaluation of the situation or just an arbitrary decision? If the importing countries are making such demands, is it not incumbent on the part of GOI to negotiate and convince the buyers regarding the technical constraints in reducing PCP to zero level? is this ban based on international protocols or just a precaution? Industry has a right to know about it in a more transparent manner.

"Indian food-grade guar gum export to the European Union is set to take a hit as the commerce ministry has directed exporters that there should be absolutely no pesticide content in the product. Till now, the commerce ministry had allowed a 0.01 milligram of pentacholorophenols (PCP), a pesticide, in a kg of food-grade guar gum. The move comes at a time when the industry is flooded with orders from EU countries. "In FY10-11, the guar gum industry earned an export revenue of Rs 2,000 crore. And this year, the export trend is extremely positive. This recent notification (notification no. 47 RE-2010 dated May 18, 2011) has created a lot of confusion among exporters. We have taken up the matter with Director General of Foreign Trade (DGFT). We are hoping that things will be sorted out this week," said Debjani Roy, executive director of Shefexil. In fact, containers are piling up at Kandla port which is worrying guar gum exporters. The guar gum industry in India has been following the quality requirements as laid down by the EU commission directive (No 258/2010 of March 25, 2010) and DGFT notification (No 50/2009-14 dated July 6, 2010). "There has been no case of dispute with the PCP presence limit of below 0.01mg/kg of guar gum," Roy added".

If the importers want zero limit for PCP, they must pay for it and GOI must help the industry to strike amicable agreements with the buyers in stead of holding up export consignments without giving clearance. Pesticide residues in foods are attracting igreater attention all over the world and their presence in foods is not tolerated by consumers with increasing sensitivity to this issue due to fear of health risks associated with them. If pesticide use is inevitable there has to be a cost-benefit-risk assessment and only based on such evaluation decision regarding the residue level can be taken. Commerce Ministry of GOI must reconsider its decision based on technical considerations rather than pious attitude and "holier than thou" approach!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

INDIAN SUGAR-PREPARING TO ENTER THE WORLD MARKET

Though sugar is a much despised food and beverage ingredient being implicated in many health afflictions, there does not seem to be any let up in the demand for this commodity from users all over the world as reflected by the high prices prevailing in the global market. This is in spite of the fact that there has been a marked shift from white sugar to High Fructose Corn Syrup (HFCS) in most of the processed foods in many developed countries because of price advantage. Probably demand pull is coming from the direct consumers such as families, candy makers, restaurant sector and others who do not accept HFCS as a sweetener. India is the major country that produces sugar from cane, its production being the largest in the world. But sugar "politics" can be intriguing as the stake holders like politicians, sugar cooperatives and large users can distort the picture with disastrous consequences. Though sugar is considered "unhealthy" GOI guarantees adequate supply to consumers through policy orchestrations that holds the industry on a tight leash. It was in 2009 GOI imposed ban on sugar export to prevent "unrest" amongst the people as there was considerable dip in the domestic production of sugar. Suddenly India finds itself saddled with surplus sugar this year and the export policy has been revisited with clearance for export of limited quantities on a "quota" basis. What impact it will have on global sugar prices remains to be seen.

"Sugar exports are set to begin next month with the government likely to expedite the processing of applications from sugar mills for release of about 5 lakh tonne of sugar for exports . It is likely that the release order for export of sugar under the open general license will be phased out over a period to ensure that substantial quantity of sugar does not get exported at one go. "We now expect to have enough leeway to accommodate all stakeholder obligations even as we allow industry to export to strengthen their finances," an official in the know said. Last week, food minister Sharad Pawar suddenly upped, for the first time, sugar estimates for this year by 1.5 million tonne to 25 million tonne, at par with industry estimates . Large exports from India could swiftly depress global sugar prices, frittering away the very advantage that the sugar mills and exporters from here hope to gain . This is the first time in nearly 15 years that the Indian sugar industry finds itself in a position of projected plenty even while the global market is experiencing supply tightness and firm prices. Raw sugar has risen to a 29-year high in New York on the apprehension that India may not allow too much exports. White, or refined, sugar for March delivery closed at $751.10 a tonne on NYSE Liffe in London by October end. The industry expects to produce nearly 25 million tonne of sugar this year and given the temptingly high prices outside, it is loathe to miss the chance to export and firm up its bottomline expeditiously".

Looking from another angle, India must feel happy that it can call shots in the world sugar market and as GOI wants to maximize the returns from exports, a "programmed" release of quota is being planned. There are already grumblings amongst sugar producers regarding the low quantum cleared for exports and it is unlikely that most of them will be benefited by this "liberalization" policy. The average price of sugar in the international

market is around Rs 32 per kg almost on par with the ruling domestic price. As such there may not be much benefit from exports though the country can earn some foreign exchange. The sugar policy of the GOI has never been based on realistic considerations and industry-friendly government invariably tries to maximize the returns to the sugar mills through control on its release into the market every month. It is a paradox that under the free market economy being promoted in the country, the sugar industry prefers a control regime to prevent any price crash that would benefit the consumers at large. There is an apprehension that sugar cane milling will become unprofitable if a free market is allowed to flourish because of depressed consumer prices.

V.H.POTTY
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JAPANESE FOOD INDUSTRY-CATCHING UP WITH THE WEST

Why is that Japanese food processing industry has not been able to make such an impact on the world scene like its counterparts in the electronic and automobile sectors? An obvious answer could be the total dissimilarity between what they consume and that consumed by rest of the world. But it cannot be the only reason. Chinese, both the mainland as well as the Taiwanese, have been able to achieve much greater success in the food sector than the Japanese. It has dawned on the food industry in Japan that its survival is not guaranteed by dependence on the domestic market only, forcing it to look outwards for growth and development.

"While Japanese products in the technology and auto sectors are household names worldwide, the same is not true in the food industry. But that may be about to change. As birth rates and the consumer market shrink at home, food companies in Japan are increasing the pace of their overseas expansions and trying to improve promotion of their brands. Analysts say that increasing sales abroad is crucial for manufacturers. To do so, the companies are combining, undertaking joint ventures, cutting production costs and creating strategies for new markets. "The domestic market is shrinking, deflation is cutting into sales and the sense of crisis is looming stronger and stronger," said Arihiro Muroya, a senior economist at Norinchukin Research Institute in Tokyo, an organization affiliated with the leading Japanese agricultural lender, Norinchukin Bank. The sector's strategy has been twofold. First, Japanese companies have been infiltrating the health food and condiment categories overseas with soy-based products like tofu in countries where few domestic companies can compete. Second, Japanese producers capitalize on cute Asian-themed characters like koalas and pandas and apply technology to make amusingly shaped treats to attract snack-happy consumers".

Japanese can play a strong role by getting into the machinery sector for which they have the necessary experience and expertise. Success however will depend on the cost as processing machinery made in Japan can have a ready acceptance. How far it can sell these machinery at costs, cheaper than those made by its counterparts from the US, Europe, Canada and Australia will decide about success in this direction.

V.H.POTTY
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INDIAN SPICE EXPORTS-THE CONTAMINATION ISSUE

Spices like black pepper are getting the attention now a days for all wrong reasons. Incidences of recall of meat products tainted with Salmonella in the US market have been attributed to use of contaminated spices by the processors and as most of the spices are sourced from countries like India, focus is going to be on the suppliers from Asian countries regarding their ability to ensure supply of contaminant-free ingredients. Though legislation to make imports more difficult by making regulatory regime more stringent has been stalled for the time being, suppliers of spices and spice ingredients must see the writing on the wall and gear up to increase vigilance and tighten the quality monitoring systems to meet with 100% safety concerns of international buyers.

"Jeff Farrar, the FDA's associate commissioner for food safety, said the government wants the spice industry to do more to prevent contamination. That would include using one of three methods to rid spices of bacteria: irradiation, steam heating or fumigation with ethylene oxide, a pesticide."The bottom line is, if there are readily available validated processes out there to reduce the risk of contamination, our expectation is that they will use them," Farrar said. But the FDA cannot currently require it. Legislation pending in Congress would require food companies to take steps, such as treating raw spices, to avoid contamination. The measure would also mandate that importers verify the safety of foreign suppliers and imported foods. The House overwhelmingly approved the bill last year, but it has stalled in the Senate".

Sun drying of spices by producers can cause contamination from the atmosphere, especially if the environment is not clean and proximity of drying yards to meat processing or waste processing areas can contaminate the products being dried. During storage also cross contamination can occur resulting in products of questionable microbial quality. The laudable efforts of the Spices Board to encourage pepper washing and drying before export are followed by many processors and if this is combined with in-package sterilization with irradiation, India can guarantee supplies with unquestionable safety.

V.H.POTTY

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