MNC RETAIL GIANTS-INDIA TO "BEND" THE FDI POLICY FURTHER?

After the euphoria about the likely massive inflow of foreign investment in multi brand retail market operations in India, the earlier enthusiasm seems to be fading in the light of the prevailing ground realities in the country. Many critics raised the issue regarding the adverse impact the new policy would have on the 8 million and odd domestic traders and small stores because of the deep pocket the MNCs have in aggressively pushing their agenda. Eventually it was feared that millions of people would be deprived of their livelihood by the modern air conditioned super markets and malls that may come up under the aegis of internationally established and recognized brands. Now comes the news that some of the major global players are putting pressure on the Government to modify the policy and they seem to be "concerned" about the preconditions like mandatory procurement of 30% of their products from local sources and investment requirement on back-end operations, the very heart of the policy to protect the local interests. Here is a take on this "behind the scene" maneuvering going on at Delhi to influence the government!

"Among the norms making global players jittery are the 30 per cent mandatory sourcing from small and medium enterprises, at least 50 per cent investment in back-end infra and state-wise approvals. The government's stand on not allowing FDI in e-commerce is also seen as a hurdle, as most foreign chains have been pushing the on line format to cut cost and beat competition. According to highly-placed sources, the French retailer, which was keen to expand India footprint from being just a cash-and-carry (wholesale) player, is now "going slow" and might even decide to "review" its investment plans, if things didn't go according to its expectations. Top Carrefour representatives, in their meetings with the government, are learnt to have demanded certain significant changes in the policy. To address foreign retailers' concerns and to woo them back, the commerce ministry is understood to be planning to issue a comprehensive clarification. Asked if the company was reviewing its India plans and had conveyed its disappointment to the French and Indian governments, Carrefour's India spokesperson said the company had "no comments" to offer. Besides India, where it only has cash-and-carry operations, Carrefour is present in two other Asian markets - China and Taiwan. As of December 2012, it had 218 hypermarkets in China and 61 hypermarkets and three supermarkets in Taiwan. Over the past few months, it has withdrawn from key Asian markets like Singapore, Malaysia and Indonesia, to reduce debt and generate cash flow. Among other geographies, it has exited from Colombia and cut stake in Turkish business, triggering speculation it might withdraw from there, too. In India, Carrefour runs a fully-owned cash-and-carry business, with four wholesale outlets - one each in Delhi, Jaipur, Meerut and Agra. It has yet to identify an Indian partner for retail operations.On the other hand, the US' Walmart, which has 20 wholesale outlets in India under a 50:50 joint venture with Bharti, is expected to extend the partnership for front-end retail, too. The UK's Tesco has a franchise agreement with the Tata group for back-end and wholesale; these two are also likely to extend the partnership for retail"

Whether government will buckle or not remains to be seen. However one thing is clear about the so called "muscle" of MNC retailers which was feared to annihilate the poor "mom and pop" stores round the corner of ever street in the country. In spite of massive efforts and investments by many industry giants who entered the retailing sector during the last one decade the organized players have not been able to capture even 5% of the business generated by this sector! Only future will tell whether MNCs will be able to fare better than their domestic counterparts. If government does relax the provisions related to domestic procurement and investment in back end infrastructure, it does not need any extra intelligence to predict that India will be swamped by cheap Chinese products sounding a death knell for the domestic players. Already Chinese products are dominating the markets for many consumer products but food products from China are yet to make a mark. One can only hope that government will stick to the original policy without bending backwards to the clout of some of the retail giants who are eying the lucrative Indian market. 

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

CRAZY IDEAS FOR CRAZY SITUATION!-SUGGESTION FOR FOOD STOCK LIQUIDATION

Food grain surplus available with Government of India is increasing every year due to the diligence of the farmers and decent procurement prices ( MSP) offered to them. On one hand MSP provides the farmer a safety net so that he is not exploited by the traders while increasing flow of grains into government granaries is creating an infrastructure jam in the form of inadequate safe storage facility and lack of quality and management factors. In spite of strictures from the Supreme Court on the wastage of grains year after year, very little has been achieved so far address the storage problem. Suggestions are made from time to time regarding the best way to get rid of the stored grains held beyond the food security linked storage level though Government is still not sure as to how this food surplus is to be tackled. Latest view on this subject is bizarre in that it suggests that eligible consumers are to be supplied with their 3 years' grain requirement at one go to get rid of the grain stock! Here is a take on this "hilarious" suggestion.      

The paper noted central agencies had excess stock even after taking into account what was needed for the FSB. The authors calculated that stocks with the Food Corporation of India (FCI) would be in excess of 30 million tonnes as on July 1. The value locked in these ranges from Rs 70,000 crore to Rs 92,000 crore. The paper suggested states where the Public Distribution Systems have been integrated with Aadhaar, the citizen identification number, be allowed to lift 36 months of their off take requirements at a discounted price. The discount, the authors suggested, would be equal to the cost of carrying by FCI. These states can ask consumers to lift their 36 months' quota at one go, with a discount on the PDS price. That way, consumers can get a larger quantity of grain and FCI would have more storage space. One of three other alternatives suggested is an open market sale scheme at last year's MSP, beside a maximum of five per cent taxes, cess and others.

Those who make the above suggestion must be out of their mind because they have no idea as to what will happen to the quality of grains if they are stored at the consumer end. Food grains are vulnerable to infestation by insects, prone to attack by rodents and can cause irreversible changes in quality and nutrition progressively with time. Even the FCI, government's food grain procurement and storage arm finds it difficult to prevent spoilage in spite of their scientifically constructed storage structures and how can one expect that a family can keep the grains safe for 3 years? One should not forget the oft repeated claims by food experts that post harvest food losses in the country can be any where from 25% to 40%! Both Planning Commission as well as the government officials including the Prime Minister routinely talk about such food wastage in the country though at the ground level not much is being accomplished to save these grains from spoilage! This suggestion is outlandish and it only will enable the government to shift its responsibility of protecting the food to the poor citizens.  

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

STREET VENDORS IN INDIA-THE ELECTION EVE ATTENTION FROM THE GOVERNMENT!

World over street foods are offered from the side pavements of many roads in major cities and towns where real estate is exorbitantly expensive and non-affordable to most small scale food vendors. It is true that this is a despicable practice due to its nuisance value to the citizens who are forced to walk on busy roads endangering their lives in the process. From time to time eviction efforts are made by the civic authorities but without much lasting success. Though most street vendors are supposed to be poor, they bribe the police as well as the civic officials to continue with their business without any harassment and hindrance. Since this sector has grown rapidly due to the affinity of even well to do citizens to the hot foods served by them on the road side, wishing away this phenomenon is no more possible and it has assumed a different dimension from a humanitarian angle. It is unbelievable that in India there are about 10 million hawkers across all the cities and towns doing a thriving business and since they constitute a sizable vote bank, the present political dispensation ruling in the country, in a desperate effort to expand its vote bank,  has cast its eyes on this group promising many things to attract their loyalty. A bill to offer many sops to these vendors has been just cleared by the government which is sought to be rushed through the Lok Sabha shortly. Here is a take on this new "sop avatar" being pushed through hastily for reaping the "harvest" in the forthcoming national election.

Ahead of the 2014 elections, the UPA government on Wednesday offered a major sop to the about 10 million street vendors across India – a part of its targeted aam admi vote bank. After hanging in fire for over a year, the Union cabinet cleared the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Bill, which once enacted will go a long way in protecting the rights of vendors by giving them legal protection. Presently, there is no law to regulate and safeguard the interest of urban street vendors in India The bill mandates municipalities to set up restriction free vending zones/ night bazaars where hawkers can sell their wares without being harassed by the authorities. Town vendor's committee which will have representatives from municipalities as well as vendor associations will demarcate space where vendors can operate. The Housing & Urban Poverty Alleviation ministry which is piloting the bill intends to introduce it in the ongoing budget session of the Parliament. However, it looks unlikely with the opposition continuing to disrupt the session. The bill will allow anyone over 14 years to apply and register as street vendor on payment of one time fees. Once registered, the vendors would be given identity cards entitling them to sell their wares in specified vending zones. It will do away with the existing license system that has become a tool of harassing the street vendors. In a city, 2.5 % of the total population would be eligible to register as street vendors. Besides, it will also help authorities regulate hawking activities in public spaces such as pavements, parks, and thoroughfares. The bill was earlier introduced in Lok Sabha last September and was subsequently referred to the Standing Committee on Urban Development. The committee which made several recommendations such as allowing vendors outside railway stations to be included under the bill's ambit were incorporated by the urban poverty alleviation ministry in the draft bill that was cleared by the cabinet Wednesday.

It was almost 25 years ago that the issue of street hawkers was brought to national attention and a few NGOs did try to bring in reforms to streamline the vending kiosks emphasizing on hygiene, sanitation and consumer safety. Many civic bodies introduced a sort of licensing and monitoring their activities through their health department officials. Even international attention was focused for some time on street vending which is prevalent in many countries in Asia and lot of efforts were made to "modernize" the kiosks with emphasis on cleanliness, safe water use and strict personnel hygiene. The present Bill is a good initiative and if properly drafted to cover the entire gamut of the issue, it can be a significant step in creating a win-win situation to both the vendors as well as the consumers. Unfortunately political chicanery to steal credit may yet derail the Bill. It is imperative that all political parties irrespective of their color or creed or biases contribute in refining the Bill so that it is practical, useful and of immense benefit to the urban consumers.    

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

THE SUGAR "CIRCUS"-A QUESTIONABLE GOI DECISION

Decontrol of sugar from the clutches of GOI was on the card for the last one decade though a vacillating government was not able to take courage in its hands due to political reasons. The recent announcement that the GOI would free the politically powerful sugar industry from the levy policy, whereby mills are forced to sell their products as per the quota fixed from time to time decides by GOI, must be a music to the industry. Whether this new policy will be accepted by the states will have to be seen because they are bound to buy the sugar from the industry at market prices for supply through the PDS at subsidized prices, expecting to be reimbursed the difference by the Center. Whether this is a industry friendly policy or the one that is favorable to the citizen is a matter of conjecture though prima facie industry is going to be largest beneficiary under the new policy. The new policy which is just approved may still be stillborn and one has to wait and see whether it will be implemented in toto. Here is a take on this new significant development.

"According to a mechanism approved by CCEA, states will now purchase sugar from open market through a transparent bidding process and sell it cheap through ration shops. The difference between the two prices will be borne by the Centre, but with a cap of two years. "According to our estimate, the current market price of sugar is Rs 32 per kg, while the price under the public distribution system (PDS) is Rs 13.50 per kg. This difference between these two prices will be paid to states. For this, the Centre will bear an additional subsidy burden of around Rs 2,700 crore," Food Minister K V Thomas told reporters after the meeting. He also assured there would not be any increase in the retail sugar price, as ample sweetener was available in the market. However, if the difference between market price and ration price rises during two years (up to September 2014), the extra burden would have to be borne by states. The sugar season runs from October to September." 

It is rather intriguing as to why GOI is so much fixated on a commodity like sugar which is now considered as "white poison" by the health experts and which has made a country like the US a morbid one with obesity and diabetes widely prevalent. While under the proposed Food Security Bill a substantial segment of country's population is being guaranteed of their basic needs of food calories through heavily subsidized grains which is understandable to some extent, subsidizing sugar cannot be justified in any manner considering that it is not an essential food for survival.  If one extends this logic there is no justification under any "National Agricultural Policy" in wasting precious land, water and other resources on sugar cane which is depletes the soil of its natural nutrients fast. A more logical alternative option could be to divert most of the land presently being cultivated with sugar cane for producing pulses and oil seeds in a phased manner.  

V.H.POTTY

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A PRESIDENT'S NOSTALGIA!-THE "SLUG" STILL CRAWLS!

A former minister, in his new avatar as the latest  President of this country recently had a chance to say some thing about Indian agriculture which is interesting to hear. It is a pity that after practically wasting 65 years since independence, now comes the realization that the country's agricultural situation is not good and the farmers in this country are not well off! Being a part of the so called planners for almost 5 decades, now turning around to blame the very same planners for not achieving prosperity through more farmer oriented programs with significantly visible impact is some what far fetched which may sound hollow. Still the fact uttered by him is 100% correct and the country must introspect as to why farmers are committing suicide in droves in spite of trillions of rupees pumped into the economy in the name of farm subsidies. Every government with a tenure of five years does not take seriously long term needs of the country, being busy managing day to day chores that will not precipitate any immediate crisis! Here is the statement of the President in a conference in Ludhiana which tells its own story.  


President Pranab Mukherjee on Tuesday underscored the need for a rethink on the agriculture policy to ensure food security in the country and meet key challenges in the farm sector. Addressing an assembly of academia and experts at the international conference on 'Sustainable Agriculture for Food and Livelihood Security' organised by Punjab Agricultural University to mark its golden jubilee, the President sought to know why despite an overall improved growth scenario in the country, economic viability of agriculture sector continued to be a challenge. He asked policy planners to ponder as to why prosperity eluded a large part of the agriculture sector despite government programmes and schemes that were backed by efforts of the scientific and corporate community. "We must have in place a coherent and comprehensive policy that has synergy among its elements. Government initiatives are of little use without efficient system for their implementation. Equally important is the necessity for collaboration between the state and Central governments on monitoring and appraisal of various schemes. A coordinated and integrated approach should start at the grassroots," he said.

if politics were not injected into the rural sector, especially in a country considered grossly under developed viewed from literacy angle, it takes lot of dedication, hard work and commitment to develop rural agriculture. A prospective but dynamic policy frame work with clear cut long term goals and mode of action must be evolved that will keep in view country's food needs while farmer prosperity is not jeopardized. If the farmers are happy the country will be well off without any foreign prop. What prevents succeeding governments from formulating such a policy is still a mystery. Funds are available, land is plenty, farmers are hardworking, consumer demand is high, private entrepreneurship is commendable and modern technologies are continuously being developed but still the country is just limping along with mediocre performance in farm sector. If President's words are sincere he must energize his government in evolving a dynamic farmer driven agricultural policy that will bring further prosperity to this country.

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

INDIA'S GRAIN HARVEST-QUANTITY VS QUALITY

Government of India (GOI) appears to be gloating over the performance of the farmers in achieving a record production of food grains this year, as being predicted by its expert forecasters. Whether this has happened because of GOI or in spite of it, is a million dollar question. Interestingly if there were shortfalls, GOI would have blamed failure of rains or trotted out some other excuse while farmers' success story is promptly touted as its own with no sense of shame!  A closer look at the statistics of production at the disaggregated level will reveal a different story. While wheat and other cereals except coarse grains have shown higher production, it is alarming to see the production of pules and oil seeds dipping to dangerous levels with decreased production to the extent of 10-15% and the aam aadmi cannot but shiver looking ahead what is in store for him in the coming months vis-a-vis the the availability and cost of these vital foods. If GOI cannot bring about a positive change in the nutrition quality of grains produced by increasing the production of oil seeds and pulses, it has no right to claim that it is working for the interests of aam aadmi! If this is not a failure of GOI agricultural policies, what else it can be? Here are the details of this sad story coming out of GOI's own backyard!

"The government's food grain storage woes have turned more acute, with food grain production for 2011-12 estimated at an all-time high of 252.56 million tonnes, almost 3.1 per cent more than that the previous year's production. This may help provide a minor boost to India's economic growth in the previous financial year, estimated at 6.9 per cent. While releasing the third advanced estimates of agricultural production in 2011-12, Agriculture Minister Sharad Pawar said storing such huge quantities of grain was a concern. "The overall food grain production is good. The only problem is storage," Pawar told reporters, adding the issue was being addressed by the food ministry. Pawar had recently urged Prime Minister Manmohan Singh to call a high level meeting of all stakeholders to discuss the storage problem. He had said if the issue was not resolved, it might affect the morale of growers. According to official estimates, the country's food grain stocks are expected to rise to 74 million tonnes by June-end, compared with the available storage capacity of about 64 million tonnes".

The situation becomes more pathetic when it is conceded that the MSP policy of the government is attracting farmers to dump their grains at the doorsteps of FCI which has no idea where the newly procured grains are going to be stored! It is known during the last few years that precious little has been done to establish a sound storage infrastructure for long term and safe storage of procured grains. Every citizen in this country has to hang his head in shame when it is universally known that the food grains stored in FCI grain storage structures are of very low quality with substantial portion unfit for human consumption!. In stead of finding ways and means to remedy this situation, the great policy paralysis and bureaucratic inertia at the government level is continuing to bleed the nation grievously. It is time that government takes proactive steps to address these woes through concrete action rather than indulging in bald and meaningless proclamations without any substance.

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

   

FOOD SECURITY-ANOTHER PERSPECTIVE

Providing food for the poor who have no access to affordable food materials both for calorie as well as nutrient requirement is indeed a laudable mission and Government of India (GOI) must receive full kudos for conceiving the giant Public Distribution System (PDS) with good intentions. Unfortunately all good intentions do not get translated into reality and to day's condition of the PDS is best described as pathetic for which the same government is responsible. In stead of learning lessons from a program which has gone haywire, GOI seems to be trapped in the quagmire committing more mistakes, intentionally or otherwise, pushing the country deeper into economic bankruptcy  Many suggestions have been made from time to time by well meaning experts regarding the direction in which PDS must be "rerouted". However GOI seems to be obsessed with garnering votes through a scheme for supplying the food grains practically free which can only expand the "pilferage" of grains by the politician-mafia nexus that operates to day with total impunity! An alternate proposal put forward by some experts calls for a transparent distribution system through issuing coupons or so called food stamps with which beneficiaries can get their entitlement from any retailer nearby. Here is a take on this new option suggested by them.

"If the government has transferred responsibility to the private sector in education, a fortiori, it also ought to put its faith in the private food trade when it comes to food subsidy. Curiously, the Food Security Bill before Parliament is all about government bureaucracy and government departments, with implications of administrative expenses overshooting the operational expenses. To be sure, food coupons are not the panacea to the vexed problem of targeted subsidy, but it is infinitely better than a PDS system that leaks like a sieve. Warts and all, the coupon system at least ensures a minimal role for bureaucracy and completely does away with state procurement, besides doing away with the problem of food rotting in the open, exposed to the elements. If students can be redirected, as it were, to private schools, the poor should be called upon to go to a kirana store in the vicinity, armed with food coupons given by the government. In fact, the initiative on the education front needs to be emulated across sectors — food, health and defence personnel; kirana store has been used more in a metaphorical sense herein. The crippling burden on government hospitals can be managed to a great extent through health coupons a la an insurance policy that is the open sesame for entry into cleaner and more effective, albeit infinitely more expensive, private hospitals".

The massive annual subsidy estimated at 70-80 thousand crore rupees coming out of the national exchequer is nothing but a wastage of resources by this economically turbulent country and to think that most of it is going to line the pockets of politicians, bureaucrats and brokers is really disturbing to the conscience of every honest citizen. No one knows who really deserves food grains at low cost when the family income has increased very significantly, especially after the implementation of various schemes of the GOI to guarantee employment in rural areas. Almost all urban families are well off compared to their counterparts in rural areas with relatively moderate income and why they should receive subsidies is baffling. With real and reliable economic statistics not available, it is time that a more precise and dependable method is evolved to identify families who are really poor and restrict the subsidies only to them through efficient and strict management system. Probably only a fraction of the number that receives subsidy may be eligible if the truth is brought out. Food coupons must be tried out at least on a limited scale to test its effectiveness in checking massive pilferage taking place at present.

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

IGNORE THE HOME, SHOW CHARITY ABROAD-THE NEW GOI APPROACH

It is amusing to read that India is acting like a super power going valiantly to help Africa rise like a food industry giant through extending credit and technical help. What is not understandable is regarding the capability and strength of this Ministry to really plan, design and implement food industry clusters for which enormous experience is needed. One gets rather nervous hearing about such grandiose plans because this Ministry, in spite of its pedestrian existence for the last two decades plus has practically nothing to show as its accomplishments within the country! The 'proclamation"by the Babus in the Ministry is indeed pathetic. Where are the people, qualified and competent to undertake this task? Is the Ministry going to hand over the money to some "favorite' consultants without bothering about the success of the so called "Mission"? Can India afford such lavish spending in a foreign country when the small food industry is languishing across the country? Whatever is the worth of this policy pronouncement, one thing must be made sure and that is to make India a laughing stock abroad for inappropriately executed and inordinately delayed projects which ultimately fail to take of.  There are many "monuments" in some parts of Africa bearing testimony to such crude attempts in the past! Reading the announcement is nonetheless interesting for what it does not say than what is said!

'The ministry of food processing industries is planning to set up a food processing cluster in Africa. The proposed cluster would entail an investment of Rs 117 crore to be spent primarily on the setting up of common infrastructure for food processing parks which includes cold storage, food testing labs, incubation centres, standard designed factories, pre-cooling chambers and other modern technologies used by the industry. This cluster is part of India's $5-billion credit line for Africa announced at the India-Africa Forum Summit last year. "The cluster is likely to come up within next three years. We are floating a competitive bid to appoint a project management agency which will help the ministry in implementing this project," said a top ministry official."

There are some Technological Institutions involved in food technology development but none of them possesses the required management dynamics to design and execute manufacturing projects as exemplified by their relatively obscure presence in the industrial landscape of the country. One wonders how many incubation centers have been established by the Ministry in India during the last 5 years! Also debatable is the success of so called Food Parks touted as achievements by the Ministry. A more logical step would have been to rope in private sector players and experienced consultants to lay out a road map to attain the objective. Good projects with trouble free functioning in foreign countries can be a standing testimony to the technological prowess of the country and spending millions in the name of foreign assistance will have no lasting impact.

V.H.POTTY
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THE "ACHIEVEMENTS" IN FOOD SECTOR PROGRAMS!-ANY TAKERS?

Glorious pictures about the achievements of Ministry of Food processing Industry are "painted and planted" among friendly media persons for country wide "splashing" and thereby get a good image in the minds of people about this highly bureaucratic set up at Delhi. Imagine what embarrassment it can cause to the Babus in MFPI when its own consultative committee has nothing but ridicule for the claims made by it every year at the budget time. Most heinous crime being perpetuated by MFPI is that in spite of its existence for almost two decades it did very little to create a reliable data base about the food industry and its figures are at best guesstimates based on heresay and unreliable sources. GOI must consider evaluation of the impact of MFPI on the performance and growth of the food industry by a blue ribbon committee of experts knowledgeable about all aspects of food processing and if its working in the past 22 years has been not satisfactory, it should have the courage to wind it up unceremoniously with no remorse! Here is a take on this issue.

"To which the committee reacted: "The committee cannot but, consider these achievements of the ministry with a pinch of salt, as their estimation is based merely on 'regular discussions' with stakeholders. Arriving at conclusions on such important matters on the basis of mere discussions throws a lot of light on the sanctity of the data flaunted in support and speaks volumes on the manner of working of the ministry in charge of the 'sunshine' sector of the Indian economy. The glaring absence of an information system for compiling data and indices pertaining to the food processing industry sector in the country, in spite of the ministry being in existence for two decades now, also reflects poorly on the planning and management capabilities of the ministry." Apart from lack of data, proper mechanism for systematic planning, and delay in execution have also been the concerns of the ministry."  

Of course many people unconnected with the food industry are benefited from the pedestrian existence of MFPI and these people are bound to protest. Even some industry players, cozy with the Babus in the MFPI may resist any attempt to close the ministry because of their vested interests. The still-born NIFTEM, touted to be a world class food technology institute is a classical example of the wrong priorities of MFPI and on top of this an undistinguished R & D set up in Tamil Nadu is being propped up as a high tech organization to solve all the problems of the industry. It is another thing that neither the food industry nor the food scientific community has any high opinion about the caliber of these organizations to deliver the required services to the proposed users.

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

FOOD INFLATION IN INDIA-THE RBI "DIAGNOSIS"

Who is not worried about the food inflation that is going up and down every week between 6% and 10% as per government "estimates"?. But the average "aam aadmi" has different experience when they go to buy their daily needs of food materials like pulses, oil, vegetables and fruits with the prices ruling at high levels persistently. During the recent discussion in the Parliament on this subject one could see clearly the GOI mindset in laying the blame for the domestic food inflation on the door steps of Europe and Global system! A small dip in inflation during the last week of November was highlighted as a trend of declining inflation, probably ignoring that only prices of Onion and Potato registered a decline in price due to fresh arrival in the market which brought down the GOI inflation figure slightly. RBI, country's Central Bank has correctly identified the reason for inflation by pin pointing that "drivers" of inflation to day are protein foods, fruits and vegetables and due to widening gap in the demand-supply situation vis-a-vis these foods, inflation is bound to persist if not to go up, unless corrective measures are taken immediately. Here is a take on this latest twist to the food inflation crisis in the country.   

"Reserve Bank of India deputy governor Subir Gokarn said that the drivers of food inflation has changed from the pair of sugar and cereals during the last four decades of the previous century to proteins and fruits and vegetables during last four years. He also asserted that the situation of persistent high food inflation warrants monetary policy responses to keep the overall inflation in check. Mr Gokarn was delivering the Kale Memorial lecture at the Gokhale Institute of Politics and Economics (GIPE) today on 'Food Inflation: This Time It's Different.'' "The more worrying attribute of food inflation is persistence. In the four decades in 1960's, the drivers of food inflation were cereals and sugar with a supporting role being played by proteins and fruits and vegetables in the second half of the period,"said Mr Gokarn, adding, "While contribution from proteins has gone down somewhat in 2011-12, which is the basis of the declines we have seen in food inflation in the most recent date releases, the pressure from fruits and vegetables have sustained." Mr Gokarn said on the demand side that people eat better as they get richer is a simple assertion. But on the supply side, we have problems. The productivity of pulses has oscillated around 600 kg/hectare for the last decade and a half. "There are several states, in which pulses may constitute an important part of the typical diet, whose productivity is significantly below the national average. If overall productivity is to be improved, a strategy which focuses on the specific bottlenecks in these states is probably the best way to go about it,"he said. Mr Gokarn pointed out the rising wages of agricultural labour and the stocks of agricultural commodities as two important factors exerting influence on their prices. "Wages rising faster than productivity can only result in rising prices, if producers cannot substitute other inputs for labour. There is important relationship between price dynamics and stocks. Periods in which stocks have been high, show relatively low rates of price increase," he said. Lastly, he pointed out the declining trend in the long period average (LPA) of monsoon rainfall. "This means that normal monsoons are delivering less water than in the past. He said that the implication of persistent supply pressures on the economy are not very good for maintaining balance between fast growth and low inflation. "While transitory episodes of food inflation do not warrant a monetary policy response, there are strong justifications for acting in the face of more persistent ones, if the objective is to keep overall inflation in check". 

It is not clear why GOI has suddenly pitched for FDI in the retail sector when food inflation is showing signs of getting out of control. Does GOI really believe that promise of investment in retail by the global retail chains will increase agricultural and horticultural productivity? GOI has to answer a lot as to why the pulse productivity in this country still stagnates at a shameful figure of 600 kg per hectare! By shirking its responsibility to bestir the agricultural sector through appropriate reforms and infrastructure augmentation, GOI has exposed its weakness in taking and implementing decisions for the good of the farmers and consumers in the country. Even now there does not appear to be any urgency to address these issues in a sincere and determined way and in stead more noise is being made with no substance to fool the aam aadmi through rhetoric and high decibel sound bytes!

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

INDIAN INVESTMENTS IN ETHIOPIA-NEED FOR AN IMAGE MAKE OVER

Leasing of land from poor and impoverished countries, especially those in Africa has been severely criticized because of its colonial flavor! While these land transactions are purely based on business philosophy, there is another dimension viz, the sociological impact. As these countries are considered relatively less developed and do not have the wherewithal to utilize the potential, their vast stretches of land offers, leasing to resource-rich private players to cultivate them for a consideration is logically sound. Most criticisms about land deals center around the fact that the local population are unable to access to adequate foods due to shortages and the foods produced by the investors find their way to international market or to the countries of the investors. Though FAO is seized of the matter and model lease agreements are being discussed, fact still remains that the foreign investors are given land not hitherto utilized. May be there can be suitable provisions in the agreement to sell a part of the production from such land in the domestic market. It is also argued that the country offering land on lease can also import most appropriate foods relevant to the local population, with the investments received. As for Indian investors, GOI must ensure that country's image is not marred by the style of working of its entrepreneurs.

"About $2 billion, or 40%, of India's $4.78 billion investments in Ethiopia come from agriculture and floriculture companies, according to the ministry of external affairs. India is the East African country's second largest foreign investor behind the European Union, and ahead of China. Indian agriculturists doing business there try to offset criticism of being neocolonialists by taking on social initiatives and highlighting their contribution to the food security of the drought-prone and famine-hit country."Ethiopia has been a food-importing part of the world, and large-scale agriculture production by foreigners is only going to boost food supply," said Sai Ramakrishna Karuturi of Bangalore-based Karuturi Global Ltd, the world's No. 1 exporter of cut roses with 250,000 acres under rose cultivation in Ethiopia and which plans to triple cultivated area with crops such as maize. The 1994-incorporated Karuturi Global ventured seven years ago into Ethiopia to scale up its low-cost rose exports business. In 2010, it logged a 20% sales growth, touching $115 million, with expectations of reaching $1 billion in five-six years. But such large-scale commercial ventures are stoking doubts about bridging the gap between the demand and supply of food in Ethiopia. "Many of the transnational land deals being concluded in Africa are therefore not about cultivation of food at all, let alone cultivation of food for Africa," said an online report of Africa-focused agriculture policy group Future Agricultures. In recent years, manpower costs of India's largely marginal farmers have surged following greater availability of less strenuous factory jobs and welfare programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme. Yet, Indian corporations that can afford to hire mechanized harvesters to cope with labour shortages steer clear of large-scale farming owing to the difficulty of buying and operating on several small plots and government restrictions on agriculture ownership. Sara Cotton's Saleem had struggled with exactly these issues. So when he attended a 2006 road show by the Ethiopian government in Coimbatore and learned about labour costs in the African nation being one-tenth those in India, and the availability of thousands of acres of untouched arable land, he took the plunge".

India is facing acute shortage of oil seeds and legumes and there is every justification for GOI to encourage its citizens to go out side the country to invest on land and cultivation of these crops. The land leasing countries cannot expect that foreign investors are tempted to take up cultivation of low value staples where margins are very thin and when such lease deeds are finalized this factor needs to be kept in mind. It is wiser for the Indian investors to keep their ears close to the ground to understand the aspirations of local people and not to injure their feelings unnecessarily. In fact there should be a social content in such projects under which either a portion of the production is shared with them or part of the land is earmarked for production of native crops. Development of infrastructure like health centers, education facilities, power generation for local population etc can also be considered and investments on them should be factored into the project. Let this route be used for fostering better relationship between the people of India and that in the land leasing countries

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

DECONTROLLING INDIAN SUGAR INDUSTRY-NEED OF THE HOUR

Sugar, though sweet to taste has always been a "sour" point that pitchforks GOI and the sugar sector on a collision course ever since India's independence. While during the "license and permit raj" the sugar policy to force the industry to sell to the PDS a major part of its production at below production cost was considered normal, after the economic liberalization policies of early nineteen nineties continuing with it is nothing but an anachronism. More over India is the world's second largest producer of cane sugar and the industry holds large stocks not being able to achieve freedom regarding sale of its products guided by market forces. Though there has been some talks regarding freeing the sector from GOI controls, nothing concrete seems to be happening except frequent announcements by the concerned bureaucrats and ministers about their "intent" to decontrol. The latest such pronouncement comes from another Babu in the Food Ministry and industry keeps wondering whether any action at the ground level will follow this.

The government is open to lifting a decades-old control over the sugar sector if interests of farmers as well as consumers are protected, food secretary BC Gupta said on Tuesday. Currently, the government decides how much sugar mills will sell in the market every month and has mandated them to supply 10% of their output at below-cost for state-run welfare programmes. It decides the minimum price the mills have to pay for sugarcane purchases and also imposes periodical limits on sugar stocks large buyers can hold to discourage hoarding in times of a shortage. Industry executives say all these regulations are leading to a regular cycle of boom and bust and also stifling the growth of the sector that hasn't attracted any foreign direct investment for years now. "There is no stumbling block in decontrolling the sugar sector, provided farmers'... interests are protected. We have to see that farmers get fair price for their produce and also the interest of consumers shouldn't suffer," Gupta said. Any decision on loosening the control will be taken after consulting state governments and other stakeholders, he added. The secretary, however, refrained from giving any time-frame for lifting the regulations over the sugar sector. Industry executives say while mills pay high prices to farmers for cane purchases, they don't have any right to fix the price of sugar at which they sell to the government for supplies under the public distribution system. Although intended to benefit farmers as well as consumers, the tight regulations often lead to mills holding back payments to farmers whenever sales realisation drop below costs.

These are the days when sugar is receiving attention for all wrong reasons and many consumers consider it as white poison because of its purported contribution to diabetes and other life style disorders from which world is suffering. A logical question is whether GOI is justified in holding to the philosophy that sugar is an essential commodity and therefore needs subsidization! Probably sugar can even be considered for removal from the PDS basket that is being distributed, leaving the consumers to buy their needs from the open market. There is good possibility domestic consumption may come down drastically sparing the population the sufferings from modern diseases. After all most of the PDS sugar is siphoned off by unscrupulous elements of the society costing the exchequer heavily. If demand for sugar comes down, naturally the sugarcane cultivation, highly dependent on water, will also will decline, sparing the land for production of other more valuable and nutritious crops!

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

FOOD SECURITY BILL-WILL IT CHANGE THE PRESENT GROUND REALITIES?

Here is a take on the line of thinking of GOI regarding food security assurance to its people as enunciated in the proposed food security bill. While on paper it looks impressive one cannot be sure about the strategy and practical steps that are needed to implement it at the ground level and ensure that the targeted beneficiaries are really benefited

"The draft Food Security Bill makes it compulsory for state governments to pay a food security allowance to targeted sections in case of failure to supply food grain through a sweeping welfare scheme targeted at nearly three-fourths of the population. The amount will be decided by the central government. The draft bill also presses for a radical overhaul of the food distribution system by giving incentives to independent agencies that procure food grain, according to a the draft, viewed by ET. The bill calls for improved "modern and scientific" storage and doorstep delivery of grain to targeted public distribution system outlets. The National Food Security Act 2011 is the most expansive - politicians have called it showpiece-legislation of the UPA government in its second term in office. It covers all India, except Jammu and Kashmir. The priority households, the main beneficiaries of this bill, will be selected from the poorest 46% in rural areas and 26% in urban areas. Another 29% and 22% of the population from rural and urban areas, respectively will be treated as general category". "The bill also guarantees 7 kgs of grain to every person belonging to priority households and 3 kgs to individuals from general households every month at subsidised prices. The draft has cast the so-called National Food Security Bill 2011 into the mother of all welfare schemes by providing free food to children and pregnant women and encompassing swathes of people such as the destitute, the homeless and migrant workers, as ET had reported on Sunday. The draft bill also envisions a radical change in welfare schemes by making women of 18 years and above as head of selected households that can access rice, wheat and nutri-cereals with ration cards. The draft bill is that it pushes for the creation of an advisory body called the National Food Security Commission to help the central government implement the landmark welfare scheme. The commission will advise the central government on "synergising existing schemes and framing news ones for entitlements". It will also recommend steps for effective implementation of schemes through greater government oversight by dramatically overhauling the nation's food distribution system, says the draft". "Under the food commission's watch, guidelines will be issued for the training, capacity building and performance management of people involved in the implementation of welfare schemes, says the draft. The commission will also prepare annual reports on implementation of the Act. The commission will be headquartered in Delhi and comprise a chairperson, a vice-chairperson and five other members, provided that there at least two women and at least one person each from the scheduled castes and scheduled tribes. The centre will pay the salaries of the commission's bosses, support staff and administrative expenses, says the draft. The emphasis on women and 'vulnerable' groups is a common thread running through the draft bill, which largely follows a script laid out by the National Advisory Council (NAC) led by UPA chairperson Sonia Gandhi. For example, the draft bill's guidelines to identify the so-called priority and general households sharply resemble an NAC explanatory note on the bill". "The draft bill says that the centre must periodically prescribe guidelines to identify households selected for the food schemes, including exclusion criteria. It also says these households must be reviewed and updated through periodic surveys, which happens to be another key NAC recommendation to the food ministry, which has prepared the draft and is tasked with the Act's implementation. The draft bill also fixes responsibilities on the central and state governments. The centre must allocate "required quantity" of food grain to state governments under targeted PDS from a central pool of stocks. This allocation must be revised annually based on actual or estimated population counts. And in case of short supply of food grain, the centre must give states funds equivalent to the deficit at prices it fixes, says the draft. States must implement and monitor schemes to ensure "actual delivery and supply of grain to entitled persons". States are to also establish food security commissions under the ambit of the national advisory body, says the draft. State governments are to support breastfeeding for six months from birth through "counselling and related assistance".

How far the new policy will alleviate the hunger and poverty in a country, notorious for corruption and misuse of public resources, remains to be seen. While the thinking behind the Bill is laudable, logistical problems and hang over from the past can derail the new approach. Another imponderable thing is whether this Bill will remain on paper or be implemented. With the food subsidy expected to go up from the present Rs 60,000 crore to 100,000 crore a year if and when the new policy is implemented, the country can ill-afford to waste such a huge public money through mismanagement and inefficiency.

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

THE "JUTE SACK" SCAM-JUTE MILLS ON THE DOCK

Jute industry, made up of about 66 mills, is located predominantly in the state of West Bengal and their main product, the jute sac is purchased by the GOI for packing food grains for storage and distribution. That quality of the sack has a critical bearing on its ability to protect the grain for long periods is well known and it is mandatory for the Jute Mills to supply as per the well-laid standards specified for its quality. However a serious fraud seems to be taking place through collusion between the government personnel entrusted with jute sac procurement and the suppliers causing almost Rs 9 billion loss annually to the exchequer. It is condemnable that these fraudsters perpetuating this scam have no social conscience about the wastage of precious food through supply of inferior sacs for lining their pockets. Here is a take on this episode.

"Meanwhile, the Punjab government has already written to the Union food ministry, requesting for the use of polythene/plastic bags for packing of food grains in the ongoing Rabi season and the upcoming Kharif season under its PUNGRAIN scheme. It is estimated that the mills are cheating the government to the tune of around Rs 72 crore per month by supplying 4,000 bales of inferior quality and used bags that are almost 65 gms lower than the standard weight of 665 gms. While the mills are quoting a price of a new B–Twill bag at Rs 37, they are only supplying used and inferior quality bags weighing 600 gms and priced at around Rs 33.36. In this way they are making an illegal income of Rs 3.64 per bag and Rs 1820 per bale. Almost 40 per cent of the annual industry production of 1.2 million tonnes of jute bags is purchased by the government under the Jute Packaging Materials Act of 1987".

The Jute Mills should be grateful to GOI for purchasing almost half their production of jute sacs at a profitable price and if FCI switches over from the jute sac to woven plastic sacs, there could be disaster waiting for the industry with most of them forced to down their shutters. In stead of being appreciative of this arrangement, it is reprehensible that the industry is trying to "bite the hand that feeds it." GOI is right in taking severe action against those indulging in this crime and no punishment will be too big for these fraudsters.

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