India Ups Intervention Prices For Rice, Oilseeds

India announced Thursday a significant hike in
intervention prices of all major agricultural commodities, including rice,
cotton, oilseeds and corn, for the marketing year that begins in October 2007
to give a push to stagnant farm output and to augment local supplies.
 
  Intervention prices of both common and "A" grades of paddy, or husked rice,
were raised by INR650 a metric ton each to INR6,450/ton and INR6,750/ton,
respectively.
 
  In India, the government sets the intervention price for agricultural
commodities and makes purchases if market rates slip below those prices, to
ensure remunerative incomes for farmers.
 
  For rice, the government is the single largest buyer in the country,
procuring up to a whopping 28 million tons from farmers each year to run
subsidized sale programs.
 
  However, since the government gave a bonus of INR400/ton to farmers, in
addition to the intervention price in 2006-07, the actual hike in intervention
prices, on the year, will work out to be only INR250/ton for 2007-08.
 
  The new intervention prices were announced by Agriculture and Food Minister
Sharad Pawar after a meeting of the federal cabinet.
 
  Pawar said the intervention price for yellow soybeans has been increased by
INR300/ton to INR10,500/ton and that of black soybeans by INR100/ton to
INR9,100/ton.
 
  He said the intervention price for sunflowers has been raised to
INR15,100/ton from INR15,000/ton.
 
  The intervention price for sesamum seed has been increased to INR15,800/ton
from INR15,600/ton and that of nigerseed to INR12,400/ton from INR12,200/ton.
 
  Pawar said the intervention price for common grade, or medium staple, cotton
has been increased to INR18,000/ton from INR17,700/ton. He said the
corresponding price for long staple cotton has been increased by INR400/ton to
INR20,300/ton.
 
  He said the intervention price for corn has been increased by INR800/ton to
INR6,200/ton.
 
  India's foodgrains output has been stagnant for nearly 10 years and the
government is working on a slew of incentives for farmers including better
prices, easy credit and improvement of irrigation facilities to give the next
decisive push to production and reduce dependence on imports.
 
  In terms of volume, India is one of the world's largest importers of edible
oils, wheat and pulses.
 
 
    Govt Yet To Decide On Time Period For Bonus On Wheat Buys
 
 
  Pawar said the government hasn't yet made a decision on whether to
discontinue by month's end the INR1,000/ton bonus, being given in addition to
the intervention price of INR7,500/ton, to farmers from whom state-run agencies
are procuring wheat.
 
  Like rice, the government is also the single largest buyer of wheat by volume
to run its subsidized sale programs, but its procurement has slipped steadily
over the past few years from around 19 million tons to barely 9.0-10.0 million
tons.
 
  Due to the shortfall, the government had to import a whopping 5.5 million
tons of wheat in calendar year 2006, its first such purchase in six years. It
needs at least 11.0-12.0 million tons of wheat to run subsidized sale programs
each year, besides maintaining a permanent buffer stock of 4.0 million tons.
 
  While the government was maintaining a 4.6 million-tons buffer stock of wheat
as of April 1, its incremental procurement from the new harvest in 2007, as of
May 17, is estimated at only 9.7 million tons compared with a marginally lower
9.2 million tons a year earlier.
 
  Despite a bonus of INR1,000/ton over the intervention price, slow procurement
of wheat by the government, for the second year in a row, is being attributed
to holding back of stocks by farmers in anticipation of even higher prices in
later months when the local harvest is over.
 
  To encourage farmers to sell their wheat in the market at the earliest,
officials in the food ministry recently proposed that a deadline should be set
beyond which the bonus over procurement price would be eliminated.
 
  However, Pawar said discussion on the issue is ongoing.
 
  He said the government's wheat-procurement program is going on as scheduled.
 
  Last week, he said, despite adequate stocks, the government will still import
anywhere between 4.0 million and 5.0 million tons wheat in 2007 to meet any
unexpected calamities such as drought.