Inauguration of Kerala farmers Association with National Spot Exchange in the name of WGAGL, the Western Ghat Agro Growers Limited on 28th Septermber at Idukki, Kerala

Dear Friends



It is my pleasure to inaugurate today the noble initiative of Kerala farmers in association with National Spot Exchange in the name of WGAGL, the Western Ghat Agro Growers Limited. I believe this is a unique initiative, one of its kind in the country, which is of the farmers, by the farmers and for the farmers. This is in consonance with the vision of the Government to ensure inclusive growth.

Traditionally, the role of farmers in the agriculture value chain has been confined to cultivation of crops and to sell the same to local traders in bulk immediately after harvesting. In general, price realization for any commodity is higher after sorting, grading, processing, packaging or value addition in any other form. Since the farmers sell their produce in bulk without any value addition, they are not able to take home such incremental price advantage. As a result, a farmer who invests his hard earned money in buying agri inputs, who spends his day and night in caring for his crop and suffers from all sorts of natural calamities such as unfavourable weather, un predictable monsoon and uncertain price behaviour of his produce, gets significantly lower profit for his entire venture. On the other hand, a trader or exporter, who buys the crop produced by a farmer, does some value addition in the form of sorting, grading, packaging, branding, etc. Thereafter, he sells such graded crop to up country buyers or overseas importers. In the process, he gets relatively higher profit margin in the agriculture supply chain compared to a farmer growing the same. This is the crux of the issue impeding agricultural growth in India. This is why farmers are still not better off, even though prices are going up and even though production is also going up in quantitative terms. Unless we turn the table and make agriculture more remunerative for the farmers, it would be difficult to get significant momentum in agricultural growth in our country.

The right solution for this issue is to organize the farmers and make them equal partner in agricultural value chain. Once the farmers form corporatized entity, they will get the might to fight the entire world. It is a great movement towards institutionalizing the farmers. Such institution promoted by farmers can set up its own grading units, packaging units and provide such services on a fee based model to all its farmer members. Such entity can use spot exchange platform to sell produce of their farmer members to all domestic buyers and consumers through spot exchange network. Gradually, these companies can develop their own brand to market such produce directly in overseas markets. Hence, the cost of intermediation will go down and farmers will be able to fetch the maximum pie out of price paid by the consumer or by the overseas buyer. This is the ideal model to protect and promote the interests of Indian farmers.

During last one decade, futures exchanges in the country have created a wonderful platform for price risk management. Futures market also provides a benchmark price which can be referred to by the farmers. But, so far as the question of farmers’ participation in futures exchange is concerned, the issue faced by the regulator and the Government is that small and marginal farmers are not able to hedge on futures exchange due to meagre marketable surplus. In general, the trading lots on futures exchanges are higher, which becomes a bottleneck for small farmers to use it. The solution to the issue lies in creating farmers’ aggregators, who can function on behalf of the farmers. These aggregators can aggregate stock of their farmer members. After sorting and grading, they can convert it into marketable lots. Such marketable lots can be hedged on futures exchanges. The aggregator in turn can pass on all the benefits to the farmer members. However, till now, we have not witnessed many farmers’ aggregators coming into being. The WGAGL model is the right answer to this issue, because it will function as an aggregator for all its farmer members and use futures exchanges to hedge their price risks in related commodities. WGAGL will provide all such services to the farmer members on a fee based model. But, the best part is that whatever profit is made by WGAGL in providing all such services, the same will come back to the farmer members in the form of dividend after meeting all expenses and taxes. Hence, the small and marginal farmers of High range Kerala will be able to get the advantages of both spot exchange and futures exchange through WGAGL.

I understand that National Spot Exchange has set up its warehouses in the high range of Kerala, where WGAGL will be able to store farmers produce. This will enable the growers to avail bank loan against pledge of warehouse receipts. This will enhance their holding power and they will be able to fetch off season premium. I request WDRA Chairman to work in association with the National Spot Exchange, so that the idea of warehouse receipt financing for small growers can fructify. I also request the bank officials present here to extend their support to National Spot Exchange and WGAGL to provide warehouse receipt financing to the farmers in this region. Once the model is implemented at ground level, it will be a big empowerment of the growers in this region. There will be no compulsion to sell entire crop immediately after harvesting.

Further, I have noticed that in Kerala, rate of VAT applicable on cardamom is 5 %, while in the neighbouring state Tamil nadu it is only 2 %. As a result, a number of unscrupulous persons illegally ship stock of cardamom to the neighbouring state and make all transactions from there. As a result, the Government of Kerala does not get any VAT on such stock and suffers loss of revenue. At the same time, this creates a problem for any institutionalized entity having good corporate governance to compete with such unscrupulous traders, who are able to sell at a lower price by playing on tax arbitrage. I would like to draw attention of the Government of Kerala towards this specific issue, which has created an impediment in the growth of organized trade in spices in the State of Kerala. In order to solve this issue, I would urge the Government of Kerala to rationalize the rate of VAT on spices and to make it at par with the neighbouring state. I hope this would result into more tax collection for the State Government, even after reducing the rate of tax, because the leakage will be plugged and there would be no advantage for the unscrupulous traders to illegally ship the stock to Tamilnadu.

I feel that gradually WGAGL should graduate to become one stop shop for the farmers in this region. It should tie up with agri input companies to provide seed, fertilizer, pesticide and other inputs to the farmers. By virtue of organizational strengths, it would be able to negotiate better terms, credit period, etc. from the input suppliers, which can be a direct benefit to the farmers. It should tie up with ICAR for promoting modern techniques to improve productivity. It should promote organic farming and promote such products under its banner in domestic as well as international market. In short, WGAGL should not limit itself just being a marketing front, rather it should provide a comprehensive package to its farmer members.

I have seen farmers’ organization fail in their endeavour for the reason of lack of managerial skill. Framers are expert in cultivation of traditional crops, but they may lack in professional and managerial skill set to run a big corporate entity. We have also seen a number of producer companies coming up in existence over last 3-4 years. They may be successful also in their initiative. But, they fail to achieve size either due to lack of professional skills set or lack of financial strengths. Producer companies cannot hire professional managers, because they do not have such payment capacity. As a result, it becomes difficult for the producer companies to achieve size and scalability. Therefore, it is important that for the first 5 years, a strong corporate entity provides them hand holding support.

In this context, the WGAGL model provides a right solution. In this case, National Spot Exchange has taken the lead to organize the farmers and to provide its financial and managerial support. Given the strength of National Spot Exchange and its parent Financial Technologies Group, WGAGAL can easily achieve a size. I am fully convinced that over a period of next 2-3 years, at least 50000 spices growers of Kerala will become members of WGAGL. I wish that WGAGL becomes the largest distribution entity for spices in domestic as well as export market. I wish that WGAGL brand becomes the largest brand for spice trade in India as well as abroad. I wish WGAGL provides a meaningful solution to the futures exchanges by connecting small and marginal farmers to futures trade by aggregating their produce. I congratulate National Spot Exchange and Financial Technologies Group to take this initiative and to deal with the farmers problems head on. I cherish that National Spot exchange develops such farmers companies in every state of the country, so that a strong network of farmers is visible in agriculture value chain of the country. I am fully convinced that futures market will play a greater role in uplifting the interests of poor farmers, if farmers companies like WGAGL come into existence in different states in all agricultural commodities traded on futures exchanges. This will provide a direct fillip at least to all those farmers, who hail from locations near to the delivery centres designated by the futures exchanges. I suggest National Spot Exchange should work in association with Forward Markets Commission and all futures exchange to make this dream come true and to replicate this model in all other agricultural commodities traded on futures exchanges. I request the local authorities, State administration, Spices Board, FMC and WDRA to provide their utmost support to the initiative taken by NSEL and WGAGL.

I also remember the initiative taken by Late Fr. Mathew Vadakkemury along with National spot exchange for launching this endeavour. Whenever a sensitive issue emerge at High range the Church will take the initiative to organise the people without any partition and stands for them by spreading universal brotherhood. I appreciated the initiative of respected fathers empowering the farmer community of high range in association with WGAGL.

SPEECH AT THE 71ST ANNUAL CONVENTION OF SUGAR TECHNOLOGISTS ASSOCIATION OF INDIA AT HYDERABAD ON 24TH SEPTEMBER, 2012

SPEECH AT THE 71ST ANNUAL CONVENTION OF SUGAR TECHNOLOGISTS ASSOCIATION OF INDIA AT HYDERABAD ON 24TH SEPTEMBER, 2012:




Mrs. Geeta Reddy, Hon’ble Minister for Sugar, Government of Andhra Pradesh, Secretary, Department of Food and Public distribution, government of India, shri Sudhir Kumar, Dr. G.S.C. Rao, President, The Sugar Technologists Association of India, Shri V.V. Shinde, President, Deccan Sugar Technologists Association, Shri R.V. Vadnal, President South India Sugarcane and Sugar Technologists Association, Shri Dhruv Sawhney, CMD, Triveni Engineering and Industries Limited, Shri Dilip Chenoy, Chairman, National Skills Development Corporation, distinguished delegates, friends from media, ladies and gentlemen:

2. It gives me immense pleasure to be present at the 71st Annual Convention of the Sugar Technologists Association of India. I understand that the Sugar Technologists’ Association of India (STAI) is a professional body of all the stake-holders of the sugar industry, and the choice of Hyderabad as the venue of the Convention underscores the rising status of the region on the sugar map of India.

3. I am happy to note that STAI, as a scientific and research body with members across the country has, during the last 87 years of its existence, been involved in the development of the sugar Industry through its workshops, seminars and conferences. In one way, the growth of the sugar industry in India has become synonymous with the activities of STAI. I am informed that STAI works in close association with The South Indian Sugarcane & Sugar Technologists’ Association (SISSTA) and Deccan Sugar Technologists’ Association (DSTA).

4. The sugar industry in India is technically highly advanced and one of the best in the world. Our technologists and professionals are working in various countries and our recent presence in Africa is an added feather in our cap. I recall that during my visit to Ethiopia last year, I had an occasion to meet and interact with a team of Indian sugar experts and technologists who were providing technical support and advice to sugar mills in that country, in the area of modernization and co-generation.

5. India, today, has a capacity to produce 26-28 Million tonnes of sugar on a sustained basis subject to availability of adequate sugarcane. Given our commitment to food security and the demand for land from competing crops, there is an urgent need that sugarcane in all its facets is better utilized as a source of sugar and bio-energy. The demand for sugar by 2020 is expected to be over 30 million tonnes signifying an annual growth rate of 3.75%. We have to gear up to take it as a challenge to meet with the increasing demand of sugar.

6. There is an absolute need to improve sugarcane yields which, you will agree, are below the potential level. The sub-tropical belt has a yield of 70 tonnes per hectare, whereas the tropical belt has a yield of only 55 tonnes per hectare. Indian sugarcane scientists and sugarcane managers have to come together and join hands with our farmers to increase the yield at the sub-tropical belt by at least 25% to bring it to a level of 100 tonnes per hectare. This can be possible with new technology like wide row spacing and mechanization of sugarcane cultivation - particularly harvesting, judicious use of fertilizer and adoption of newer and better technologies.

7. We must also have to think in terms of the welfare of the farmers of sugarcane. One way could be inter-cropping of various crops along with sugarcane, which will protect the farmers against sudden fall in production. This will also diversify risks and result in increase incomes.

8. I mentioned earlier the need for diversifying into bio-energy. Out of 500 factories only 150 factories are adopting co-generation of power which stands at 2500 MW now. Technocrats can really work towards increasing the number of factories going in for cogeneration of power and realize the full potential capacity of 8000 MW.

9. The ethanol blending programme depends on distilleries for constant and uninterrupted supply of ethanol. We will have to see if adopting modern technology can be taken recourse to pursue alternative ways of producing ethanol. Already concerns are expressed on the effect of distilleries on our fragile environment. Therefore, I would impress upon the STAI to consider working in this area by taking financial assistance from the Sugar Development Fund which supports such initiatives.

10. Sugar sector is badly in need of skills development. However, the presence of the Chairman of the National Skills Development Corporation here assures me that things are being taken care of in this area also. I am sure the sugar industry will benefit through development of skills of its regular and part time workers. A package of skills development designed for the sugar industry through coordination efforts among the sugar industry, the NSDC and the STAI will work wonders in developing the skills of the regular and part-time workers employed in the sugar industry.

11. The theme of this year’s convention – “Globalization of Indian Sugar Technologies” reflects the confidence of our technocrats in pursuing the phenomenal opportunities that exist to explore for them beyond our borders. A case in point has been our successful experiment in Ethiopia. Similar opportunities are available in other countries which need our assistance and guidance, which we can make the most use of. But one thing that we must keep in mind is that when we operate abroad, we are not just entrepreneurs, but double as the nation’s goodwill ambassadors. All our business activities must conform to the diplomatic norms and etiquettes. I exhort you to excel in technological innovations and strive for dissemination of this knowledge for the betterment of mankind, and exploit the excellent business opportunities that come our way.

12. I hope that through this convention, the STAI could play a catalytic role through mutual exchange of scientific knowledge and technical support. I am sure this will help sustain the sugar industry leading to creation of wealth and prosperity of all stakeholders including our farmers with the industry. I am sure the deliberations here will result in excellent scientific contributions encompassing subjects of sugar production, constraints in production, infrastructural development and mechanization of small farms that would be beneficial to all of us.

13. I wish the Convention the very best.

JAI HIND.

SPEECH ON THE OCCASION OF THE “SEA AWARD FUNCTION” TO BE HELD ON 21ST SEPTEMBER, 2012 AT RENAISSANCE MUMBAI HOTEL CONVENTION CENTER, POWAI, MUMBAI

SPEECH ON THE OCCASION OF THE “SEA AWARD FUNCTION” TO BE HELD ON 21ST SEPTEMBER, 2012 AT RENAISSANCE MUMBAI HOTEL CONVENTION CENTER, POWAI, MUMBAI.


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It gives me great pleasure to be amongst you on this auspicious occasion of the “Annual Awards Function” of the Solvent Extractor’s Association of India, honoring achievers in the field of processing and export of Solvent Extracted Oils, Oilcakes and Oil meal. This is the third time that I am attending the Association’s Annual Awards Function. I am happy about this continuity as this gives us an opportunity to mutually interact with the leaders of the industry, other stakeholders and policymakers on our concerns and constraints with a view to lay a proper road map for the overall development of the industry.



2. I must congratulate the President and the members of the Solvent Extractors Association for their contribution in the field of edible oils. With its huge network of solvent extraction plants, refineries, compound feed manufacturers and fatty acid plants, they have contributed to the growth of the sector and by this annual award function, the Association has created a suitable forum for its members to address problems and jointly find solutions. This brings about a spirit of togetherness within the industry, trade and allied groups, which is relevant in the context of emerging global economic order. I understand that the immense amount of data generated by the Association is also effectively utilized by all involved in this sector.



3. Agriculture in the country is by and large dependant on the monsoons. Most of the oilseed- producing states in the country are in rain-fed areas. A 20% deficit in the monsoons has resulted in a drop in oilseed production. As per the 4th Advance Estimates of the Ministry of Agriculture and Cooperation the estimated oilseed production for the year 2011-12 is 300.12 lakh tonnes as compared to 324.79 lakh tonnes in the previous year. The production of oils from these oilseeds is likely to be 71.25 lakh tonnes as compared to 76.27 lakh tonnes in the previous year indicating a decrease of about 6.6 %.



4. Similarly, area under cultivation of oilseeds has also shown a decrease during the current year. As per the Department of Agriculture & Cooperation the area sown as on August 2012 is 160.77 lakh hectares as against 167.43 lakh hectares during the same period in the previous year. This is in spite of the various schemes that are being implemented by the Government to increase the area under oilseed cultivation.



5. The growth and development of the edible oil industry is primarily dependant on the domestic production of oilseeds and its availability to the industry. The demand for edible oils during the year 2010-11 has been 181.53 lakh tonnes and the demand for the year 2011-12 is projected to be about 187 lakh tonnes.



6. The ever increasing gap between demand and availability of edible oils in the country forces the government to continue with the import of edible oils while continuing with the ban on exports. In the year 2010-11, the country had to import 83.71 lakh tonnes while in the current oil year i.e. 2011-12, 71.25 lakh tonnes has been imported till the month of July 2012. Import of edible oil is a necessity. Various policy measures such as keeping the import duty of crude edible oil at zero percent while that of refined oils at 7.5%, de-freezing of the tariff value on import of RBD Palmolein from USD 484 to align it with the current international price of USD 1053 have been implemented with the motive of augmenting the domestic availability as well as to give a boost to the refining industry.



7. Rising prices of edible oils have always been a point of concern for the Government. Prices of edible oils in the international market, especially Soya bean and Sunflower, have increased by 5.53 & 5.15 percent respectively during the last one month. Lower production of Mustard seed during the current Rabi season and the decrease in the Groundnut crop have contributed to rising prices. Keeping in mind the interests of the farmers, the MSP of oilseeds such as Groundnut, Soya bean and Sunflower seeds have been increased by 37, 32 and 32% respectively. This has also affected the prices of edible oils.



8. In order to provide relief to the consumers from rising prices, the scheme for distribution of edible oils to ration card holders at subsidized rates is being extended every year. The current allocation to the States/Union Territories has almost doubled to 6.82 lakh tonnes as compared to 3.24 lakh tonnes during the previous year.



9. I appreciate the various issues raised by the President, SEA in his speech. The Government is taking various initiatives for increasing the production of oilseeds thereby increasing the availability of edible oils in the country. The Ministry of Agriculture has prepared an extensive programme in the 12th Five-Year Plan for increasing production of oilseeds and enhancing oil palm cultivation in the country. The salient features of the programme are production and purchase of breeder seeds with involvement of ICAR and State Agricultural Universities, distribution of certified seeds through National Seeds Corporation, NAFED, KRIBCO, IFFCO, etc., supply of cheap and alternate fertilizers and distribution of farm implements. This will enable to increase the production and productivity of oilseeds from the present yield of 1000 kg. per hectare to 1431 per kg. per hectare which will in turn result in the increased production of oilseeds from 30 million tonnes to about 38 million tonnes by 2017.



10. Further, under a special programme on Oil Palm Area Expansion (OPAE), support in the form of 50% of cost is extended for a period of four years to oil palm growing farmers and for promotion of drip irrigation. Special emphasis on development of waste land, especially in the North East is expected to put an additional three lakh hectares of land under oil palm cultivation. A target of three lakh tonnes of oil from tree borne oilseeds is envisaged by the end of the 12th Five-Year Plan period. The Department is consulting State Governments for allowing local refineries in taking part in tenders for supply of refined palmolein to Central PSUs/State Governments under the Scheme for distribution of subsidized edible oil through PDS. The issue of increasing the quota for export of edible oils in branded consumer packs from 10,000 tonnes is also under consideration. So far as permitting the blending of multiple vegetable oils, the Department will take up the matter with FSSAI. As far as the issue of declaration of oil palm as a plantation crop is concerned, I may say that it is engaging the attention of the Government for a decision.



11. Friends, I am happy to note that the Solvent Extractors Association of India is honoring achievers in the field of processing and exports. Such awards induce the spirit of competitiveness, innovation and efficiency. I congratulate the winners and hope that this will encourage them to set higher goals in the future.



12. I take this opportunity to thank the President of The Solvent Extractors Association of India for giving me this opportunity to share my views with you all.



THANK YOU.

Inaugural Address at the Kingsman Conference on 11th September, 2012 in New Delhi

Inaugural Address at the Kingsman Conference 11th September, 2012, held in Delhi:



Mr. Jonathan Kingsman, President of Kingsman SA and the prime-mover behind this conference, Shri Gautam Goel, President, Indian Sugar Mills Association (ISMA), Mr. Jayantilal B. Patel, President, National Federation of Cooperative Sugar Factories, Shri Narendra Murkumbhi, distinguished delegates, friends from the media, ladies and gentlemen: a very good morning to you.



It gives me immense pleasure to be amongst you all at the Kingsman Conference which has been organized to visit the sugar sector of the country and to deliberate on important issues concerning it, seen as it is not only from the national perspective but from the international dimensions as well. I would like to extend a special welcome to those of you who have travelled from abroad to attend this important conference.



The sugar sector has long played an important role for millions of rural households across the world, as a source of employment and income generation. Sugar is one of the most important agricultural commodities traded internationally. The value of world sugar trade exceeds USD 24 billion annually, of which developing countries account for more than 80 percent, underpinning the impact of the sector on the livelihood of sugar farmers, many of whom are smallholders. In the Indian context the sugar economy is approximately USD 16 billion and impacts 50 million farmer families. The growth of India as the world’s biggest consumer of sugar and a major producer has been recognized internationally. This is amplified by the fact that Kingsman have made their conference in India an annual feature.



Friends, India is the largest consumer of sugar, the current level of consumption standing at about 23 million tonnes, growing at an annual rate of 4%, much higher than the global average, probably owing to rising incomes and changing consumption patterns in favour of confectionery and sweet-based drinks. After Brazil and Thailand, India is the third largest exporter of sugar, bracketed with Australia. The unique impact of India lies in its being an import and exporter of sugar alternatively, providing swings to the global sugar markets. From an entirely plantation white sugar producer India has graduated to a producer of sizeable quantities of raw sugar as well refined sugar for the global markets.



The conference, I am sure will deliberate, on the various issues facing the sugar world. There have been some setbacks in the normal cycle of sugar production which has resulted in abnormal and unexpected rise in sugar prices in the past few months. However, the situation is fast improving with the major exporters recovering and promising to enter the global market. On the Indian front we had two seasons of good production and were hoping for another good year with increased acreage under sugarcane. A delay in the monsoons may impact some areas but the overall analysis at this stage suggests that we may have taken steps towards tackling the infamous Indian sugar cycle. (I understand the subject will be discussed at the conference). Many informed commentators have estimated the ensuing sugar production in the range of 23.5 to 25 million mt. We, in the Government, will however, formulate our first estimate by the end of this month in consultation with State Sugar Commissioners as per the usual practice. It can, however, be said today that we are likely to produce enough sugar during the year 2012-13 to meet the consumption demand and perhaps have a small exportable surplus.



Dear delegates: you are all aware that recent global sugar trends show that the sector has suffered underinvestment at both factory and farm levels, evidenced by the fact that world sugar production was not able to keep pace with the fast growth in consumption over the last 10 years, leading to a draw down in sugar reserves to historical lows. In fact, world sugar stocks fell to their lowest level in 20 years in 2010-2011. It is with pride that I can state that during this period India was an exporter supplying the world with its surplus sugar. A come back to a global surplus position is a matter of comfort to us as the largest consumers.



In addition, amid rising demand for bio fuel, as a supplement to transportation fuels, the production of sugarcane-based ethanol has grown significantly over the last decade. It is estimated that in 2012, at the global level, about 20 percent of sugarcane production is used for the production of ethanol. Bio fuel offers sizeable opportunity to the sugar sector, but it also raises great challenges to our global food system. This will be tested in the current season when maize production in the US has been hit adversely affecting ethanol production. Where sugarcane competes for arable land and water, it puts additional strain on our already scarce supplies of productive resources, thereby contributing to the upward pressure on food prices. As illustrated by the FAO Food Price Index, food prices increased by 79 percent between 2006 and 2011, and they are now back on the rise prompted by the prospects of tight grain supplies. However, where sugarcane does not compete directly for resources with food crops, bio fuel can yield positive net effects, as it develops rural communities, provides environmental benefits, and lowers a country’s exposure to oil price volatility. A proper balance between food crops and sugarcane will therefore have to be maintained as we strive to increase sugarcane production. Also sugarcane must take its place as a bio-energy crop rather than a source of sugar alone.



Still, realizing the full benefits of bio fuels entails better policies. Large and generous tax credits for blenders, tariffs on imported bio fuels, and agricultural support for grain producers all hindering low-cost sugarcane based ethanol producers from competing on a level playing field. Clearly, bio fuel policy reforms are needed to alleviate some of the risks that prevent greater investment in the sugar sector. These structural trends are likely to influence the sugar industry beyond the next decade and have significant implications for sugar producers in developing countries.



India’s growth as a sugar producer has largely been propelled by its own internal consumption demand. The increase in per capita consumption is likely to continue and with an increasing population the requirement in the coming years is projected to go up. It is heartening to note the conference is also looking at issues related to logistics and infrastructure as important components related to the growth of the sector. The progress made by the Indian sugar industry in production forecasting and the increased use of technology for the same have also given comfort to the policymakers in taking important decisions related to the sector.



The theme of this conference last year was decontrol of Indian sugar industry. We have been conscious of the need to revisit the regulations. A high level committee has been tasked with the brief to make recommendations in this regard. We are expecting the report of the committee to be submitted soon. This will give us an opportunity to modernize the regulatory framework for sugar sector consistent with interests of consumer, farmer and development of the industry.



The transition may not be at the pace desired by the industry but the sensitivities of the different stake holder need to be considered as this transition takes place. I can only request the stake holder to exercise patience during this process of change.



Finally, I compliment Kingsman SA and the organizers for fielding a very prominent team of highly competent and eloquent Indian and international speakers for the conference. We are grateful to all the participants for taking time off for the special conference, and for the lively discussions expected here from which our industry and stakeholders could greatly benefit, especially from the rich and varied experience delegates from every corner of the world are going to share with us.



In parting, I have a word for the international delegates: please take time off during this visit to India to enjoy and see a little of our country before you return to your homelands. Let me assure you, India’s rich history and cultural and geographical diversity will reward you with an experience you will cherish forever.



THANK YOU!

SPEECH AT THE EVENT “EMERGING KERALA, 2012” ON 12TH SEPTEMBER,
2012 AT COCHIN, KERALA:


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Hon’ble Prime Minister of India, Dr. Manmohan Singh ji, Shri H.R. Bhardwaj, Hon’ble Governor, Shri Oommen Chandy, Chief Minister of Kerala, Shri A.K. Antony, Union Minister of Defence, other dignitaries on the dais, distinguished delegates and invitees, friends from the media, and ladies and gentlemen:



2. It gives me immense pleasure to be present here amongst you at this important event aptly titled “Emerging Kerala,” and, I am grateful to the Government of Kerala for giving me an opportunity to share my views with this august gathering. I would limit myself to a few words on what I feel is an important agenda for the State of Kerala to help it become a role model for other States to emulate.



3. Thinking of Kerala, the first thing that comes to one’s mind is ‘nature at its abundance.’ It cannot be denied that the recent socio-economic advancement of the State has a lot to do with a dynamic tourism sector in the State. Kerala is one of the first States in the country to have focussed on ‘tourism’ as an important sector and to have succeeded in making it vibrant, with cascading results on various other fronts. The effect of tourism on local economy, in direct, indirect and induced manners is quite high. It can be said that this had led many other States to follow in Kerala’s footsteps. This is one more first to Kerala’s credit.



4. Similarly, Kerala was the first State in India in spotting the potential of the I.T. sector in contributing towards economic development of the State, especially in areas like R&D services, financial services, medical transcription services, etc. The First Info-Park in India was built in Kerala. Although neighbouring States have surpassed us in the recent past, we have been fast catching up with them and will soon, hopefully, outgrow them in this sector, too.



5. It cannot be denied that Kerala’s strength flows through its services sector. The weakness that the State suffers in the areas of agriculture and industrial sectors has been more than made up by its energetic tertiary sector. Kerala has the highest Human Development Index of all Indian States; its literacy rate is the highest of any Indian State; it is least corrupt and ranks as India’s cleanest. The State also has efficient and talented work force. Every economic activity has a service component to it and hence service sector benefits the society through employment generation at various levels. We just need to tap and exploit these potentials that will contribute to the growth of the State at the grass-root levels.



6. Availability of sound logistics attracts multi-national companies to set up their shops as they help them cut costs in areas such as material handling, production and packaging, warehousing and transportation, inventory and security. The Kochi International Container Transhipment Terminal (ICTT), known as the Vallarpadam Terminal, is a dream-come-true for Kerala. The only trans-shipment port in India, the terminal reduces our country’s dependence on foreign ports to handle trans-shipment. I take this opportunity, as a member of his team and as the sitting M.P. of Kochi to thank our Hon’ble Prime Minister for the personal interest which he took in ensuring that a three-year relaxation has been given to the CABOTAGE law, which will benefit the Vallarpadam terminal in a major way. Similarly, the Kochi Metro, for which the Foundation Stone will be laid tomorrow by our beloved Prime Minister will also be a major milestone in the overall infrastructure and logistics development of Kochi in particular and the State in general.



7. I will be found wanting if I do not say a few words about protection of agricultural resources of the State with an emphasis on value addition in food and agro-processing. Agriculture is the backbone of India. Better utilization and value addition of agricultural produce offers huge scope for enhancement of income of farmers. Properly developed, this sector covering cannery, fish processing, meat packing plants, slaughterhouses, vegetable and fruit packing plants, especially those of mango, jack fruit and banana can make the State of Kerala a major player at the national and international levels. We also need to encourage R&D activities in processing of coconut for product and process development and improved packaging.



8. Kerala is known for its intellectual achievements. We have our sons and daughters spread all over the world excelling in each and every field they have chosen for themselves. The mind-set of becoming good employees must change to be able to become efficient entrepreneurs. The initiative of the State of Kerala in the development of programmes like the Kerala State Self-Entrepreneurship Development Mission is a welcome one which, if followed-up in right earnest, will result in the birth of thousands of entrepreneurs whose intellect, efficiency and hard work will result in the industrial development of the State and the nation.



9. “Emerging Kerala – 2012 – Global Connect” is an idea whose time has come and I congratulate the State Government of Kerala on their initiative in finding ways and means to ensure that the State’s march towards prosperity is on right track. I am sure that the path is set now for the traction of Kerala from a service-based economy to wealth and value creating sectors predominantly in micro, small and medium sectors. I would request trade delegates, diplomats and the corporate heads that have assembled here to participate in B2B and B2G deliberations and succeed in finalizing business partnerships for common good.



10. With these words, I would like to conclude my speech and, in parting, wish the event every success and fruitfulness.



THANK YOU!



JAI HIND!



 

Kerala has changed and it is an investment-friendly State now that welcomes investors. This is the message that Chief Minister Oommen Chandy wants to send out to the world.

“We want to showcase the opportunities available here. We also want an open discussion and want to hear the other side on Kerala’s chances for development,” Mr. Chandy told The Hindu group of publications in an interview at Cliff House, his official residence, here on Thursday.

Exchange of ideas

He said that Emerging Kerala 2012 to be held next week was not an investment meet but a forum for exchange of ideas. Mr. Chandy is clear that infrastructure development is the key to job creation and that will be his main aim in the remainder of his term.

“We have neglected infrastructure development. We know that if infrastructure is there, investment will definitely come and job opportunities will open up. My main aim is to develop the infrastructure of the State with whatever possible method,” Mr. Chandy insisted.

He plans to focus on ten major areas to develop in his term as per the advice of Sam Pitroda, who is a mentor to the government. The first will be coastal transport, which will reduce road traffic and bring down transport costs by up to 40 per cent. Along with the Vallarpadam terminal and the upcoming Vizhinjam and Azhikkal projects, 14 minor ports will be developed. The second will be development of national waterways. The idea is to extend the Kollam-Kottappuram waterway to Kasaragod.

Ayurveda

The third is to focus on development of the Ayurveda system, which is linked to tourism. These are apart from the focus on information technology and high-quality educational institutions.

Admitting to Kerala’s limitations in attracting manufacturing industries, Mr. Chandy said the government was thinking of a manufacturing corridor from Kochi to Palakkad. Dense population and scarce land have prevented serious growth of the manufacturing sector in the State.

Availability of labour is also an issue in the State, according to Mr. Chandy. Aspiration levels have increased along with education leading to a scarcity of unskilled workers.

“In my constituency, there is a powerloom and a spinning mill. They find it very difficult to get labour,” Mr. Chandy pointed out.

Asked if trade-unionism was a problem, Mr. Chandy was quick to point out that Kerala had the lowest figure in India for working days lost due to labour strikes. Militant unionism is an old story that is no longer true, according to him.

Asked about his vision for Kerala, the Chief Minister said: “My main aim is to develop the infrastructure of the State with whatever possible method. There is only one problem, that of acquisition of land. Money is not an issue. We are ready to take care of the financial aspect of landowners. We are ready to give a good financial package for them at market value.”

 

I have a funny anecdote to recite here as I heard it from my Gujarati friends. It is said that in Gujarat, entrepreneurs over there prefer a Malayalee to a local Gujarati when it comes to hiring as office assistant, the reason being that a Malayalee would restrict himself to being a good, faithful and hardworking helping hand without ever thinking about turning an entrepreneur himself. This will not be so if the assistant were to be a Gujarati who, at the quickest opportunity, would try to outwit his own employer and become a business rival.

INAUGURATION OF THE GEOGIT CO-OPERATIVE OFFICE IN KOCHI,
 KERALA ON 14TH SEPTEMBER, 2012:


                                                           ********

It gives me immense pleasure to inaugurate the opening of the GEOGIT Corporate Office in Kochi today. It is a very heartening and proud occasion for two reasons: first, because an Indian Company with a humble beginning has completed 25 years of service to the people of India and abroad, and second, because the beginning of this Company was from the land of Kerala! I extend my heartiest greetings and good wishes to Geojit BNPP on their 25th Anniversary and for this new Corporate Office which is dedicated to the service of the people.



2. It is heartening to learn that starting from a small garage in 1987, Geojit grew over a period of time in terms of number of clients, employees and revenue through hard work and determination and today is a trusted brand all over the country!



3. We have seen a paradigm shift in the commodity and stock trading business with much technological advancement, such as the internet trading and innovation like mobile trading. Commodity and stock trading has markedly moved from the hands of intermediaries to that of investors and has become more transparent. But there is a need to create awareness among the investors so that they can invest responsibly.



4. With two-third of the population depending on agricultural commodities, the relevance of commodity futures trading needs no emphasis. The National Agricultural Policy announced in July 2000 recognized the positive role of forward and futures market in price discovery and price risk management, especially in agricultural commodities. By a notification dated 01.04.2003 prohibition on futures trading was completely withdrawn. The commodity futures trading was started with objective of mitigating price risks faced by the producers and other market participants. The futures prices discovered on the commodity trading platforms act as price barometer to various stakeholders of the commodity supply chains. The Commodity Futures Market in India comprises National and Commodity Specific (Regional) Commodity Exchanges which perform the critical economic functions of price discovery and price risk management. The price signals – futures prices – emanating from the exchange platform indicate the future likely prices of the underlying commodity. The prices discovered on the Exchange are driven by perceptions of supply and demand at a future date.



5. The commodity futures market in India has grown exponentially in the last eight years. The value of trade in this market has grown from Rs. 66,000 crore in 2002-2003 to Rs.181 lakh crore during 2011-12. This growth is an indication of the increasing liquidity, depth and participation in this market.

6. One of the major concerns is to ensure that the farmers who are the major stake holders should derive the benefits of the futures markets. At present use of futures contracts to the benefit of farmers is limited as the farmers lack necessary expertise to enter the futures market. However, the knowledge of futures prices helps the farmers in taking pre-sowing and post harvest decisions and the knowledge of futures prices increases his bargaining power vis-à-vis the traders.

7. The farmers can benefit from futures market only when there are aggregators acting on their behalf to trade on the commodity futures exchanges. There are many cases where farmers have been able to reap the benefits of futures trade through aggregation. Some of the Rubber Co-operative Societies in Kerala are working as aggregators and are participating in the futures market on behalf of their members. These Rubber cooperative societies have successfully brought many small and marginal farmers to the commodity exchanges for price discovery and price risk management. Many Rubber Co-op. Societies have accepted futures market so well that their members/producers are able to avail of bank finance against the warehouse receipts and ‘sell’ Contracts in futures market to meet their major needs. The exchanges and members have to work towards developing aggregation models in other states and commodities to help farmers trade on futures platform for managing the price risks.

8. The Forward Markets Commission has taken various steps to bring out more transparency, fair-play in the market and improving hedgers participation. The increased participation of producers, consumers and others having exposure to physical commodity market will enhance the price discovery process. In this regard the intermediaries like Geojit can play a very important role. They have to augment the efforts of the Forward Markets Commission to create more awareness among the physical market participants to use the futures market.

9. I would like to emphasise that, unlike other financial markets, the commodity derivatives market touches the lives of all citizens of the country, either as producers or as consumers. Hence, price discovery in the most efficient and transparent manner assumes much greater significance in this market. It is especially so since majority of the farmers are small and marginal. The Commodity Market has to perform the duty of ensuring that this market functions most efficiently and transparently and that the prices discovered therein are made available to the multitude of stakeholders.

10. It is, therefore, essential that business institutions involved in commodity/stock broking and marketing must become even more sensitive to the concerns of the people of the country. I am sure, responsible business institutions like the Geojit BNPP will not be found wanting in addressing these concerns. Once again, I congratulate the entire Geojit BNP Paribas team on their 25th Anniversary and for this grand Corporate Office which has become a prominent landmark in Kochi!



Thank you!

Launch of Oxfam-IDS, Sussex University Bulletin on Food Justice in India--on 18th July, 2012

INAUGURAL SPEECH AS THE CHIEF GUEST AT THE 2-DAY “LAUNCH OF OXFAM – IDS, SUSSEX UNIVERSITY BULLETIN ON FOOD JUSTICE IN INDIA” ON 18TH JULY, 2012 AT 10 A.M. AT DEPUTY SPEAKER HALL, CONSTITUTION CLUB, NEW DELHI – ORGANISED BY THE OXFAM INDIA, THE INSTITUTE OF DEVELOPMENT STUDIES AND THE CENTRE FOR LEGISLATIVE RESEARCH AND ADVOCACY:




Ms. Nisha Agarwal, Executive Director, Oxfam India, Prof. Lawrence Haddad, Director, Institute of Development Studies, Sussex. Mr. Vinod Bhanu, Executive Director, Centre for Legislative Research and Advocacy, government representatives, specialists and academics, civil society members, friends from the media, and ladies and gentlemen:



It gives me great pleasure to be amongst you, the distinguished audience, at the launch of the Oxfam-Institute of Development Studies Bulletin on Food Justice in India. I congratulate the Oxfam and the IDS on bringing out such a valuable bulletin, a unique collection of original thoughts by leading commentators and practitioners on crucial subject of food security and connected issues like the right to food and the need for a just food system in India. I have no doubt that such a compilation on such an important subject matter as food security will definitely help us understand the issue, as viewed from different angles and perspectives.



Ensuring food security, i.e., availability of sufficient food-grains to meet the demand as well as access, at the individual level, to adequate quantities of food at affordable prices, has been a focus of planning and policy of Government of India. The technological breakthrough achieved through Green Revolution in the sixties helped the country attain self-sufficiency in food-grains production. You will be happy to know that now our focus is on eastern region of the country where there is good potential to harness ample natural resources to achieve food security and agricultural sustainability. This is being done under the programme of “Bringing Green Revolution in Eastern India (BGREI)” started since 2010-11 as a part of on-going Rashtriya Krishi Vikas Yojana (RKVY).



The Government is also conscious of the immense contribution of the farming community in India to our successful efforts in the field of agriculture. The price support operation of the Government, aimed at ensuring remunerative prices to farmers for their produce and incentivizing them to produce more, has also played an important role in increase in farm produce. The Minimum Support Prices are fixed to ensure that they not only cover the costs of production but also ensure a reasonable return to farmers, thereby acting as a cushion to farmers against any sudden drop in market prices in a situation of excess supply.



To ensure food security at the individual or household level, the Government of India implements various schemes/programmes in partnership with State Governments and Union Territory Administrations. I would like to briefly touch upon these policy initiatives. The Government is implementing the Targeted Public Distribution system (TPDS) under which food-grains at subsidized rates are provided to Below Poverty Line [including Antyodaya Anna Yojana (AAY)] and Above Poverty Line Households through a network of more than 5 lakh fair price shops spread across the country. Currently, allocations of subsidized food-grains is being made for about 6.5 crore BPL households, which includes 2.5 crore AAY households, and 11.5 crore APL households. Besides, Government is also implementing schemes to specifically address the concerns related to malnutrition, especially among women and children, through schemes like Integrated Child Development Services, Mid-Day Meal, Annapoorna, etc.



In order to further strengthen the commitment of the Government towards food security in the country, the President of India in her address to the Joint Session of Parliament on 4th June, 2009, inter alia, announced that the Government proposed to enact a new law – the National Food Security Act – that would provide a statutory basis for a framework which assured food security for all. Pursuant to the announcement, the Government held extensive and wide-ranging consultations with various stakeholders, including State Governments and UT Administrations, Central Ministries, experts and other individuals and organizations at different stages of preparation of the Bill. A draft of the Bill was also placed on the website of the Ministry in September, 2011 to seek comments/suggestions. Valuable inputs on the proposed law were also received from the National Advisory Council, besides recommendations of an Expert Committee under Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister. Taking into account the comments/suggestions received, “The National Food Security Bill,” the historic legislation, was introduced in the Lok Sabha on 22nd December, 2011.



I am very happy to inform you that the proposed legislation marks a paradigm shift in addressing the problem of food security – from it being viewed as a welfare approach to a right-based approach. The Act seeks to address the issue of food security in the country in a holistic manner by adopting a life cycle approach. The Act provides for about two thirds of the population to become entitled to receive subsidized food-grains under Targeted Public Distribution System, with special focus on nutritional support to women and children. Pregnant women and lactating mothers, besides being entitled to meal, free of charge, as per the prescribed nutritional norms, will also receive maternity benefit @ Rs. 1000/- per month for six months. In case of non-supply of food-grains or meals, beneficiaries will be entitled to receive food security allowance. Elaborate provisions for grievance redressal mechanism have also been made in the Bill besides other provisions for ensuring transparency and accountability such as disclosure of records of Targeted Public Distribution System (TPDS), social audit and vigilance committees at various levels.



I also would like to share with you some of the major highlights of the Food Security Bill:



• Up to 75% of the rural population (with at least 46% from priority category) and up to 50% of urban population (with at least 28% from priority category) are to be covered under Targeted Public Distribution System.

• 7 kg of food-grains per person per month to be given to priority category households which include rice, wheat and coarse grains at Rs. 3, 2, and 1 per kg, respectively.

• At least 3 kg of food-grains per person per month to be given to general category households, at prices not exceeding 50% of Minimum Support Price.

• Women to be made head of the household for the purpose of issue of ration cards.

• Maternity benefit to pregnant women and lactating mothers.

• End-to-end computerisation of Targeted Public Distribution System.

• Three-tier independent grievance redressal mechanism.

• Social audit by local bodies such as Gram Panchayats, Village Councils etc.

• Meals for special groups such as destitute, homeless persons, emergency/disaster affected persons and persons on the verge of starvation.

• Food Security Allowance in case of non-supply of food-grains or meals.



The Bill is at present under consideration of the Standing Committee on Food, Consumer Affairs and Public Distribution. The Parliamentary Committee has so far held two meetings. We are awaiting the outcome of deliberations by the Standing Committee so that we could take further action to take the Bill forward. It is definitely going to be a challenging task to ensure successful implementation of the Bill of such scope and magnitude. I hope that all the stakeholders would contribute to make this historic initiative of the Government a success. I welcome suggestions for improvement of food security situation in the country. I assure you that Government is committed to ensure food and nutrition security of the people of the country, especially the vulnerable sections.



I am sure that all aspects of food security in India that got covered in the Oxfam-IDS Bulletin will be thoroughly discussed in detail in the two-day event by the experts and distinguished persons who have assembled here. I expect that your deliberations here will result in emergence of suggestions and recommendations being suitable to needs and requirements of food security in the country.



I once again commend the effort of Oxfam India, IDS and CLRA on this important topic, and, while conveying my deep appreciation for the same, convey my best wishes to all of you for the success of this two-day event.



Thank You.

 

4th Global Summit on 'Second Green Revolution: Agriculture to Agribusiness' on 11th July, 2012`

Inaugural Session of 4th Global Summit-cum-Exhibition on “Second Green Revolution : Agriculture to Agribusiness” - 11th July, 2012.


                                                                 * * *



Ensuring food security has been a focus of Government’s planning and policy. Food security means availability of sufficient foodgrains to meet the domestic demand as well as access, at the individual level, to adequate quantities of food at affordable prices.



Due to technological breakthrough during Green Revolution in the sixties, the country attained self-sufficiency in foodgrains production. Now, the focus is on eastern region of the country where there is good potential to harness ample natural resources in order to achieve food security and agricultural sustainability. This is being done under the programme of “Bringing Green Revolution in Eastern India (BGREI)” started since 2010-11 as a part of on-going Rashtriya Krishi Vikas Yojana (RKVY). The price support operation of the Government, aimed at ensuring remunerative prices to farmers for their produce and incentivising them to produce more, has played an important role. MSPs are fixed in such a manner that it not only covers the costs of production but also ensures a reasonable return to farmers. The MSP operation of the Government has acted cushion to farmers against any sudden drop in market prices in a situation of excess supply.

Having attained self-sufficiency in foodgrains production, the issue of access to each individual or household to foodgrains/food at affordable prices is equally important. To ensure food security at the individual or household level, Government of India implements various schemes/programmes in partnership with State Governments and Union Territory Administrations. The Government is implementing the Targeted Public Distribution system (TPDS), under which subsidised foodgrains is provided to Below Poverty Line [including Antyodaya Anna Yojana (AAY)] and Above Poverty Line Households at subsidised prices through a network of more than 5 lakh fair price shops in the country. Currently allocations of subsidised foodgrains is being made for about 6.5 crore BPL households, which includes 2.5 crore AAY households, and 11.5 crore APL households. Besides, Government is also implementing schemes to specifically address the nutrition related concerns, especially among women and children, through schemes like Integrated Child Development Services, Mid-Day Meal, Annapoorna etc.



In order to further strengthen the commitment of the Government towards food security in the country, the President of India in her address to the Joint Session of Parliament on 4th June, 2009, inter alia, announced that the Government proposes to enact a new law – the National Food Security Act – that will provide a statutory basis for a framework which assures food security for all. Pursuant to the announcement, Government held extensive and wide-ranging consultations with various stakeholders, including State Governments and UT Administrations, Central Ministries, experts and other individuals and organizations at different stages of preparation of the Bill. The Bill has been introduced in the Lok Sabha on 22nd December, 2011.





The proposed legislation marks a paradigm shift in addressing the problem of food security – from the current welfare approach to a right based approach. It seeks to address the issue of food security in a holistic manner, by adopting a life cycle approach. About two thirds of the population will be entitled to receive subsidized foodgrains under Targeted Public Distribution System. Nutritional support to women and children has been given a special focus in the Bill. Pregnant women and lactating mothers, besides being entitled to meal, free of charge, as per the prescribed nutritional norms, will also receive maternity benefit @ Rs. 1000/- per month for six months. In case of non-supply of foodgrains or meals, beneficiaries will be entitled to receive food security allowance. Elaborate provisions for grievance redressal mechanism have also been made in the Bill besides other provisions for ensuring transparency and accountability such as disclosure of records of TPDS, social audit and vigilance committees at various levels.



The Bill is at present under consideration of the Standing Committee on Food, Consumer Affairs and Public Distribution. We are awaiting the outcome of deliberations by the Standing Committee and further action will be taken accordingly to take the Bill forward.



Agri-business is an all encompassing area covering almost the entire off farm activities which have a bearing on growth of agriculture sector. It is a generic term for the various businesses involved in food production, including farming, seed supply, agrichemicals, farm machinery, wholesale trade and distribution, processing, marketing, and retail sales. All these activities are obviously crucial for a sustained growth in agriculture to meet the food security needs of the country, and the Government has taken various initiatives in these areas. To supplement efforts of public extension, the Ministry of Agriculture, in association with NABARD has launched a unique programme to take better methods of farming to each and every farmer across the country and to support agricultural development. This programme aims to tap the expertise available in the large pool of Agriculture Graduates and to create gainful self-employment opportunities for them.



One aspect of agribusiness which has a bearing on the food security is how to stop wastage of food. Apart from curbing social and cultural practices resulting in wastage of food and ostentatious consumption, development of a strong and vibrant food processing industry is essential to minimise the wastages. Development of infrastructure for storage, transportation and processing of agro-produce is required for minimising wastage at all stages in the food processing chain. Department of Consumer Affairs has already taken initiative to stipulate certain measures to eliminate wastage of food as well as to create awareness among the people of the need to control the wastage.



The Ministry of Food Processing Industry has taken a number of initiatives to promote the industry through policy initiatives as well as developmental initiatives which inter alia includes assistance to food processing industries under its various Schemes, support to various R&D activities and Human Resource Development to meet growing requirement of skilled manpower, and to promote entrepreneurship.



I am hopeful that all aspects of agribusiness and its potential role in giving a further boost to agriculture sector will be discussed in detail in this summit by the experts and distinguished persons drawn from diverse fields. I also hope that deliberations of this summit will come up with useful suggestions and recommendations suitable to our needs and requirements.

JAI HIND.

INDIAN COMMODITY MARKETS AND FCRA AMENDMENT BILL, 2010” ORGANISED BY FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY (FICCI) AT NEW DELHI ON 4TH JULY, 2012:

SEMINAR ON “INDIAN COMMODITY MARKETS AND FCRA AMENDMENT BILL, 2010”

INAUGURAL SPEECH OF PROF. K.V. THOMAS, MINISTER OF STATE (I/C) OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION AT THE SEMINAR ON “INDIAN COMMODITY MARKETS AND FCRA AMENDMENT BILL, 2010” ORGANISED BY FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY (FICCI) AT NEW DELHI ON 4TH JULY, 2012:







Shri Rajiv Agarwal, Secretary, Department of Consumer Affairs, Shri Ramesh Abhishek, Chairman, Forward Markets Commission, Dr. Arbind Prasad, Director General, FICCI, Shri Venkat Chary, Chairman, MCX, Mr. Nick Ronalds, Executive Director, FIA Asia, President, Asia Markets, friends from the media, ladies and gentlemen:



I am happy to be here today amongst you at the Seminar organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) under the title of “Indian Commodity Markets and FCRA Amendment Bill 2010.” This is indeed a very welcome initiative of FICCI. I congratulate FICCI on their pro-active efforts in organizing such an event as they help in generating a healthy debate on a crucial subject of commodity futures trading and its contributions to the economy.



The commodity futures markets in India have come a long way since 2003, the year when three on-line electronic trading exchanges came into existence and futures-trading in over 100 commodities was allowed. It is a matter of great satisfaction that over the years, the volume of trade has increased considerably with the number of members and clients and contracts traded on the exchanges having increased significantly.



While there is an understandable excitement regarding the significant growth of this market, it cannot be denied that there are also apprehensions in equal measure among some quarters whether the market is truly achieving its objective of price discovery and price risk management and helping farmers and hedgers. We need to take a balanced view and address the apprehensions as well as the challenges before us to enable the market to live up to the expectations of farmers and hedgers. It is well known that hedgers transfer their risk in this market which is assumed by the speculators who bring in the liquidity and that greater participation and volumes lead to a more efficient price discovery, thereby reducing the possibility of price manipulation. An analysis of the trade volumes on futures market indicates that in case of some commodities, the volumes are much higher than the open interest, thereby indicating that the extent of hedging is much less than the speculative volumes generated. It is also seen that in respect of a number of commodities, the volume of participants is not very significant. It is a matter of concern for us, as this will result in poor quality of price discovery in such contracts. There are also apprehensions in some quarters that these markets are contributing to, if not leading to, price rise and price volatility of commodities.



A number of studies and reports do indicate that futures trading in commodities cannot be said to be responsible for price rise. It is, however, possible that if futures-market is not aligned properly with the physical market, price discovery in the futures platform may become distorted which may be misused by vested interests. Such a situation can only be avoided when hedgers and potential hedgers are encouraged to participate in this market in large number.



The Forward Markets Commission (FMC) has been taking a number of initiatives to address the above challenges. To improve hedging which is reflected in higher open interest, the Commission has asked all the commodity exchanges to prepare a road map for improving the volume open interest ratio by increasing hedgers’ participation. We need to create awareness among the hedgers and industry associations about these critical issues – it is here that I would expect and request industrial bodies such as FICCI to play their important role in creating such awareness among the potential hedgers for using the commodity futures market as an effective tool to manage their commodity price risk.



I am told that the FMC has also started a comprehensive exercise for alignment of futures market with the physical market. A staggered delivery system has been introduced in a number of agricultural commodities. This has already resulted in significant reduction in excessive speculation in the near month and in reduced price volatility in these commodities. The FMC is also reviewing all the futures contracts traded in the market to examine if those are suited to the needs of the physical market participants. The feedback of physical market participants and other stakeholders has been sought and it is proposed to review these contracts and make suitable modifications as required.



The Government is also considering constituting an Advisory Committee to provide an institutional mechanism for the Government and the Commission to consult all the stakeholders regarding the regulation of commodity futures market. I have no doubt that these measures are bound to bring about much needed changes in the working of these markets by bringing down excessive speculation, improving hedging and better aligning with the physical market.



One of the primary objectives of Commodity Markets is to help farmers to get best possible price for their produce. The farmers, especially small and marginal, are not able to participate in the market directly. They do so through aggregators. Therefore, the FMC has asked the exchanges to promote aggregators on a pilot basis in the agricultural commodities so that the market benefits the farmers much more. The Price Dissemination Project of the Commission is being implemented across the country with 1400 ticker boards already have been installed and 7500 proposed to be installed during the next 5 years. The price signals coming from futures market also help farmers to take important sowing and marketing decisions. Farmers would be benefited far more by introduction of options which would be possible after the amendment of the FCR Act.



The participation of institutions such as Banks is also necessary to bring adequate liquidity to this market. Introduction of investor protection measures will instill a sense of confidence in the retail clients encouraging them to participate in large number. Investor Protection Fund has been set up in each exchange with over Rs. 65 crores and a trust is being set up to operate the fund. The clients are now getting SMS and Email alerts every day regarding the trade done in their account. A uniform KYC norm has been introduced and quarterly settlement by members with clients has also been done. In the last one year FMC has proactively taken several such measures. There is also a need to undertake a major media campaign in collaboration with the Exchanges to increase investor education in all the States on a sustained basis.



The need for strengthening regulatory mechanism through Amendment of FCR Act has been discussed over the years and it is certainly necessary to strengthen this mechanism. The proposed amendment of FCRA would enable the FMC to play a more effective role in regulation of these markets. The amendment would also bring in much-needed new products such as options. However, there is also a need that all the stakeholders appreciate the need to take this market to a new level where the hedgers and farmers would be the primary beneficiaries and this market would play its rightful role of providing price discovery and price risk management functions to the physical market participants. This would provide necessary confidence to the policy makers as well as law makers to bring about the necessary changes in the legislative structure of the commodity futures market.



With these words, I have great pleasure in inaugurating this Seminar.

AGRIBUSINESS & COMMODITY MARKETS STAKEHOLDER AWARENESS AND EDUCATION SEMINAR” ON 30TH JUNE, 2012 AT KOCHI,

INAUGURAL ADDRESS OF PROF. K.V. THOMAS, HON’BLE MINISTER OF STATE (I/C) OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION AT THE “AGRIBUSINESS & COMMODITY MARKETS STAKEHOLDER AWARENESS AND EDUCATION SEMINAR” ON 30TH JUNE, 2012 AT KOCHI, BEING ORGANISED BY THE HINDU BUSINESS LINE, FMC AND NCDEX:




Chairman of Forward Markets Commission, M.D of National Commodities and Derivatives Exchange (NCDEX), G. Chandrasekhar from Hindu Business Line, other dignitaries on the dais, Ladies and Gentlemen: It gives me great pleasure to inaugurate the “Agribusiness & Commodity Markets Stakeholder Awareness and Education Seminar” being organised in Kochi by The Hindu Business Line, Forward Markets Commission (FMC) and the National Commodity and Derivatives Exchange (NCDEX). I especially would like to thank The Hindu Business Line for taking the initiative as a confidence building measure, in association with the FMC and the NCDEX, in bringing about awareness amongst all the stakeholders of the commodity markets such as producers, processors, trading houses, importers, exporters and others operating in the physical market about the importance of reducing/controlling commodity price risks arising out of volatile market conditions.

Agriculture occupies an important role in Indian Economy and importance of Agri-business and commodity trading in present times cannot be underestimated. Indian Commodity markets have been in place since historical times. It is heartening for me to note that in just about 9 years since liberalization, commodity futures market has emerged as one of the fastest growing segments of our economy. At present there is permission for trading for more than 100 commodities. Out of these 100 permitted commodities, about 27 Agri-commodities and 20 Non-Agri-Commodities are actively traded on exchange platforms. Price volatility of essential commodities has great significance to developing countries like India as it has been found to be contributing to poverty, social unrest and other negative economic and welfare impacts. Price volatility also affects the business environment in that the uncertainty that it creates undermines investors’ confidence in the business, ultimately affecting the economic development of the nation. It is therefore essential that public-private effort is encouraged to address price volatility of food and other agriculture commodities in an effective manner. I take this opportunity to congratulate The Hindu group of publications for their proactive efforts in attracting the attention of policymakers to areas that need urgent and prompt attention.

India has always been adopting a cautious approach when it comes to its finance and economic policies. India is a democratic and a socialistic country. The need to take along all sections of the society as we strive to ensure a better future for all the citizens of the country is of utmost importance. However, adopting caution can never be considered lacking in courage. The principle of cautious approach holds true in all spheres of economic policy of the Government including the sensitive commodity markets. We believe that the fundamentals of demand and supply in the physical market decide the prices of commodities and that futures market only acts as a platform for price discovery and price risk management for the physical market participants.

However, I must admit that the rise in prices of certain agricultural commodities, including some essential commodities in recent months, has been attributed as contributory, in some quarters, to excessive speculation in futures market. I may add that in the first quarter of 2012, prices of mustard seeds, chana, potato, mentha oil, soya bean, cardamom, black pepper, etc. increased by more than 100% which was a matter of grave concern to the government. Although FMC is an independent regulatory, it acts in close coordination with the Government and is keeping a close watch on the situation and will make use of all the regulatory tools available to keep a check on the excessive speculation in the futures trading in commodities, specifically the agricultural commodities. The FMC has already implemented higher margin requirements for trading in agri-commodities and has also reduced position limits for essential commodities. This is in addition to advisory committees being formed for all commodities including agri-products which would consist primarily of physical market participants such as representatives of farmers, producers, processors, exporters, domain experts and other stakeholders to advise the Government and the FMC. These advisory committees will guide the government on how to bring about better alignment between the physical markets and the futures market so that farmers and hedgers are substantially benefitted from the futures trading which is its primary purpose. An advisory committee has already been constituted to study various issues in rubber futures trading. The FMC will also look into areas of hoarding and sources of finance that help hoarding. All these initiatives will definitely help us to steer clear of the pitfalls generated out of commodity price risks. AGMARKNET, the e-governance portal has been evolved for strengthening the interfaces among government organisations, farmers, industry, policy-makers, academic institutions and other beneficiaries.

But I must also share with you our concern that our attempts in cleansing the system should not result in weakening our commodity markets which are still under-developed with huge scope for progress. Development in the sector is expected to contribute significantly in strengthening Indian economy and the agricultural field in particular and enable it to face the challenges of globalization. Commodities today account for 48% of the Indian GDP and are on the path growth even beating equities. Demands from developing economies like India have a sure share in developing economies sustaining global growth which is a good sign for India as a developing country. Commodity Spot Exchanges are helpful for farmers to sell their small lots through Commodity Exchanges. Farmers who cannot directly take part in this area due to various reasons can benefit from the price signals emanating from the exchange platform. For example, farmers of Kerala have gained a lot through the Commodity Spot Exchanges: especially the rubber growers benefited a lot in realising over 90 per cent of the final prices through participation in the future markets. So what is needed in a balanced and cautious approach as our aim is to ensure that the benefits of commodity markets are reaped while the loopholes leading to counterproductive effects on the people are plugged.

All developing countries including India are dependent on primary commodities for the precious foreign exchange. But we must beware risks and instabilities that come on the way. But with increasing awareness of such risks, the potential of commodities for India’s economic growth, role of futures exchange, regulatory functions, etc. we can learn to use financial instruments to our advantage, to improve our economic management, and to the betterment of the people of the country.

The Forward Markets Commission along with National exchanges is implementing price Dissemination Project for disseminating spot and futures prices of agriculture commodities by installing Electronic Price Tickers Boards at all prominent locations frequented by farmers and other stakeholders. Am happy to note that 1400 price Tickers Boards have been installed in the 11th Five Year Plan and another 7500 price Ticker Boards would be installed in the 12th Five Year Plan. Large scale presence of Price Tickers Boards and information display about Agri-commodities prices would go a long away in checking Information Asymmetry and benefit farmers in Price Risk Management.

Indian Commodity markets have to come to terms with many challenges. Efforts to effectively deal with them will strengthen these markets further. One of the pressing needs of the time is better alignment of Physical and Futures markets. Commodity futures markets in India are about 3 times the size of physical markets but more than 10 times the size of physical markets in other developed countries hence physical markets are precious for our economy. If I may say so Physical markets are tied to the soil of the land and alignment of physical markets with futures markets will benefit farmers most. Futures markets can serve as adjunct to the physical commodities markets.

Warehousing facilities is another dire requirement of farmers and other participants of commodities markets. Warehousing system and warehouse receipts act as the chain, connecting farmers with the future market and credit financing. But compared with the growth of futures trading in India, there are not sufficient numbers of warehouses. Small and marginal farmers do not have a storage capacity and hence are forced to sell their crops at whatever price is offered to them and cannot wait to get better prices. Effective warehouse facilities would provide necessary storage support to farmers and they can hold the commodity for future profit can make money for giving inputs and make day to day expenditure. Effective warehousing is also essential for facilitating effective delivery mechanism on exchange platform. There are wide differences among different states in terms of storage capacities for commodities and there is a need to smoothen these differences. There is a need to work on the reliability and efficiency of current warehouse systems in the country. The warehousing system also helps in the better integration of ready market for commodities across time and places, thereby facilitating better integration of spot and futures markets. This in turn improves efficiency of futures market in price discovery and price risk management functions. Starting of new warehouses would be very useful for the further development and increasing participation of all kind of players in the commodity futures market.

Instruments like warehouse receipts are very important for the transition to well functioning markets. Current methods of physical settlements can be replaced with settlement using warehouse receipts over a period of time. Eventually physical receipts would be completely replaced by electronic receipts. Warehouse receipts also help in availing credit financing. Loan facility against warehouse receipts is useful for farmers and traders and they can use this money for inputs for crops and sowing. Commodity markets are expected to serve as a hedging platform. At present there are institutional as well as other constraints for effective hedging. There is a need to broaden the participation of hedgers like banks, SMEs and corporate houses. Primary role of banks would be to facilitate hedging. Participation of Cooperative Societies also needs to be encouraged as they also are a strong agency to play the role of “Aggregators”. States like Kerala have an effective experience at “aggregation” and I am confident that participants from other states would benefit by that experience. Hedgers’ participation will also enable market deepening as they can act as agents and aggregators for retail participation, thus leading to market inclusion of millions of potential investors. At the same time, their participation will bring in high amount of liquidity in the

I am sure, the seminar which is going to have suggestions and opinions of a cross section of society from the industry, government agencies and the experts, will prove to be an excellent opportunity to understand such a critical and sensitive issue as the “commodity markets” so that we could make the best use of them to the overall economic development of the nation.

THANK YOU!

Food Safety – Role of Standards”

“Food Safety – Role of Standards”




Prof. K.V. Thomas

Minister of State (I/C)

Consumer Affairs, Food & Public Distribution





"God comes to the hungry in the form of food” is a famous quote by Mahatma Gandhi. Food is essential to nourish any living being. Our physical and mental health also depends on the food we eat. For human beings, the journey from hunter-gatherers to that of a connoisseur of cuisine has been a long, long one. Like in any other civilization, food and eating habits in India are influenced by various aspects such as geography and climate and have contributed their share in the overall development of Indian cultural identity in its present form.



Access to good quality and safe food has been man's main endeavour from the earliest days of human existence. By definition, Food Safety is the condition that ensures that food by itself causes no harm to the consumer when prepared and/or eaten according to their intended use. It implies absence or acceptable and safe levels of contaminants, adulterants, naturally occurring toxins or any other substance that may make food injurious to health. Consumers are taking unprecedented interest in the way food is produced, processed and marketed, and are increasingly calling for strong initiatives from government and industry for food safety and consumer protection. As an awareness of food safety among our citizens is showing an upward trend, the need for an assurance about the safety and quality of food is also greatly felt.



Today the commonly used phrase ‘farm-to-fork’ has taken a different dimension from earlier times. Earlier, farm produce was consumed locally with the effects of pollutants and contaminants being minimal. Now the situation is different – the phrase ‘farm-to-fork’ does not remain local any longer since the farm may be located hundreds of kilo-meters away or perhaps in a different continent altogether. Ever-increasing presence of pesticides and preservation methods in conjunction with other variables such as contamination during transportation and storage add to our concerns about safety of farm produce.



Food and agricultural products constitute an important segment of world trade. India has made significant strides over past several decades in food production as well as in exports of food products. India is in fact numero uno in the production of milk, sugarcane, cashew and spices and the second largest producer of rice, wheat, pulses, fruit and vegetables in the world today. It possesses the largest share of cattle and buffaloes in the world, the second largest share of sheep and goats, the third largest of marine landings, and occupies the fifth position in poultry production - placing India among the 15 leading exporters of agricultural products in the world. During 2010-11, exports of agricultural and allied products registered a robust growth rate of 39.3 per cent.



The globalization and the resultant international trade has a two-fold benefit: it introduces a wider variety of foods into the diet by providing consumers with a bigger and better choice of products; and it provides food exporting countries with foreign exchange, which is indispensable for the economic development of any country, and thus for an improvement in the standards of living of the people. However, Globalization is also adding a new external dimension to the issue of food safety. In order to be a successful food exporter, a country must produce food that is not only acceptable to consumers in other countries, but also comply with the regulatory or statutory requirements of the importing countries.



In this scenario, the inevitable effects of globalization on issues of food safety should be seen more as a challenge and not just as an impediment to a nation’s march towards reaching a bigger international market share. Standards, I believe, are powerful tools in our hands to respond to this challenge. Role of standards in the domain of food safety is immense. Standards promote public health by reducing the risk of food-borne illnesses. They protect consumers from unsanitary, unwholesome, improperly-labeled or adulterated food, and provide a sound regulatory foundation for domestic and international trade in foo



The Bureau of Indian Standards (BIS), the National standards body of India, is engaged in standards formulation and conformity assessment. The main objectives behind formulation of standards include:



 Promoting public health by reducing the risk of food borne illness;



 Protecting consumers from unsanitary, unwholesome, mislabeled or adulterated food; and



 Providing a sound regulatory foundation for domestic and international trade in food.



The BIS has made significant contribution by way of formulating a number of Indian Standards in various fields in accordance with the needs and priorities of our country and adopting various International Standards to suit our national conditions. BIS has formulated about 18700 Indian Standards, covering various technological areas. About 88% of Indian Standards have already been harmonized to International Standards where such International Standards exist. BIS has been promoting these Indian Standards through organization of seminars, like this one.



BIS has also formulated about 1000 Indian Standards in the area of food products and food safety. This includes IS/ISO 22000: 2005 ‘Food Safety Management Systems – Requirements for any organization in the food chain’. IS/ISO 22000: 2005 is an internationally harmonized standard and has emerged as the international bench mark for food safety. The retail sector in India is booming now and food sector is no exception to it. The importance of hygiene in food preparation and the responsibility of the food manufacturing industry need no emphasis. Three newly released Indian Standards in food safety concerning (i) food retail management; (ii) good hygiene practices; and (iii) organizations in the food processing sector are expected to give the necessary fillip to safeguarding and increasing food standards as prevailing now, in addition to acting as foundations of Food Safety Management System. They delineate the basic conditions and activities that are necessary to maintain a hygienic environment throughout the food chain suitable for the production, handling and provision of safe end products for human consumption, leading to a better and safer food management system in the country.



Another area that merits special attention is that of street food. This sector has shown phenomenal growth recently. Readily accessible and affordable to urban populations, street food provides the energy and nutrient needs to large segments of workers and their families in the cities. This sector is also a source of livelihood for a large number of people, the street vendors. However, it cannot be denied that food safety is a major concern with street foods prepared and sold under unhygienic conditions posing a high risk of food-borne diseases due to microbial contamination, improper use of food additives, adulteration and environmental contamination, etc. The customers are also found to be having limited access to clean water, sanitary services, or garbage disposal facilities. BIS has recently finalized an Indian Standard on basic requirements for street food vendors which is praiseworthy. These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer over the entire spectrum of food industry.



These Indian Standards have immense potential to safeguard public health and also promote the confidence of the consumer on entire gamut of food industry, if implemented efficiently. Implementation of these standards can give rise to exceptional improvements in food safety performance, but requires high level of commitment and full functional involvement of all stakeholders, particularly the industry.

***

LAUNCH OF KENDRIYA BHANDAR BRAND AGMARK ATTA ON 23RD MAY 2012:

SPEECH OF PROF. K.V. THOMAS, HON’BLE MINISTER OF STATE (INDEPENDENT CHARGE) OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION AT THE LAUNCH OF KENDRIYA BHANDAR BRAND AGMARK ATTA ON 23RD MAY 2012:




It gives me immense pleasure to be here amongst you on the occasion of launch of Kendriya Bhandar Brand Agmark Atta. Set up in 1963 as a welfare project, the Kendriya Bhandar renders a useful service to the general public by making available essential commodities and thereby keeping a check on their price rise. Agmark Atta is a new addition today and, I am sure, this will be welcomed by the public.



One could see similarities between the utility of the Kendriya Bhandars and the Public Distribution System (PDS). If Kendriya Bhandars make available essential commodities to all at a price range that cannot be breached by neighbourhood shops, the PDS, the single largest retail chain existing in the country, offers essential food items to the public, especially the poor and the downtrodden, at a price that is affordable by even the poorest of the poor.



The Targeted Public Distribution System (TPDS) was launched in 1997 with a focus on the poor. Strengthening and streamlining of TPDs is being undertaken as a continuous process in partnership with States/UTs. Timely distribution of commodities to the beneficiaries, door step delivery of food-grains to fair price shops, effective monitoring of PDS items through social audit are our priority areas. In addition, States have been making full use of technology for tracking TPDS vehicles and redressing grievances of consumers through toll free call centres. Creation of awareness among the public about the PDS, Market Intervention for strengthening financial capabilities of State agencies like Civil Supply Corporations enabling them to intervene during price rise by providing non-PDS items at reasonable rates to consumers are some of the other important actions being taken by us. Cooperation of Gram Panchayats and self-help groups of women are also being sought to make the PDS system more vibrant.





Under the Open Market Sale Scheme (OMSS), the Government has allowed retail sale price of wheat and rice by States at MSP compared to earlier years when freight charges were also included. Under the OMSS bulk scheme for sale of wheat through tender to bulk consumers, while in wheat procuring States the reserve price has been kept at MSP, in other States only 50% freight will be charged compared to full freight which was being charged earlier.



Retail is being hailed as India’s industry of the future, incited by the country’s huge urban middle class population. Food and grocery is the second-largest segment of the retail industry. Growing at the rate of 30%, the Indian food retail is going to be the major driving force for the retail industry. Traditionally, Indians were used to buying their sugar, wheat, pulses, rice etc. from their neighbourhood stores. With changing lifestyle there is scarcity of time; therefore one-stop retail format is emerging as an important driver of growth that can offer consumer 'value for time' in addition to 'value for money.’



In the present era of competition, when organized sector is entering retail trade, the cooperatives must respond to the challenges by adopting technology & professionalism. They need diversification and should adopt market driven strategies for its sustenance. I understand that in line with latest trend in retailing, Kendriya Bhandar has taken up immense efforts to modernize the existing stores in term of its ambience, display system, computerization etc. in a phased manner. Concerted steps are also being taken for computerization of godowns and installation of the latest Point of Sales (POS) Machines at retail stores for ensuring better supply chain management. About 52 per cent of the Bhandar’s sale of consumer and grocery items is to general public while only 48 per cent of its sale is to government employees. Keeping this in view they should develop new strategies for a quantum increase in its sales.



Kendriya Bhandar and similar cooperative Societies should be able to anticipate and gear up to this situation of market transformation and consumer awareness and should be able to introduce innovative ideas in marketing, bringing in more clientele into their fold. I am sure, the introduction of professionalism and better quality products with trust marks like Agmark will generate consumer confidence in sourcing products from Kendriya Bhandar.



THANK YOU!