Can India Replace PDS Rice with
Cash Transfers?
Jul
24, 2015
The present government of India, which took charge last year, has come out
with an ambitious plan of replacing the rice distributed to the below poverty
line (BPL) families under the public distribution system (PDS) with direct cash
transfers in order to address some problems such as corruption. However,
whether India can smoothly handle the transition is a big question. An aticle
in Bloomberg analyses the issues related to the Indian cash transfer system.
Nearly two-thirds of the India population, especially in villages, receive
the PDS rice. The Indian government distributes about 10 kilograms of rice to
each family every month as part of efforts to ensure food security.
But certain problems like middlemen, corruption and missing stocks have
been making the system inefficient. The High Level Committee set up by the
Prime Minister to make recommendations for the Food Corporation of India (FCI)
restructuring has suggested to replace PDS rice with cash transfers. The
suggestion is beneficial as it reduces a lot of financial burden on the
government to procure, store and distribute rice as well as ensure financial
security to the people of India.
However, the implementation of the system is associated with several
problems. Most of the rural Indians do not have bank accounts, which are
crucial for implementing cash transfer system. The government helped open
nearly 170 million bank accounts in the rural areas and also started pilot
testing of the cash transfer in three states. A testing in the state of
Pondicherry has not proven fruitful and has been dismantled after three months.
Several beneficiaries complained of hardships in collecting money from the
banks.
A Professor in the Indian Institute of Technology (IIT), New Delhi, who
surveyed the PDS across 10 states in 2013, noted that lack of proper
financial/banking infrastructure in India is a major hurdle to the cash
transfer system. There are not sufficient bank branches in rural India to make
payments to the beneficiaries on time and most importantly, they may not be able
to afford to buy rice in the private shops. Some experts say, they may even
spend the whole lot of money paid by the government on other things and remain
hungry. In that case, the purpose of the government to ensure food security is
lost.
The Senior Vice-President for sovereign risk at Moody’s Investors Service
noted that the success of cash transfers would depend on the public
administration and the extent to which it is understood and accepted by the
public.
Oryza Overnight Recap – Chicago
Rough Rice Futures Turn Negative as Sharply Lower Grains Weigh on Prices
Jul
24, 2015
Chicago rough rice futures for Sep delivery are currently seen trading 13
cents per cwt (about $3 per ton) lower at $10.980 per cwt (about $242 per ton)
during early floor trading in Chicago. The other grains are seen trading
lower this morning; soybeans are currently seen trading about 0.9% lower, wheat
is listed about 1.4% lower and corn is currently noted about 1.9% lower.
U.S. stocks traded mixed on
Friday, despite surprisingly strong Amazon earnings, as signs of slower
global growth weighed on sentiment. Stocks briefly attempted gains before
turning lower, with the Dow and S&P a touch below the flatline and the
Nasdaq clinging to gains. Overnight, the Caixin Markit flash general
manufacturing PMI for July came it at 48.2, a 15-month low. The July euro zone
flash PMI was 52.2, a 2-month low. The flash manufacturing PMI for the U.S.
comes at 9:45 a.m. and
new home sales comes at10:00 a.m. European
stocks traded lower and Asian stocks closed in the red, with metals falling
further and gold hitting a fresh five-year low. The precious metal held near
$1,081 an ounce in early trade. The Dow Jones Industrial Average traded 17
points lower, or 0.11%, at 17,713. The S&P 500 traded down 3 points, or
0.12%, at 2,099, with health care leading six sectors lower and consumer
discretionary leading gainers. The Nasdaq traded up 6 points, or 0.12%, at 5,151.
Gold is currently trading about 1.1% lower, crude oil is seen trading about
0.3% higher, and the U.S. dollar is currently trading about 0.3% higher
at 8:45am Chicago
time.
India 2015-16 Main Paddy Rice
Sowing Area Continues to Pick Up Despite Deficient Monsoons
Jul
24, 2015
Total area planting to India's 2015-16 Kharif (main) rice crop (June -
December) stood at around 18.85 million hectares as of July 24, 2015, up about 7%
from around 17.65 million hectares planted during the same time last year,
according to a press release by the Agriculture Ministry.
India received 7% below normal rainfall in the fourth week of July, according
to the Indian Meteorological Department (IMD). Central, south peninsular and
north-east regions received 12%, 12% and 6% below average rains during the
week. However, the north-west region received 6% above-average rainfall. Some
areas of Maharashtra are still dry. Analysts are still concerned that a long
dry patch in major rice growing areas could severely impact rice yields.
Monsoon rains in July were only 7% below normal though they were forecast
to be 12% below normal. According to the Economic Times, the Director of the
Central Rice Research Institute (CRRI) noted that the 2015-16 kharif rice
output may not be significantly impacted if the monsoon deficit is curbed at
10. "Current rainfall is very encouraging to farmers. If distribution of
rains is same and there are no major spells of drought, we should not worry
about the deficit," he was quoted as saying.
A likely drought-inducing El Nino this year is expected to lower production
prospects this year. The IMD has forecasted the El Nino pattern to reach to
moderate to a strong one during the monsoon season (June – September).
The total Kharif crop sown area stands at 69.38 million hectares as on July
24, 2015, up about 26% from around 55.04 million hectares during the same
period last year, according to the Agriculture Ministry.
Oryza Weekly: Global Rice Prices
Rebound on Supply Slump
Jul
24, 2015
The Oryza White Rice Index (WRI), a weighted average of global white rice
export quotes, ended the week at about $404 per ton, down about $3 per ton from
a week ago, down about $1 per ton from a month ago and down about $73 per ton
from a year ago.
The USDA estimates 2015-16 will be the third crop year in a row with
declining global rice stocks due to lower carryover from the 2014-15 crop
year. Stocks are expected to tighten in Thailand and India in particular,
as dampened exports prices and lower demand; dry weather from El Nino; and
declining government support in Thailand all lower production incentives.
Thailand
Thailand 5% broken rice is today shown at about $380 per ton, down about
$15 per ton from a week ago, up about $10 per ton from a month ago and down
about $45 per ton from a year ago.
The Thai Commerce Ministry, which planned to hold an auction to sell about
1.29 million tons of sub-standard rice in early July, is likely to postpone the
auction to early August as the separation procedure of the rice is delaying the
preparation process.
The government of Thailand has decided to conduct a large-scale survey of
drought-affected farm land in the Central Region in order to assess the
severity of the damage in order to provide adequate support to the affected
farmers.
The Thai Rice Exporters Association (TREA) expects this year’s rice exports
to be lower than the target of 10 million tons due to extending drought conditions
and a sluggish world economy. New estimates are around 9.5 million tons.
The TREA expects that the ongoing drought conditions will increase
Thailand’s domestic and export rice prices in the second half of 2015.
The Thai Commerce Ministry plans to auction about 500,000 tons of rice in
its next auction, the fifth of this year.
Vietnam
Vietnam 5% broken rice is today shown at about $350 per ton, unchanged from
a week and a month ago and down about $100 per ton from a year ago.
The Vietnam Food Association (VFA) has forecasted Vietnam to export around
5.91 million tons of rice in 2015, down about 6.5% from an earlier estimated
6.32 million tons exported in 2014 due to a likely fall in exports in the
fourth quarter.
Vietnam rice exporters are expecting the Philippines traders to import the
entire quota of 293,100 tons from Vietnam under the WTO minimum access volume
(MAV) country specific quota (CSQ).
Vietnam exported about 2.875 million tons of rice during the period January
1 – July 16, a decrease of about 21% from the first seven months of 2014.
Rice exports from Vietnam declined about 10% y/y in the first half of 2015,
reaching only about 2.71 million tons. The decline is due to stiff
competition from countries such as India, Thailand, Pakistan, Myanmar, and
Cambodia, but analysts expect Vietnam’s exports to improve in the second half
of 2015.
Vietnam’s Ministry of Agriculture and Rural Development has converted
around 78,735 hectares of rice are in the Mekong Delta into higher value crops
under a two-year agricultural restructuring project.
As negations between the European Union and Vietnam regarding the EU-Vietnam Bilateral Free Trade Agreement (EU-V BFTA) are in
their final stages, the European association of EU farmers unions and
cooperatives (Copa-Cogeca) has expressed concern about the future of the EU
rice growing sector. The Secretary General of Copa-Cogeca is reportedly sending
a document highlighting all the concerns regarding the EU rice sector in the
light of increasing duty free imports from Asian countries to the Directorate
General (DG) Trade and DG Agriculture.
India
India 5% broken rice is today shown at about $390 per ton, unchanged from a
week and a month ago, and down about $50 per ton from a year ago.
Total area planting to India's 2015-16 Kharif (main) rice crop (June -
December) stood at around 18.85 million hectares as of July 24, 2015, up about
7% from around 17.65 million hectares planted during the same time last year
The government has removed quantitative restrictions on exports of rice
bran oil and allowed for its bulk export, according to local
sources. Exporters anticipate higher interest from Japan.
Rice farmers in Bangladesh are avoiding hybrid rice
varieties this year due to high production costs.
Pakistan
Pakistan 5% broken rice is today shown at about $375 per ton, unchanged
from a week ago, down about $15 per ton from a month ago and down about $65 per
ton from a year ago.
Pakistan Finance Minister has met with the Kenyan High Commissioner and
requested him to review the high level of import duty on Pakistani rice as the
high import duty was affecting Pakistan rice exports to Kenya in recent months.
The rice sector in Pakistan is currently facing problems with excess stocks
as it faces stiff competition from other rice exporting countries such as
Thailand, India, and Vietnam. High input costs and low crop prices, along
with low global demand, are further impacting stocks.
Rice exporters in the country are expressing concern that the rice sector
lacks a specific forum that would fix, maintain and control rice prices in the
country.
Central & South America
Brazil 5% broken rice is today shown at about $500 per ton, unchanged from a week
ago, down about $50 per ton from a month ago and down about $165 per ton from a
year ago.
Five percent broken rice from Uruguay and Argentina is today shown at about $540 per
ton, unchanged from a week ago, down about $25 per ton from a month ago, and
down about $85 per ton from a year ago.
Peru lost its trade dispute against Guatemala at the World Trade Organization
Appellate Body, who said that Peru’s “additional duty” on rice and other
agricultural imports was illegal under global trade.
Ecuador’s winter rice crop (December-June) output is expected to increase about 3%
y/y due to a 3% y/y increase in acreage.
U.S.
U.S. 4% broken rice is today shown at about $475 per ton, unchanged from a
week ago, up about $20 per ton from a month ago and down about $80 per
ton from a year ago.
The United States Agriculture Department’s Animal and Plant Health
Inspection Service has published a new rule further restricting entry of
certain commodities, including rice, from countries where the Khapra beetle is
known to exist.
Other Markets
The Chairperson of Senate Agriculture and Food Committee urged the
government of the Philippines to consider rice imports
only through G2G deals and avoid imports through the private sector in efforts
to curb rice smuggling in the country.
An NFA official says that Philippines rice traders may not import all 805,200 tons of rice under the WTO MAV
quota. The government is studying demand and supply conditions and
assessing whether more rice imports are needed.
Monsoon rains have damaged about 18.8 million peso (around $415,455) worth
of rice crop in the northern Luzon region of the Philippines.
Myanmar is looking to secure an export deal with the Philippines as part of its efforts to diversify
its export markets and reduce dependence on China.
China’s rice imports increased sharply in the first six months of 2015, reaching
1.42 million tons, up about 7% from the same period last year.
Rice farmers in Laos are worried that dry
conditions and insufficient rainfall linked to the El Nino phenomenon are likely
to severely impact rice production in the country.
Scientists from China, Sweden and the U.S. have developed a new
genetically-modified rice variety called SUSIBA2 that is low methane-emitting.
South Korea's state run Agro Fisheries & Food Trade Corporation (KAFTC) is seeking
to buy about 41,000 tons of non-glutinous rice in tenders for delivery between
October 15, 2015 and February 29, 2016.
Italy will host its 105th rice seed contest for breeders, with
applications due by September 30.
Rice prices for Italian paddy remain unchanged in the second week of July
2015.
South Korea Seeks to Buy 41,000
Tons of Non-Glutinous Brown Rice in Tenders
Jul
24, 2015
South Korea's state run Agro Fisheries & Food Trade Corporation (KAFTC)
is seeking to buy about 41,000 tons of non-glutinous rice in tenders for
delivery between October 15, 2015 and February 29, 2016, according to a
statement on its website.
The details of the tonnage and volume of the rice sought:
Registration of tenders will close at 4.00 p.m on July 30, 2015. Electronic
bidding will take place on July 31, 2015 between 10:00 and 11:00 a.m.
Thailand, Vietnam, India Rice
Sellers Lower Some of Their Quotes Today; Pakistan Rice Quotes Unchanged
Jul
24, 2015
Thailand rice sellers lowered their quotes for 5% broken rice by about $5
per ton each to around $375-$385 per ton today. Vietnam rice sellers lowered
their quotes for 100% broken rice by about $5 per ton to around $310-$320 per
ton. India rice sellers lowered their quotes for parboiled rice by about
$5 per ton to around $375-$385 per ton. Pakistan rice sellers kept their quotes
mostly unchanged.
5% Broken Rice
Thailand 5% rice is indicated at around $375 - $385 per ton, down about $5
per ton from yesterday and about $30 per ton premium on Vietnam 5% rice
shown at around $345 - $355 per ton. India 5% rice is indicated at around $385
- $395 per ton, about $15 per ton premium on Pakistan 5% rice shown at around
$370 - $380 per ton.
25% Broken Rice
Thailand 25% rice is shown at around $355 - $365 per ton, about $30 per ton
premium on Vietnam 25% rice shown at around $325- $335 per ton. India 25%
rice is indicated at around $350 - $360, about $20 per ton premium on Pakistan
25% rice shown at around $330 - $340 per ton.
Parboiled Rice
Thailand parboiled rice is indicated at around $390 - $400 per ton. India
parboiled rice is indicated at around $375- $385 per ton, down about $5 per ton
from yesterday and about $40 per ton discount to Pakistan parboiled rice
last shown at around $415 - $425 per ton.
100% Broken Rice
Thailand broken rice, A1 Super, is indicated at around $320 - $330 per ton,
about $10 per ton from premium on Vietnam 100% broken rice shown at around $310
- $320 per ton, down about $5 per ton from yesterday. India's 100% broken rice
is shown at around $305 - $315 per ton, about $20 per ton premium on
Pakistan broken sortexed rice shown at around $285 - $295 per ton.
University of Arkansas
Pathologist Suggests Means to Cope with Rice Sheath Blight
Jul
24, 2015
Rice sheath blight, which is caused by a soil pathogen/fungus, is
considered to be a major disease affecting rice plants in Arkansas. The disease
is said to prevail in rice fields if there are prolonged periods of high
humidity and high temperatures. Experimental plots inoculated on July 9 have
started showing symptoms of a spreading disease.
Experts are concerned if the disease may impact the state yields this
year. Currently, temperatures are not very high for the fungus to
survive, but they fear it may develop in fields where inoculum is active and
nights are dewy and warm.
The fungus survives as “sclerotia” (tiny masses of fungal structure called
“mycelia”) which are capable of floating on flooded rice fields. These floating
fungal structures come into contact with the rice plant at or just above the
waterline and spread throughout the plant tissue. Sheath blight starts at the
panicle initiation (green-ring) and spreads to panicle differentiation (1/2”
internode elongation).
Yeshi Wamishe, a University pathologist says farmers should search for the
presence of sheath blight from green ring to pre-heading. Further he adds that any
rice variety is not completely resistant to sheath blight. But its intensity
varies between short and long rice verities and the ambience under which it
develops. But application of appropriate level of fertilizer may reduce the
sheath blight incidence. He warns that sheath blight may be confused with other
rice diseases such as “aggregate sheath spot”, “bordered sheath spot”, “stem
rot”, or “black (crown) sheath rot”, which do not require fungicides.
He notes that fungicide application also depends on varietal
susceptibility, the height of the variety, weather condition, the field
management (seeding rate and nitrogen fertilizer rate), and the treatment
threshold. He says that optimum fungicide treatment should be between 7-14 days
after it reaches panicle differentiation. However, adequate knowledge of the
distribution of the disease in a field and its intensity between ½” internode
elongation and early heading” can decide the correct usage of fungicides.
The following table shows the recommended fungicides and their usage.
Venezuela Orders Rice Farmers to
Sell Output to State to Overcome Food Shortages
Jul
24, 2015
The government of Venezuela has ordered rice farmers to sell between 30%
and 100% of their output to state stores to address the problem of food
shortages, according to the Telegraph. Producers of milk, pasta, oil, sugar and
flour have also been asked to sell their output to the state.
However, the decision is criticised by some experts. They say there are
only 7,245 state stores in the country compared to nearly 113,000 private
stores. People may have to travel several kilometers to reach a state store and
wait in the queues for longer times.
The President of the Venezuelan Food Industry Chamber noted that the
decision does not help address the issue of food shortages. Most of the traders
will resort to hoarding by buying from the state owned shops and then resell at
higher profits.
The only way is to increase production in the country, he said. The
official added that the government has not discussed the plan with the
Chamber before implementing it.
Venezuelan government imposes rigid currency controls and consequently a
shortage of foreign exchange makes it very difficult for traders to import rice
and other goods.
Recently, Venezuelan government also hinted that it would not
renew the PetroCaribe deal with Guyana after it expires in November this
year. Local sources say the government is in talks with the Uruguayan
government to strike a new rice import deal.
VFA Lowers Vietnam Rice Export
Forecast to 5.91 Million Tons
Jul
24, 2015
The Vietnam Food Association (VFA) has forecast Vietnam to export around
5.91 million tons of rice in 2015, down about 6.5% from an earlier estimated
6.32 million tons exported in 2014, Reuters quoted a report from the VFA.
The decline is mainly due to a likely fall in the last quarter shipments.
The VFA is forecasting Vietnam to export around 1.4 million tons of rice in
October-December 2015 period, down about 22% from an estimated 1.8 million tons
in July-September 2015 period. Vietnam exported around 2.71 million tons of
rice the first six months of 2015, down about 10% from around 3.015 million
tons last year.
The VFA's latest forecast is much below the government's projection at
around 7 million tons.
The UN's Food and Agriculture Organization (FAO) is estimating
Vietnam to export around 6.3 million tons , almost unchanged from last year.
USDA estimates Vietnam to export around 6.7 million tons of rice in 2015.
Vietnam 5% broken rice is currently quoted at around $350 per ton compared
to Thai 5% rice at around $380 per ton, India 5% rice at around $390 per ton
and Pakistan 5% rice at around $375 per ton.
EU Farmers Association Warns
About Impact of Increasing Duty-Free Rice Imports
Jul
24, 2015
As negations between the European Union and Vietnam regarding the
EU-Vietnam Bilateral Free Trade Agreement (EU-V BFTA) are in their final
stages, the European association of EU farmers unions and cooperatives
(Copa-Cogeca) has expressed concern about the future of the EU rice growing
sector.
The EU may import about 76,000 tons of rice, mostly husked and milled, from
Vietnam at zero percent duty if the EU-V BFTA goes ahead. The Secretary General
of Copa-Cogeca is reportedly sending a document highlighting all the concerns
regarding the EU rice sector in the light of increasing duty free imports from
Asian countries to the Directorate General (DG) Trade and DG Agriculture.
In the document, the Copa-Cogeca Secretary General noted that already
increasing rice imports from Cambodia (about 22% of EU rice imports) and Myanmar
(about 3% of EU rice imports) in the past three years have led to a decline of
about 40% in the EU indica rice acreage to around 96,000 hectares from around
156,000 hectares. He warned that if the zero-duty rice imports continue at this
pace, there is a danger that the cultivation of Indica rice in Europe will
disappear entirely by 2020.
The Copa-Cogeca official noted that inclusion of Vietnam rice will further
deteriorate the EU rice situation as Vietnam FOB prices are the lowest in the
South East Asia region and at zero percent duty, they would be even more
competitive and may directly compete with European local indica varieties.
He also noted that the EU's ongoing FTA negotiations with India (which
already accounts for 24% of EU rice imports), Thailand (which accounts for 18%
of EU imports) and the U.S. (which accounts for 4% of EU imports) despite
granting all the tariff rate quotas (TRQs) to the third world countries are
likely to lead to an unrecoverable crisis in the EU rice sector.
He reiterated that the EU's stance to decouple specific support for rice
production since 2012 has put the position of European rice producers in even
more vulnerable position. He also noted that continuation of rice production in
the delta area of the EU is most important to maintain biodiversity in the
region.
The official urged the EU not to grant further duty free TRQ for rice to
any other country after the EU-Vietnam FTA. He also stressed on the inclusion
of a strict safeguard clause mechanism in the same FTA in order to avoid any
future crises in the EU rice sector.
Pakistan Urges Kenya to Lower
Import Duty on Rice
Jul
24, 2015
Pakistan Finance Minister has met with the Kenyan High Commissioner and requested
him to review the high level of import duty on Pakistani rice, according to
local sources.
He reportedly told the Kenyan official that the high import duty was
affecting Pakistan rice exports to Kenya in recent months.
Pakistan has accumulated around 600,000 tons of surplus stocks for the last
two years and this year's bumper crop of around 7 million tons is expected to
push up the surplus stocks to over one million tons. This year, Pakistan has
been facing a stiff competition with India, Thailand and Vietnam. Declining
global prices and lack of demand from traditional importers is also a major
concern for Pakistani rice exporters.
Kenya, which is a part of the East African Community (EAC), imposes 75%
duty on rice imports from non-EAC countries. The EAC is keen on protecting the
region's local rice sector from the cheap imported rice from the Asian
countries.
Both Pakistan and Kenya agreed to discuss matters related to trade and
business cooperation at the upcoming Pak-Kenya Joint Ministerial Commission
(JMC) meeting that will be held in Pakistan.
Pakistan exported a total of around 3.73 million tons of rice in FY 2014-15
(July-June), up about 11% from around 3.37 exported in FY 2013-14, according to
data from the Rice Exporters Association of Pakistan (REAP).
Vietnam Expects High Interest
from Philippines Private Rice Traders
Jul
24, 2015
The Philippines National Food Authority (NFA), which has already imported
around 550,000 tons of rice from Vietnam under government-to-government (G2G)
contracts to ensure adequate stocks in the lean season (June – September). It
has further allowed private rice traders to import around 805,200 tons of 25%
broken rice at 35% tariff under WTO minimum access volume (MAV) country
specific quota (CSQ) before November 30, 2015.
Under the quota, Philippines traders can import up to 293,100 tons each
from Thailand and Vietnam; up to 50,000 tons each from China, India and
Pakistan; 15,000 tons from El Salvador and the rest from other countries.
Vietnam rice exporters are expecting the Philippines traders to import the
entire quota of 293,100 tons from Vietnam, according to local sources. The
Vietnam rice export sector is facing trouble as China, its major importer has
increased imports from Thailand.
Vietnam is struggling hard to increase its exports this year due to a stiff
competition from Thailand, India, Pakistan as well as emerging exporters such
as Cambodia and Myanmar.
Vietnam exported about 2.875 million tons of rice in January 1 - July 16,
2015, down about 21% from about 3.63 million tons of rice exported in first
seven months of 2014, according to data from the Vietnam Food Association
(VFA). Average rice export price so far in this year stands at about $415 per
ton (FOB), down about 4% per ton from about $431 per ton recorded during same
last year.
The Philippines private rice traders have so far applied to import only
300,000 tons of rice from Thailand and Vietnam, Reuters quoted a NFA official.
While the NFA is authorized to import another 250,000 tons of rice if the
El Nino-induced drought conditions intensify. The government is currently
assessing the need for importing the additional volume of rice, the Director of
the Department of Economic Research at the Bangko Sentral ng Pilipinas (BSP)
told reporters.
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