Voluntary Report - public distribution

**Date:** 8/14/2003

**GAIN Report Number:** IN3075

IN3075

**India**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, No. 33**

**2003**

**Approved by:**

![](media/image1.wmf)Chad R. Russell

U.S. Embassy, FASNEWDELHI

**Prepared by:**

Santosh Kr. Singh, V. Shunmugam

**Report Highlights:**

\*FCI suspends foodgrain allocation for exports\*, \*Move to scrap
cotton import duty may hurt domestic producers\*, \*Food regulatory body
in the cards\*, \*Bt toxin faulty: Gene campaign\*.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

New Delhi \[IN1\]

\[IN\]

Welcome to Hot Bites from India, a weekly summary of issues of interest
to the U.S. agricultural community. The report includes information that
has been garnered during travel within India, reported in the local
media, or offered by host country officials and agricultural analysts.
Press articles are included in this report. Significant issues will be
expanded upon in subsequent reports from this office.

DISCLAIMER: Any press summary contained herein does NOT reflect USDA's,
the U.S. Embassy's, or any other U.S. Government agency's point of view
or official policy.

# FCI SUSPENDS FOODGRAIN ALLOCATION FOR EXPORTS

A top food ministry official informed that the Food Corporation of India
(FCI) has suspended fresh allocations of wheat and rice for exports
until the backlog of orders are cleared. Allocations made before the
suspension order and consignments for which payments have been made will
be cleared for export. The backlog was in view of the railways being
unable to allocate railcars for movement of grains to ports. The total
backlog of grains is estimated at around three million tons. Although
fresh allocations have been suspended from August 7, 2003, officials
believe that exports of food grains will continue without hindrance.
However, exporters believe that suspension of fresh allocations will
mean no new contracts for the next 4-5 months. They also felt that rice
exports may not be affected much, while wheat exports could be hit. Some
within the trade point at declining foodgrain stocks for the suspension
of allocations from the FCI, but officials deny this. (Source: Business
Line 08/10/03)

# MOVE TO SCRAP COTTON IMPORT DUTY MAY HURT DOMESTIC PRODUCERS

There are reports that the Textile Ministry has recommended abolition of
import duty on raw cotton on the ground that it will benefit the
domestic cotton textile industry in addition to providing a bargaining
chip at the World Trade Organization (WTO). However, some industry
experts have raised concerns and want to further analyse the cost and
benefits of such a policy change. The abolition of import duty would
surely benefit the textile industry by allowing access to lower priced
raw material. However, it is unclear what kind of bargaining chip a duty
waiver on cotton will provide at the WTO. Besides, cotton is an
important commercial crop cultivated on 8.5 million hectares, and it
provides livelihood to several thousand farmers. The article further
mentions that cotton is a highly subsidized commodity in many of the
developed nations, including the US. As for India, no subsidy is granted
to cotton producers and the only instrument to rein-in imports that may
hurt domestic producers is the custom duty, continues the report.
(Source: Business Line 08/13/03)

**FOOD REGULATORY BODY IN THE CARDS**

Ministry of Food Processing is planning to set up a regulatory authority
and a "Council for Food Standards" under a new statute to be called
"Food Bill 2002". The objective of the new bill is to integrate all laws
related to food and food processing industries. Presently, over 30 laws
govern the food sector, administered by various departments of the
central and state governments. The regulatory body, to be called the
Food Development and Regulatory Authority of India, will be headed by a
high court judge or a person of eminence in the food sector. It will
have about four members from industry. According to reports, the draft
of the bill has been examined by the Minister for Food Processing
Industries and is being discussed by a group of ministers. The bill is
likely to be tabled in parliament soon. (Source: Business Standard
8/9/03)

**BT TOXIN FAULTY: GENE CAMPAIGN**

A recent study by an NGO -- Gene Campaign -- reportedly found Bt cotton
varieties did not result in much savings in terms of pesticide sprays.
According to the NGO, "As the approved Bt cotton varieties were
effective only against green bollworm, it led to greater infestation of
pink boll worm. To control pink bollworm the farmers have resorted to
heavy spraying." Dr. Sahai, who heads the NGO said, "Constant exposure
to Bt toxin without the implementation of the 'refuge area' has created
a favorable environment for pink boll worm by effectively checking the
green boll worm infestation." The study also revealed that the farmers
and local breeders have created their own version of Bt cotton, crossing
local varieties with the unapproved Navbharat-151 (Bt) variety. These
varieties have spread to many of the cotton growing states through an
informal sales network. (Source: Economic Times, 8/9/03)

*Post Comment*: The local press continues to report varied results
regarding the effectiveness of Bt cotton in India. Post will visit
production areas within the next month to evaluate producers reactions
to this seed technology. For this year's crop, sales of Bt cotton seed
increased significantly.

**RECENT REPORTS SUBMITTED BY FAS/NEW DELHI**

  --------------- ------------------------------------- -----------------------
  ***REPORT#***   ***SUBJECT***                         ***DATE SUBMITTED***

  IN3072          Weekly Highlights & Hot Bites, #32    08/08/2003

  IN3073          Tree Nuts Voluntary                   08/11/2003

  IN3074          Tree Nuts Voluntary                   08/13/2003
  --------------- ------------------------------------- -----------------------

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