Voluntary Report - public distribution

**Date:** 12/2/2005

**GAIN Report Number:** IN5129

IN5129

**India**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, #44**

**2005**

**Approved by:**

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

U.S. Embassy, New Delhi

**Prepared by:**

A. Govindan, Santosh Kr. Singh, V. Shunmugam

**Report Highlights:**

\*Study says Foreign Direct Investment (FDI) in Retail will create eight
million jobs\*, \*FCI rules out wheat imports\*, \*Maharashtra\'s grapes
turn sour\*, \*Government to set up expert panel to monitor Avian
Influenza\*, \*Increased soybean oil imports hurting farmers\*,
\*Greeanpeace demands ban on Genetically Modified food trials\*,
\*Authority to protect farmers\' rights to be established\*, \*Snacks to
boost demand in packaged food sector\*.

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.

**STUDY SAYS FOREIGN DIRECT INVESTMENT (FDI) IN RETAIL CREATE EIGHT
MILLION JOBS**

A study by Pricewaterhouse Coopers indicates that increased employment,
efficiency in agriculture, and increased exports are the benefits of
modern trade for India. An additional eight million jobs are projected
to be generated through direct and indirect employment with the
development of an organized retail sector. Allaying fears that FDI in
retail will create unemployment by wiping out the existing small grocery
stores, the study says that only those working in about 100,000
mid-category stores will be displaced in the medium term, but that there
will be redeployment of this workforce in the long run. (Source:
Financial Express, 11/24/05)

**FCI RULES OUT WHEAT IMPORTS**

The Food Corporation of India (FCI), the government's grain procurement
and distribution agency, said that there is no need for the country to
import wheat, due to sufficient stocks and stable prices. "The chances
of wheat imports are nil," said Chairman of the FCI. "Stock levels do
not support the idea of imports," he said. He said government agencies
had 8.1 million tons of wheat and 11.6 million tons of rice on November
18. "If you take consumption of around 1.5 million tons of wheat a
month, we will be left with at least one million tons in April," he
said. Additionally, a good wheat crop is expected next year because of
ample soil moisture after widespread monsoon rains in September.
(Source: Business Standard, 11/23/05)

*Post Comment:* For Post's analysis of the wheat situation, which
differs from FCI's, please refer to GAIN report IN5127.

**MAHARSHTRA\'S GRAPES TURN SOUR**

Grapes could "turn sour" for the state of Maharashtra, which accounts
for 90 percent of the country\'s production, despite a projected bumper
crop. Maharashtra growers blame it on the government\'s policy of
unrestricted grape imports from the United States and Australia. They
also blame the government for not doing anything to open up new markets
for Indian grapes. An official of Mahagrapes, a Maharashtra grape grower
association, alleged that when Americans and Australians want to supply
grapes to India, quarantine issues are cleared quickly, but no
reciprocal arrangements are made for exports to their markets. (Source:
Economic Times, 12/01/05)

*Post Comments:* India\'s imports of grapes are arguably too small to
affect the domestic market for local grapes. India\'s imports of grapes
during Indian fiscal year 2004/05 (April/March) was 1,110 tons, compared
to the domestic production of approximately 1.3 million tons.
Additionally, the retail price of imported grapes is arguably too high
(Rs. 250-300 per kg) to affect the price of local grapes (Rs. 20-50 per
kg). However, Maharashtra grape growers, a politically strong lobby,
have been quite vocal trying to stop the import of grapes.

**GOVERNMENT TO SET UP EXPERT PANEL TO MONITOR AVIAN INFLUENZA**

A top government official said that the Indian government would set up a
high-level expert committee to keep a close watch on bird flu cases and
to suggest preventive measures. As part of the surveillance program, the
federal government has asked state governments to strictly monitor
deaths of poultry and other birds. State animal husbandry departments
have also been asked to keep a close eye on migratory birds.

The Secretary of the Department of Animal Husbandry and Dairying ruled
out the possibility of Avian Flu entering India through imported poultry
products, since imports from flu-positive countries are banned. (Source:
Financial Express, 11/14/2005)

**INCREASED SOYBEAN OIL IMPORTS HURTING FARMERS**

The Chairman of the Soybean Processors Association of India (SOPA)
suggested that the government renegotiate the bound tariff for soybean
oil (currently at 45 percent) to safeguard the interests of soy farmers.
According to him, the current market price of \$261/ton for soybeans is
much less than last year. He indicated that low tariffs on soybean oil
and weak international markets have a negative impact on domestic
soybean prices. In order to alleviate this situation, he said that
farmers should increase crop productivity and that the government should
protect farmers from low international soybean oil prices. (Source:
Business Standard, 11/22/05)

**GREENPEACE DEMANDS BAN ON GENETICALLY MODIFIED FOOD TRIALS**

Greenpeace-India's \"bio-hazard hotspot map\" of India indicates that
there are 21 genetically modified crops at different stages of
experimentation in India, despite damaging evidence in other countries.
It also claims that there is no transparency regarding health and safety
issues that involve genetically modified products entering the food
chain. Greenpeace-India has asked the government to take a precautionary
approach to the commercial approval of these crops, and has sought the
intervention of the Health Minister. The Minister is reported to have
agreed to the need for a \"guarded approach\" to biosafety issues.
(Source: The Hindu, 11/30/05)

## AUTHORITY TO PROTECT FARMERS' RIGHTS TO BE ESTABLISHED

The Indian government has announced the creation of a "Protection of
Plant Varieties and Farmers' Rights Authority." The Authority will
regulate all matters pertaining to plants and seed varieties in the
country, said an official statement. The authority will also act as the
national registry for documenting, indexing, and cataloguing all flora
of India, including extant varieties, farmers' varieties, and land
races. See GAIN report IN3125. (Source: Financial Express, 11/14/05)

**SNACKS TO BOOST DEMAND IN PACKAGED FOOD SECTOR**

Convenience, variety, and health concerns are likely to drive the demand
for packaged food in India. A joint study by the Confederation of Indian
Industries and AC Nielsen found that the greatest scope for innovation
in the immediate future is with respect to snacks and ready-to-eat
meals. With lifestyles changing rapidly, consumers are in need of, and
are willing to spend on, options that offer convenience, variety,
health, and luxury. (Source: Business Line, 11/21/05)

# RECENT REPORTS SUBMITTED BY FAS/NEW DELHI

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

  IN5125      Weekly Highlights & Hot Bites, #43      11/18/05

  IN5126      Cotton Quarterly Lock-up Report         11/30/05

  IN5127      Grain & Feed Monthly Lock-up Report -   11/30/05
              December                                

  IN5128      January-August Rice Exports             12/01/05
  ----------- --------------------------------------- -------------------

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