Voluntary Report - public distribution

**Date:** 5/19/2006

**GAIN Report Number:** IN6043

IN6043

**India**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, #18**

**2006**

**Approved by:**

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

U.S. Embassy, New Delhi

**Prepared by:**

A. Govindan, Santosh Singh

**Report Highlights:**

\*Heat mounts on Pawar on wheat imports\*, \*Rigid import norms may take
wheat imports costlier\*, \*Wheat import norm unlikely to be relaxed\*,
\*No plans to cancel Australian wheat shipment\*, \*Disputed Aussie
wheat diverted elsewhere\*, \*Food safety bill in parliament this
week\*, \*GOI revised reference prices for imported vegetable oils\*,
\*Activists against Indo-US Agro deal\*, \*Agriculture in transition,
get used to imports\*, \*Monsanto moves Supreme Court for stay on MRTPC
order\*.

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.

# HEAT MOUNTS ON PAWAR ON WHEAT IMPORTS

The government's decision to import 3.5 million tons of wheat has come
under attack in Parliament. The opposition and the supporting Left
parties have begun questioning the need to import, arguing that there is
no shortage of wheat in the country. The government may find it
difficult to explain the reasons for importing wheat from the
scam-tainted Australian Wheat Board at a higher price and by relaxing
quarantine norms. (Source: Financial Express, 05/13/06)

# RIGID IMPORT NORMS MAY MAKE WHEAT IMPORTS COSTLIER 

Buying three million tons of wheat from the international market may
prove to be an expensive proposition for India due to rigid import norms
laid out in the recent tender floated by the State Trading Corporation
of India (STC), according to an industry official. Because of the
enormous risk involved, India will have to pay a huge premium to import
wheat this time, said the official. Despite India's efforts to increase
participation in the wheat import tender, rigorous norms will limit the
number of bidders, and many trading houses may not participate at all,
an Indian representative of a multinational trading house said. (Source:
Business Standard, 05/15/06)

# WHEAT IMPORT NORM UNLIKELY TO BE RELAXED

The government will not give any further relaxation in the tender
floated by the State Trading Corporation to import three million tons of
wheat, according to a senior government official. The norms in the
second import tender are already much more lenient than the first tender
to import 500,000 tons, he added. "We have tried to achieve a balance
between what is in the overall interest of the country. Wherever there
was a possibility of relaxing plant quarantine norms, the second tender
addressed that ... no further relaxations are likely," he said. (Source:
Business Standard, 05/14/06)

# NO PLANS TO CANCEL AUSTRALIAN WHEAT SHIPMENT

The government has no plans to cancel Australian wheat shipments delayed
by disagreements over quality criteria, a top government official said.
"I don't anticipate that, we are optimistic of getting all of the
wheat," he said. Some 400,000 tons of Australian wheat shipments to
India are being held up because of "stringent quality specification" in
the contract, AWB Ltd spokesman Christian Sealey said, adding it hoped
to resolve the issue soon. About 100,000 tons of a half-million ton
tender have already arrived in India. Australian traders said the
remaining shipments were being delayed due to a different interpretation
of the contract term "zero tolerance" for weed seeds, pesticides, and
other material in wheat shipments. (Source: Financial Express, 05/17/06)

**DISPUTED AUSSIE WHEAT DIVERTED ELSEWHERE**

Australia has diverted two shiploads of wheat originally sold to India,
but the contracts are unlikely to be cancelled as talks continue to
resolve a dispute over grain quality, said Christian Sealey, AWB Ltd.
spokesman. AWB was also negotiating to send two further shiploads of
wheat contracted by India to other destinations, he said. He said
disagreements between Australia and India over contract specifications
were still not resolved and were now seen unlikely to be settled soon.
"We think it will be going on for quite a while," he said. Australian
traders said the shipments were being held up due to different
interpretations in the contract of the term "zero tolerance" for weed
seeds, pesticides, and other material in wheat shipments. (Source:
Business Standard, 05/18/06)

# FOOD SAFETY BILL IN PARLIAMENT THIS WEEK 

"The Group of Ministers has cleared the formulation of the proposed Food
Safety Bill today," said the Minister of State for Food Processing. The
Bill would be introduced in Parliament this week, he added. The Bill
seeks to set up a single regulator that will put in place food standards
and to regulate the manufacturing, import, processing, distribution, and
sale of food products. The proposed Bill not only incorporates the
salient provisions of India's Prevention of Food Adulteration Act, but
is also based on international food safety norms. (Source: Business
Line, 05/17/06)

*Post Comment:* The draft of the proposed Bill is available at:
<http://mofpi.nic.in/foodsfty.pdf>

# GOI REVISES REFERENCE PRICES FOR IMPORTED VEGETABLE OILS

On May 16, 2006, the Government of India raised the tariff value (the
reference price for tariff calculations) for the palm oil group by a
uniform \$6 per ton, and for crude degummed soybean oil by \$22 per ton.
The revised tariff values are in the following table:

+--------------------------------+------------------+-----------------+
| **Edible oil**                 | **Tariff**       | **Tariff**      |
|                                |                  |                 |
|                                | **Value          | **Value         |
|                                | (\$/Ton)**       | (\$/Ton)**      |
|                                |                  |                 |
|                                | **Effective**    | **Effective     |
|                                |                  | 05/16/06**      |
|                                | **04/28/06**     |                 |
+--------------------------------+------------------+-----------------+
| Crude Palm Oil                 | 427              | 433             |
+--------------------------------+------------------+-----------------+
| Crude Palmolein                | 449              | 455             |
+--------------------------------+------------------+-----------------+
| RBD Palm Oil                   | 442              | 448             |
+--------------------------------+------------------+-----------------+
| RBD Palmolein                  | 452              | 458             |
+--------------------------------+------------------+-----------------+
| Other Palm Oil                 | 435              | 441             |
+--------------------------------+------------------+-----------------+
| Other Palmolein                | 451              | 457             |
+--------------------------------+------------------+-----------------+
| Crude Degummed Soybean Oil     | 518              | 540             |
+--------------------------------+------------------+-----------------+

The government notification is available at:
<http://www.cbec.gov.in/cae/customs/cs-act/notifications/notfns-2k6/csnt51-2k6.htm>

**Activists against Indo-US agro deal**

Agricultural scientists and farmers' rights activists have criticized
the Knowledge Initiative in Agriculture (AKI) for lack of transparency,
consultation, and credibility. They have demanded that the research
establishment be kept in the loop of crucial issues pertaining to
intellectual property rights, ownership of genetic resources, and
primacy of Indian laws in the deal. "It is unfortunate that there has
been no consultation with stakeholders. Ours must be a pro-small farmer
agriculture policy. We do not understand why the Indian Council of
Agricultural Research has been reticent in holding wider consultation on
what should be the guiding principle for international research," Dr.
M.S. Swaminathan, an eminent agriculture scientist was quoted saying.
\[Dr. Swaminathan is an honorary advisor to the AKI\]. "Through the
Agriculture Knowledge Initiative, the Americans have asked for
unhindered access to the rich biodiversity in India's gene banks," Ms.
Suman Sahai of the Gene Campaign said. (Source: Pioneer, 05/18/06)

*Post Comment*: Facts about the KIA are available in the FAS/USDA
website (see

<http://www.fas.usda.gov/icd/india_knowl_init/india_knowl_init.asp> and
the Indian government Department of Agricultural Research and Education
website (see <http://dare.nic.in/usa.htm>)

**AGRICULTURE IN TRANSITION, GET USED TO IMPORTS**

When under attack by several members of the Parliament on wheat imports,
Agriculture Minister Pawar made it clear that imports are going to be a
way of life. He said Indian agriculture is in a transition phase and
reforms would take time to bear results. He said time had come to have
credible export and import policies for agriculture, especially in the
changed international environment. (Source: Indian Express, 05/19/06)

# MONSANTO MOVES SUPREME COURT FOR STAY ON MRTPC ORDER

Monsanto has asked the Supreme Court of India to review the order of the
Monopoly and Restrictive Trade Practices Commission (MRTPC) that directs
the company to fix a reasonable price for the sale of Bt cotton seeds to
farmers (see IN6041). The MRTPC earlier upheld the petition of Andhra
Pradesh government alleging that Monsanto was indulging in restrictive
and monopolistic trade practices by charging an exorbitant trait fee.
MRTPC further issued directives to the company to lower the trait fee
and fix the price within a month. (Source: Indian Express, 05/17/06)

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

+-----------+---------------------------------------+------------------+
| ####      | #### SUBJECT {#subject-1}             | ###              |
| REPORT \# |                                       | # DATE SUBMITTED |
+-----------+---------------------------------------+------------------+
| IN6041    | Weekly Highlights & Hot Bites, #17    | 05/12/06         |
+-----------+---------------------------------------+------------------+
| IN6042    | India: Oilseeds and Products: Annual  | 05/15/06         |
+-----------+---------------------------------------+------------------+

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