Voluntary Report - public distribution

**Date:** 7/30/2004

**GAIN Report Number:** IN4082

IN4082

**India**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, #29**

**2004**

**Approved by:**

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

U.S. Embassy, New Delhi

**Prepared by:**

A. Govindan, Santosh Kr. Singh, Sayed Sarwer Hussain

**Report Highlights:**

\*Government presses drought button\*, \*Rainfall deficiency increases
to 28 percent\*, \*No compromise on agriculture, India tells WTO\*,
\*UPA may rework FTA with Thailand\*, \*Big Mac plans to pump in over
\$55 million in next 2 years\*, \*Godrej plans foray into food
retailing\*, \*BANGLADESH: Crop loss assessed at \$233 million\*.

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.

# GOVERNMENT PRESSES DROUGHT BUTTON

The government has pressed the panic button and is contemplating a slew
of measures to deal with the impending drought. In order to tackle
consequence of drought on crop production and supply, the Agriculture
Ministry is seeking suspension of exports by the Food Corporation of
India (FCI). The FCI has been directed to keep aside enough grain in the
drought-affected states of Rajasthan, Maharashtra, Madhya Pradesh, and
Andhra Pradesh to meet relief requirements for three to four months. The
Agriculture Ministry has finalized a contingency plan to meet the
crisis, which includes providing grain and fodder to drought affected
regions, encouraging water harvesting and water conservation,
implementing food-for-work program, and providing seeds of alternative
crops. (Source: Pioneer, 07/24/04)

# RAINFALL DEFICIENCY INCREASES TO 28 PERCENT 

Rainfall was 28 percent deficient during the week ending July 21. This
was the fourth consecutive week of deficient rainfall. Rainfall was 66
percent deficient in northwest India, 40 percent in central India, and
48 percent in south peninsula. However, it was in excess by 43 percent
in northeast India. Twenty-six of the 36 meteorological subdivisions
received deficient or scanty rains. The average cumulative rainfall for
the entire country during the June 1 to July 21 period was 12 percent
below normal. Over half of the country's 71 major water reservoirs have
less than 30 percent water storage, threatening the collapse of the
canal irrigation system in rain-deficit areas, where standing crops are
facing moisture stress. The drought could also adversely affect
hydropower generation. (Source: Financial Express, 07/24/04; Business
Standard, 07/28/04)

*Post Comment*: For more details on monsoon, see GAIN report IN4075.

# NO COMPROMISE ON AGRICULTURE, INDIA TELLS WTO

India has made it clear that it will not compromise on issues affecting
the livelihood concerns of millions of the country's farmers, most of
whom are at the level of bare subsistence. "Developed countries must
understand that (in agriculture) we are battling not so much for trade
as for subsistence and therefore, we cannot compromise on subsistence,
risking in the process social and economic upheavals," Mr. Kamal Nath,
Minister for Commerce and Industry, said. (Source: Press Information
Bureau, GOI, 07/27/04)

# UPA MAY REWORK FTA WITH THAILAND 

The United Progressive Alliance (UPA) government is not backing out of
the Free Trade Agreement (FTA) with Thailand, signed by the previous
government, but would like to carefully examine and possibly rework some
aspects of the agreement, according to official sources. The Prime
Minister is concerned that FTA's with other nations, as well, may have
made promises without adequate thought given to implementation. The UPA
government's view is that the previous National Democratic Alliance
regime had engaged in an FTA signing spree in the last few months before
its exit from office, in order to refute the suggestion that India was
isolated after the failure of the Cancun WTO talks. (Source: Times of
India, July 29, 2004)

**BIG MAC PLANS TO PUMP IN OVER \$55 MILLION IN NEXT 2 YEARS**

Fast-food chain McDonalds plans to pump rs. 25 billion (\$56 million)
into their Indian operations over the next two years to take its total
investment to rs. 100 billion (\$222 million). Its future plans include
opening eight new outlets in northern India. A McDonald's official said
its restaurants are serving over 2,500 customers per day in its existing
53 outlets. It is operating as two separate joint ventures in the
northern and southern markets. However, McDonalds is considering
franchising for future expansion. (Source: Business Line 7/27/04)

**GODREJ PLANS FORAY INTO FOOD RETAILING**

The Godrej group, one of India\'s major food processors, plans to
venture into food retailing, either by acquiring a food retail chain or
by setting up a new one. The group has been in talks to acquire a south
India based retail chain, Trinethra. India\'s corporate presence in the
retailing sector includes RPG group (Foodworld & Giant chains), Tata
group (Westside), Raheja group (Shopper\'s Stop), and Pantaloon group
(Big Bazaar & Food Bazaar). The organized retailing industry grew by 25
percent in 2003/04. The food and grocery segment accounts for 14 percent
of the market. (Source: Business Standard 7/26/04)

BANGLADESH: CROP LOSS ASSESSED AT \$233 MILLION

A parliamentary standing committee yesterday termed the rehabilitation
allocation for the flood-hit farm sector highly inadequate, prompting
Agriculture Minister MK Anwar to assure it of increased funding over and
above the \$8 million sum. The agriculture ministry has assessed a crop
loss of \$233 million in 36 districts due to the flood so far. Small
farmers will be provided with funds to buy fertilizer, seed, and other
inputs under this program. (Source: The Daily Star, 07/26/04)

# RECENT REPORTS SUBMITTED BY FAS/NEW DELHI

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

  IN4076      Weekly Highlights & Hot Bites, #28      07/23/04

  IN4077      FAIRS Country Report - India            07/29/04

  IN4078      India -- Livestock Annual               07/30/04

  IN4079      Cotton & Products -- August Update      07/30/04

  IN4080      Grain & Feed -- August Update           07/30/04

  IN4081      Oilseeds & Products Trade Data - July   07/30/04
  ----------- --------------------------------------- -------------------

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