Category: Agriculture

India may offer relief to fertiliser sector, big decision on MRP likely soon: Sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The fertiliser sector is expected to get some relief soon as the government is considering increasing the fixed cost of urea, sources told CNBC Awaaz. According to the sources, the MRP for P&K Fertiliser may be reinstated. The Fertiliser Association of India said the government is expected to take a decision on this soon.

The government is preparing to give big relief to the fertiliser sector on three fronts. This includes increasing urea’s fixed cost and reinstating the MRP for P&K Fertiliser.

According to sources, the Ministry of Chemicals and Fertilizers is considering a proposal to increase the minimum fixed cost of urea. Discussions have happened between the fertiliser industry and the Ministry of Chemicals and Fertilizers on this issue. 

Also read: Cabinet hikes subsidy rates on NPKS fertilisers — check new rates here

However, the government has not changed the fixed cost since 2002-03. In this case, the price of a 50 kg bag of urea is fixed at Rs 268.

However, it marginally increased during NPS-III in 2014. The Fertiliser Association of India says urea production is becoming difficult due to a lack of increases in fixed costs. Fertiliser Association of India chairman KS Raju recommends increasing fixed costs by 12 percent of profit after tax (PAT) every year.

In addition, Fertiliser Association of India has pushed for the return of P&K Fertiliser’s market-based MRP system. In addition, there has been a need to eliminate indirect taxes while setting the MRP of P&K Fertiliser units.

“The government is considering these proposals. And a decision on this front is likely to be taken soon,” according to the Fertiliser Association of India.

Also read: Deepak Fertilisers, Aarti Industries join hands in Rs 8,000 crore Nitric Acid supply arrangement

The fertiliser industry is also receiving assistance from the international front in addition to government relief. International prices for natural gas and fertiliser raw materials, which had previously climbed significantly, are now showing a drop.

According to Dr PS Gehlot of Indian Potash Limited, this could result in a decrease in the need for fertiliser subsidies of around 25 percent in the following fiscal year.

For the long term, however, the fertiliser industry has developed a roadmap till 2030. This plan calls for 50 percent of the energy needed by the industry to come from renewable sources. During the 8th and 9th of December, a seminar will also be held on this topic.

Shares of major fertiliser companies are trading red. Chambal Fertilisers and Chemicals is down 0.6 percent, Deepak Fertilisers and Petrochemicals Corporation is down 0.1 percent, Gujarat State Fertilizers & Chemicals is down 1.5 percent and Coromandel International is down 1.8 percent from previous close on the BSE.

Also read: Fertiliser subsidy unlikely to hit Rs 3 lakh crore, says government official

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Views | G20 Presidency: A chance for India to end international conflicts on farm subsidies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As India takes over the G20 Presidency for a year from this December onwards, it can attempt to bring global consensus on the issues related to farm subsidies. For a long time, this issue has been contested on the global platform and India has witnessed international opposition to its farm subsidy programmes. 

Farm Subsidies & G20

A report titled “G-20 Presidency For India A Golden Opportunity To Correct The Longstanding Issues Regarding Agricultural Subsidies” published by State Bank of India (SBI) stated, “India’s Presidency is a golden chance for India to correct the long standing anomalies that are heavily loaded against the developing countries in the domain of agriculture and food subsidies.” It observed that in developed countries like the US and UK, the domestic support per farmer in 2016 was $60,586 and $6,762 respectively. It expects that the post pandemic figures must have jumped higher. But in India the post-pandemic number is around $600. 

As per the World Trade Organisation’s (WTO) rule, agricultural subsidies resulting in trade distortion are not allowed and are marked within the amber box. In this box, minimal subsidy is permitted according to 1986-88 prices which brings the figures at 5 percent for developed countries and 10 percent for developing countries. Report mentioned, “discounting the agri-output numbers at 1987 prices, using the GDP deflator show that India will need to cut its subsidy by as much as 92 percent from current levels if it were to bring subsidy to 10 percent of agri output / WTO-mandated targeted subsidy! This is thus a theatrical absurdity as it will require India to eliminate all support to the vulnerable segment of the rural economy.”

The reference year is significantly outdated and India under its G20 presidency can amend these clauses. Report suggests to go by the G33 proposal to “use the discount factor as a trimmed 3-year rolling average for every year, based on the preceding five-year period excluding the highest and lowest price.”

As G20 brings together various stakeholders, India can be a bridge between developing and developed world in framing these new rules for the new economic age.

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Read Patki’s previous articles here 

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Agritech startup investment increases by two times to $4.6 billion in FY22

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investment in technology startups in the agriculture and food sector jumped over twofold to USD 4.6 billion during the last fiscal on the back of higher inflow in restaurant marketplace and e-grocery, according to a report by AgFunder and Omnivore.

“Total investment in agrifoodtech startups for India’s fiscal year (FY) 2022 stood at USD 4.6 billion, up 119 percent from FY2021. Deal volume also increased to 234 in FY2022 as compared to 189 deals in FY2021,” according to the report titled ‘India AgriFoodTech Investment Report 2022’.

AgFunder is foodtech and agtech venture capital firm, while Omnivore is a venture capital firm, based in India, which funds entrepreneurs building the future of agriculture and food systems.

Also read: Ban lifted on exports of organic non-basmati rice

“Downstream investments continue to boost overall funding into the agrifoodtech space. Downstream startups raised USD 3.8 billion in FY2022, a 115 percent increase from USD 1.77 billion in FY’2021. This significant growth is due to Swiggy which raised USD 1.2 billion accounting for 26 percent of total investment in the agrifoodtech space,” the report said.

Restaurant marketplace and eGrocery emerged as the most funded downstream categories, with funding of USD 1.9 billion and USD 1.4 billion, respectively.

The capital raised by restaurant marketplace and eGrocery accounts for 66 percent of total funding in the agrifoodtech space.

Farmtech startups raised USD 1.5 billion across 140 deals, a 185 percent increase year-on-year.

Also read: India approves sale of pesticides through e-commerce platforms

Mark Kahn, Managing Partner, Omnivore, said, “The investment trends are proof that the agrifoodtech space can no longer be called niche. It has caught the attention of generalist VCs the world over who understand that agrifoodtech is key to the transformation of India’s massive agricultural sector and rural economy.”

Michael Dean, founding partner, AgFunder, said: “India has always been a leading agrifoodtech ecosystem…but to see investment levels surpass all other countries in the Asia-Pacific region and compete on the global stage is indicative of the impressive range and depth of innovations coming from the country and potential to impact the agrifood industry as a whole.”

Also read: RBI okays new interest subvention rates on farm loans for FY23, FY24

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ban lifted on exports of organic non-basmati rice

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Tuesday lifted the ban on exports of organic non-basmati rice, including broken rice, a move which would help in promoting the outbound shipments of the commodity.

The government had, in early September, banned the export of broken rice with an aim to increase domestic availability.

This followed a 20 percent duty on the export of non-basmati rice aimed at shoring up domestic supplies after prices surged in retail markets.

In a notification, the Directorate General of Foreign Trade said the export of organic non-basmati rice, including organic non-basmati broken rice, will now be governed by rules that prevailed before the September ban.

Rice exports stood at USD 5.5 billion during April-September this fiscal. It was USD 9.7 billion in 2021-22, according to the commerce ministry data.

“India exports about 10,000-15000 tonne of organic rice (basmatic and non basmati) annually. The exports of organic basmati and non-basmti rice was growing rapidly in the last 4-5 years and the government has taken the right step to lift the ban,” All India Rice Exporters Association past president Vijay Setia said.

Food Corporation of India (FCI) MD Ashok K K Meena on November 23 has said that the government is regularly monitoring the price scenario of essential commodities and taking corrective measures as required.

“In comparison to last month, there is a marginal increase in retail and wholesale prices of wheat and wholesale price of rice. There is negligible hike in the retail price of rice and prices are under control,” he had said.

Also Read: India approves sale of pesticides through e-commerce platforms

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India approves sale of pesticides through e-commerce platforms

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amending the existing rules, the union government has approved the sale of pesticides through e-commerce websites in India. Now, all e-commerce platforms including majors like amazon and Flipkart can home-deliver pesticides to their customers.

The government amended the Insecticide Act to make the online sale of pesticides legal in India. However, it is mandatory for the company selling pesticides to have a licence and strictly follow the laid-out guidelines. Moreover, the e-commerce platforms would be solely responsible for the verification of the license.

Also Read:Government’s paddy procurement up 9% at 306 lakh tonnes so far this year

“A licensee may undertake the sale of any insecticide through e-commerce entity for supply of insecticides to the doorstep of the farmers during the currency of licence, and the licensee shall comply with the provisions of the Act and the rules made there under for the time being in force,” the notification read.

This latest step is set to increase competition in the pesticide market resulting in a reduction in the prices of pesticides. This move will also assist agrochemical manufacturers in establishing their online presence and increasing their customer base. Moreover, Farmers would now have more options available to them.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI okays new interest subvention rates on farm loans for FY23, FY24

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) on Wednesday, November 23, said the government has approved the interest subvention scheme availed through Kisan Credit Card (KCC) with modification for the financial years 2022-23 and 2023-24.

The applicable lending rate to farmers will be 7 percent and the rate of interest subvention to lending institutions will be 1.5 percent, according to an RBI notification.

The interest subvention will be calculated on the loan amount from the date of disbursement up to the date of actual repayment of the loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year.

Also, an additional interest subvention of 3 percent per annum will be provided to the farmers repaying in time, subject to a maximum period of one year from the date of disbursement.

Further, farmers repaying promptly as above would get short-term crop loans and/or short-term loans for allied activities, including animal husbandry, dairy, fisheries, bee keeping, etc, at 4 percent per annum during the financial years 2022-23 and 2023-24. However, this benefit would not accrue to those farmers who repay their agri loans after one year of availing of such loans.

What is interest subvention

Subvention means grant of money by the government. And interest subvention refers to the government subsidising the interest on a loan. The government offers interest subvention mostly on home, crop and education loans. 

Also Read: Explained | What RBI has done so far to make digital payments safe

To ensure that the farmers have to pay a minimal interest rate to the bank, the government of India introduced interest subvention scheme (ISS) to provide short-term crop loans and short-term loans for allied activities, including animal husbandry, dairy, fisheries, bee-keeping, etc, up to an overall limit of Rs 3 lakh to farmers through KCC at a concessional interest rate for farmers.

The interest subvention will be provided to lending institutions, namely public sector banks and private sector banks, small finance banks, and computerised primary agriculture cooperative societies.

Also Read: Forex reserve is not a showpiece, but to use it on a rainy day: RBI governor

To ensure hassle-free benefits to farmers, Aadhar linkage would continue to be mandatory for availing the short-term loans in 2022-23 and 2023-24.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RCF shares surge 13% to a 52-week high, NFL also gains over 10%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Rashtriya Chem” isinid=”INE027A01015″ bseid=”524230″ nseid=”RCF” sector=”Fertilisers” exchange=”nse”]

Shares of two leading fertiliser companies, Rashtriya Chemicals and Fertilizers Ltd. (RCF) and National Fertilizers Ltd. (NFL), soared 13 percent and 10 percent respectively on Wednesday on the back of strong volumes.

RCF shares jumped as much as 137 percent in intra-day trade to hit a new 52-week high value of Rs 119.20 apiece. The stock also saw a spurt in trading volumes, with the number of shares changing hands jumping by more than 5.42 times.

Earlier this week, RCF informed investors that a meeting of the board of directors would be held on November 29,  2022, to consider the declaration of interim dividend on the equity shares of the company for the current financial year.

Since then, the RCF stock has been on a gaining spree. The shares have gained nearly 19 percent in the last three trading sessions (taking Wednesday’s high into account).

Meanwhile, NFL shares also climbed 10 percent in intra-day trade on Wednesday to hit a high of Rs 57.05. The stock has been rising for the past three trading sessions, gaining 14.6 percent during this period (taking Wednesday’s high into account).

The NFL stock counter also saw huge volumes on Wednesday, with the number of shares changing hands jumping by 13.7 times.

Interestingly, a few reports in September said that eight PSUs, including RCF and NFL, have been identified by the Central government for divestment in the fertiliser segment.

Under the new Public Sector Enterprises (PSEs) Policy announced by the government in 2020, the fertiliser sector will be the first to be privatised if the government goes ahead with its divestment plans.

Currently, the shares of RCF and NFL are trading at Rs 116.40 and Rs 56.50, up 11.60 percent and 9.82 percent respectively.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indian farmers sow more wheat, rice and slow down on lentils, pulses this rabi season

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The rabi crop sowing data for 2022 shows that Indian farmers have preferred to sow wheat and rice more than lentils and pulses. The rabi sowing season took off on a shaky note due to an erratic monsoon but seems to have caught up and gone above last year’s figures.

The reading shows that sowing is up over seven percent when compared to last year and the government will be hoping that eventually, this will help cool off the high agri-inflation further.

For example, wheat, one of the major important crops, has seen sowing increase by nearly 15 percent. This might give some relief to the government India’s buffer stock has declined by 49.9 percent as compared to the previous year. Moreover, wheat prices have gone up by 20-25 percent in 2022 due to geopolitical and trade hassles as a result of the Russia-Ukraine war.

Similarly, prices of other crops like rice, oil seeds, and mustard have shot up in the last six or seven months.  This is also the reason that farmers are sowing these crops more than a year before.

Also Read: Fertiliser subsidy unlikely to hit Rs 3 lakh crore, says government official

Commodities such as lentils, chana, and pulses, which have not seen prices rise to that extent have seen lower sowing in the season. Pulse prices in fact have been sluggish and hovered below the minimum support price or MSP for the most part of last year.

For the Indian markets, the government has had to take various measures in the recent few months — steps like cutting import duty and giving subsidies — that have impacted the domestic market prices as well.

Also Read: GM mustard hybrid show 25-30% higher yield over traditional varieties: Centre

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Fertiliser subsidy unlikely to hit Rs 3 lakh crore, says government official

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A ballooning fertiliser subsidy bill is posing fresh fiscal challenges for the government. The bill is a crucial component of the government’s expenses every year and the trend over the last few years has been a bit worrying for a government that is keen on sticking to a fiscal glide path.

During the last three financial years alone, fertiliser subsidy has been clocking a new high every year. From a modest Rs 73,000 crore in 2019, the number jumped nearly 55 percent in two years to Rs 1.33 lakh crore in 2021 and then to a record Rs 1.62 lakh crore last fiscal. For FY23, this number is expected to come in anywhere between Rs 2.25 lakh crore and Rs 2.5 lakh crore.

This is based on the fact that the Department of Fertiliser has asked the Finance Ministry for an additional Rs 1.48 lakh crore, which will mean that the budget nearly doubles from its original size.

Fertiliser secretary Arun Singhal told CNBC-TV18 that the fertiliser subsidy is unlikely to hit Rs 3 lakh crore as raw material prices have started softening a bit.

Also Read: Massive fertiliser subsidy bill a fiscal challenge but hope floats

He added that the government of India is fully committed to ensuring that farmers get all the fertiliser that they require at very reasonable prices.

“Every time we import fertilisers we get it at a different rate. Even for indigenously manufactured fertlisers, the prices of gas, phosphoric acid etc keep on fluctuating, so it is very difficult to give an exact figure as to how much the subsidy is going to be. However, it is going to be above Rs 2 lakh crore. The government of India is fully committed to ensuring that farmers get all the fertiliser that they require at very reasonable prices,” Singhal said.

Watch video for entire conversation.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Unseasonal rains hit chemical and fertilizer sector: Deepak Fertilizers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Deepak Fert” isinid=”INE501A01019″ bseid=”500645″ nseid=”DEEPAKFERT” sector=”Fertilisers” exchange=”nse”]

The unseasonal and excessive rains impacted the chemical as well as fertilizer sector with a little shift this time, said Shailesh C Mehta, CMD at Deepak Fertilizers and Petrochemical Corporation (DFPCL). He, however, believes that this should even out by the end of the year.

Mehta was referring to the seasonally weak quarter for the chemical segments.

DFPCL posted strong quarterly earnings  with revenue rising 52 percent and margin expanding to over 18 percent. However, there was some weakness when compared sequentially.

Typically, quarter two of the financial year was a lean quarter for the company too.

“The topline of the company has jumped 52 percent and the bottomline has jumped 192 percent over the last year. First half of the year has surpassed the whole of last year. So, from that perspective it is a very strong positive traction that is emerging,” Mehta said.

“The industry has witnessed a huge price hike on the raw material side and the company has been very successful in passing it through to the customers. That is the reason the delta has improved over the last year,” he explained.

The revenues from the ammonia plant are expected to kick in from May 2024.

Once this kicks in, the company is expected to cross the revenue of Rs 15,000 crore in next two-three years. There are three projects, which will aid this revenue going forward, he said.

The peak debt of the company should be around Rs 5,000 crore.

For the full interview, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow