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Doubling Indian Farmers income by 2022 can be a reality

By Sunil Bakshi

Sunil BakshiLONDON, April 19: Indian Government can help double farmer’s income by the year 2022 with a firm resolve by re-structuring agricultural sector. This will need full management commitment and firm leadership. I have worked at grassroots agricultural sector in India and experienced the pitfalls that inhibit the Indian farmer, limiting his scope. The growth in the farm sector alone can help double farmer’s income by 2022 with the help of three key factors -- Consolidation of marginal farms; Reduction of fresh produce waste; and better access to market.

1. Consolidation of Marginal Farms

Small and marginal farmers as per 10th Agricultural census 2015-2016 own 47.3% of crop area with land holding size of less than two hectares. They account for 86.2% of all farmers in India. They are the most vulnerable section of farmers. This high risk section of farmers have maximum farmer suicides.

Government of India in recent years has devised many policies to help protect farmer’s income and facilitate growth. However they are not enough. Farming for many marginal farmers is no longer feasible as farming at such small scale is high risk and does not bring in the necessary income. Lot of marginal farmers are also trapped and forced to live in poverty as they have no viable alternative. With each generation marginal land holding size is getting smaller, forcing the farmer to flee to city in search of livelihood.

We urgently need a government policy to help consolidate marginalised land holdings, making them feasible and competitive for farming. This will help lift millions out of poverty.

While such marginal land holdings can be pooled together and farmed as a cooperative/sold for farming to regenerate the area by making marginalised farmers burden less with an income to pursue a brighter future.

There are various options for implementing such a change, both through public and private sector. Pooled marginalised farm areas can get capital investment from government /private investors, promoting farming creating jobs and prosperity.

The task will need to be done carefully by strengthening the farms and without displacing the farmer. This will also help stop migration of marginal farmers from rural to urban areas. Such restructuring alone can increase farmer income many fold.

2. Reduction of Fresh Produce Waste

In a Reuters report in January 2018 (Thomson Reuters Foundation – New Delhi) it was highlighted over 40% of Indian fresh produce gets wasted as farmers are unable to get the produce in time to markets due to poor logistics.

This is waste of money on a colossal scale costing the Indian farmer $14 billion a year. If we could even half this we would be adding 7 billions a year to our rural farming communities.

However we need serious action and firm leadership to achieve such a change. In the current scenario it is possible to create make shift government infrastructure to aid fresh produce logistics at grassroots level based upon seasonal demands, storage and distribution while market forces develop and create the necessary infrastructure in time.

This can be done at each district level through district collectors. They need to form fresh produce committees comprising of all village Panchayat heads. These committees needs to meet atleast once a month to highlight local issues facing produce farmers, marking local crop cycles and anticipated harvest dates of fresh produce.

The Panchayat heads should organise produce collection point in each of their villages from where suitable transport can cart their produce to district storage centre. The collector’s office should coordinate and organise all such collection / storage / distribution. There should be an Auction centre at district produce storage and distribution centre.

All this can be subcontracted by the district collector’s office as the model is financially viable.

3. Access to market

In most of rural India, the marginal farmer is dependant on the local agent (Aarti
/Shopkeeper/broker). The farmers generally take daily provisions from the local agent and at the time of harvest hand over the produce to this agent. The agent forwards the crop at farmers risk to the nearest Mandi/commercial produce hub. The produce is handed over to another broker who than either disposes the produce in that Mandi/commercial hub or forwards it after consolidation with other produce to a bigger Mandi / commercial hub at farmers risk.

This process can take between seven to 10 days and following this the payment of monies for produce will reach the original forwarding agent in several months. Each agent in the chain deducts his commission and wastage before paying monies for the produce to the supplying agent. Hence, the farmer has no control over this whole marketing exercise while the whole process is at farmer’s risk.

The produce sale, marketing and payment infra-structure in India is outdated and not at all farmer friendly. This has to be re-engineered to suite the farmer and reduce his risk.

Therefore, we need to create district level auction centres where farmers can sell their produce daily and let agent take the risk of taking the produce to end market for the margin. This will reduce farmers risk.

As the saying goes “Cash is King” we need to make the Indian farmer cash rich, so he can invest where he wants and when he wants for the right return. This can be done by three tiered marketing infrastructure.

1. Organised Storage/Distribution and Auction centre at district level – District Collector as in point 2/Subcontracted to an enterprise to run as it is financially viable

2. Disbursement of monies from produce sales to farmers the same day

3. Facilitate forwarding in-time of fresh produce to commercial centres – so buyers feel secure and are encouraged in using auction centres to buy and sell products.

The advantage of this model is that it will utilize the current resource/enterprises and help create additional resource/enterprise by regeneration of the sector.

In my view with a firm resolve and strong leadership, the Indian government can devise policies to restructure farming sector to the advantage of Farmers to more than double farmers’ income by 2022.

@ Sunil Bakshi is an entrepreneur and investor in agriculture and food processing sector with a social conscious

India suspends trade across LoC, says misused for smuggling by Pak groups

NEW DELHI, April 18: India suspended trade across the Line of Control in Jammu and Kashmir over concern that the route was being misused by Pakistan-based elements to smuggle weapons, narcotics and fake currency, the Ministry of Home Affairs said on Thursday.

New Delhi said the Centre will revisit the decision to suspend LoC trade at Jammu and Kashmir’s Salamabad and Chakkan-da-Bagh after putting in place a stricter regulatory and enforcement mechanism.

Cross-LoC trade is meant to facilitate exchange of goods of common use between local populations across the LoC in Jammu & Kashmir. The trade is allowed through two Trade Facilitation Centres located at Salamabad, Uri, District Baramulla and Chakkan-da-Bagh, District Poonch. The trade takes place four days a week. The Trade is based on Barter system and zero duty basis.

The home ministry decision comes after the federal anti-terror probe agency National Investigation Agency told the government that a “significant number of trading concerns engaged in LoC trade” were linked with banned terror organisations involved in fuelling terrorism”.

“Investigations have further revealed that some individuals, who have crossed over to Pakistan, and joined militant organizations have opened trading firms in Pakistan. These trading firms are under the control of militant organizations and are engaged in LoC trade,” a home ministry statement said.

The home ministry said there were also inputs to indicate the LoC route is likely to be misused to a “much larger extent” to evade higher duties after India withdrew the most favoured nation to Pakistan.

Relations between India and Pakistan have been under strain since Pulwama terror attack in February when 40 jawans of the Central Reserve Police Force were killed on Jammu-Srinagar highway.

The cross-LoC trade between Jammu and Kashmir and Pakistan-occupied Kashmir had resumed on Tuesday after nearly two weeks. The trade and travel across the LoC had been suspended on April 1 in the wake of heavy shelling from the Pakistani side. Three people including a Border Security Force officer, a woman and a five-year-old girl died in Poonch.

The relation between India and Pakistan has been under strain since Pulwama terror attack in February when 40 jawans of the Central Reserve Police Force were killed on Jammu-Srinagar highway.

Trade and travel across the LoC had been suspended on April 1 in the wake of heavy shelling from the Pakistani side. Three people including a Border Security Force officer, a woman and a five-year-old gilr died in Poonch.

The cross-LoC trade between Jammu and Kashmir and Pakistan-occupied Kashmir had just resumed on Tuesday after nearly two weeks.

Elon Musk loses $1 billion in two minutes as Tesla shares tumble

NEW YORK, April 4: Elon Musk saw $1.1 billion wiped from his net worth in the first two minutes of New York trading as Tesla Inc. shares sank as much as 11 percent.

The fall cut his net worth to $22.3 billion on the Bloomberg Billionaires Index as of 9:32 a.m. The electric-car maker had reported a record decline in deliveries during the first quarter, down to 63,000 vehicles in the three months that ended in March, from 90,966 in the fourth quarter.

About $10 billion of Musk’s fortune is derived from Tesla with approximately $13 billion coming from his stake in closely held rocket business Space Exploration Technologies Corp., according to calculations by the ranking.

The biggest Saudi oil field is fading faster than anyone guessed

RIYADH, April 3: It was a state secret and the source of a kingdom’s riches. It was so important that US military planners once debated how to seize it by force. For oil traders, it was a source of endless speculation.

Now the market finally knows: Ghawar in Saudi Arabia, the world’s largest conventional oil field, can produce a lot less than almost anyone believed.

When Saudi Aramco on Monday published its first ever profit figures since its nationalization nearly 40 years ago, it also lifted the veil of secrecy around its mega oil fields. The company’s bond prospectus revealed that Ghawar is able to pump a maximum of 3.8 million barrels a day -- well below the more than 5 million that had become conventional wisdom in the market.

“As Saudi’s largest field, a surprisingly low production capacity figure from Ghawar is the stand-out of the report,” said Virendra Chauhan, head of upstream at consultant Energy Aspects Ltd. in Singapore.

The Energy Information Administration, a U.S. government body that provides statistical information and often is used as a benchmark by the oil market, listed Ghawar’s production capacity at 5.8 million barrels a day in 2017. Aramco, in a presentation in Washington in 2004 when it tried to debunk the “peak oil” supply theories of the late U.S. oil banker Matt Simmons, also said the field was pumping more than 5 million barrels a day, and had been doing so since at least the previous decade.

In his book “Twilight in the Desert,” Simmons argued that Saudi Arabia would struggle to boost production due to the imminent depletion of Ghawar, among other factors. “Field-by-field production reports disappeared behind a wall of secrecy over two decades ago,” he wrote in his book in reference to Aramco’s nationalization.

The new details about Ghawar prove one of Simmons’s points but he missed other changes in technology that allowed Saudi Arabia -- and, more importantly, US shale producers -- to boost output significantly, with global oil production yet to peak.

The prospectus offered no information about why Ghawar can produce today a quarter less than 15 years ago -- a significant reduction for any oil field. The report also didn’t say whether capacity would continue to decline at a similar rate in the future.

Aramco wasn’t immediately able to comment.

The new maximum production rate for Ghawar means that the Permian in the U.S., which pumped 4.1 million barrels a day last month according to government data, is already the largest oil production basin. The comparison isn’t exact -- the Saudi field is a conventional reservoir, while the Permian is an unconventional shale formation -- yet it shows the shifting balance of power in the market.

Ghawar, which measures about 174 miles long -- or about the distance from New York to Baltimore -- is so important for Saudi Arabia because the field has “accounted for more than half of the total cumulative crude oil production in the kingdom,” according to the bond prospectus. The country has been pumping since the discovery of the Dammam No. 7 well in 1938.

On top of Ghawar, which was found in 1948 by an American geologist, Saudi Arabia relies heavily on two other mega-fields: Khurais, which was discovered in 1957, and can pump 1.45 million barrels a day, and Safaniyah, found in 1951 and still today the world’s largest offshore oil field with capacity of 1.3 million barrels a day. In total, Aramco operates 101 oil fields.

The 470-page bond prospectus confirms that Saudi Aramco is able to pump a maximum of 12 million barrels a day -- as Riyadh has said for several years. The kingdom has access to another 500,000 barrels a day of output capacity in the so-called neutral zone shared with Kuwait. That area isn’t producing anything now due a political dispute with its neighbor.

While the prospectus confirmed the overall maximum production capacity, the split among fields is different to what the market had assumed. As a policy, Saudi Arabia keeps about 1 million to 2 million barrels a day of its capacity in reserve, using it only during wars, disruptions elsewhere or unusually strong demand. Saudi Arabia briefly pumped a record of more than 11 million barrels a day in late 2018.

“The company also uses this spare capacity as an alternative supply option in case of unplanned production outages at any field and to maintain its production levels during routine field maintenance,” Aramco said in its prospectus.

For Aramco, that’s a significant cost, as it has invested billions of dollars into facilities that aren’t regularly used. However, the company said the ability to tap its spare capacity also allows it to profit handsomely at times of market tightness, providing an extra $35.5 billion in revenue from 2013 to 2018. Last year, Saudi Energy Minister Khalid Al-Falih said maintaining this supply buffer costs about $2 billion a year.

Aramco also disclosed reserves at its top-five fields, revealing that some of them have shorter lifespans than previously thought. Ghawar, for example, has 48.2 billion barrels of oil left, which would last another 34 years at the maximum rate of production. Nonetheless, companies are often able to boost the reserves over time by deploying new techniques or technology.

In total, the kingdom has 226 billion barrels of reserves, enough for another 52 years of production at the maximum capacity of 12 million barrels a day.

The Saudis also told the world that their fields are aging better than expected, with “low depletion rates of 1 percent to 2 percent per year,” slower than the 5 percent decline some analysts suspected.

Yet, it also said that some of its reserves -- about a fifth of the total -- had been drilled so systematically over nearly a century that more than 40 per cent of their oil has been already extracted, a considerable figure for an industry that usually struggles to recover more than half the barrels in place underground.

Demonetisation won’t work: RBI board had warned 2 hours before Modi’s noteban

NEW DELHI, March 11: The board, according to minutes of the meeting revealed by the central bank in an RTI reply, had met just two-and-a-half hours before Prime Minister Narendra Modi in an address to the nation announced the demonetisation decision on November 8, 2016.

The RBI board, which included the present Governor Shaktikanta Das as a director, had warned of short-term negative impact of demonetisation on the country’s economic growth and observed that the unprecedented move will not have any material impact on tackling the black money menace.

The board, according to minutes of the meeting revealed by the central bank in an RTI reply, had met just two-and-a-half hours before Prime Minister Narendra Modi in an address to the nation announced the demonetisation decision on November 8, 2016.

Curbing black money was one of the prime objectives of the shock move to junk old Rs 500 and 1,000 notes, which saw 86 per cent of high value currency going out of circulation.

The minutes of the crucial board meeting, which approved the government’s request for demonetisation, recorded the presence of the then RBI Governor Urjit Patel and the then economic Affairs Secretary Shaktikanta Das. Others at the board meeting included the then Financial Services Secretary Anjuli Chib Duggal, and RBI deputy governors R Gandhi and S S Mundra. Both Gandhi and Mundra are not part of the board now, while Das was appointed as the RBI governor in December 2018.

“It is a commendable measure but will have short-term negative effect on GDP for the current year,” as per the minutes posted by RTI activist Venkatesh Nayak on the website of Commonwealth Human Rights Initiative.

“Most of the black money is held not in the form of cash but in the form of real sector assets such as gold or real estate and that this move would not have a material impact on those assets,” the board observed in its 561st meeting held in Delhi.

The prime minister had announced demonetisation of high-value currency notes with the aim to curb the black money, check counterfeit currency and stop terror finance among others.

While any incidence of counterfeiting is a concern, the minutes said, Rs 400 crore as a percentage of the total quantum of currency in circulation in the country is not very significant.

Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, notes worth Rs 15.31 lakh crore came back during the 50-day window for depositing junk notes given to resident Indians and till June 2017 for non-resident Indians.

Only Rs 10,720 crore of the junked currency notes did not return to the banking system, rest 99.9 per cent was deposited raising question mark over the government’s effort of curbing black money through the demonetisation.

The minutes pointed that “the growth rate of economy mentioned is the real rate while the growth in currency in circulation is nominal. Adjusted for inflation, the difference may not be so stark. Hence, this argument does not adequately support the recommendation (in favour of demonetisation)”.

The government has always maintained that the decision did not have much impact on the GDP growth. The board was assured that the government would take mitigating measures to contain the use of cash, it said.

In another reply, the RBI has said it has no data on the old 500 and 1,000 rupee notes used to pay for utility bills such as fuel at petrol pumps — payments that are anonymous and are believed to have formed a good part of the demonetised currency that returned to the banking system.

The government had allowed the exchange of the junked notes as well as they being used for payment of utility bills for 23 services.

Both old 500 and 1,000 rupee notes could be used at government hospitals, railway ticketing, public transport, airline ticketing at airports, milk booths, crematoria/burial grounds, petrol pumps, metro rail tickets, purchase of medicines on doctor prescription from the government and private pharmacies, LPG gas cylinders, railway catering, electricity and water bills, ASI monument entry tickets and highway toll.

On November 25, 2016, the exchange of old notes was stopped and the government allowed the use of only old 500 rupee notes at these utilities till December 15, 2016. The government, however, stopped the use of even this currency at petrol pumps and for the purchase of air tickets at airports abruptly with effect from December 2, 2016, after reports that they were becoming fronts for laundering of old currency notes.




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