Cotton, rice and sugar will surely gain
No doubt, we will have to sympathise with the havoc that floods have wreaked in Pakistan. Reports talk of how stench is emanating from bodies and how acres and acres have been washed away. Surely, our neighbour, despite its hostility towards us, needs our care, affection and help.
Surely, we need to help our neighbours because we could be benefiting from their hardships. Wondering how? Therein lies the secret of business. The seasons for Pakistan crops run parallel with India’s and it too has rice, cotton and sugar as the main crops during this period.
What the unprecedented rains and floods have done is to damage these three main crops. In the case of rice, basmati and non-basmati have been affected. At least one-third of Pakistan’s cotton crop has been washed away, while sugarcane fields too have taken a pounding.
The problem with the damage is that there is very little time left for farmers in Pakistan to go in for re-sowing. At the most, they can go in for pulses or other short-term crops, say vegetables before they can sow wheat for the season that is parallel to our very winter or Rabi sowing.
The developments also bring along with them more benefits for Indian industry, particularly sugar, textiles as also rice exporters. There are also a couple of other developments that are favouring India’s rise this year in the world of commodities. One is again problem of rains and floods in China, where, too, cotton and rice have been affected. The second is drought in Russia. Already, the wheat market is on fire due to an estimated fall of 5 million tonnes in the former Soviet Union’s mainstay. It has banned exports, while barley production is now reported to be hit.
Let us first see rice. India will stand to gain in the export market, particularly basmati exports. India exports over 30 million tonnes a year and Pakistan is India’s main competitor, pricing its produce at least $50 a tonne lower. With its production being lower, we will have now to see how much really Pakistan can offer its rice lower.
We have to bear in mind that Pakistan will also face pressure on account of the fall in non-basmati rice. Will it resort to imports? If that happens, then rice prices could gain all-round globally and in turn, boost basmati price.
Back home, we are looking at a higher basmati crop this year. This means, we can really get the fragrant rice at a cheaper rate. For exporters, this is half the battle won.
So, whichever way you look at, Indian rice industry will look up this year.
With regard to sugar, India is already getting demand from Pakistan. We are already looking at a far better crop of nearly 24-25 million tonnes of sugar likely to be produced in the season that begins in October. With some of Indian sugar mills having to fulfil the mandatory obligation of having to export white sugar against imports of raw sugar, Pakistan can look forward to Indian sugar at a competitive price.
Cotton could prove to be the king of kharif crops this year. One, India is looking at a record crop. Second, the Government is removing the ban on exports, though indications are that the shipments will surely be capped. With Pakistan and Chinese cotton crop suffering damage, India will surely be a dominating factor in the global market. The higher production means that Indian exporters can really be competitive in the global market. So, the grower too will stand to gain.
Not just this, the industries that depend on these for raw material will also stand to gain. We already dealt with rice and sugar. In the case of cotton, a cap on exports mean the spinning mills and textile units can be guaranteed raw material at a price fairly lower than the global market. This will make Indian textile products very competitive compared with say Chinese or other destinations. Therefore, we are on the verge of seeing some good 12 months for these three sectors.
In addition, global demand for feed in the wake of what has happened in China, Russia and Pakistan will force prices of all cereals to rise. Therefore, be it jowar, bajra, maize or barley. All will definitely rule higher. That makes us to take note of the potential that India has realised in corn (maize) in the last few year. Maybe, we could see a rebound after the lull in the last couple of years.
At this point, one wishes that our Government can be a little innovative and forward-thinking. Surely, it can help India emerge a crucial player in the global commodities market. Agreed, that our industries have to be ensured raw materials availability.
With huge stocks lying the warehouses, it can begin exploring the export market. There is scope without offering any subsidy, as we had witnessed at the beginning of this decade.
This will ensure good returns to our farmers and in turn, sow seeds for better coverage and productivity in the years to come. Will our Government see the long-term benefits of such policies? Or is it going to play take ad hoc decision just to cater to its short-term electoral benefits?
We will get to know in the next few months.
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