Agri imports rising on rain woes, duty cuts.

India’s import of agricultural commodities like cotton, maize and edible oil is on the rise, led by reasons like a lower yield in a drought-like situation, reduced duties and a price drop in markets abroad. 

Though the Cotton Advisory Board (CAB), a government agency, is yet to come out with its latest production figures, trade body Cotton Association of India (CAI) has lowered the 2018-19 production estimates in its monthly assessment. While CAI has forecast 315 lakh bales, a section of the industry has objected to this. 

“India’s cotton production is expected to drop by over 5 per cent in the 2019 cotton season because of low water availability and inadequate south-west monsoon in key cotton-producing states and lower yield owing to increase in incidents of pest attacks,” ratings agency Crisil said. 

Domestic cotton prices jumped 7-8 per cent and exports slumped in fiscal 2019. “India is likely to import 27 lakh bales of cotton this year as against 15 lakh bales a year ago,” said CAI president Atul Ganatra. Record maize prices have increased the production cost of poultry feed firms and starch manufacturers. The government has allowed import of 1 lakh tonnes of maize which, the industry says, is too little to meet the shortage. While starch has been operating at lower capacities, the feed industry has shifted to cheaper alternatives for costly maize. “We have replaced 50 per cent of our maize use with broken rice and feed wheat since last two months,” said Jaison John, general manager at poultry group Suguna Holdings. 

There is no shortage of wheat in the country. The government has raised import duty on wheat to 40 per cent to stop poultry firms in the South from importing the commodity. Industry said the transport cost of sourcing wheat from North India to feed plants in the South is more than the cost of importing it even with a 10 per cent higher levy. 

Lowering of import duty on palm oil and reducing the duty difference between crude and refined palm oil from Malaysia from 10 per cent to 5 per cent since Jan 1 have fuelled a 26 per cent spurt in edible vegetable oil imports in March, according to industry body Solvent Extractors Association. “India is flooded with RBD palmolein from Malaysia. Reduction in duty difference between CPO and palmolein sourced from Malaysia has resulted in RBD palmolein imports going up from 1,30,000 tonnes in December 2018 to over 3,00,000 tonnes in March 2019,” it said.