ROLLER FLOUR MILLERS FEDERATION OF INDIA

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ROLLER FLOUR MILLERS FEDERATION OF INDIA

• First National Conference on Rabi Commodities-
• WHEAT GLOBAL DOMESTIC TRADE SCENARIO
• January 7, 2007,New Delhi

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Roller Flour Millers Federation Of India

• An apex body of roller flour mills in the country
  .
• More than 950 mills are members -170 direct
  individual members alongwith all state
  associations .
• Founded 66 years ago in Delhi .
• Primarily takes care of industry interests and
  development activities in consumer interests .
• A non profit , non Governmental organisation
  

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WHEAT- GLOBAL SCENARIO

• Cereals competing for FOOD ,FEED FUEL .
• 2006 as the sixth warmest year since 1880
• Global weather aberrations around the globe .
• Food Production lower by 4 (69MMT)
• Six out of last seven years production lower
  than consumption
• Wheat Production during 2005-06 - 585 to 592 MMT
  as per different agencies
• 10 year peak prices

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WHEAT -Global Scenario

• Lowest ending stocks during 2006 at 119 MMT - 25
  years low enough to last 10 weeks global
  requirements .
• Production drop in Australia ( 11 MMT against
  24.5 MMT expected )
• EU 117.3 against 122.6 MMT
• Russia 41.5 against 47.6 MMT
• Ukraine 13.5 against 18.7 MMT

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WHEAT -India -2006

• Low Opening buffer stock
• Increase in MSP from 640 to 650 per Qtl and
  later with a bonus of Rs 50 per Qtl.
• Drop in production
• Drop in procurement by the Govt .
• Corporate sector participation in purchase
  during procurement season raising prices
• Price aberrations during the year and more than
  50 price rise .

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WHEAT- INDIA -2007

• PER CAPITA CONSUMPTION
• Population Wheat Projections
• Present Buffer and Wheat Stocks
• Temperatures rise Productivity issues
• Rising per capita consumption

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SUB-CONTINENT WHEATPER CAPITA CONSUMPTION
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SUB-CONTINENT RICEPER CAPITA CONSUMPTION
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INDIAS NUMBERS
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(No Transcript)
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Buffer Norm Stocks in MMT
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Wheat Stocks on January 1
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Global Warming Productivity Drop

• 1.Temperatures in
• degree Celsius in
• Ambala Hissar
• in February

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Productivity Per Hectare in Kgs
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Background

• International production drop
• Domestic production and productivity dropping
  and stocks low
• Successful Efforts to increase area under crop in
  states of MP,UP, Bihar, Rajasthan, Maharashtra,
  Jharkhand etc .
• Production expected to touch 74 MMT
• MSP increase procurement policy change applies
  to surplus states alone

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Who procures wheat

• Government procurement agencies (FCI)
• Entry of corporates ( for own use or custom
  milling ) ,
• Trading houses ,
• State procurement agencies -commercial buying
• milling industry (for own use ) ,
• Traders (commission agents ),
• Farmers .
• Consumers

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Trade Distortions Price Volatility

• Procurement Costs
• VAT
• Futures Trading
• Government Interventions
• Rumours
• Movement outside regulated market where total
  procurement costs higher
• Diversions from Government programs

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PROCUREMENT COSTS

• Kucha arhtiyas commission ( 2.5)
• Pucca arhtiya commission ( 1 )
• Auctioneering ( 0.08)
• Labour charges , stitching , consumables .
• Market Fee ( 2)
• Rural Development Fund ( 2 )
• Infrastructure Cess ( 1 - in Punjab only .

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VAT

• An indirect tax
• Intended to replace all forms of indirect taxes
  on all commodities
• To be uniform
• Phasing out of CST .
• VAT was proposed _at_ 4

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Trade Distortions

• State Governments have not lived upto that
  expectation of trade and industry in terms of
  uniformity , and replacement of all indirect
  taxes .
• High Powered Committee allowed states to zero
  percent tax for one year extended to another
  year awaiting news for the next year .
• Govt of India not phased out CST .
• States not retained uniformity and carved out
  branded( 4) and non branded segment( 0) in
  wheat products
• Some states exempting Roller Flour Milling
  industry from the payment of Market fee and RD
  fund some others adopting compounding facility
  .
• Farmer allowed / not questioned for any tax, fee,
  cess for movement of his produce from producing
  states to consuming states thereby avoiding all
  taxes ( tax, fund ,cess).
• Railways were not disclosing names of consignors
  .

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OUTLOOK 2007 Summary

• Low Buffer stocks opening as on Apr 1
• Interest of Commodity investors in procurement
• MSP -750 would it require a bonus or market
  price procurement
• We may look at staggered procurement
• We may target state-wise MSP and limit to
  procure grain there for Govt programs .

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Outlook 2007

• HAVE -
• Nations statistics availability and
  reliability without regulation - in terms of
  collection of production data , stock levels ,
  consumption ,storage product availability .
• Price monitoring-physical and futures to ensure
  movement within a band
• Free imports and exports
• Use of futures trading as hedge mechanism

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PROMISING FUTURE

• Industry capacity restructuring likely
• Goods and Services Tax to help achieve
• Level Playing field through uniform levies
• Linkage with farmer to reduce intermediaries
  through APMC changes
• Consumer to Demand Social responsibility from
  business in terms of meeting nutritional goals
  Govt to regulate to enforce it

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• Thank You for Patient hearing
• vinod kapoor_at_gmail.com or
• President / Secretary
• Roller Flour Millers Federation of India
• 613 ,Devika Towers
• Nehru Place
• New Delhi .
• rfmfdn_at_rediffmail.com