Food Inflation – Where Is Arable Land?

Food Inflation (III) – Where Is Arable Land?

It is only likely that India and Pakistan will stay perennially engaged in a competition to sell their basmati rice in West Asian countries, the UAE, the US and the UK. Helped by restricted supplies from Pakistan and stock building by mot importing countries, India could lift basmati rice exports by 11.5% to 4.9m tonnes in 2023, almost equalling the record high of 5m tonnes in 2020. But revenue from exports was a record $5.4bn, 21% up on 2022, thanks to high prices.

A Reuters report, however, says: “India’s basmati rice exports are likely to fall in 2024… as rival Pakistan is offering the grain at competitive prices amid a rebound in production.” In the meantime, in order to put a check on suspected trade malpractices, New Delhi first laid down minimum export price (MEP) of basmati rice at $1,200 a tonne in August. Expectedly, the move provoked an outcry from the trade since the MEP was found to be higher than market price prevailing then. Subsequently in October it was brought down to $950 a tonne.

No other country or group of countries in Asia will ever have the same kind of bearing on global food economy like that of China. The world’s second largest nearly $18.5 trillion economy with less than 10% of the planet’s arable land is the producer of one-fourth of the world’s grain but has the onerous task of feeding one-fifth of the earth’s population. No wonder then a major concern of the Xi Jinping led administration is to ensure that there are no disruptions to food supply triggering domestic unrest.

What haunts the Chinese leaders all the time are the memories of the Great Famine of 1959-61 that claimed 30m lives and caused nearly the same number of lost or postponed births. No surprise since taking charge of the country in 2013, President Xi had many occasions to say: “The rice bowls of the Chinese people must always be held firmly in our own hand and filled mainly with Chinese grain.”

Mark the word “mainly.” According to the ministry of agriculture and rural affairs, China produced a record amount of 695.4m tonnes of grain in 2023, a year on year rise of 8.8m tonnes over 2022. Incidentally, this was the ninth year in a row that the country, which is the world’s largest producer of cereals such as corn, wheat and rice, harvested over 650m tonnes of grain. China’s per capita grain output exceeding the globally recognised security level of 400 kg by over 90 kg is, however, of little comfort to the authorities for several reasons. First, the country still continues to lose arable land because of neglect and use of excess fertilisers. What further aggravates land loss situation is the country being subject to extreme weather, environmental issues and water scarcity.

Mercifully, China has introduced a “farmland red line” policy that sets a preservation target of at least 120m hectares of arable land for growing crops. Moreover, there is a target for very high quality 66.7m hectares of farm land. (Loss of farmland and its progressive deterioration is also a major problem for India and many other countries in south and south-east Asia.)

Second, since the beginning of the millennium, China’s food self-reliance is down to around 65% from 93.6%. Why is this so in spite of high grain and dairy products output? The fear of disruptions in food supply has led Beijing to build stockpiles of food, mainly corn, rice, wheat and pork, mostly by way of imports. China’s large imports of soybeans, corn, wheat, rice have invited criticism from many quarters. This way of seeking insurance against domestic food supply problem at any point leads to rises in food prices throughout the world as it may create shortages outside China.

Third, despite improvements in national food safety standards brought about in 2022, the urbanites with sufficient buying capacity being scared of local food not safe and toxic will opt for imported stuff. Concern about food safety is also a booster for imports. USDA says in a report: “As incomes rose, the average Chinese diet changed to include more meat, dairy and processed foods. In the past 20 years, per capita consumption of poultry meat increased 32%, soybean oil consumption more than quadrupled and fluid milk intake more than tripled.” The country is close to 70% import dependent on edible oils.

Fourth, in a number of farm products, the Chinese cost of production is higher and productivity lower than from the countries, including the US and Brazil from where imports are made. Take soybeans for instance, the cost of its growing in China is 1.3 times more than in the US. The yield too is 60% less.

For many years, the US remained the largest supplier of farm products to China. But then the two countries got locked in a trade war in 2018. This and also Beijing’s good relations with Brasilia are the reasons for China buying more and more from Brazil leading finally the South American country replacing the US as China’s largest agricultural supplier.

Being highly sensitive to any food supply disorders, since heightened by geopolitical crisis in Europe and West Asia, Beijing is actively pursuing diversification of supply sources. Its Belt & Road Initiative (BRI) is primarily a massive China led infrastructure development programme. But Beijing is taking advantage of it to promote agricultural cooperation with BRI participants in all continents. As it has done with minerals, China continues to encourage its investors to buy farmland in foreign countries. According to USDA, Chinese investors had by 2021 owned 383,935 acres of farmland in the US. Africa is the principal target of China for owning land to grow crops.

(This is the concluding part of the series)

Read Part I: Food Inflation – Grains of Truth

Read Part II: Food Inflation – The Rice Factor

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Food Inflation -- The Rice Factor

Food Inflation (II) – The Rice Factor

Farmers are a major constituency for the government and they remain in protest mode asking for a better deal from the state. In this situation it will not be in order to expect import duty to be lowered, till at least parliamentary elections are over and a new government is formed in June.

At the same time, the government being engaged in taming food inflation is unlikely to signal resumption of wheat exports, a ban on which was put in May 2022. Wheat exports in 2021-22 (April to March) exceeded the target of 7m tonnes by 850,000 tonnes. Soon thereafter came the ban.

Deficiencies in crop estimates – in the present case it is over wheat crop of the 2023-24 season, the harvesting of which has begun – make taking decisions about food related trade policies difficult, says Dhanuka. This, however, should not be the case any longer with monitoring of crops from sowing to their different stages of growth being possible using satellites and drones. For the same reason of data related confusion, India’s neighbour Bangladesh with a population of 174.25m was not sure for a long time whether the production of rice this season has been enough to take care of domestic demand.

The question remains if the country is harvesting a lot more rice than local requirements then why should the cereal price be on an upswing, especially during the Ramadan month when most Muslims observe strict fasting from dawn to sunset.

Bangladesh Rice Research Institute (BRRI), an agriculture ministry outfit, has forecast a total of 41.2 million tonnes of rice is likely to be produced this year, including 20.9m tonnes of boro, 3m tonnes of aush and 17m tonnes of aman. Such a level of production should leave a surplus of 5m to 6m tonnes after meeting domestic demand of around 35m tonnes. The United States Department of Agriculture (USDA), however, says Bangladesh rice production of 36.3m tonnes will fall short of likely local consumption of 37.6m tonnes, leaving a deficit of 1.3m tonnes.

ALSO READ: Food Inflation – Grains of truth (I)

Without going into the merits of which of the two agencies, BRRI or USDA, has done a better job of estimating 2023-24 rice output, the worrying development is rising rice prices. What is to be said in favour of Dhaka is that it has been quick in reworking the import duty and asking private agencies to import the sanctioned volume of grain. Moreover, it has begun a dialogue with New Delhi for import of rice and wheat and also three other commodities, namely, onion, ginger and garlic that hopefully will soon lead to the signing of memorandum of understanding. Though there is a ban on export of rice and wheat, New Delhi has supplied rice, wheat and onion to countries in the neighbourhood and also to “key partners” such as the UAE, Indonesia and Vietnam on a case to case basis.

The unusual dry weather is making Bangladesh, which is the world’s third largest producer of rice after China and India, harvest a crop that will fall short of local demand. Imports, therefore, is unavoidable. Recent price inflation notwithstanding, the country highly vulnerable to flooding has moved from recurrent food shortages to self-sufficiency. The flooding risk is because of its location in the Bengal delta and its low-lying flat topography, which is further compounded by several factors linked to climate change. Rising frequency of extreme precipitation events more erratic rainfall has made Bangladesh’s pursuit of green revolution highly challenging.

The country’s agricultural research organisations have, however, been able to develop high-yielding varieties of rice that will grow in conditions of salinity, submergence and extreme temperature. Observers of Bangladeshi economy attribute breakthroughs to other factors like availability of locally produced quality seeds and nutrients and an efficient extension programme designed to arm farmers, almost entirely small owning less than 3 hectares with ideal farming practices. The country in the meantime has graduated from “green revolution to gene revolution.” Once again thanks to research successes in developing HYV seeds, Bangladesh is also producing over a million tonnes of wheat.

FAO says in a report that in spite of the 2023-24 season having suffered La Nina related weather setbacks, “improvements in the relative profitability of rice cultivation have stimulated expansions in main-crop plantings in Asia, Africa and Northern America should help offset the negative impacts of the weather disruptions.” Based on this premise, FAO has forecast world rice production to rise 0.8% from the 2022-23 reduced harvest to 523.9m tonnes in 2023-24 season on a milled basis.

However, price rises both in domestic and international prices that will keep in check use of the grain both for animal feed and human consumption is to arrest rice use at 522m tonnes. International trade in rice in 2024 is forecast to remain close to the 2023 reduced level at 52.8m tonnes. Till there is a new government in June, India will not consider lifting ban on rice exports. But according to FAO: “Apart from Brazil, Uruguay and Viet Nam, most exporters are expected to raise their shipments” compensating for squeeze in supplies from India. Global rice stocks will be up to a record high of 198.9m tonnes. Thailand, a major producer and exporter of rice, is, however, to see fall in milled production to 20m tonnes in the 2023-24 marketing year from 20.909m tonnes a year earlier.

In the family of rice consisting of quite a few varieties, the long slender-grain aromatic basmati is the niche one that is sold at a high premium over the normal grain. Basmati rice too comes in several varieties. Grown principally in India and Pakistan and sold in the world market by them, basmati has got geographical indication (GI) tag, speaking for its exclusivity and integrity. Grown in the Indian subcontinent’s Himalayan region benefiting from its unique climatic and soil condition, distinctive qualities of the aromatic rice are gained by finely tuned cultivation and processing practices.

(This is the second article of a three-part series on the subject)

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Food Inflation (I) – Grains of Truth

They are contrasting tales of food inflation in the two Asian countries hosting more than 1.4bn people each and between them having more than a third of the global population of close to 8.1bn. Notwithstanding their impressive economic progress in the past two and a half decades, both China and India still have significant numbers of people living below the poverty line (BPL).

China has to its credit moving 700m poor rural people out of poverty. Even then the country has over 50m people under the national poverty line of RMB 2,300 ($317.88) annual net income per capita for rural residency. All these are confirmed by UNDP findings. As for India, the Hindu nationalist BJP led government claims that it has in the last ten years lifted 600m people out of poverty. A claim though contested by the opposition and many economists. Whatever that is, India remains home to millions of BPL people and it has large pockets of poverty, particularly in rural areas.

This being the situation, the authorities both in China and India are acutely aware that shortages of food and their high prices are sure to fuel popular discontent to the extent of threatening government stability, says agriculture expert Om Prakash Dhanuka. In India, agriculture and allied sectors being provider of employment to nearly 55% of the total national workforce the government there comes under constant pressure to ensure remunerative prices for farm produce. Not only the poor but also the middle class are smarting under high overall inflation in which the contribution of food (all items without exception) was maximum. (In stark contrast to China, India has experienced double digit inflation in food.)

The Indian central bank’s attempt to rein in prices by pegging interest rate high has not worked effectively because of supply side issues. Below normal rains during last year’s peak monsoon season from June to September and occurrences of floods and extreme dryness in different parts of the country affected production of rice, vegetables and sugarcane and this has had a major impact on consumer price index, says Dhanuka.

Take onion, an essential item in common man’s diet. Following production collapse of onion in India to an expected 25.47m tonnes in 2023-24 from 30.22m tonnes in 2022-23 and 31.69m tonnes in 2021-22, prices went through the roof causing popular unrest. In response, New Delhi first started charging an export duty of 40%, then put a ban on exports up to March end, which has been extended till further orders. But considering politically sensitive Bangladesh, Sri Lanka and UAE are perennially dependent on supplies of onion from India, a caveat is there in the order that exports will be granted on requests from importing countries.

Of far greater consequence for world trade in agri-commodities, is India’s decision in July last to stop exports of non-basmati white rice as a domestic counter-inflationary measure. Being the world’s second largest producer of the cereal after China and by far the most dominant exporter – Indian shipments are two and a half times more than that of Thailand, the next in the league of exporters – such an action by India, no doubt prompted by consideration to contain local cost of living, caused world rice prices to climb to their highest levels at one point in 15 years, according to UN Food & Agriculture Organisation (FAO).

India’s trade action, though not totally unexpected has put importing countries in south and south-east Asia and sub-Saharan countries in a bind. This is because drying up of Indian white rice exports coincided with fall in export surpluses of other major Asian suppliers such as Thailand, Vietnam, Pakistan and Myanmar, all having suffered the impact of occurrence of El Nino and climate change for the worse.

ALSO READ: Can Rice Export Ban Bring Down Inflation?

According to official sources, Indian rice production is likely to fall for the first time in eight years in 2023-24 crop year ending June to 123.8m tonnes from the year before 135.76m tonnes. As a shield against shortages in a season leading to price spikes, New Delhi has remained steadfast in maintaining buffer stock of rice and wheat, procured by government agencies in step with progress of harvests. Supplies to the market are made from such stocks when prices rise and these also support the extensive public distribution system of food.

India has two rice crops – summer, the big one and winter. What naturally follows is focus of official procurement on summer rice harvest. Official sources say, rice procurement this time was 44.15m tonnes as of March 5, against 47.55m tonnes previous year or 7% lower. Since the current season rice procurement is already more than 40% of output, more government buying is not in order as it may lead to shortages in the open market. As for wheat, the procurement target is 31m tonnes. Under India’s PDS around 67% of people are given wheat, rice, sugar and kerosene at highly subsidized rates. Furthermore, at the intervention of prime minister Narendra Modi, the country also runs a massive free foodgrains programme. Because of all this, any surplus for exports has shrunk in a difficult crop year.

Trade officials have, however, started seeing light at tunnel end following weatherman announcement that in the forthcoming peak monsoon season, India will experience “above normal precipitation” to be caused by likely smooth transition from El Nino to La Nina condition. Will the disappointment with rice production now extend to wheat in the current agriculture year?  As for wheat production, the assessment of agriculture ministry and private agencies do not converge, points out Dhanuka.

The official target is 114m tonnes against 2022-23 production of 110.55m tonnes. But an S&P Global Commodity Insights survey of 13 analysts and traders points to lower output year on year in a range of 107m and 108m tonnes. The slight setback will be due to fall in yields though acreage remained steady. Poor monsoon precipitation in wheat growing regions left poor soil moisture and the problem was compounded by insufficient winter rains that are crucial for crop growth and productivity.

Trade officials say even while wheat production will like last year be lower than the official target, New Delhi is expected to be aggressive in procurement of because of the expanded food relief programme. The expected high levels of government procurement can only lead to supply tightness in the wholesale market to the concern of trade. Will New Delhi in this situation respond positively to the trade asking for a cut in import duty on wheat, now at 40%?

(This is the first article of a three-part series on the subject)

Humanitarian Crisis Unfolding In Myanmar

A Humanitarian Crisis Unfolding In Myanmar

Democracy in Myanmar proved to be the briefest spring possible following the November 2020 general elections. Aung San Suu Kyi led National League for Democracy had a decisive victory at the polls despite all the army tricks in the face of popular championing of democratic rule. But on February 1, 2021 when the newly elected parliament was due to hold its first session, the military junta staged a coup on the specious plea that in many ways the conduct of elections compromised the country’s sovereignty. However, there never was any elaboration of the junta’s reservations about the poll process.

Whatever that was, brutalities have routinely followed the junta’s accession to power, resulting in the killing of thousands, locking up of much greater numbers of pro-democracy protesters across the country, which shares common borders with India (including a maritime boundary in the Bay of Bengal), China, Bangladesh, Thailand and Laos. Displacement of nearly 2 million people is a massive human disaster story.

Thanks to the brave human rights groups such as Assistance Association for Political Prisoners (Burma), Myanmar Witness and Human Rights Foundation of Monland and an alert Western Press, the world becomes aware of the growing ferocity with which the junta is out to crush dissent. Junta reprisals take the form of wanton killing and condemning dissenters to jail where many routinely perish. Unfortunately and very rarely, India’s English dailies will use stuff about gory happenings in the neighbouring country sourced to Western syndicates.

A New York Times dateline New York story based largely on inputs from civil society and rights groups tells the world of the horrific torture and inhuman living condition that await pro-democracy inmates in Myanmar jails. The NYT story, which has a chilling effect on readers who care for democracy and freedom of speech, says the junta unnerved by growing protests and successes of rebel groups in their encounters with the army in various parts of the country “is meting out increasingly lethal treatment to those in custody. In the first two months of the year, more than 100 prisoners perished, either from torture or neglect… Conditions in military-run prisons have deteriorated further… with prisoners being deprived of food, proper sanitation and healthcare.” More than words, bits of statistics pointing to the gory outcome of growing severity of junta abuses shows human rights in Myanmar have gone for a toss. Unfortunately without the outside world caring.

According to the NYT report, since the February 2021 coup, the number of people dying in detention has crossed 1,500, including dozens dying due to physical torture. Jail inmates themselves confirm the flagrant abuses. It further says, the junta, allergic to elected government running the country, has the notorious reputation to bomb “civilians, using them as human shields, persecuting minorities, including the Rohingya people and torturing pro-democracy activists.”

Despite the fear of reprisals by Tatmadaw, the Burmese word for royal armed forces, the ranks of activists pining for restoration of peace and democracy are growing to junta’s dismay. A much bigger concern for Tatmadaw is the rising spirit of accommodation among ethnically diverse groups. They now have the shared goals to see that the army is divested of political power for it to go back to the barracks. The aspiration is to have a federal democratic future. But to win every bit of freedom, the combine of Arakan Army (AA), Myanmar National Alliance Army and Ta’ang National Democratic Alliance Army will be engaged in a battle to be bloodied by the junta. The combine is formally named The Brotherhood Alliance (TBA).

As is the wont with military rulers and despots of every other kind everywhere, the Myanmar junta will press the repressive button firmly every time it feels challenged. From the progress the rebels continue to make since the success achieved in the ‘Operation 1027’ (named from the date it began last year) with TBA springing lighting attacks on the army in the northern Shan state bordering China, the Myanmar scene is emboldening the activists. Since the October bravery, the rebels have to their credit some other major successes in wresting control of territories from the army.

ALSO READ: We Have Asked All Indians To Leave Myanmar: MEA

The writ of rebels now runs over Laukkai, which earned notoriety for being the den of gamblers and internet fraudsters, Kayin state in southeast and Chin state in the west. More recently, the rebels seized control of main township of Ramree island off the coast of Rakhine state. This particular rebel success is of considerable strategic significance since the place happens to be next to Kyaukpyu wherefrom China sends oil and gas by pipe to its landlocked areas. China has developed a deep water port and terminals at Kyaukpyu and to keep the facilities from being targeted by the rebels, Beijing must find ways to keep them in good humour.

China does not conduct its foreign policy based on scruples or ideology. When the junta overthrew the elected government in February 2021 to run Myanmar, Beijing had no compunction to describe the development as a “major cabinet reshuffle.” What is more besides selling arms worth over $250 million to the junta,  China came down hard on the West for its sanctions on Myanmar liking these to exacerbation of prevailing tensions. But once the TBA, a coalition of ethnically based militias, started getting the better of the junta in northern Myanmar to start with, a flip in Beijing’s policy towards its disturbed neighbour was visible.

No doubt, China not in any way is discouraging the rebels and on the contrary, as reports say providing help to TBA is solely in order to protect its economic interest. The Economist writes: “China, which had long supported the junta, is doing deals with others… China will surely seek an accommodation with the AA at Kyaukpyu to protect its energy supplies there.” Measured support from China alone is, however, not enough to create condition for Myanmar to return to democracy.

As the conflict between the rebels and the junta has by now spread over two-thirds of the country, the people are facing an acute economic crisis. The United Nations Development Programme (UNDP) says in a report released the other day that the ranks of middle class in Myanmar are shrinking dramatically and poverty is spreading widely. The report further says the middle class is now half the size it was three years ago. Rising inflation is forcing households to cut spending on food and other essentials. Nearly half the population lives under the national poverty line of 76 cents a day.

Unnerved by rebel challenge, deepening economic crisis and consequent public unrest, a bewildered junta introduced conscription in February with the provision that anyone trying to avoid the mandatory draft will be consigned in the prison for five years. Expectedly many are trying to flee the country. Many others are joining people’s defence forces pledging loyalty to the National Unity Government in exile.

What the rebels need the most at this stage is moral and material support from democratic countries, the US and India in particular. Their indifference to junta atrocities is only helping China to have growing control both over the junta and the rebels in Myanmar. This, The Economist finds quite concerning. It says: “A Myanmar over which China establishes dominance is in no country’s interests but China’s. Yet America is distracted. India has called for dialogue, but offered little else. The ten-country South-East Asian club, ASEAN, timidly sticks to a lame ‘five-point consensus’ that the junta does not even pretend to honour.”

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Mining Electoral Bonds to Curry Favours

Mining Electoral Bonds to Curry Favours?

India is exceptionally rich in mineral resources, be it thermal coal, iron ore, bauxite or limestone. It also has fairly large endowments of zinc ore, manganese ore and chromite. Helped by resource bounties and growing local demand for energy and metals, India is counted among the world’s major producers of thermal electricity, which, however, meets with increasing frowning by environment activists, and steel, aluminium, zinc and cement. The governments at the centre and in states have over the years introduced many mining related reforms, the most important being the dispensing with the power to make discretionary allotment of reserves in favour of their auctioning. This is aiding transparency in resource allocation.

The authorities had been under growing pressure to introduce reforms as the mining sector’s production performance was not in line with resources lying underneath the earth. Moreover, much to their embarrassment, the extensive wrongdoings in the mining sector, resulting from the nexus between miners and a section of bureaucracy was increasingly coming to light. First in Karnataka and then in Goa, the Supreme Court cancelled iron ore mining leases on grounds of illegalities some years ago.

Such strong action, which had a telling effect on the country’s production of steelmaking ingredient and its supply to local steel mills and for exports must have instilled some fear and discipline among miners. The Goa government was in the firing line for its act of omission. In an indictment of the local administration, the Court said while its direction was to grant fresh licences in accordance with the mining laws, the state government’s renewal of mining leases was found to be “unduly hasty, without taking all relevant material into consideration and, therefore, not in the interest of mineral development.” The Court found violations of environmental norms in the process of ore extraction and its transportation in Goa in particular quite distressful.

After all the reforms, between making a successful bid for lease ownership of a reserve and opening of the mine is still a tortuous process where government agencies at the Centre and in states have a decisive say. Because of the rigmarole, including time-consuming environment and forest clearances, a mine opening in India can take up to eight years against three years in Australia, the world’s largest producer and supplier to the global market of a number of minerals. What will be admitted straightaway is the continuing need for government oversight once a mine is opened because mines in India are found to be prone to breaking rules with impunity and cutting corners endangering the lives of workers and causing harm to the environment. But for such oversight to be effective demands that officials posted in far corners where extraction happens will honestly record all mining related misdoings to be followed up by corrective and also exemplary actions by people at higher bureaucratic echelons.

As sector observer members of civic society will say, if this were the case then the “murky affairs” relating to Karnataka and Goa mining would not have happened. Monitoring of mines operations by using satellites and drones might have curbed what is visible from air. What will, however, always stay under radar are the dubious deals in the sector happening all the time because of the unholy understanding between miners, politicians and government officials. Avarices of miners apart, politicians and bureaucrats will not miss the opportunity to line their pockets by way of withholding required permissions till they get paid and overlooking many acts of omission by mining groups, again for a consideration.  

All these are among the reasons why the mining sector has remained bereft of foreign direct investment (FDI). This is despite New Delhi’s liberalised FDI policy allowing 100 per cent foreign equity holding in the sector on automatic route for all non-fuel and non-atomic minerals. Diamond and precious stones also remain beyond the scope of FDI. Finding the overall environment not to their liking, years ago British-Australian mining giant Rio Tinto (the world’s second largest) and Norwegian bauxite and aluminium producer Norsk Hydro cried off from India. While Rio Tinto had big iron ore mining plans in the then Orissa (since renamed Odisha), the Norwegian group had nursed the ambition to develop a bauxite mine and an alumina refinery in the downstream in the same state in partnership with Tata Sons and Canadian Alcan, part of Rio Tinto since 2007.

What could have been a richly rewarding business for the three iconic houses is now owned by Kumar Mangalam Birla’s flagship Hindalco Industries. Called Utkal Alumina International, a 100 per cent subsidiary of Hindalco, it has a highly cost effective 2.1 million tonne alumina refinery at Rayagada in Odisha and a 8 million tonne bauxite mine at Baphlimali also in the same state.

ALSO READ: Why Business Houses Betting Big on Orissa?

What has underwritten the success of Birla when a combination of bigger entities, unable to take the project forward, sold their entire stakes to the former in phases? The cryptic answer will be the Birla group’s capacity, which several other Indian entities too have, to manage the environment to its advantage. The expression ‘manage the environment’ stands for the skill to find resolution of any thorny issues by taking care of the right people. Ask any media person writing on mining, she/he will confirm the opaqueness of the sector. However big private sector mining companies may be, they will have nothing to do with the media.

Their reluctance to share basic industry related information, which has nothing to do with their own working is galling. They are not listed on stock exchanges. Therefore, they have no obligation to publish quarterly and annual results and annual reports. PSUs in the country’s mining universe such as Coal India, NMDC and Moil are, on the other hand, listed entities and the media has easy access to them. In a government undertaking all income and expenses are to be shown in books and their officials cannot find a way out of a difficult situation by paying bribes.

And also unlike private sector companies, mining, metal and power PSUs were not buyers of electoral bonds, an instrument made available to business houses to support electioneering efforts of political parties of their choice. In the list of top 20 electoral bond purchasers are found Vedanta, a major producer of oil, iron ore, zinc ore and aluminium, Essel Mining, an unlisted money spinner for Aditya Birla group and Haldia Energy, a coal-based power producer in RP-Sanjiv Goenka group. Vedanta bought electoral bonds of Rs376 crore, Haldia Energy Rs377 crore and Essel Rs225 crore.

At this writing, one does not know how the mining and metal groups went about in giving the bonds to political parties. Incidentally, the five companies belonging to Jindals but managed separately by family members bought bonds of Rs195 crore. Jindals have a big manufacturing and mining profile in Odisha and they have a hugely Odisha based ambitious growth plans. It’s a given that BJP being an all-India political party will be the largest recipient of electoral bonds purchased by companies and individuals. What at the same time can be said with certainty is that mining, power and steel groups made large donations to Odisha’s Biju Janata Dal and West Bengal’s Trinamool Congress for obvious considerations. Nothing to do with politics or ideology.

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Vietnam The Emerging Asian Tiger

Vietnam – The Emerging Asian Tiger

This is a race not formally announced but in which every south-east Asian country and prominently India in south Asia are keen participants. The competition is about getting as big a slice as possible of manufacturing capacity touching electronics and telephony to engineering products that is gradually being moved from China by MNCs, principally headquartered in the US and Japan to relatively low cost regions, as part of the China plus one policy. Saving in cost is definitely a consideration for paring MNC manufacturing exposure in China.

Consider Vietnam, which because of state focus on education, boasts of a plentiful supply of educated, hardworking and disciplined workers needed by new generation industries. What further draws MNCs to employ Vietnamese workers is their availability at almost half the cost of Chinese peers in their country’s coastal regions. Manufacturing wages in Vietnam remain the lowest in the entire south-east Asia barring the Philippines.

Cost advantage was certainly not at the top of mind of policy makers of countries now in pursuit of decoupling from China wherefrom earlier huge investments were supporting capacity building of many industries, including hi-tech ones in China and in the process becoming too critically dependent on a single supply source. Geopolitical considerations, growing frictions in trade relations leading countries such as the US, EU and India hauling China to WTO (World Trade Organisation) for dumping of a number of products, including steel and aluminium, arbitrary Chinese policies that became palpably evident during Covide19 pandemic management and reservations about the uncommonly strict data privacy law have underpinned the need to promote investment in other Asian countries that will supplement or cut capacity in China.

Over the years supply chains based in Asia have expanded well beyond China to include Vietnam, India, Indonesia and the Philippines. “We are supplying finished products in large volumes to the US and EU. However, for components and parts we continue to remain dependent on China. The much publicised decoupling from the Chinese economy and all the efforts to expand the supply chain beyond the world’s second largest economy may not have hurt China that much till now. Whatever that may be, Vietnam’s reputation is no longer based on as a global supplier of clothing to American and European companies but of products based on very high technology,” a local head of a leading MNC told this reporter on condition of anonymity.

Because of its strategic location sharing terrestrial and maritime borders with China being wooed by both Washington and Beijing and a population of over 100 million with a per capita income of $4,163.5 in 2022 (source World Bank), it is only natural that MNCs, including the ones dealing with pinnacle of technology, will have a growing presence in Vietnam. From FMCG groups Unilever to Nestle to Procter Gamble to IT companies Microsoft to IBM and Samsung among electronics items manufacturers are finding their businesses growing here.

In Apple’s diversification of supply sources from China, the two countries figuring prominently are Vietnam and India. For Cupertino (California) based Apple, makers of iPhone and MacBook, shifting geopolitical tides, triggered by among other issues President Xi Jinping’s instruction to his military to be prepared to invade Taiwan by 2027 and President Biden’s resolve to defend Taiwan in such circumstances, it has become imperative to ensure that iPhone supplies are not disturbed. Therefore, the company with market capitalisation of $2.87 trillion is constrained to hedge its bet on Vietnam and India by supporting suppliers there.

For example, the Tata group, which already owns an iPhone factory in Karnataka acquired from Taiwanese company Wistron will commission a greenfield iPhone assembly plant at Hosur in Tamil Nadu in the next 18 months. Going beyond assembly, the group has started making iPhone enclosures or metal casings.

ALSO READ: Why Singapore Manufacturers Are Moving To India

In the meantime, Taiwan based electronics manufacturing group Foxconn is successfully running an iPhone assembly unit, one of the largest for Apple outside China, at Sriperumbudur in Tamil Nadu. Production now at 6 million pieces is to be rapidly expanded. In this context, the Wall Street Journal says in a recent report: “Apple and its suppliers aim to build more than 50 million iPhones in India annually within the next two to three years, with additional tens of millions of units planned after that.”

In India suppliers to Apple, however, have to contend with poor infrastructure, logistical challenges getting slowly resolved and trade union issues. Interestingly, China in spite of staying in command of the communist party is spared labour problems. Whatever the challenges of being here, Apple CEO Tim Cook’s visited India in April last and met prime minister Narendra Modi to convey the company’s commitment to be part of this country’s digital journey. In the meantime, the two flagship Apple stores in Mumbai and Delhi that Cook opened have in a short time proved a roaring success. In Vietnam too, Apple products have caught the imagination of the people, especially the young, following the launch of online Apple store and backup service from the online team.

In terms of range products made for Apple by its suppliers, Vietnam has remained nonpareil in Asia outside China. The bright spot that Vietnam is for Apple in its China decoupling move will very substantially increase capacity to make IPads, Apple watches, MacBooks and AirPods by 2025 considering fresh capacity building investments being proposed by existing and new suppliers. For example, Foxconn is to make growing volumes of iPad and MacBook in Vietnam. As the company is in the process to invest $270 million to build a new factory there, one of its subsidiaries is to exclusively supply made in Vietnam servers for Apple to train and test AI services. A shining example of going up in the production value chain. The Taiwanese Compal Electronics, a major supplier to Apple, is too rapidly expanding capacity in Vietnam.

Not only in IT and electronics, Vietnam, according to CLSA, a bank, received in the first three quarters of 2023 foreign direct investment (FDI), which as a share of GDP was twice as large as in Indonesia, the Philippines or Thailand. Whatever that is, neither Hanoi nor New Delhi will not be able to wish away the fact that for many critical components, the two countries continue to remain hopelessly dependent on supplies from China. FDI that propels growth as also supply of technologies fell 16 per cent for India to $70.9 billion in 2022-23 from $84.84 billion in the previous year.

In contrast, a much smaller country Vietnam found FDI rising to $36.6 billion in 2023, a jump of 32.1 per cent year on year. This incidentally happened to be the highest FDI received by Vietnam in the past five years, underlining the destination’s attractiveness to foreign investors, especially the ones keen to reduce their Chinese profile.

The more important considerations that have helped Vietnam to attract FDI from a number of destinations – in 2023, the country received investments from as many as 111 countries – are: adroitness with which the regime continues to handle two antagonists, namely, the US and China; over three and a half decades of opening of the economy and reforms since the end of collectivism; building of human resources to support investment in new generation industries; and incentive package for foreign investors. But now inertia has set in in decision making, specially when it comes to giving approvals to new projects for fear of being hauled up on corruption charges. The inactiveness of politicians and bureaucrats at every level is due to the launch of anticorruption drive some time ago.

Incidentally, President Nguyen Xuan Phuc was forced to resign in January 2023 along with some ministers as part of an anti-corruption campaign. No wonder The Economist highlights “big risks to Vietnam’s tigerish emergence. Its geopolitical sweet spot may not last – especially if Donald Trump returns to power and takes exception to the size of America’s bilateral trade deficit with it. The beneficial demography underlying its growth is weakening.” But the most disturbing phenomenon, according to the magazine, is the rulers’ “resistance to political reform.”

(The writer was lately in Vietnam)

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Reading The Darjeeling Tea Leaves

Nearly a century and a half ago, a renowned English tea expert J. Berry White wrote tea “has the reputation of furnishing a beverage that cheers but does not inebriate.” White at the same time described “tea mania as an addiction.” This addiction was not confined to the ones for whom tea drinking became a religion. Enthusiasm to grow tea for many decades since then became so infectious that Robert Fortune, whose reputation is based on expanding tea cultivation here using seeds smuggled from China lamented that “in India every man seems to think himself qualified to undertake the management of tea cultivation without having any knowledge of the subject.”

Fast forward to the present times. Is not the unchecked wilting of tea industry in Darjeeling, very small in size seen in the context of India making 1,365 million kg in 2022 but commanding an unrivalled reputation for quality, over the past many decades also largely due to poor estate management? What Fortune feared would befall tea industry in general so long in the past if gardens come to be managed by unschooled owners is proving right for gardens in the hills of Darjeeling. Tea being the principal source of revenue and livelihood for Darjeeling, the unchecked setback in its fortunes has been wreaking havoc on the local economy as it is also a cause of social unrest.

In more than one way, the past year would go down in the annals of the famed Darjeeling tea industry abroad as annus horribilis. Production of tea in the hills slid a worryingly around 9 per cent to about 6.3 million kg in 2023. The exact production fall will be known when December plucking and manufacture figures are available. In any case, the cold December when flushing of tea leaves don’t happen is a marginal month in terms of plucking. Quality of the hill origin beverage that begins to turn indifferent at the end of the second flush with the onset of monsoon turns even flatter during the year-end. December neither contributes of any significance to revenue nor to profits with harvesting limited to around 60,000 kg and quality not in line with the hill produce in preceding months. That tea does not find favour in the export market and is almost all sold locally.

The unique beverage of Darjeeling origin and of the first two flushes continues to enchant royalties from the United Kingdom to Japan and connoisseurs with deep pocket across the globe. Select ranges of first flush Darjeeling tea will fetch eye-popping prices from European and Japanese buyers in spite of their economies not having the best of times. But as is the long-time global experience, very high value products from Hermes bag to Bugatti and Rolls Royce cars to Patek Philippe and Berguet watches will do well through all economic seasons. People with astronomical income is spared tightening the belt when the general economy faces headwind. Some lines of Darjeeling first flush harvested in small quantities making them rare and highly coveted would fetch prices of around $300 a kg. The first flush beginning in February and finishing in April with new two leaves and a bud will leave a light, floral, fresh, brisk and astringent flavour in the brew. A divine experience for the few who can afford.

Incidentally, Darjeeling tea was the first among all commodities in India to have been accorded GI (Geographical Indication) status. Securing this recognition following multi-steps scrutiny became essential as large volumes of teas of other origins with some attributes of Darjeeling tea but not in any way comparable in quality with what is produced in the hills of north Bengal were sold in the market here and abroad as Darjeeling tea to the dismay of its makers. Such fakery not only did damage to the brand value of Darjeeling tea but also told on producer margins.

The Tea Board, the administering authority of GI, says the regulations apply to “87 tea gardens” whose harvested leaves have been “processed and manufactured in a factory located in the defined geographic area” and when such tea subject to review by tea tasters is found to have the “distinctive and naturally occurring organoleptic characteristics of taste, aroma and mouth feel, typical of tea cultivated, grown and produced in the region of Darjeeling, India.” The requirement that only 100 per cent Darjeeling tea is entitled to carry the Darjeeling logo has to a large extent succeeded in stamping out teas of other origins being masqueraded and sold as Darjeeling tea.

ALSO READ: Storm Brewing In Darjeeling Teacup

Even then in the domestic market, practically unrestricted arrival of tea from Nepal across the border continues to play spoilsport for Darjeeling tea, especially by way of depressing prices. While large imports from Nepal continue to cause distress to tea producers in Darjeeling, a very few gardens in the hills are in the black, unable to recover production cost, not to speak of earning profits, from auction and private sales. No wonder, as many as ten gardens in Darjeeling remained closed through 2023, knocking off around 1 million kg of production.

But the industry ills go well beyond that. Leave out a little over a dozen estates, the owners of other operational gardens are desperate to exit the business, only if they would find buyers. The figure of ₹200 a kg loss borne by Darjeeling gardens may be an overstatement by Indian Tea Association. The depth of the crisis is, however, not to be denied. For mitigation, the industry is seeking subvention from the state government on two counts – promotion of exports and transport subsidy. Even while West Bengal government’s financial health remains a subject of concern, it cannot but lend a patient hearing to Darjeeling planters, providing livelihood to nearly one lakh people with women engaged in plucking benefiting in a major way.

The unique climatic condition, cool bridge from the Himalayas wafting through the gardens in the hills, which are brushed by thick clouds, soft mountain rains and intensive sunshine help in making that adorable beverage. The rich organic reddish soil is also a deciding factor in making Darjeeling tea the ‘champagne among all teas.’ A planter of nearly five decade standing says the magical properties of Darjeeling brew has got much to do with estates being at high elevation of 600 to 2,000 metre above the sea level. The higher an estate is located in the hills, the better is the quality of its tea.

Whatever the mystique surrounding the tea grown in the southern slopes of the Himalayas covering an area of 17,500 hectares, the crisis surrounding the industry is worsening. Darjeeling tea continues to experience a downhill journey from the time when production would be over 10 million kg, with the withering of a good number of gardens and some experiencing ownership change. When committed planters of the kind of Rudra Chatterjee of Luxmi Tea or Ashok Lohia of Chamong Group will step into a weak estate, the working inevitably improves over time. Goodricke Group is also doing a good job in increasingly difficult circumstances. But all that is not enough to redeem plantation in Darjeeling hills wherefrom tea in 2023 auctions at Rs319.74 a kg sank to its lowest since 2015 when it was a distressingly low Rs285.71 a kg.

Not even a quarter of Darjeeling tea output is sold through auctions, allowing scientific price discovery. Whatever that is, fall in auction prices combined with geo-political crisis involving two raging conflicts involving Russia-Ukraine and Palestinians-Israelis ensured up to 20 per cent erosion in private sale prices over 2022. Calcutta Tea Traders Association secretary J Kalyana Sundaram would attribute the setback in auction and private sale prices to export demand squeeze and the continuing impact of imports of Nepal origin tea on domestic sale of Darjeeling tea. Annual exports of Darjeeling, made up of a very large portion of the first flush and a fairly good amount of second flush, are around 3 million kg.

Much to the concern of planters in Darjeeling, imports from Nepal had a humongous share of 17.36 million kg in total arrivals of 29.84 million kg here from all destinations in 2022. The industry has recommended to the central government some corrective steps to curb imports from Nepal. The more important of these are: fixing of a minimum import price for tea originating in the Himalayan neighbour and subject all imports to quality testing to ensure that foreign origin teas, Nepal and otherwise conform to standards of the Food Safety & Standard Authority of India (FSSAI). Whatever the industry may want, it will do well to remember that New Delhi will not be inclined to initiate any steps that may cause misunderstanding in Kathmandu.

Mizoram’s Measured Approach

Mizoram’s Measured Approach And Search For Peace In Assam

The strategic and also commercial importance of the seven north-eastern states Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura and also what is described as the brother state Sikkim cannot be overemphasized. All these states combined have common borders with China, Bangladesh, Myanmar and Bhutan. Security aspect aside, the north-east if given a robust infrastructure and commercial acumen could emerge as an important gateway for trade with neighbouring countries. As it would happen, the potential of the region, which is a rich mosaic of culture and social practices, has very largely remained unexplored because of continuing indifference of mainland powers that be and people in general to the north-east.

Such being the reality causing despair among north-easterners for not being able to meaningfully participate in and benefit from economic progress happening elsewhere in the country, it is good that the largely overlooked region left to fend for itself and periodically the scene of internecine conflicts has now Lalduhoma as chief minister of Mizoram. But what is so special about Lalduhoma that he could become the agent to bring national focus to a long overlooked group of states?

As an IPS officer who looked after the security of Prime Minister Indira Gandhi and subsequently became a member of the Lok Sabha from Mizoram in 1984, Lalduhoma is familiar with the goings on in Delhi. His recent first trip to the capital and apparently productive discussions with Prime Minister Narendra Modi, Home Minister Amit Shah and some other ministers go to confirm while he will maintain the distinct identity of Zoram People’s Movement (ZPM) without aligning with either the Congress or BJP in any way, in true federal spirit he will be seeking the Centre’s help for the state’s development. Lalduhoma conducted himself in true federal spirit during his maiden trip to New Delhi as CM and seemed to have secured assurances of development from central ministers.

What actually is the outcome of the 74 year old Mizoram CM’s visit to Delhi? He came to the capital soon after the Union government announced the plan to build a fence over a 300-km stretch of unfenced boundary with Myanmar and also end the 40 year old free movement regime, allowing people living on both sides of international border to travel within 16 km into each other’s territory without visa. New Delhi’s compulsion to build the fence along the border with a disturbed country is well understood. Mizoram is hosting more than 31,000 individuals belonging to the Chin community from Myanmar who had to flee their country following a coup by the army in February 2021. Now, close to 10,000 displaced people from Manipur, victims of ethnic violence, have taken shelter in Mizoram.

It goes to the credit of Mizoram and all the local parties that they are bearing the burden of sheltering and providing basic support to refugees from across the border and also to Kuki-Zo community members despite fund crunch. That the CM has been able to secure some help from New Delhi in looking after displaced people is clear from what Lalduhoma said on his return to Aizawl: “Even though the Centre can’t accord refugee status to the Myanmar nationals, it is ready to collaborate with us in providing relief to them. People from Manipur, who fled their homes due to ethnic violence, will also be looked after with help of the central government.”

Thankfully, New Delhi took cognisance of the fact that the Chin community from Myanmar and Kuki-Zos from Manipur have common ethnic ties with the Mizos. Lalduhoma was bold enough to tell Modi that the Chin people “are not strangers, but brothers with identical blood running through our veins.” To the relief of the newly minted Zoram People’s Movement (ZPM) government, Lalduhoma secured assurance from Shah that New Delhi though would not grant refugee status to people from Myanmar, it would not ask them to leave till normalcy was restored in their country. Moreover, there will be handholding of Aizawl in looking after the people from Myanmar and Manipur.

ALSO READ: Methodical Mizoram Votes For A Change

A much bigger challenge for Lalduhoma will be to ensure that the 12 priority programmes of ZPM government are implemented within 100 days and 2024 becomes the year of financial consolidation. The new regime having embraced economic development as the mantra says redemption will come with investments coming from the centre, particularly in infrastructure development and private sector making use of the state’s “rich natural resources.”

The Christian dominated Mizoram has a rate of literacy much higher than the national average of 77.7 per cent. Despite this, the employment scene, particularly among the young, has remained dismal. Before the last election in which ZPM won 27 of 40 seats, Mizoram was governed by the Congress and Mizo National Front (MNF) by turn. Both were found wanting in creating an environment for investment. The apathy of the centre was also palpable. In fact, Aizawl found New Delhi to be distant and domineering. That also is a common experience of other north-eastern states.

The other day, the country was witness to unbound rejoice in the Union Home Ministry and also in Assam government, which is ruled by BJP, over the signing of a ‘peace accord’ with pro-talks faction of the United Liberation Front of Asom (ULFA), led by Arabinda Rajkhowa. But such celebrations may be premature and peace in the north-eastern state may still be eluding, for Paresh Baruah heading the more aggressive and militant ULFA (Independent) has stayed away from the peace agreement.

A fugitive from his own country and reportedly moving in Myanmar-China border areas, Baruah has made his participation in peace talks difficult, if not impossible by insisting on the government conceding his demand for discussion on sovereignty. Thankfully, Assam chief minister Himanta Biswa Sarma has expressed the hope that it is only a matter of time before Baruah returns to the mainstream and “joins the peace process.”

ULFA formed four decades ago has a chequered history and the combined outfit was responsible for a series of violent acts in different parts of the state resulting in a couple of major army operations and also dismissal of the first Asom Gana Parishad (AGP) government for its failure to tame insurgency. ULFA militants would carry out disturbingly large insurgency operations striking terror and then disappear in their camps in Bangladesh.

Mercifully, the Sheikh Hasina government removed all such camps and steadfastly refused to play host to ULFA militants from across the border. The split between the pro-talk group and the obstinately uncooperative ULFA wing in finding a solution to contentious issues involving identity, land ownership and claims to natural resources of indigenous population has remained beyond repair.

Howsoever recalcitrant Baruah may still sound from the foreign base, he knows that the tripartite accord to which Rajkhowa group is a signatory has taken some steam out of his sovereignty campaign. The three principal features of the accord that would certainly make Baruah sit up and take note are: The highly controversial and sensitive Armed Forces Special Powers Act (AFSPA), giving Army extraordinarily large powers is lifted from85 per cent of the state; proposed investment of around Rs1.5 lakh crore for a number of development projects and third, delimitation of the majority of assembly seats that should work to the advantage of indigenous communities. Shah has promised “tome-bound implementation of the terms of memorandum of settlement by the centre and the Assam government.” People will be watching the earnestness of the government in implementing the clauses of the agreement in letter and spirit.

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Mizoram Votes For Change

Methodical Mizoram Votes For A Change

What will immediately strike any visitor from a city in the plains to Aizawl, capital of the north-eastern state Mizoram is the disciplined way people live there. Congested Aizawl is with little green left, but life goes on in a quaint way. For instance, unlike drivers in Delhi or Kolkata their counterparts in Aizawl are not prone to take liberty with traffic rules or honk horn to the irritation of others. In the plains, election campaigns these days are marked by noisy processions, public order disrupting meetings and often pasting of revolting posters on the walls. The large cut-out of leaders all over the place once predominant in some southern states are now an all-India eyesore. Nothing like that in Mizoram.

In the kind of medley seen during the recent election campaign in Rajasthan, Madhya Pradesh, Chhattisgarh and Telangana, real issues often got blurred by announcement of promises destined to remain unfulfilled. The opposite was the case in Mizoram where Christians, according to the 2011 census, constitute 87.16 per cent of the population. Likely because of religiosity impacting their behaviourial pattern, the Mizos will unfailingly go by the norms laid down by the Church and civil society. With politicians in the plains prone to running wild in their campaign often describing opponent leaders in derogatory language, the north-eastern state presented an altogether different picture.

The three principal political outfits in the state, namely, ZPM (Zoram People’s Movement), now in power for the first time pulling off a silent revolution, MNF (Mizo National Front) that led a 20-year insurgency but finally signed the Mizoram Peace Accord in 1986 with the Union government and the Congress all agreed ahead of start of election campaign to abide by the code conduct while seeking favour of voters, authored by the Church-led Mizoram Public Forum (MPF).

Akin to what happens in more mature democracies, candidates from all parties will use MPF platforms to present their programmes and invite debates. Big election rallies and vulgar use of money power do not find favour with the code of conduct. Even door to door campaigns must not be intrusive. Election Commission in a rare instance conceding the Church request to postpone the vote counting day from a Sunday (3rd December) to the following day in order that religious activities were not disturbed is a testament of its influence.

Whatever the differences in behaviour of politicians and the public in Mizoram from what we have been experiencing in the plains, elections to the 40 member assembly in the tiny north-eastern state were keenly contested. Even while it was always the Congress or the MNF that would rule the state since its formation in 1987, at no point this time there was any doubt that the duopoly was destined to end and ZPM led by indefatigable former IPS officer Lalduhoma would come up trumps. Not only does Mizoram figure close to the top of state literacy table, but the voters, especially the young ones, are mindful of exercising their franchise. The recent elections saw nearly 90 per cent casting their votes. Mizoram is a vibrant democracy by any reckoning.  

No doubt anti-incumbency had worked both against MNF and Congress. Local identity being a big issue in Mizoram, MNF lost traction with many by being a part of the BJP-led National Democratic Alliance. Data from Election Commission will show that there is no correlation here between the percentage of votes secured and seats won. ZPM got 27 seats with 37.86 per cent votes, MNF won 10 seats with 35.10 per cent vote and Congress secured only one seat with 20.82 per cent vote. Take BJP securing two seats with just 5.06 per cent vote against one last time.  

Anti-incumbency and the concomitant administrative torpor definitely did work against the parties that between them always ruled the state. Poor governance and corruption linked to implementation of New Economic Development Policy and transfer of monetary benefits during the MNF rule convinced the Mizos that ZPM, full of new faces and drawn from different walks of life such as media and sports, has the potential to start a new chapter for Mizoram where poverty is rampant and unemployment high. ZPM promising a “new system” that will usher in “administrative reforms, land reforms and economic reforms” resonated with the voters.

ALSO READ: Double-Engine Manipur Goes Up In Flames

The state wanted a break with inactivity in management of state affairs and vibrancy in governance was what Lalduhoma promised. ZPM commitment to introduce minimum support prices for locally grown crops of ginger, turmeric, chilli and broomgrass and also their procurement went down well with rural families.

As he was sworn in as chief minister along with 11 ministerial colleagues, Lalduhoma’s three principal challenges will be to create jobs in industry and agriculture, introduce effective welfare schemes for women who stood by ZPM in assembly election in a big way and ensure that Chin refugees from Myanmar and Bangladesh and Kuki-Zomi refugees from Manipur are treated with compassion and respect. Incidentally, the Chin and Mizos are kindred tribes of the Kukis and they collectively are described as Zo people. Naturally, whether it is ZPM or MNF, the feelings are strong for refugee welfare. ZPM has, therefore, no compunction in saying that on the issue of taking care of refugees of identical ethnicity as Mizos, it stays on the same page as MNF.

Here, however, the rub is the Union government is disinclined to support the cause of refugees. Lalduhoma has occasions to register his regrets about the denial of Central assistance to look after the refugees. This, however, will not in any way dim his resolve to give shelter to the ones who fled from the tyranny of the Myanmar military regime. One of his top priorities on assuming the office of chief minister will be to prevail upon New Delhi to share the burden of refugee care. At this point, the state with parlous finances is hosting around 47,000 refugees.

Lalduhoma says: “The state’s financial situation is bad and the government has received a warning from the Reserve Bank on this. We will use the new financial year for consolidation.” The budget for the 2024-25 financial year bearing the stamp of ZPM policy will give the roadmap of attempts to be made at economic revival leading to creation of jobs and resurgence of rural economy, the chief minister has hinted. He wants his ministerial colleagues to embrace austerity. Only the future will tell how their behaviour will be once they taste power. The real challenge for Lalduhoma will be to enlist the support of the Centre without aligning with NDA. Mizo nationalism (one may call it sub-nationalism) is pretty strong. After all, one reason for MNF losing the turf to ZPM was its hitching to NDA. 

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Farmer Welfare Through Food Processing

Farmer Welfare Through Food Processing Promotion

In the mission to raise production and diversification of agriculture and at the same time improve the income of growers, the past UPA and the present NDA governments’ thoughtful prescription is to add value to farm produce by rapidly expanding food processing units across the country. This is besides other measures linked to the mission, including popularisation of cultivation and use of millets and making it globally popular for food security, raising of income of farmers and proven health benefits.  Over the years, the country’s production of cereals such as rice, wheat and pulses, horticulture and dairy products, poultry items and fish and meat has risen, making it either the largest or the second largest producer of many of these items in the world.

At the same time following official thrust, millets output is rising in a number of states, so also their popularity. Here a special mention is to be made of India’s coastal state in the east Odisha whose millets mission New Delhi wants every other state to emulate and implement. Cambridge University has partnered with Odisha to explore the possibility of millets growing as an alternative to green revolution.

Incidentally, the Odisha government is investing over ₹2,500 crore to provide livelihood support to millet farmers. Chief minister Naveen Patnaik described his state as “pioneer in designing a people-centric millet mission with focus on livelihood and nutrition of tribal communities.” The state’s assured procurement of millets at minimum support price has proved to be a major incentive for farmers to boost production.

The importance of building food processing capacity in tandem with rise in production is principally underlined by the following reasons: First, as processed food products are meeting with growing demand both in the domestic and foreign markets and acting as a trigger for crop diversification, the income of farmers is rising in consequence.

Second, postharvest food wastage, particularly of seasonal and fast perishable items such as fruits and vegetables remains a major national concern and an income destroyer for farmers. It is, therefore, essential to go on creating sustainable supply chains seamlessly connecting farmers with processing and marketing outfits. Third, by way of building robust backward and forward linkages from farm gates through food processing units to local retail outlets and exports, this fast emerging sector has tremendous job creation potential through the length and breadth of the country of different skill sets. In fact, the sector has the capacity to discourage many in rural crop growing centres to migrate to urban areas in search of jobs. Fourth, processed foods lead to commercialization of agriculture, freeing farmers from price manipulation and exploitation by ‘adathiyars’ (brokers).

In the event, not only is the freshness of farm produce preserved through cold chain to processing factories, but the value-added food products with a long shelf life with food quality not compromised have proved a boon for consumers of all income groups. The growth of the food processing industry, helped by liberal policies and periodic policy fine tuning, stands on two pedestals – domestic market and exports primarily to Europe, the Middle East and south-eastern and Far Eastern countries.

According to Agricultural and Processed Products Development Authority (APEDA), the country’s export of processed food was an impressive ₹59,580.72 crore ($7.409 billion). In processed food exports, major contributions have been made by processed vegetables, prepared and preserved cucumber and gherkins, processed fruits, juices and nuts, jaggery and confectionery items, cereal preparations, guargum, alcoholic beverages and prepared animal feeder.

ALSO READ: From Ship-To-Mouth To Food Grains Surplus

At the same time, the Ministry of Food Processing Industries says in its 2022-23 annual report: “During the five years ended 2020-21, food processing sector had been growing at an annual average rate of 8.38 per cent as compared to around 4.87 per cent in agriculture and allied sector (at 2011-12 prices). Food processing sector has also emerged as an important segment of Indian economy in terms of its contributions to GDP, employment and investment. The sector constituted as much as 10.54 per cent and 11.57 per cent of GVA and manufacturing and agriculture sector, respectively in 2020-21 (at 2020-21 prices.)”

APEDA says a “big retail revolution” is awaiting India and this holds great promise for processed food products in the local market. It opines that food and grocery retail, which figures among the largest sectors in the global economy, is also going through a transition phase in this country. Compared to around 75 per cent of food sales in developed countries occurring through superstores, India, according to APEDA “is the least saturated… with small organized retail” still the dominant phenomenon. It further says food and grocery retail is expected to grow at a CAGR (compound annual growth rate) of 3 per cent from 2022 to 2030. APEDA’s prescription for rapid growth of the sector and more domestic and foreign investment flowing into it is rapid improvement in cost competitiveness and efficiency of marketing channels. All this asks for an efficient logistics system covering the value chain from farm to retail outlets for processed foods.

Being fully aware of the sector’s potential to do good to the economy, particularly for the farming community, the government continues to initiate measures for strengthening the sector and encouraging both domestic and foreign investment. In fact, New Delhi has allowed 100 per cent foreign direct investment in food processing industries and also in trading, including ecommerce in respect of food products produced locally. The country received FDI of ₹7,194.13 crore ($895.34 million) in 2022-23, according to APEDA. In a boost to the industry, the last few years has seen the country’s big retailers owning superstores and smaller sized other outlets have an increasingly big presence in food processing industry mostly using factories

In a boost to the industry, the last few years has seen the country’s big retailers owning superstores and smaller sized other outlets have an increasingly big presence in food processing industry mostly using factories owned by third parties (or merchant producers) but providing them with technologies and subjecting their products to strict quality checking.

It has come as a boost for the sector that the government has either fully exempted from GST or put raw and processed food products in the 5 per cent bracket, numbering well over 70 per of all items of the sector. In order to incentivize investment, the government has classified loans to food and agro-based processing units and also cold chain as priority sector lending. It begs the question that further growth of the industry will require strengthening of the infrastructure, particularly extending the cold chain across the country, widening of R&D base and creating adequate numbers of food testing laboratories. In the building of infrastructure, investment has to come mostly from the government.

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