India's Minister of Agriculture, Consumer Affairs and Food and Public Distribution Sharad Pawar says the record production of 216 million tonnes of food grains, 22.7 million bales of cotton and 345 million tonnes of sugarcane restores the country's confidence that India has the potential to meet the challenges.

Following is a speech that Pawar gave on the inauguratl day of the Economic Editors Conference in New Delhi on Tuesday:

Editors and other members of Media, ladies and gentlemen.

It is my pleasure to be with you at this Economic Editors Conference, being convened at a very crucial juncture for the economy, when there are signs of a turnaround in Indian Agriculture.

Agriculture

I compliment our farming community and all those associated with the management of the sector. Despite several odds, a revival in the sector in the past two years is quite evident. During 2006-07, the agriculture sector has posted new landmarks. The record production of 216 million tonnes of food grains, 22.7 million bales of cotton and 345 million tonnes of sugarcane restores our confidence that we have the potential to meet the challenges. The encouraging response to the initiatives under the National Horticulture Mission, including that in the North Eastern region, Micro Irrigation, market reforms and extension reaffirms our commitment towards a more remunerative and efficient agriculture.

The average growth rate of the sector during the last two years has been more than 4%. Investment in agriculture has also shown a rising trend in these two years. Market reforms have started providing a better opportunity for the farmers to realise higher prices. The extension which had not been satisfactory seems to be reaching to the farmers. Credit availability has been more than doubled in the last three years and irrigation expansion programmes have been taken up in a more focussed manner.

However, these achievements leave no room for complacency, in view of the serious constraints still faced by the sector. Agriculture production remains susceptible to spatial and temporal climatic aberrations. The pattern of production in the recent past, particularly that of oilseeds and pulses has not maintained pace with demand causing substantial import dependence. The country had to import wheat also to bridge the demand-supply gap. Further, improvement in the economic conditions of majority of our farmers is not fully reflected despite our development efforts.

These issues necessitated a policy re-orientation. We have envisaged restructuring of our policies for achieving accelerated, broad based and inclusive growth, aiming at faster reduction in poverty and helping to bridge the divide between farm and non-farm sector. The 4 per cent annual growth targeted for the Agricultural Sector during the 11th Plan would contribute to a more inclusive growth.

We are determined to sustain the growth trend of 4 per cent, not only in the short-term, but also with a medium to long-term perspective. As the Chairman of the Sub-committee of the National Development Council for the agriculture sector, I had taken a close look on various issues that have been affecting agriculture such as irrigation, natural resource management, animal husbandry, agro-climatic zonal planning, marketing, credit, technology, land and global issues. The 11th Five Year Plan document clearly reflects the strategy, which is being finalized by the government.

Our response to these challenges was also manifested in the Resolution of the 53rd Meeting of the National Development Council which had the exclusive agenda of re-energizing the agriculture sector. The resolution of the NDC was quite emphatic that agricultural development strategies must be reoriented to meet the needs of the farmers and called upon the Central and the State governments to evolve strategies to rejuvenate agriculture. Towards this end, the resolution identified the steps to be taken by the Central and State Governments.

I am happy to state that my Ministry and the Planning Commission proactively engaged in the follow up of the NDC Resolution and the two major initiatives of Rastriya Krishi Vikas Yojna (RKVY) and the National Food Security Mission (NFSM) have already been launched. The RKVY, with the proposed XIth Plan central allocation of Rs 25,000 crores (Rs 250 bn), aims to incentivise the States to invest more in the agriculture sector.

To deal with the crucial issue of food security, which is as important as national security, given the size and population of the country, the government has launched a Centrally Sponsored Scheme 'National Food Security Mission (NFSM)' with the proposed Plan outlay of about Rupees Five thousand crores. The scheme is being implemented in a mission mode for achieving the goal of producing additional 10 million tonnes of rice, 8 million tonnes of wheat and 2 million tonnes of pulses by the end of the plan. This would primarily aim to bridge the demand-supply gap, to prevent import dependence for cereals.

Animal Husbandry, Dairy & Fisheries: The livestock sector also plays an important role in strengthening food and livelihood security and it contributes about 27 per cent of the agriculture GDP. India is already the largest milk producer and the fourth largest egg producer in the world. The major areas in this sub-sector relate to genetic upgradation, infrastructure development and fodder production. The fisheries sector is also an important source of livelihood. To realise the untapped potential of this sub-sector, the National Fisheries Board has been set up in 2006 to focus attention on the areas of fish capture, culture, processing and marketing with the modern tools of research and development. All these efforts should yield 6-7 per cent growth for this sub-sector during the 11th Plan.

These major initiatives are harmonized with other initiatives being taken for bridging the knowledge gap between research and farm practices, flow of inputs and support services, resource use efficiency and post harvest management. We have an elaborate network of research, extension, input supply and delivery of services. This infrastructure would be used to its full potential to deal with the problem of "technology fatigue" relating to agriculture. It is also our endeavour to harness full benefits by strengthening soil and fertilizer testing facilities.

Further, the conservation and efficient use of water and energy are also key issues for sustainable development. The extent of farm mechanisation in different regions is also highly uneven. I feel that in the emerging gender dynamics of labour force participation in agriculture and non-availability of skilled labour, appropriate policy for farm mechanization is required to be put in place. This is expected to improve the income realisation of the farmer.

Indian Council of Agriculture Research and Education

The launching of a major project on 'Seed Production in Agriculture Crops and Fisheries during the fag end of Xth Plan started paying rich dividends. The implementation of this project through 85 nodal centres within one year resulted in doubling seed and planting material production by research institutions.

The ICAR had also launched, in July 2006, a World Bank funded project 'National Agricultural Innovation Project" with an outlay of Rs. 1190 crore (Rs 11.9 billion) so as to fill up critical gaps in agriculture research and the major aspects being addressed through this project are:

• Research on production to consumption systems.
• Research on sustainable rural livelihood security in disadvantaged regions
• Basic & strategic Research in frontier areas of agricultural sciences.

During Xth Plan, the Government had taken a decision that each of the rural districts of the country should have one Krishi Vigyan Kendra (KVK) and in this endeavour, 557 KVKs have already been sanctioned and the remaining rural districts are targeted to be covered by the end of 2007-08. To meet the national and international requirements and in order to protect our intellectual properties, the ICAR prepared and put to implementation the Guidelines on "Intellectual Property Management and Technology Transfer/ Commercialization" w.e.f. 2nd October, 2006.

Changes in the climate at global level are now a reality and these are likely to impact Indian agriculture making it more vulnerable. The ICAR has already established a countrywide network project to study the impacts, adaptations and the mitigation strategies. In this endeavour we also organized a national conference in October, 2007 wherein leading experts deliberated on various dimensions of climate vis a vis agriculture and came out with some practical recommendations and flagged research priorities as well.

Food & Public Distribution

The MSP plus Bonus for paddy stands at Rs.695 and Rs.725 per quintal for this year as against Rs.550 and Rs.580 per quintal in 2003-04. The MSP for wheat has been announced at Rs.1000 per quintal for the coming Rabi Season as against Rs.620 in 2003-04. The Government have, therefore, provided the biggest increase in MSP to ensure that farmers get better prices for their produce. In spite of increased MSP, it was not possible to procure adequate quantities of wheat in 2006-07 and 2007-08 for Public Distribution System. Wheat imports had to be resorted to ensure that the PDS is not starved-of foodgrains and that there will be adequate supplies in the country. As a result of the various steps taken by the Government, the wholesale wheat prices in Delhi market stands at Rs.1068 per quintal compare to over Rs.1120 per quintal on the same date last year. This is in spite of the fact that an increase of Rs.150 was given to wheat farmers as MSP and bonus. During the year international prices of wheat went up by nearly 80% due to various factors affecting international supplies.

The edible oil prices in the country have also been maintained at reasonable levels by adjusting the import tariff from time to time. Both Soya oil and Palm oil witnessed an unprecedented increase in prices ranging from 80% to 100% whereas domestic edible oil prices have gone up during the year about 15 per cent. This increase is partly on account of increased MSP given to oil seeds growers.

The Sugar industry is in difficulties due to excess production. We have announced the following measures for providing assistance to sugar industry primarily with a view to providing assistance to the sugarcane farmers.

(i) improve liquidity status of sugar mills through concessional loans to sugar mills under a special scheme for liquidating 06-07 cane price arrears and payment of 2007-08 cane dues to sugar mills;

(ii) buffer subsidy payments;

(iii) export assistance to help stabilize domestic sugar market, improve finances of sugar factories and reduce sugar stock while linking it to payment of cane dues to sugarcane farmers;

(iv) Ethanol doping will to the extent of 5 per cent blending of ethanol with petrol mandatory across the country except in J&K, North-Eastern States and Island Territories and to make 10 per cent blending optional from October 2007 and mandatory from October 2008.

(v) Permitting sugar factories to produce ethanol directly from sugarcane juice to augment availability of ethanol and reduce over supply of sugar.

All the measures announced by the Government are primarily intended to ensure that the dues of the sugarcane farmers are paid in time.

The Warehousing (Development and Regulation) Act 2007 has been enacted to ensure that the farmers are able to keep their goods in certified warehouses and use the warehouses receipts as a negotiable instrument. The Act is proposed to be implemented during the year 2007-08. With the full implementation of this Act, farmers would find it easy to take loans from commercial banks against negotiable warehouse receipts and not resort to distress sales to take care of their urgent cash needs.

The Price Situation

During the current year, prices of most essential commodities have generally remained within reasonable levels barring some variation in prices of pulses, edible oils, potatoes and onion. The reasons for the rise in prices were shortfall in domestic supplies relative to demand, diversion of foodgrain to bio-fuel and animal feed, production losses due to inclement weather conditions, which resulted in hardening of international prices of food grains.

The price situation is reviewed periodically at high-level meetings such as Committee of Secretaries and the Cabinet Committee on Prices. Government responded to the price rise in certain commodities by taking several policy decisions.

(i) Resorting to imports to augment supplies. Period of validity of import of wheat at zero duty was extended from 31.12.06 to 28.2.2007 and further to 31.12.07.

(ii) Customs duty on import of pulses was reduced to zero on June 8, 2006 and the period of validity of import of pulses at zero duty has been extended from 31.3.07 to 1.8.2007 and further to 31.3.09.

(iii) A ban was imposed on export of pulses with effect from June 22, 2006 (except export of kabuli chana w.e.f. 7.3.07). The period of validity of prohibition on exports of pulses which was initially upto 31.3.07 was further extended upto 31.3.2008, vide DGFT Notification dated 9.3.2007.

(iv) As per initiative of Government the State agencies (NAFED, PEC Ltd, MMTC and STC) would target to import 1.5 Million Metric Tonnes (MMT) of imports of pulses. Out of the total contracts of 12.18 lakh tonnes made by these agencies, 6.44 lakh tonnes have arrived up to 30.10.07.

(v) W.e.f 23.7.07, the import duty on sunflower oil, both crude and refined, has been reduced the duty now stands at 40% and50% respectively.

(vi) With effect from 23.7.07, the import duty on palm group of oils has been further reduced by ten percentage points, making the import duty on crude palm oil (CPO) at 45% and that on refined palm oil at 52.5%. The Government has also withdrawn the 4% additional countervailing duty on all edible oils.

(vii) To increase the availability of onion, NAFED increased the MEP by USD 100PMT for all destinations from 20.8.2007 for restriction in export and making availability in domestic market. NAFED has further increased the MEP by USD 50 PMT w.e.f. 01.10.2007. The current MEP is US$ 495 PMT. The export of onion is now permitted under license through designated canalizing agencies vide Notification No.22 (RE-2007)/2004-2009 dated 4th October 2007. In accordance with the directive received from Ministry of Food and Consumer Affairs, NAFED started sale of onion in retail through its outlets at Krishi Bhavan, Lawrence Road, Ashram Chowk etc. to the consumers at different rates ranging from Rs. 17/- per kgs kg to Rs. 24/- per kg. from 31.08.2007 onwards. The retail sale is being undertaken at Krishi Bhavan, Lawrence Road and Ashram Chowk, New Delhi at Rs. 18/- per kg. Due to above Government efforts, retail prices of onion at Delhi stabilized at Rs. 19 per kg on 6.11.07.

In the recent past, a number of initiatives have been taken by the Government to liberalize futures trading in commodities, in India. While the markets have been liberalized by permitting all commodities for futures trading and modern institutional structures are in the process of being evolved, Forward Markets Commission (FMC), the market Regulator, set up in 1953, is still functioning in its traditional format. In order to make FMC an independent and more effective Regulator, the amendment to the Forward Contracts (Regulation) Act, 1952 is on the anvil, this would provide features that are in tune with the latest developments in the commodity futures market. The main objectives of the proposed amendments are to provide for:

(i) strengthening & restructuring of the FMC,

(ii) creation of FMC General Fund and conferring power upon FMC to levy fees;

(iii) registration of intermediaries;

(iv) removal of the ban on options;

(v) enhancement of penal powers of FMC;

(vi) adjudication and investigation by FMC.

(vii) designating Securities Appellate Tribunal as the Appellate Tribunal for the purpose of Forward Contract (Regulation) Act

I compliment the Press Information Bureau for this opportunity to share our views with the media and press, who also have a significant role in mass communication of our development programmes and initiatives. The process should help catalyse the progress of our rural economy, particularly the agriculture sector.