GM technology can enrich our farmers

TRADE TALK: DORAB MISTRY

's exclusive interview with him:

How do you see the demand-supply scenario for edible oils globally and in India?

The global demand-supply scenario for vegetable oils in 2007 is quite lopsided. I expect the growth in demand to outstrip supply. Therefore, we will see higher prices in order to balance demand and supply.

The problem started in 2006, as demand for vegetable oils for biodiesel and green energy became more prominent. On top of that, we have had a major bull market in wheat and an emerging bull market in corn.

Prices of Chicago futures for corn rose by 80 per cent during 2006, while wheat prices rose by about 60 per cent. Farmers all over the world have been switching over to wheat and corn and oilseeds acreage is not expanding.

In fact, we are seeing the oilseeds acreage in the country diminishing during both kharif and rabi seasons. This fight between foodgrains, feegrains and oilseeds is taking place all over the world and it will be more acute in 2007. The earliest relief will come in late 2007, if oilseed prices rise. It is my belief that higher prices of oilseeds are inevitable.

What should India do to protect the interests of farmers and consumers of edible oils?

The country's oilseeds farmers are not in good shape. The growers of groundnut in Gujarat and Andhra Pradesh and rapeseed growers of Rajasthan are among the poorest of the farmers in the country.

We need to give them security of higher minimum support price. We also need to open up the seeds industry and allow the use of the best quality seeds, including GM seeds.

Let us take notice of the wonderful results we have obtained in the country from Bt cotton. The economics of cotton farming has been transformed. The government and the industry must work out a way for the introduction of proven varieties of GM oilseeds.

Secondly, we must gradually allow the introduction of contract farming. It will never lead to exploitation of landless labourers. On the contrary, it will bring in new technology, better management and guaranteed higher wages for farm labour.

Contract farming has the potential to create thousands of well-paid jobs in the rural sector. If we can raise our productivity per acre, we can automatically safeguard the interests of our farmers as well as our consumers.

Should biofuels be encouraged at the cost of edible oil consumers?

Biofuels have a place in the total energy economy of any country. It does not mean sacrificing the interest of edible oil consumers. Biofuels will create a safety net for oilseed farmers and create greater wealth for our rural sector.

What is the likely price outlook?

We are looking at higher prices in the next 12 months. In real terms, in inflation -adjusted terms, agricultural commodities have been losing ground. The global prices of RBD Palmolein were around $500 a tonne when I entered the trade in 1977.

Even today, some thirty years later, they are still around $500 a tonne. The price of crude petroleum oil used to be below $20 a barrel in 1977. Clearly, vegetable oils have been left behind.

If prices do not rise, neither will production rise. As I forecast in December 2006, I expect RBD Palmolein to rise from the current levels to about $650 a tonne FOB Malaysia by March 2007.

After that, we will have to once again assess various factors of rainfall, production and demand before making a longer-term forecast. One thing is certain that 2007 will be a prosperous year for agriculture.