Every third year, pulse prices catch fire. This time it's acute
According to a research report, every third year, prices of pulses go up. However, this year’s peak is higher than previous two peaks due to weak supply and rising demand besides weather-related shocks and higher global prices 
Data for the last decade shows a clear pattern of spike in pulses inflation every third year and a variety of factors explains these peaks and troughs. This year though, the peak is higher than the previous two peaks, mainly due to weak supply and surge in demand coupled with weather shocks and steep global prices leading to wholesale price index (WPI) inflation cross 34% average so far, says a research report.
According to ratings agency CRISIL, last few years have seen frequent and regular acceleration in pulse-prices. Historically (1983-84 to 2014-15) WPI pulse-inflation rate in India has averaged 8.9%, which is higher than the overall WPI inflation of 6.7% average. But in the last decade - 2004-05 to 2014-15 – while overall WPI inflation rate fell to 6.3%, pulses inflation has been much higher at 9.4% average. "Such high inflation rate in pulses is undesirable for a country where pulses are second most important part of diet after cereals and an average Indian spends nearly 5% of his food expenditure on pulses," the report said.
Both supply and demand factors are responsible for keeping the price level high. CRISIL said, "Supply constraints arise from lower production, while demand factors arise from higher incomes (especially in rural areas), which has caused a shift in food consumption from cereals or staples to more protein-based items especially pulses. As a result, pulses prices have spiralled in years when there have been adverse supply shocks as is the case this fiscal. Three consecutive monsoon shocks – deficient southwest monsoons in 2014 and 2015 affecting the kharif season output, and weather disturbances in March 2015 affecting rabi output - have hurt overall pulses production. At the same time, global pulse prices are elevated and the rupee is weak, suggesting that resorting to imports could provide limited comfort to domestic prices."
Inflation has come down sharply this year for three reasons like decline in global crude oil and commodity prices, sluggish domestic demand conditions, and softening food inflation. Of these, the biggest contributor to the decline in the consumer price inflation (CPI) has been food prices. Carrying a 39.1% weight in the CPI, food inflation is down to 4.1% average so far this fiscal compared with 7.6% in the same period last fiscal. However, while nearly all food components are seeing a decline in inflation, pulses inflation has seen the sharpest spike in a decade. The CPI and WPI inflation for pulses was 42.2% and 53%, respectively in October.
A price-spike cycle usually begins with a monsoon shock that hurts production. Given that demand side factors in recent years have been strong, supply shortfall pushes up market prices. In many of these years, high global pulses prices have meant that imports provided little comfort to domestic prices. In fact, higher global prices lend impetus to exports. This was especially true during fiscals 2011 and 2012 when global food prices rose nearly 18% and 10%, respectively. Around the same period, domestically, rural wages surged 20% on average, pushing up farm labour cost and demand. In this scenario, both to dis-incentivise exports and to cover rising production costs, the government announced large increases in minimum support prices (MSPs), which tend to act as a floor for market prices. MSPs were up 12-18% in fiscals 2011 and 2013, which kept prices high, CRISIL says.
Why is supply insufficient and volatile?
Over time, the ratings agency says, supply of pulses has failed to catch up with demand. Production remained stagnant for nearly seven years since fiscal 2004, while demand accelerated, causing per-capita availability of pulses to decline and prices to spiral. Although there was some policy push to production after 2010, yields have remained low because of weather shocks, low irrigation cover, and lack of access to latest production technologies, CRISIL said.
Pulses account for about 20% of area under foodgrain production, but less than 10% of foodgrain output. Also, over time, production of pulses has failed to catch up with demand. Output has grown less than 2% average in the last 20 years, while acreage has grown even lesser at 0.8%. Not surprisingly, yield rose only 0.9%.
Between fiscals 2004 and 2010, acreage was constant at 23 million hectare and output stagnated at around 14-15 million tonne (MT). This led to higher dependence on imports, which quadrupled to 4MT from 1MT. Thereafter, however, the inclusion of pulses under the National Food Security Mission (NFSM) provided a policy push to production. The NFSM was implemented in 14 producer-states covering about 98% of the pulses growing area. Under the ‘Accelerated Pulses Production Programme’, the government provided improved production technology, high-yield seeds, nutrient inputs, crop advisories, higher MSPs for pulses and improved procurement mechanisms, all of which had a visible impact on raising productivity. While yields grew by nearly 5% between 2009 and 2013, there was little improvement in acreage. And recently production suffered because of repeated monsoon shocks.
So what is behind the low acreage?
1. Yield remains fairly low despite the recent rise seen because of the policy push. Yields rose from about 570 kg/hectare, to about 700 kg/hectare. Still, they are much lower than average global levels of about 800 kg/hectare (Figure 4).
Low yield and rising cost of cultivation are major disincentives to pulses producers
2. High fluctuation in prices has meant that farmers are seldom sure of getting stable returns. This may have led to large-scale substitution of area under pulses cultivation to other high-value crops that give comparatively higher returns.
3. Pulses are highly risk-prone crops because most of the production is rain-dependent. Barely 16% of total pulses area is covered by irrigation and hence the crop is highly vulnerable to monsoon shocks.
4. Production is also risky because of inadequate post-harvest storage facilities, absence of assured marketing outlets (unlike wheat and rice) and lack of government assurance for purchase under public distribution.
5. Profitability is low and declining as cost of inputs continues to soar. The largest disparity between cost of cultivation and output prices is in urad, gram and tur. In urad, while output prices in the last decade have risen by 12%, cost of cultivation in major producer states have risen in the range of 12-26%. Similarly, in gram and tur, output prices grew about 10%, but cost of cultivation rose 12%-18%.
According to CRISIL the fall in yields could continue this fiscal, too, as production suffers. This does not bode well for prices given that demand for pulses is relatively inelastic in the short term. This naturally increases import dependence. Historically, India has imported about 3 to 4 MT a year since 2008. This year, however, imports might have to go up to 10 MT to bring down prices, said an Assocham study.
Why is demand for pulses rising?
Increasing population, faster growth in per capita income, rising rural wages and changing dietary habits, have had a direct impact on pushing pulses demand, the ratings agency says. 
In India, consumption of pulses is at a much higher frequency than other sources of protein. As per a study1 based on the National Family Health Survey 2005-06, about 89% of the population consumes pulses at least once a week. This is likely to have risen further.
1. Per capita income growth: The sustained rise in demand was a consequence of rapid economic growth after fiscal 2004, which led to a sharp rise in incomes and affluence. Another big push to demand came when rural incomes rose following the implementation of the National Rural Employment Guarantee Scheme (NREGS) in 2006. Over time, as coverage of the scheme expanded and wage rates increased, rural wages rose sharply - by 17% average between fiscals 2010 and 2013. Per capita income grew by almost 7% in real terms between fiscals 2004 and 2012, or twice the rate in the previous decade. This pushed up demand, including that for pulses.
2. Changing dietary habits: During this period, there was a visible shift in preference towards pulses, and away from a cereal-dominated diet. Data from the National Sample Survey Organisation (NSSO) show that consumption spending on pulses, as a source of protein in the diet, surged nearly 12% annually between fiscals 2005 and 2012. In contrast, spending on cereals rose about 6-7% per year. 
In real terms, too, pulses consumption rose -- by about 0.5%, while cereal consumption fell 1% between fiscals 2005 and 2012. Spending on pulses grew at a much faster pace compared with actual consumption indicating elevated inflation. Given India’s high population growth of 1.5% per year, despite higher spending, per capita availability of pulses was constant at 35 gram per day. High inflation therefore meant eroded purchasing power, CRISIL says.
According to the ratings agency, as supply failed to catch up with demand, price pressures remained firm and whenever there was an adverse supply shock, prices spiked. Supply shortfall has had a bigger effect than demand in the current episode of price spike. The demand-side influence is weak as rural wage growth has been declining dramatically and also GDP growth is much weaker. Then there were the successive monsoon shocks to production. In fiscal 2015, pulses production fell 4.3%, and this year, estimates suggest, kharif pulses production growth at 1.1% is much below the trend growth rate of 4.3%. Two successive years of deficient south-west monsoons hurt kharif pulses production, while weather related disturbances in March destroyed the rabi crop of pulses, which is about 68% of the total production. The government has allowed imports but that has had little impact on prices, given that global pulses prices remain high.
Which pulses items are facing the most price rise and why?
Across pulses categories, inflation has spiralled, but the sharpest rise is in tur, followed by moong, urad and masur, CRISIL says. 
These carry a weight of 0.4% in the WPI and 1.7% in the CPI inflation baskets, and make up about 65% of total pulses consumption in India. This year, sowing for all these commodities was much below trend. 
CRISIL’s Deficient Rainfall Impact Parameter, which measures crop-wise impact of weak rains highlights tur as the most affected crop this year. Naturally, inflation in tur is the highest at average 39% so far.
Within the WPI food inflation index, the three most volatile sub-groups are ‘condiments and spices’, ‘pulses’ and ‘fruits and vegetables’. Within pulses, volatility is highest in urad, followed by gram and tur, the ratings agency says.
Four states produce about 70% of India’s pulses output – Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh. Of these, except Rajasthan, 4 out of the last 8 years have seen acute rainfall deficiency, causing pulses production to suffer (Table 2). At an all-India level, just about 16% of the total area under pulses cultivation is irrigated, compared with 58% for cereals, leaving a large portion of pulses area vulnerable to monsoon shocks. The least irrigated area is in Maharashtra (8.7%) whereas as the most irrigated area under pulses is in Uttar Pradesh (35.1%).
Total area under cultivation of pulses is about 25 million hectare. About a fourth of this is in Madhya Pradesh, where the yield is also the highest. However, in states such as Rajasthan, despite a higher share of area under cultivation, pulses yield is the lowest. This could in part be due to a sharp increase in the cost of cultivation, especially in gram.
CRISIL says the contribution of pulses to food inflation is less given its low weight. "However, considering that it is a significant component of the consumption basket, rise in pulses prices can have a large impact on inflation expectation and can influence wage-price negotiations. This is especially critical given that the Reserve Bank of India (RBI)’s inflation target is set at around 4% in the medium-term, and for this to be achieved, food inflation will have to remain significantly low," it said.
There are a number of areas that the government will have to focus on. In India, demand and consumption of pulses will continue to rise as the population increases. Therefore, attaining self sufficiency in pulses will be an imperative in the medium-to-long run. That is because very few countries produce the pulses that Indians consume and global supply is limited. India is the largest consumer (27% of global consumption) and producer (25% of world production). However, given the limitations to expand acreage, improving productivity and yields will be most important. 
The Indian Institute of Pulses Research forecasts demand at 39 million tonne by 2050, which will require production to grow at an annual rate of 2.2%, compared with the 0.9% seen in the last decade. "Raising the irrigated area under pulses is an imperative, as is making available high-yielding variety seeds and nutrients at a reasonable cost. Both of these will help to raise productivity. Focus on post-harvest storage and transportation facilities is also critical. Efforts to prevent hoarding and maintaining price stability will also necessary to incentivise producers," CRISIL concluded.


New Ebola vaccine safe, stimulates strong immune response
A fresh clinical trial of a new Ebola vaccine has found that it is well tolerated, safe and stimulates strong immune responses in adults in Mali, West Africa and in the US.
The study included the first testing of this vaccine in adult health care workers and other at-risk persons in Africa.
It identified the dose to be used in subsequent clinical trials and for large-scale manufacture of the vaccine.
According to a global consortium of researchers assembled at the behest of the World Health Organisation (WHO), if larger trials (some already ongoing in Mali) corroborate the vaccine's clinical acceptability and immunogenicity, the vaccine can obtain regulatory approvals to become a tool to interrupt transmission in future outbreaks.
This would be achieved by vaccinating all people who have come into contact with confirmed Ebola cases.
"This is a crucial step on the road to using this vaccine in humans," said Myron M Levine, associate dean for global health from University of Maryland's school of medicine.
"This gives us essential information that the vaccine is not only well-tolerated but the high dose stimulates strong immune responses in adults in West Africa, the global region where the Ebola outbreak was rampant last year," he added.
The investigators also found that the administration of a booster vaccination with another vector vaccine producing Ebola virus antigens led to further enhanced immune responses likely to be associated with long-lived protection.
This approach provides a way to vaccinate health care workers and other front-line workers who live in areas where Ebola poses a threat to re-emerge and who need prior enduring protection.
"If the vaccine is ultimately found to be safe and effective, it could offer crucial protection for contacts (family members, neighbours, etc.) of patients with confirmed Ebola disease in future epidemics, thereby helping to interrupt transmission," the authors noted.
The vaccine consists of an adenovirus (cold virus) that has been modified so that, in humans, it does not cause illness and cannot multiply.
It does not contain the entire virus but a single Ebola protein.
The study compared the clinical acceptability and immune responses of 20 adult participants in Baltimore and 91 in Mali and each group was given different dosage levels of vaccine.
The study found that there were no safety concerns and recommended that further studies be carried out.
The paper was published in the latest issue of the journal Lancet Infectious Disease.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


Trail of Paris Attackers Winds to Terrorism’s Longtime Outpost

As a pre-dawn raid Wednesday outside Paris targets suspected mastermind of last week’s attack, his roots point to the shadow Belgium casts over the terror threat in Europe


PARIS 2014 Before a SWAT team stormed a tenement in the Belgian city of Verviers in January, police used listening devices to monitor their targets inside: Belgian jihadis who had returned from Syria to attack a local police station in the name of the Islamic State.


Police gunned down two suspects during the pre-dawn firefight, foiling the plot. But a chilling detail stuck with the Belgian counterterror investigators who tracked down the plotters with help from French and U.S. intelligence. As investigators listened, the militants responded to the police assault with a ferocity forged in the battlegrounds of the Middle East.


"They were talking about their plans to commit violence here," a senior Belgian counterterror official recalled in a recent interview. "The police flashbang grenade goes off. And immediately these two start firing their AK-47s. No hesitation, no panic. These are guys with combat experience. They were ready to fight and die."


As the fast-paced investigation of the rampage in Paris that left at least 129 people dead unfolded, elite tactical teams carried out another pre-dawn raid Wednesday on suspected terrorists holed up in an apartment outside the French capital. The target was the accused Belgian mastermind of the thwarted effort to attack the police station in Belgium in January who is also believed to have played a central role in directing the Paris attacks last week: Abdelhamid Abaaoud.


Two suspects died in the gunfight this morning, one of them a woman who detonated a bomb vest, authorities said. Five SWAT officers were wounded. Police arrested five suspects. The target of the raid was Abaaoud, who investigators now believe may have made a daring return from the Islamic State's stronghold in Syria to lead the Paris attacks in person. Authorities had not yet announced Wednesday morning whether he was among those killed or captured, or if he remained at large.


Abaaoud, 27, is a stick-up man-turned-terror kingpin from the tough Brussels suburb of Molenbeek, which has been raided repeatedly by Belgian counterterrorism investigators in the days since the attack. The extent of his role in the Paris massacre is not yet clear, but he had longtime links to at least two of the suspected attackers, according to European counter-terror officials.


Abaaoud's name had already surfaced in connection with previous plots targeting France and Belgium. In one instance that directly foreshadows Friday's attack in Paris, French police in August arrested a militant who had trained in Syria. He told authorities that Abaaoud had directed him to attack live music venues in France, officials say.


There are also suspicions that the Belgian was involved in a deadly shooting at the Jewish museum in Brussels last year, as well as the foiled attack on a Paris-bound train from Belgium by a Moroccan gunman who was subdued by a trio of vacationing Americans this summer.


The leading role of Belgians in the Paris massacre highlights the disproportionately large shadow cast by Belgium on the map of terror in Europe during the past two decades. Belgium featured in a wave of bombings in France by Algerian-dominated groups in the 1990s. Belgium-based terrorists have been active in al Qaida: killing an anti-Taliban warlord in Afghanistan two days before the Sept. 11 attacks, plotting to bomb the U.S. embassy in Paris, and sending jihadis to Pakistan, Africa and U.S.-occupied Iraq in the 2000s.


In a practice seen again in the Paris plot, operatives in the Franco-Belgian networks move back and forth across the border with speed and agility, outpacing law enforcement.


"Things are easier for terrorists in Belgium than they are in France," said Commandant Mohamed Douhane of the French national police. "They use Belgium as an outpost."


Mounting Threats, Multiple Faces

Friday's tragedy in Paris was an attack foretold. During interviews earlier this year, French and Belgian terror chiefs warned that a swarm of threats had reached overwhelming levels. They identified Abaaoud as one of several senior Francophone militants relentlessly plotting attacks on Europe from Syria.


"The threat is so high," a French counterterror chief said during an interview in the spring. "There will be new attacks. There is a permanent fatwa from the Islamic State: Attack the West."

As disturbing intelligence reports piled up in recent months, French and U.S. counterterror agencies teamed up to target suspected European plotters. Complicating matters, the threat had multiple faces. Al Qaida in Yemen had overseen the attack on the offices of Charlie Hebdo magazine in January. Although the Islamic State has many more recruits than al Qaida's affiliate in Syria, the latter group includes veterans who have been hatching plots against Western targets since the early 2000s, when they operated from refuges in Afghanistan and Pakistan.


"They are a direct threat and, while smaller than the Islamic State, have bigger plans," the French counterterror chief said. "They want to do more spectacular attacks, [a] more choreographed style of attacks as opposed to shootings."


U.S. drone strikes this summer killed two top names on the al Qaida list who kept French spymasters awake at night: convert David Drugeon, an expert bomb-maker, and Said Arif, who had been linked to plots against France dating to 2000.


"There has been some progress made in getting guys with strong connections and who were among the most operationally capable," a U.S. counterterror official said. "But clearly the bench is pretty deep."


Air strikes also targeted Abaaoud and two Frenchmen thought to be actively involved in Islamic State plotting against France, according to U.S. and European counterterror officials. In October, a French bombing raid on the Syrian city of Raqqah missed Salim Benghalem, a 31-year-old Parisian ex-convict known for beheadings and sadistic treatment of hostages. Another Islamic State Frenchman who dodged an air strike was Boubaker el-Hakim, who is suspected of assassinating two political leaders in Tunisia in 2013. Both jihadis have ties to the Charlie Hebdo attackers.


About 2,000 French militants have gone to Syria, the single largest contingent of fighters from Europe. French-speaking Tunisians and Moroccan militants in Syria are thought to number close to 10,000. But the more than 500 Belgians are the largest proportionate group of Europeans. Most Francophone jihadis join the ranks of the Islamic State in Syria, where they live and fight together. They see France as their top target.


For ISIS, Shifting Strategies

The Islamic State's war on the West differs from the hands-on plotters of al Qaida, whose foreign operations unit has traditionally hatched plots in Pakistani and Yemeni hideouts and directed attackers to their targets. Those plots often involved bombs and specific, highly symbolic targets. Instead, the primary focus of the Islamic State, whose leaders are mostly Iraqi and Syrian, has been conquest of turf and the consolidation of their self-declared caliphate.


The Islamic State has used a social media barrage to inspire jihadis abroad to carry out strikes without training or direct contact. The group has also given its trusted foreign fighters considerable autonomy to develop attacks in the West, delegating details such as target selection to militants who best know their homelands, according to European and U.S. intelligence officials.


"The Islamic State's general directive has been to do attacks," the French counterterror chief said, "and the Europeans propose projects."


This year, however, that dynamic seems to have evolved in response to an offensive by the coalition fighting against the Islamic State, according to U.S. and European counterterror officials. They said the Islamic State has developed a kind of external operations unit that may be behind a flurry of large-scale attacks in Paris, Egypt and Turkey, officials said.


"Months ago they created a department to coordinate the jihad overseas based on the foreign fighter elements," a senior Spanish intelligence official said. "They weren't as interested in that before. They were interested in the territory."


2018They Are Ruined People'

Belgium 2014 small, prosperous, tolerant 2014 has historically been a hub for espionage, arms trafficking, organized crime and extremist activity. The country has a generous welfare state and lacks the huge public housing projects that breed crime, alienation and extremism in France. Nonetheless, the integration of Muslims in Belgium remains problematic. Successive jihads in Afghanistan, Iraq and Syria have radicalized scores of young, disaffected, working-class Muslims. Most are of North African descent and have criminal pasts; the groups they join grew out of longtime networks active in Europe and the Muslim world.


Belgium has skilled counterterror officers who know the extremist underworld, including a number of investigators of Muslim descent. Despite the intensity of the terror threat, the bureaucracy puts constraints on them. The government has scrambled to beef up counterterror forces in recent years, with one unit tripling in size. It is hard to keep suspects in jail without overwhelming evidence, and sentences for terrorism are short 2014 as in the rest of Europe.

In an interview, a senior Belgian law enforcement official said the swagger and savagery of the Islamic State has a disturbing appeal among aimless young criminals in Molenbeek and other neighborhoods.


"They go to Iraq and Syria because there they will be somebody," he said. "Here they are nobody. They are told that if they join the Islamic State they will get to drive a nice car, get women, they won't have to pay in the shops down there. They will be badass warriors."


The Belgian official described a police search of the home of three brothers who all joined the Islamic State and have been implicated in decapitations and other violence in Syria. Their father had a well-paid job with a U.S. automotive company. Each brother had his own room stocked with computers, video games, clothes and other consumer goods, the law enforcement official said.


"They don't work; they live with their family into their 20s," he said. "They manipulate the welfare system for money; they don't study. They go to Syria, and they come back with PTSD. They come back after they saw killing and raping. What are you supposed to do to cure them? They are ruined people. Game over."


Rise of a Paris Plotter

Abaaoud's trajectory is emblematic. He is of Moroccan descent, a wiry man with an engaging grin. Like many youths in Molenbeek, he got involved in low-level gangsterism and was arrested for a hold-up along with Salah Abdeslam of Molenbeek, who is now a fugitive suspected of renting cars and safe houses for the three Paris attack teams. Abaaoud also had ties to Abdeslam's brother, who would die in one of the Paris suicide bombings.


Abaaoud joined the Islamic State and went to Syria, where he became notorious for a video in which he hauled a pile of corpses with a tractor and joked about it. In late 2014, intelligence agencies picked up communications indicating he wanted to carry out an attack back in Belgium. U.S., Belgian, French and German intelligence tracked the plotters for three or four months, officials say.


"The Belgians proposed an action to Daesh [Islamic State], and they said yes," the senior French counterterror official said. Islamic State bosses provided $5,000 to help finance the operation, Belgian investigators said.


Abaaoud dispatched Sofiane Amghar, 26, and Khalid Ben Larbi, 23, who had fought in a special squad of fighters in Syria, according to Belgian investigators. Amghar, a Molenbeek recruit, posted a fake obituary about himself online to cover his tracks as he made his way back. Ben Larbi returned via the United Kingdom. They set themselves up in a safe house in Verviers.

Their plot involved using stolen police uniforms to storm a police station in the Brussels area. Three plotters stockpiled weapons in the safe house, monitored by police. The SWAT team went into action because an attack seemed imminent, officials said.


"We heard them speaking about projects and manipulating weapons, it was obvious they were about to do something," a Belgian law enforcement official said. "One of them always stayed awake, standing guard. The stun grenades went off at the front room window, but they were lucky because they were in back and weren't stunned. The firefight lasted 10 minutes."


Abaaoud, however, had been directing his fighters by phone from Greece. He melted away. And if the allegations are true, he kept launching human missiles at France until his dreams of devastation came true on a Friday night in Paris.


For more reporting like this, read Sebastian Rotella's investigation into the European Union's revolving-door prisons.


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