Why is India still importing wheat and rice from other countries?

Recent report says nearly 45000 MT wheat was imported last year?  source: India Wheat Imports by Year

Alfonso Llanes, Master Degree in International Development

Answered just now

Reuters reports that unfavorable weather and dwindling stocks may cause India to import a record volume of wheat over the 2016–17 year.

In two consecutive lower than average monsoon-years , India has been facing drought conditions for this year’s wheat crop and heat waves have added extra stress to the crop. Indian wheat farming depends on sufficient rain water for a successful harvest. Also, the total amount held by the Food Corporation of India (FCI) has fallen each year since 2012 that this government-owned corporation buys and stores much of the country’s wheat crop.

India has been self-sufficient in the past 30 years on average and it has been usually able to produce and stock enough grain to feed its population. But as weather adversities become a predominant theme in a rapid pace to climate change Indian wheat deficit could help flare up scarcity in the world wheat market for 2016/17.

In the past, India reached wheat production volumes near 95 million tons per season, placing it in second place behind China in wheat production. Last year, Indian wheat production suffered a deficit of 7 million tons mainly due to warm and dry weather throughout the growing season. In the balance of the 2015 crop-season 89 million tons was no match for the demand of 94 million tons leaving a gap of 5 million tons that was imported from Australia.

What is the main difference between partnership and cooperation in international relations? How it could be explained in context of bilateral relations?

Alfonso Llanes, studied at Florida International University

Answered Thu

UNITED NATIONS SECURITY COUNCIL MEETINGS

In a statement to the Security Council, outgoing Secretary General, Ban Ki-moon, said that Chapter VIII is as relevant today as ever, noting that many regional and sub regional organizations had long histories of engagement in conflict prevention and mediation, peacekeeping and peace building; others were becoming increasingly active in those areas. In Latin America and the Caribbean, there has been a long history of partnership, including joint missions with the Organization of American States (OAS). Today, collaboration exists in a range of areas from mediation and dialogue to combating illicit trafficking. The emergence of the Community of Latin American and Caribbean States (CELAC) and the Union of South American Nations (UNASUR), have contributed to both peace and security and sustainable development on the continent.

In a paraphrase the functions of the Security Council is to maintain global peace and security, develop effective partnerships to consider more ways to promote closer cooperation between the United Nations and regional and sub regional organizations Also, early warning, conflict prevention, peacemaking, peacekeeping and peace building and sometimes nation building.

Bilateral-ism is the practice of conducting political, economic, or cultural relations between two autonomous states. In contrast, unilateralism or multilateral-ism is an activity by a single state or cooperatively by multiple states, respectively. States commonly recognize one another as independent states and agree to develop diplomatic relations and normally exchange ambassadors or state affairs agents.

How is trade between the nations of the European Union tracked and recorded?

For our business, we watch carefully the market trends and trade patterns of our commodity between nations, and we can clearly see the imports/exports between EU nations, but what is the mechanism that tracks these shipments? How accurate is the customs data?

Alfonso Llanes, Master Degree in International Development

Answered 20h ago

The following data banks are published by the European Union. The accuracy of the data is dependent on the reporting mechanism established between traders and Customs in the EU and other countries.

Data sources and availability http://ec.europa.eu/eurostat/

Trade in goods of EU Member with world. http://ec.europa.eu/eurostat/sta...

Trade in goods between EU Member States. http://ec.europa.eu/eurostat/sta...

Trade with European Neighborhoods Policy - East - statistics on trade flows with the EU. http://ec.europa.eu/eurostat/sta...

Trade in services. http://ec.europa.eu/eurostat/sta...

These statistics are the official source of information about imports, exports and the trade balance in the EU, its Member States and the euro area.

EU trade in goods with the rest of the world

EU-28 international trade in goods with the rest of the world (the sum of extra-EU exports and imports) was valued at EUR 3 453 billion in 2016.

Trade in goods between EU Member States

Trade in goods between EU Member States (intra-EU trade) was valued — in terms of dispatches — at EUR 3 110 billion in 2016.

Trade in services.

International trade in services in the European Union (EU), the EU Member States and some countries in European Free Trade Association (EFTA). It provides information about the EU’s main trading partners for services and about the different categories of services traded.

European neighborhood Policy - East - statistics on trade flows with the EU

This publication presents information relating to recent developments for international trade in goods between the European Union (EU) and the six countries that together form the European neighborhood Policy-East (ENP-E) region, namely, Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

What are the factors affecting equilibrium?

In economic theory consumers and producers react differently to price changes. Higher prices tend to reduce demand while boosting supply, and lower prices increase demand while depressing supply.

In a free market there will be a single price which brings demand and supply into balance, known as equilibrium price. Consumers and producers engage in commerce because one party requires what the other party has to offer.

Price setting

The constant interaction between buyers and sellers allows a given price to emerge over time. It is often problematic to appreciate this process because the retail prices of most manufactured goods are set by the seller. The buyer either accepts the price or does not. An individual shopper has no influence in price but a group of shoppers do and but the seller will set the maximum price buyers are willing to pay for the merchandise offered. However as a group, buyers have influence over market price. Eventually a price is found which enables an exchange to take place. Price setting by a seller is found initially by gathering as much market information as possible in an attempt to set a price which maximizes a profitable number of sales when a new item is introduced to the market. For markets to work, both a well-informed buyer and seller acting must act on effective flow of information to consummate a transaction.

Market clearing

Market clearing price is used to describe equilibrium price because at this price level the exact quantity that producers take to market will be bought by consumers, and all the merchandise is sold and cleared. This is efficient because there is neither an excess of supply with lost output, nor a scarcity – the market clears efficiently. This is a central feature of the price mechanism, and one of its significant benefits of market economics.

How is this equilibrium found theoretically?

At a price higher than equilibrium, demand will be less than the quantity offered. If supply is more than the units needed by the market there will be an excess of supply until the market clears it with pricing strategy.

In a Graphic, demand contracts inwards along the curve and supply extend outwards along the curve. Both of these changes are called price shifting along the demand or supply curve in response to a price change.

How hard is it to start an import/export business?

Alfonso Llanes, Master Degree in International Development

Answered just now

Commerce whether domestic or international is one of our ancient occupations that still thrive today. Transportation and trade are the two largest sources of income for many countries, corporations and individuals from the artisan to the banker.

One must recall the Phoenicians as being one of the oldest merchants in the Mediterranean which activity was later taken by the Romans and other merchants such as French, Germans, Dutch and so on. A famous name from the past is Venetian merchant and adventurer by the named of Marco Polo who traded from Europe to Asia in 1271 to 1295. The list of merchants is long and extends from land traders to much later sea traders once they learned the art of sailing and became the major source of merchandise exchange across nations and it remains true today. Christopher Columbus, explorer and navigator discovered the New World trying to find a shorter route between Europe and India for the trade of spices.

An argument can be made that— trade continuously offers new opportunities to entry as the world becomes more globalized and transportation services cover and ever growing portion of the planet. Exotic fruits and vegetables as well as manufactures are traded globally every day whether they come from factories or from artisans and artists looking for new markets.

Microfinance is available in many regions of the world offering an array of financial services, including loans, savings and insurance made available to poor entrepreneurs and small business owners who have no collateral and otherwise would not qualify for a standard bank loan.

All the elements for commerce are there, however, the exercise is to find a niche market and a product with a pricing difference that would make up for all expenses and still leave a margin of profit for the entrepreneur.

What is the best method of credit export without bank involvement and exporter security of payment?

Alfonso Llanes, Master Degree in International Development

Written Mar 13

Unless the exchange of merchandise and money takes place in situ, risk is involved, especially if the parties are in different countries without par regulations such as duties, taxes, tariffs and such.

Without a financial institution in the middle of such transaction risk of non-payment becomes greater but there still are independent methods of transaction payments.

Cash-in-Advance

In this case risk is transferred to the importer who pays for merchandise that might be different quality or defective from what was agreed.

Open Account

This can be used when the importer of goods has reputable credit verified by the exporter. There still is risk for an unforeseen bankruptcy.

Documentary Collections

Where the importer signs a negotiable document by a third party factoring agent who assumes the risk of collection for a fee normally based on a percentage of the invoiced amount.

Payment Insurance

This method is commonly used in the futures market where buyer and seller agree to a fixed amount to be paid of future delivered in a given currency and if something changes the third party guarantees that payment takes place. A service fee is mainly assessed on a percentage of the transaction value.

Institutional third party risk taker.

Many countries have a government import/export bank which extends credit to an importer and guarantees payment to the exporter like Eximbank US.

Why does the trade deficit involve the government when trade is between two business concerns?

International trade is an economic condition that takes place when a country is importing and exporting merchandise and is measured from country to country not from business to business.

A deficit is a negative value of goods being imported and a plus the value of goods being exported. Both together provide the accounting method for net trade and it is given in the currency of the country in question. For instance, assume that the United States imports 100 billion US Dollars’ worth of goods, from China and exports 75 billion US Dollars to China. In this example, the trade deficit for the US would be 25 billion US Dollars.

Measuring a country's net trade is a difficult task, which involves measuring different flows of investment accounts. These accounts are the current account and the financial account, which are then totaled to help form the balance of payments figure. The current account is used as a measure of all transactions for import/export of goods and services, interest earned from foreign sources, and any money transfers between countries. The financial account is made up of the total changes in foreign and domestic equity. The net resulting from these are designated as the balance of payments.

The balance of payments (BOP) is the method countries use to monitor all international monetary transactions during specific periods of time. Usually, the BOP is calculated every quarter and every calendar year. It includes all trades conducted by both private and public sectors and is accounted for in the BOP to determine how much money is going in and out of a country. In general accounting terms it means that if a country receives money is counted as a credit. If instead a country pays or transfers money, to another country the transaction is counted as a debit. In theory adding credits (positives) and debits (negatives) should balance to zero. In essence the BOP can tell an observer whether a country has a deficit or a surplus and from which part of the economy the discrepancies are originating..

Balance of Payments Components

The BOP is divided into three main categories: the current account, the capital account, and the financial account. Moreover each division of accounts is further subdivided in different categories for different type of international monetary transaction.

Current Account

The current account is used to measure the inflow and outflow of goods and services into a country. Interest on capital and earnings on investments, from either public or private sources, are all put into the current account.

The current account comprises credits and debits on the trade of merchandise, which also includes raw materials and manufactured goods that are bought, sold or given away (possibly in the form of aid). Receipts arisen from services such as tourism, transportation, engineering, business service fees from consulting firms and royalties from patents and copyrights are all included in the current account.

When every item on the ledgers composed of goods and services is put together it results in a country's balance of trade (BOT). The BOT is typically the biggest bulk of a country's balance of payments as it makes up total imports and exports of all capital transactions in the country’s currency. Other income-generating assets such as dividends from stocks are also recorded in the current account. The last component is unilateral transfers. These transfers are credits that are mostly from worker's remittances, which can be salaries sent back to a home country from a worker abroad and foreign aid that is directly received by public or private institutions.

The Capital Account

The capital account is where all international capital transfers are recorded. This refers to the acquisition or disposal of non-financial assets such as waterfront land to build a port, mines etc., and other non-produced assets, which are needed for future production but which rights have not been yet exercised.

Capital account is broken down into monetary flows branching from debt forgiveness, the transfers of ownership on fixed assets such as oil rigs to extract oil, transfer of funds received for the sale or acquisition of fixed assets, gift and inheritance taxes, death levies and, finally, uninsured damage to fixed assets.

The Financial Account

In the financial account, international monetary flows related to investment in business, real estate, bonds and stocks and bank accounts are all documented. This includes government-owned assets such as foreign reserves, gold, special drawing rights (SDRs) from the International Monetary Fund (IMF), private assets held in foreign banks and direct foreign investment.

Balance of Accounts

We should note that, with fluctuating exchange rates, the change in the value of money can add to BOP discrepancies. When a deficit occurs in the current account, which is a balance of trade deficit, the difference can be covered or funded by the capital account. The balance of payments is divided into the current account, capital account, and financial account. Again, theoretically, the BOP should be zero.