"Food Crisis" Warning in India

Food demand risks a shortage in India, warns agricultural scientist M.S.Swaminathan...

WORLD FAMOUS agriculture scientist Mankombu Sambasivan Swaminathan has said India will face a food crisis if government doesn't help farmers and the agricultural sector, reports Commodity Online from Mumbai.

Speaking at the 97th Indian Science Congress, Swaminathan – one of the architects of India's green revolution said – "The future belongs to nations with grains and not guns. The current food inflation is frightening.

"If pulses, potatoes and onions are beyond the purchasing capacity of the majority, malnourishment will be a painful result," he added.

M.S.Swaminathan urged the Indian government to implement recommendations made under his chairmanship of the National Commission on Farmers and tabled in parliament in November 2007.

Commenting on India's current double-digit food inflation amid shortages and supply constraints, Swaminathan said India should introduce legislation in the Budget session to amend laws governing the agriculture sector.

With prices rising and state-aid likely to hit the sector, investors and investment funds also see big potential in agricultural commodities, especially in India and China. "We see shortages in lot of the commodities going forward – particularly at the rate China and India are consuming," says Mark Mobius, executive chairman of Templeton Asset Management.

"We have been buying some companies in Ukraine for example that are very big in agriculture."

Mobius says energy and mining stocks are going to be the best performers in 2010, with Templeton banking on commodity stocks in the New Year after they gave the best performance in 2009.

Templeton made big returns last year from investing in Indian iron-ore exporter Sesa Goa, its top holding in 2009 with a five-fold rise. Those gains came despite a probe into offences allegedly committed prior to 2007 when London-listed Vedanta Resources took a majority stake.

Sesa Goa accounted for 6.2% of the Asian Growth Fund's portfolio of Templeton in 2009. Templeton's other big bet was on Thailand, which accounts for 22.9% of the fund's portfolio despite concerns about the political situation there. The fund's top Thai holdings include oil firm PTT, Siam Commercial Bank and Siam Cement.

The Thai stock market rose 63% last year, bettering the performance of bigger Asian markets such as Hong Kong and Korea. The Templeton fund also has a 4.8% weighting in Pakistan, higher than its holding of companies listed in Hong Kong, Taiwan or Singapore.

According to Mark Mobius, Templeton will now focus on oil companies and mining companies producing precious metals such as Gold and platinum as well as base metals such as nickel.

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