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India: Agriculture exports unlikely to get a big push from new policy

At a time when farmers across India are anguished due to a collapse in wholesale prices, the Cabinet on Thursday approved a first of its kind agriculture export policy. The government’s stated goal is to increase exports from $37 billion currently to $60 billion by 2022, which it said will play a pivotal role in doubling of farmers’ incomes.

The policy will seek to integrate the Indian farmer with the global value chain by diversifying the export basket and promoting high-value exports with a focus on perishables, the government said in a statement. It added that progress will be monitored regularly by a committee with the commerce ministry as the nodal department alongside other ministries such as agriculture.

“Right now rice, marine and meat products comprise 52% of our agriculture exports, so there is a need to diversify,” commerce minister Suresh Prabhu said. He added that under the new policy all export restrictions on organic and processed food will be removed, but trade restrictions on sensitive commodities such as onions will be reviewed regularly.

The minister also said that the government will set up commodity and state-specific export clusters for crops like banana, mango, grapes, onions and spices, among others. The Centre will also develop the required infrastructure, and create ‘brand India’ to promote farm exports. Existing export promotion schemes will be merged to create a corpus of Rs 1,400 crore to boost exports, Prabhu said.

Will this new export policy help farmers? “The best part of the policy is the focus on creating export clusters for specific crops… creating the value chain for, say, lychee in Muzaffarnagar (Bihar) or fisheries in the coastal state of Odisha will definitely help farmers,” said Shweta Saini, senior consultant at the Indian Council for Research on International Economic Relations, Delhi.

However, Saini adds that keeping so-called essential commodities like onions and potatoes under review means that farmers, exporters and importers will continue to operate under the current unpredictable regime. “If a domestic exporter is unsure that the government will allow unhindered export of onions or potatoes, it will not develop the required infrastructure for storage and transport… an unpredictable trade policy also hinders the image of India as a reliable global supplier,” Saini said.

Saini added that the government’s goal to double the value of exports by 2022 is unrealistic due to low global food prices. “India is now exporting its surplus sugar and milk but only with government subsidy… we are not price competitive in the international market otherwise.”

The Indian government has repeatedly used agriculture trade policy to keep domestic food inflation in check. For instance, it has curbed exports of onions and potatoes when retail prices rise within India, and allowed imports of cheap edible oil, which hurt domestic growers but benefit consumers. It remains to be seen if the farmer will have an upper hand over the consumer in the new trade policy regime.
Source: Live Mint

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