Agri Export Policy – Comprehensive Notes

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One of the most important policies announced this year. Cannot be missed at any cost.

Context

  • The Union Cabinet has approved the Agriculture Export Policy, 2018.
  • The Cabinet has also approved the proposal for the establishment of Monitoring Framework at Centre with Commerce as the nodal Department with representation from various line Ministries/Departments and Agencies and representatives of concerned State Governments, to oversee the implementation of Agriculture Export Policy.
  • The Government has come out with a policy to double farmers’ income by 2022.

Overview

  • Today, India ranks second worldwide in farm output. The economic contribution of agriculture to India’s GDP is steadily declining with the country’s broad-based economic growth, yet, having nearly 50% of the population dependent on it for livelihood.
  • Agriculture, along with fisheries and forestry, is one of the largest contributors to the Gross Domestic Product (GDP). As per the estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry, and fishery) is expected to be 17.3 percent of the Gross Value Added (GVA) during 2016-17 at 2011-12 prices.
  • The Department of Agriculture and Cooperation under the Ministry of Agriculture is responsible for the development of the agriculture sector in India. It manages several other bodies, such as the National Dairy Development Board (NDDB), to develop other allied agricultural sectors.
  • Horticultural crops occupy 10% of Gross cropped area and producing 160.75 m tones. Total production of fruits is at 49.36 m tones and vegetables are at 93 m tones.
  • Animal husbandry output constitutes about 32% of the country’s agricultural output. The contribution of this sector to the total GDP during 2006-07 was 5.26%.
  • India is the highest producer of milk and the second highest producer of fruits and vegetables.
  • India accounts for 57% of the world’s buffalo population and 14% of cattle population.
  • India holds the 6th place with 7% world’s market share in medicinal and aromatic plants.

Objectives

Objectives of the Agriculture Export Policy are as under:

  • To double agricultural exports from the present US $ 30+ Billion to US $ 60+ Billion by 2022 and reach US $ 100 Billion in the next few years thereafter, with a stable trade policy regime.
  • To diversify our export basket, destinations and boost high value and value-added agricultural exports including a focus on perishables.
  • To promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri products exports.
  • To provide an institutional mechanism for pursuing market access, tackling barriers and deal with sanitary and phytosanitary issues.
  • To strive to double India’s share in world agri exports by integrating with global value chain at the earliest.
  • Enable farmers to get the benefit of export opportunities in the overseas market.

Need

With India moving out of the income bracket of per capita gross national income of less than $1000, it is not allowed by the WTO to give export sops.

  • The government has committed to double the farmers’ income by 2022 and promoting agricultural exports will give an impetus to achieving the goal.
  • Promoting agricultural export requires integrating Indian farmers and agricultural products with global value chains. This requires a policy direction.
  • Increasing agricultural exports would require greater thrust on value-added products, promotion, and branding of the produce of India.
  • Improving India’s reliability as a global supplier of farm products is also one of the deliverables of the policy. The Agricultural export policy can give a direction to this.
  • There is a need for synergy between Central and State governments, as Agriculture and allied activities are under the state list.
  • India’s export of value-added products is very low and there is the huge scope of improvement”. The share of India’s high-value and value-added agriculture produce in its agriculture export basket is less than 15 percent compared to 25 percent in the US and 49 percent in China.

What are the concerns addressed?

Trade –

  • India is today a leading global producer of foodgrain, dairy and several horticultural crops.
  • But it holds a minuscule 2.2% share in global agri-exports.
  • It is stuck at the lowest rung of the value chain, and India’s farm exports are highly reliant on a handful of commodities.
  • These include marine products, meat, rice and plantation crops.

Shortfalls –

  • Exports even in these items are frequently interrupted by self-imposed and arbitrary trade curbs.
  • State-level curbs on movement of produce add to already high costs from fragmented farms and poor logistics.
  • High rejection rates on consignments due to poor quality, antibiotic and pesticide residues and other phytosanitary grounds are major concerns.

Farmers –

  • Bumper crops continued to trigger a meltdown in food prices.
  • Policy interventions such as e-Nam and the repeal of the APMC Acts by States have made scant progress.

Policy –

  • Domestic price and production volatility of certain agricultural commodities lead to using the existing policy for short-term goals.
  • These include taming inflation, providing price support to farmers and protecting the domestic industry.
  • These decisions may serve the immediate purpose of maintaining domestic price equilibrium.
  • However, they end up distorting India’s image in international trade as a long-term and reliable supplier.
  • It is thus imperative to frame a stable and predictable policy.

Elements of Agriculture Export Policy

The Agriculture Export Policy encompasses Strategic and Operational elements. These are:

Strategic Operational
  • Policy measures
  • Infrastructure and logistics support
  • Holistic approach to boost exports
  • Greater involvement of State Governments in agri exports
  • Focus on Clusters
  • Promoting value-added exports
  • Marketing and promotion of “Brand India
  • Attract private investments into production and processing
  • Establishment of a strong quality regimen
  • Research & Development
  • Miscellaneous

What are the key recommendations?

Infrastructure – The policy stresses on improving the infrastructure, and storage and exit point logistics.

  • It suggested a comprehensive need-gap analysis of existing export-oriented infrastructure across the value chain for this.

R&D – The policy emphasized promoting R&D activities for new product development for the upcoming markets.

  • Increased focus on R&D, new varieties and state of the art lab for effective accreditation and monitoring are called for.
  • This will be part of the efforts towards establishing a strong quality regime.
  • Besides, the policy stressed the need to ensure greater interaction between the various research organizations and industry bodies.

Exports – The policy aims to boost high value and value-added agricultural exports, focusing on perishables.

  • Improving the institutional mechanism for tackling market access barriers is suggested as a measure.
  • Dealing with sanitary and phytosanitary issues are also the priorities.
  • Processed agricultural products and all kinds of organic products will not be brought under any kind of export restriction.

APMC – Monopoly of the Agricultural Produce Market Committee (APMC) is a long existing concern.

  • It prevents private players from setting up markets and investing in market infrastructure.
  • APMC across states have not been able to achieve farmers’ welfare envisaged in these acts.
  • The policy hinted at continuing the efforts with state governments to remove perishables from their APMC Acts.
  • It also suggested better coordination between central ministries that are now working at cross-purposes.

Mandi – State governments would also be urged to standardize/ rationalize mandi taxes for largely exported agricultural products.

  • Simplification or uniformity of mandi/agricultural fee across states will create a transparent supply chain.
  • This will empower the farmers, providing wider access to markets and enabling free trade across the country.

Products – It is proposed that the agricultural export policy must focus on the promotion of value-added, indigenous and tribal products.

  • Development of organic export zones/organic Food park with an integrated approach is suggested to help promote shipments.

Agency – Global bodies like US FDA and the European Food Safety Authority are empowered to frame, regulate and implement policies related to both agricultural production and trade.

  • The draft policy considered working towards bringing in similar agencies in India.

Besides the policy made a case for promoting contract farming as it would help in attracting investments.

  • Some of the other notable recommendations include:
  1. promotion of region-specific clusters for lucrative crops
  2. coordinated branding efforts
  3. a shared database for exporters on market intelligence and export rejects
  4. quality assurance at the farm
  5. wider adoption of land leases

Other Initiatives needed

  • ‘More from less’ should be the aim of agriculture because rapid industrialization and climate change have raised the scarcity value of land and water.
  • Indian agriculture is the victim of the Green Revolution’s success. It has become cereal-centric, regionally-biased and resource-intensive. A rainbow revolution must follow the green and white revolutions.
  • Genetically modified crop technologies have ‘significant net benefits.’ Evolved regulation is needed to allay public fears so they can be deployed.
  • Pulses and oilseeds must be supported with procurement and support prices that reflect their social contribution – less water use and enrichment of soil with atmospheric nitrogen.
  • Advancements in Seed Technology – New varieties need to be tested and seeds of these varieties should be made available to the farmers for cultivation in the regions in which it is suitable.
  • Regulatory measures for quality seed production have to be tightened so as to discourage the sale of spurious seeds to the farmers.
  • Subsidies on power must end to curb water wastage. Cheap power makes India a net exporter of water through commodities like cotton, sugar and soybean, while China is a net importer of water through soybean, cotton, meat and grains.
  • Agricultural research has the biggest impact on yield and profitability but it is weak in states where agriculture is relatively more important (eastern and northern states, except Punjab and Haryana).
  • The private sector must be enticed into pulses research (which it has shunned) by offering a ‘disproportionately large enough award’ to the winner for innovating in desirable traits, but the intellectual property rights must vest with the government. There should be equal treatment of the private, public and citizen sectors in this respect.

Conclusion

The recent initiatives taken by the Government are definitely steps taken in the right direction. The agreements signed between India and Israel further underscore the fact how water management and judicious usage of limited resources is vital for a thriving agricultural sector.

  • Recent developments further underscore the fact that India urgently needs to diversify its cropping pattern- this will help conserve moisture and thus help in the judicious use of resources. Efforts described above can further the objective of the Government of doubling farmer’s income by the year 2022.
  • Such an effort would involve the collective participation of various stakeholders, including the wider farming community, pressure groups, private sector, banking sector, and both the central and state governments.
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