Agri sector remains a disappointed lot after stimulus pkg

Written by Commodities Bureau | New Delhi | Updated: Dec 9 2008, 05:55am hrs
Much was expected from the government's fiscal stimulus package for the agriculture sector, as farm exports have been badly hit because of the slump in global commodity prices and poor demand.

But, the measures have left most agriculture exporters disappointed as barring textiles no big announcement has been made to boost farm exports. Farm exports constitute just around 12.15% of the countrys total export basket.

Though exporters are hopeful that all is not lost for them given the governments assurance that more steps would be taken if needed, but sources said concerns over rising food inflation and estimated shortfall in production of some commodities could have stopped the government from going whole-hog to boost agriculture exports for now.

Sources said the proposed move to allow corn and soyameal exporters, import goods duty free up to 10% of the value of their export, under the Vishesh Krish & Gram Udyog Yojana (VKGUY), could have been stalled for now because of uncertainty over kharif maize production and concern that allowing more exports could push up local maize prices.

At present the rate of import duty credit is 5%. Maize exports have been badly hit this year first because of ban on exports for three months that ended in September and also because of fall in international prices. As per the governments first advanced crop estimate for 2008-09, maize production is projected at 13.04 million tonnes, down from last years 15.50 million tonnes because of floods in Bihar.

Similarly in the case of soymeal, which was tipped to get increased rate of duty credit. Traders said the government might have been concerned after the recent hike in import duty on crude soyoil, steps to boost oilmeal exports could push up prices of edible oils in the local markets. Oilmeal exports have been facing stiff competition from South America because of 40% drop in global soymeal prices. The governments much awaited steps to boost cotton exports also did not come despite exports falling by a whopping 95% this year.