Farm exports: Cabinet secretary-led panel may review curbs

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Published: June 13, 2019 7:05:45 AM

In December 2018, the Cabinet Committee on Economic Affairs (CCEA) had approved an agriculture export policy that proposed to keep the outbound shipment of processed and organic items free of any restriction.

In March 2018, the commerce ministry had released the first draft farm export policy, seeking a stable trade policy regime with limited government interference for key farm items.In March 2018, the commerce ministry had released the first draft farm export policy, seeking a stable trade policy regime with limited government interference for key farm items.

The government could soon mandate a high-level panel under the Cabinet secretary to review curbs on exports of major farm items — including onion, rice, wheat, cotton and sugar — that witnessed periodic restrictions in the past, in a bid to have a predictable trade regime and add to farmers’ income.

“The mandate of a committee under the cabinet secretary — which used to review prices, demand and supply of various commodities — is likely to be soon expanded to enable it to review export restrictions on sensitive items,” a senior government official told FE. Apart from the Cabinet secretary, the panel will likely comprise secretaries of agriculture, food, consumer affairs, commerce and revenue.

In December 2018, the Cabinet Committee on Economic Affairs (CCEA) had approved an agriculture export policy that proposed to keep the outbound shipment of processed and organic items free of any restriction. However, it had stopped short of advocating a removal of restrictions for all the time on exports of major farm items.

In March, the government introduced a Rs 300-crore scheme to offer financial assistance for transport and marketing of dozens of agricultural commodities for exports to certain countries. But exports of key items, such as rice, wheat, onion, meat and raw sugar, remained outside the scheme’s ambit.

Analysts have argued that without keeping key items free of export curbs for all times and undertaking structural reforms, especially in farm marketing, it would be difficult to raise agriculture exports to $60 billion by 2022 (from over $38 billion in FY19), as targeted by the government.

Periodic curbs on items ranging from rice to cotton, especially during the UPA years, had stoked uncertainties, shifted buyers to competitors and dented India’s image as a reliable supplier. However, in recent years under the NDA, such policy restrictions on exports have been curtailed. Export curbs include the imposition of minimum export price, quantitative limit on shipment, export duty and an outright ban.

Analysts have suggested that a predictable export regime is all the more important when the government has announced a 50% premium to farmers over their cost of production, which has threatened to inflate domestic prices of several commodities and hurt export competitiveness.

The government had imposed a ban on exports of wheat in 2007 and on non-basmati rice in 2008 to keep domestic supplies steady, before lifting the restriction in 2011. It has resorted to curbs on onion exports almost every year and periodically slapped restriction on cotton and sugar exports as well. A ban on exports of key pulses and oil-seeds was in effect for a long time.

In March 2018, the commerce ministry had released the first draft farm export policy, seeking a stable trade policy regime with limited government interference for key farm items. Reforms in the APMC Act, streamlining of mandi fee and liberalisation of land leasing norms are among the raft of measures suggested in the draft policy.

Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices and current professor for agriculture at ICRIER, had said: “It (achieving the target) is possible if they build export value chains, keep them free from any export restrictions, encourage investment in infrastructure for export value chains, ensure food safety standards. The potential is much more.”

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