A new field: Move to free farm exports

By: | Published: August 22, 2018 5:38 AM

The commerce ministry has moved a Cabinet note on farm export policy, seeking to keep the outbound shipment of processed and organic items free of any restriction.

narendra modi, pm narendra modi, agriculture sector, economyDelivering his Independence Day speech, Prime Minister Narendra Modi had announced that the new agriculture export policy will be unveiled soon to boost farm income.

The commerce ministry has moved a Cabinet note on farm export policy, seeking to keep the outbound shipment of processed and organic items free of any restriction, official sources told FE.

Importantly, once the Cabinet approval for this proposal is in place, the commerce ministry will initiate consultations with the ministries of agriculture, food and consumer affairs to gather consensus on a policy to limit export curbs to only a very few farm items that are crucial to the country’s food security, and not all the dozen-odd items that are considered essential commodities. This means the scope for periodic curbs on exports of politically sensitive onion or pulses, cotton and sugar that the government has resorted to in the past will be ended if there is a consensus. These curbs include the imposition of minimum export price, export duty and an outright ban.

“The commerce ministry’s view is that curbs on farm exports may be imposed only in case of a very few essential items like rice and wheat and that, too, only in exceptional circumstances and as a last resort. The idea behind the farm export policy is to help double farmers’ income by ensuring a predictable trade policy environment so that we establish ourselves as reliable suppliers in the export markets,” said one of the sources.

Delivering his Independence Day speech, Prime Minister Narendra Modi had announced that the new agriculture export policy will be unveiled soon to boost farm income.

In March, the commerce ministry had released a draft farm export policy, seeking a stable trade policy regime with limited government interference for key farm items — including the politically sensitive onion and pulses — as it suggested measures to double the country’s farm exports to over $60 billion by 2022.

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. “…changes in export regime on ground of domestic price fluctuations, religious and social belief can have long-term repercussions. This is particularly important for commodities such as onions, rice, wheat, oilseeds, pulses and sugar,” it said.

India had imposed a ban on exports of wheat in 2007 and on non-basmati rice in 2008. Although the ban on rice and wheat exports was later lifted in 2011, it came too late for wheat traders to exploit the advantage of a massive drought in key supplier Russia and others in the Black Sea region. The government has resorted to impose curbs on onion exports almost every year and periodically slapped restriction on cotton and sugar exports as well. An export ban on key pulses and oilseeds was in effect for a long time. However, in recent years, the fluctuations in farm trade policy have reduced considerably.

Elaborating on the stable trade policy regime, the policy said given the domestic price and production volatility of certain agricultural commodities, there has been a tendency to utilise the policy as an instrument to attain short-term goals of taming inflation, providing price support to farmers and protecting the domestic industry. Such decisions may serve the immediate purpose of maintaining domestic price equilibrium, but they end up distorting India’s image in international trade as a long-term and reliable supplier, it said.

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