Disappointing agriculture policy: Leaves room for future bans on exports of rice, wheat etc

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New Delhi | March 21, 2018 4:07 AM

Leaves room for future bans on exports of rice, wheat etc

exports of rice, wheat, agriculture, agriculture sectorOver the three years, nearly 15 million tonnes of non-Basmati rice could have been exported because stocks were overflowing. (Reuters)

The biggest bottleneck where India’s agri-exports are concerned has been the arbitrary policy framework; governments have been prone to clamping down on exports of one product or another depending on what is politically expedient at the time. So, it is unfortunate that the blueprint for doubling India’s agri-exports promises free exports only for processed agri-products and all organic products. Exports of other products would be restricted. The draft policy paper notes that those products considered to be “essential from a food security perspective” will be subject to restrictions. One assumes, therefore, commodities such as rice, wheat, sugar, pulses and vegetables would all be considered essential. If India wants to boost exports, the policy needs to be a more liberal one. One of the case studies highlighted reveals how the country could have saved some $7.5 billion between 2008 and 2011 had the exports of non-Basmati rice not been banned. Over the three years, nearly 15 million tonnes of non-Basmati rice could have been exported because stocks were overflowing; instead, the farmers earned lower realisations for their crop because the government wanted to control consumer inflation. A policy that bans exports of too many products can’t help; in that case, the bulk of India’s exports will continue to comprise meat and marine foods. What is unfortunate is that India is importing products that are already grown here—among them, wheat, apples, tea, raw cashew and almonds—and whose production can be increased with some minimal investment.

The problem, as agri economists have pointed out, is the absence of any structural reforms in the agri-sector. In fact, the Centre has been unable to convince even some BJP-ruled states to denotify fruit and vegetables from the APMC Act. Moreover, very few states have been able to set up smaller mandis to which farmers can bring their produce, leaving the monopoly of larger mandis intact. The e-NAM has taken off, but slowly. There may be big potential to increase exports in areas such as marine products, but before entrepreneurs commit to big investments, they need to be assured of some basic infrastructure facilities. At a policy level, the government must have a hands-off approach like it does for the IT sector. An investment of just `5,250 crore in aquaculture, for instance, can yield additional exports of `36,400 crore per annum. Many of the focus areas and proposed measures appear simple enough. Obviously, the inefficiencies are many, else, India’s total agri-exports would have been far higher than $30 billion annually, which is around 2.2% of global agri-markets. At the very least, this should double to $30 billion by 2020.

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