Explainer: The prickly issues for farmers in the India-US trade deal

India agreeing to import a host of agricultural products from the United States under the interim trade deal has left a section of the farming community worried that more concessions could follow. That non-tariff barriers could perhaps be trimmed at a later stage is adding to the concerns, explains Sandip Das

l  What farmers are afraid of

WHILE SEVERAL FARMERS’ groups have called for a protest on February 12 against the India-US trade deal, with not much clarity on the details of the deal the fear is this may just be the beginning of more US agricultural products being sold in India. The interim deal statement includes a phrase saying “ India also agrees to address long-standing non-tariff barriers to the trade in US food and agricultural products”. The potential threat to non-tariff barriers is thus another cause for concern. 

Again, cheaper imports of soyabean oil and certain other agricultural  products will depress domestic prices and hit farmers’ income, they say. While the government has maintained its stand against imports of genetically modified (GM) variants of soyabean, soyameal and maize, the apprehension is that allowing Distiller’s Dried Grains with Solubles (DDGS) and red sorghum to come in as animal feed, albeit in small quantities, may pave the way for imports of GM crops from the US at a later stage. Bhartiya Kisan Sangh, the farmers’ wing of Rashtriya SwayamSevak Sangh, has said that the government should provide more clarity on GM products from the US, which are used there as animal feed.

l  But poultry and dairy farmers want feed imports

FEED COSTS CONSTITUTE 60-65% of the cost of production for the livestock sector.  Any volatility in feed prices thus leads to rise in cost of production and subsequent rise in prices of the end-products. As Bahadur Ali, MD of IB Group, one of the largest poultry companies in India, said, domestic production of maize and protein sources often falls short of the growing requirements of the poultry, dairy, and fisheries sectors. Feed demand is projected to grow faster than domestic supply, making large scale imports necessary by the early 2030s. A recent United States Department of Agriculture report had also stated that domestic production of maize and soyabean would not be able to keep up with the rising demand for feed. Thus, feed imports, especially of reduced or zero duty imports of red sorghum (jowar), can help bridge the demand-supply gap. 

l  DDGS as a low-cost alternative feed

THE RATIONALE BEHIND allowing imports of limited quantities of DDGS (sourced from GM-maize) is this will supplement domestic feed availability. DDGS, a byproduct of ethanol manufactured from corn and other grains, is a protein-rich material that is a relatively low-cost alternative livestock feed ingredient to de-oiled cakes used in India. India produces around 3 million tonne (MT) of DDGS against total consumption of around 50 MT of animal feed, mostly dominated by maize (20 MT), wheat (6.5 MT) and soyameal (6.2 MT). Maize, wheat, sorghum and other cereals are sources of carbohydrates while soyameal (after extraction of around 18% oils from soyabean seed) provides protein.  But domestic feed supply is increasingly constrained by limited arable land and productivity gaps. India’s maize productivity is only about 3.7 MT/ hectare compared to over 11MT/ hectare in the US (for GM maize). While India’s soyabean yield is about 1 tonne/ hectare, for the US it’s over 3 tonne/hectare. The US, the largest producer and exporter of red sorghum (non-GM variant), has also been pitching for an alternative to GM-maize based DDGS. “By ensuring a timely and cost-effective supply of these essential feed ingredients, the government is directly addressing the challenge of feed inflation. This will not only stabilise production costs for farmers but also ensure that high-quality protein remains affordable,” said IB’s Ali.

l  No imports of GM crops yet

INDIA HAS NOT permitted imports of GM soyabean and maize, the US’s two top agri exports. “No genetically modified items will be imported into India,” Commerce Minister Piyush Goyal has said. New Delhi hasn’t granted approval for the commercial cultivation of any GM crops since the nod to the commercial cultivation of BT cotton in 2002. However, in 2021, India had allowed the import of 1.2 MT of GM soyameal for chicken feed on an exceptional basis due to high domestic feed prices. The Confederation of Indian Industry in its vision document for 2047 for the poultry industry had also suggested allowing GM maize as rise in maize and soyabean prices have hit the poultry industry.

l  Cheaper apples leave a bitter taste

WITH AMERICAN APPLES and dry fruits set to enter India either duty-free or at reduced tariffs, farmers in Himachal Pradesh and Jammu and Kashmir are bracing for pressure on prices of domes-tic produce. “There may be some impact on the domestic prices of high-value apples following the decision to reduce duties on apple imports from the US,” said Kunal Chauhan, an owner of an apple orchard at Kotkhai, Shimla district, Himachal Pradesh. Chauhan said market prices of a box of apples (20 kg each) may decline to `2600 from `3000 now. The high-value apple variety constitutes 15- 20% of the total annual production of around 2.58 MT. Currently, India imports 0.6 MT of fruits annually. Some, though, say the move will force local producers to improve the quality of their stock.