Farmers have turned increasingly sceptical of the Government’s promise of doubling their incomes by 2022. Bumper crops continued to trigger a meltdown in food prices, and policy interventions such as e-Nam and the repeal of the APMC Acts by States have made scant progress. The time, therefore, appears right for the new Draft Agricultural Export Policy floated by the commerce ministry. It moots a dramatic shift in India’s policy objectives on agri-trade, from the excessive attention to tackling shortages and inflation-control on behalf of consumers, to dealing with problems of plenty and ensuring a fair price for producers. But while the policy does well in diagnosing key barriers to agri-exports and suggesting broad-brush measures to dismantle them, it needs fleshing out if it is to deliver results.
India is today a leading global producer of foodgrain, dairy and several horticultural crops, but holds a minuscule 2.2 per cent share in global agri-exports. Apart from being stuck at the lowest rung of the value chain, India’s farm exports are highly reliant on a handful of commodities — marine products, meat, rice and plantation crops. Exports even in these items are frequently interrupted by self-imposed and arbitrary trade curbs such as minimum export prices, export duties and, lately, laws banning cow slaughter. This has earned India the reputation of a fickle participant in global agri-trade. High rejection rates on consignments due to poor quality, antibiotic and pesticide residues, and other phyto-sanitary grounds further queer the pitch. State-level curbs on movement of produce add to already high costs from fragmented farms and poor logistics. After homing in on these issues, the draft policy suggests five key sets of fixes: committing to a stable trade policy for all ‘non-essential’ commodities, improvements to storage and exit point logistics, better coordination between central ministries now working at cross-purposes, and greater state involvement in reforming agri-exports. Some of the workable ideas mooted include the promotion of region-specific clusters for lucrative crops, coordinated branding efforts, a shared database for exporters on market intelligence and export rejects, quality assurance at the farm, and wider adoption of land leases and contract farming for scale economies.
But putting these big-picture ideas into practice will mean thrashing out the nitty-gritty first. For instance, cereals, meat and vegetables offer lucrative export opportunities, but it isn’t clear how these can be redefined as ‘non-essential’ commodities to shield them from ad-hoc trade curbs. Similarly, cost competitiveness is key to promoting value-added food exports, but that is in direct conflict with the Centre’s MSP promise to local farmers. Then, there’s the fact that any attempt by India to seek better market access for agri-exports is bound to bring up the politically fraught issue of its high tariff barriers on agri-imports and input subsidies to farmers. Policymakers should resolve such conflicts on the exports of primary produce, before leap-frogging to fanciful ideas such as exporting organic foods, Ayurvedic nutraceuticals and canned sarson ka saag.