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The Government to focus on export of agricultural commodities to get a fair deal for the farmers

The Government may soon adopt the Agricultural Export Policy that aims to double Agri export to 60 billion US Dollars annually in an effort to mollify the resentment of the farming community which they expressed through conducting mass rallies in the National Capital as well as Mumbai.

The promise of no further restrictions on processed agricultural export, a stable export policy regime for farm products, and streamlining of the current Agricultural Produce Market Committee (APMC) laws are part of the changes in the final policy to be implemented by the government. It aims to push India into the list of the top 10 agriculture export countries while doubling country's share of global export in the category.

The policy parameter, after wide ranging consultations at the ministerial level has been forwarded to the Prime Minister’s Office (PMO) a few months ago. The government's proposals will be placed before the Union Cabinet shortly according to official sources.

The Commerce Ministry had released the draft policy in March but had difference of view with the Agriculture Ministry over various issues, most notably the proposed changes to the model Agricultural Prices Marketing Committees Act.

The new norms envision an institutional mechanism for tackling market access barriers. “This has been India’s focus over the past few years in most bilateral negotiations. We need to create a better environment for farm export to flourish according to official sources. The policy asks for reforming the APMC laws across states.

Agricultural wholesale markets have been prey to inefficiency and cartelization. For decades, farmers have been forced to sell at these official market yards, which might not offer the best price and restrict private players from setting up markets and investing in infrastructure.

The draft policy paper points out that between 2012-13 and 2016-17, the country’s Agri trade dwindled from 36 billion to 31 billion US Dollars, a 5 per cent annual drop. India’s export basket is led by marine products (5.8 billion US Dollars), meat (4 billion US Dollars), and rice (6 billion US Dollars) making up 52 per cent of the total trade in Agri-products.

Despite India occupying a leading position in global trade of these products, the total agri-export basket still accounts for only a little over 2 per cent of world agri trade, estimated at a massive 1.37 trillion US Dollars

In such a scenario, the target of doubling agri export to 60 billion US Dollars ambitious — exports have dipped in the past few years and may require consistent tweaking of rules in other sectors as well.

The policy has suggested zero restrictions in the form of a minimum export price (MEP), export duty bans on processed agri products or organic products. However, the door has been kept open for restrictions on commodities considered essential for food security.

Given the domestic price and production volatility of certain commodities, there has been a tendency to utilize trade policy as an instrument to attain the short-term goals of taming inflation, providing price support to farmers, and protecting the domestic industry, the draft policy says. Examples are Minimum Export Prices on onion and rice shipments. Sudden changes in policy regarding shipment of commodities such as onion, rice, wheat, oilseed, pulses or sugar have a long-term impact on economic and foreign relations with many developing nations, the policy cautioned.

There is a lot of scope for marine products and processed food; also in high-value products. We need to rectify domestic policies and remove transport bottlenecks. The cost of transporting many products from hinterland to ports is higher than the cost by sea to reach the import destination.

The air cargo needs to be made affordable, to speed up the movement of perishable agricultural commodities according to the trade. To boost high-value and value-added exports, the government will focus on perishables. The policy has also identified 50 district-wise clusters for developing export-oriented infrastructure including setting up of cold storage facilities.

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