Commerce ministry wants price curbs on most farm exports lifted

22 Jan 2018


The commerce minister wants removal of all price curbs on agricultural products removed in order to boost the country's farm exports and establish India as a reliable supplier of agricultural commodities in the global market.

The move comes in the wake of reports of farmers in West Bengal destroying  tonnes of potatoes for want of better price realisation.

The ministry will soon float a proposal for doing away with the practice of imposing export restrictions in the form of minimum export prices (MEP) for commodities such as onions, tomatoes and potatoes.

The draft Agriculture Export Policy is likely to include a proposal to restrict the application of MEP to a small list of items essential commodities, perhaps rice or wheat, and leaving all other commodities out of the ambit of essential commodities.

The commerce ministry is working on a comprehensive policy covering issues such as logistics to promote export of agri commodities like tea, coffee, fruits and vegetables, joint secretary in the commerce ministry Santosh Sarangi said at a press conference on India's mega international food and beverage trade show - Indus Food - which began on 18 January.

India is one of biggest producers and exporters of agri commodities, and still holds huge potential to increase shipments. ''So, the possibility of value addition and moving up in the global value chain is immense. All important elements such as logistics, certification and traceability of items would be part of the new policy,'' the official said.

While the decision to do away with MEP could be difficult because of price volatility of commodities like onions and potatoes, and the political sensitivity of these items.

''The prime minister is keen to improve India's image in the global market. India has to take some tough decisions to make that happen. All stakeholders, including the ministries of agriculture and consumer affairs, would be welcome to give their comments and opinions on the matter,'' the official said.

The government imposes MEP on items such as onions and potatoes when prices in the domestic markets surge. While the MEP is intended to prevent prices from spiralling further, it often tends to be so high that it effectively acts as a ban on exports.

''If our farm goods exporters are not able to fulfil the commitments towards their buyers because of a sudden imposition of MEP, the buyers are left high and dry. Our exporters risk losing their buyers permanently,'' the official pointed out.

There could be other ways to control rising domestic prices of commodities such as checking cartelisation by traders.

The draft Agriculture Export Policy is likely to be made public next month.

Meanwhile, agricultural exports from the country grew 18 per cent to $21 billion in the April-October 2017-18 period compared to just 5 per cent in 2016-17, according to a government official.

The two-day global food trade fair will see the participation of over 400 exhibitors and attract buyers from about 43 countries resulting in a business of an estimated $1.5 billion-$2.5 billion, according to government estimates.

''Once the draft Agricultural Export Policy is approved by the commerce minister, we will put it up online for stakeholders' comments and suggestions,'' Sarangi said, adding that the policy will be placed before the Cabinet only if the final document includes provisions that would need approval at the top level.

Export of agricultural produce must touch around $60 billion by 2020 (double from the level of $31 billion in 2015) to help double farmers' incomes in line with the Prime Minister's stated policy.

''Exports can be increased largely by focusing on value addition and bringing down wastage through pre and post-harvest interventions,'' Sarangi said.

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