The Hindu Business Line : Whither agri-exports?

SINCE ASSUMING OFFICE nearly a year ago, this Government's professed focus has been on strengthening agriculture and related activities. The Finance Minister devoted considerable space in his two Budget speeches to farm growth and the efforts of the Government in the direction. Now, in the annual supplement 2005 to the Foreign Trade Policy 2004-2009, the Commerce Minister has projected employment generation through exports as a thrust area. If job creation is the objective, there can be no better way than improving the terms of trade in favour of agriculture, and investing farm commodities with competitiveness will contribute to agri-export growth. From this perspective, the Exim policy supplement falls considerably short of expectation. If agri-commodities are to become major export earners, there has to be a paradigm shift in thinking among policymakers and businessmen. We produce what we can, and export what is left after meeting domestic needs.. Until recently, increases in agri-export earnings were often the result of rupee depreciation or concessions and subsidies doled out. Export profits are generally not ploughed back to create sustainable production systems, for instance, through contract farming.

Only a comprehensive view of the entire agricultural system with its various linkages can help design end-to-end solutions for promoting agri-exports — starting with production of quality raw material through hygienic processing and packaging so as to meet the stringent phyto-sanitary stipulations of importing countries. State governments have an important role to play in strengthening production systems and creating favourable conditions for sound supply chain management. `Producing for export' has to be a national effort involving major stakeholders; and the policy should be able to cut through the red-tape. Annual review and fine-tuning of policies and procedures are no doubt necessary, but that would not make for an agri-export policy with a long-term perspective. Having said that, the Commerce Minister deserves to be complimented for proposing to abolish the export cess levied by various Commodity Boards; that would go some way in providing fiscal relief. In addition, under the Produce Cess Act, export goods are burdened with a levy (as a percentage of the specified tariff value). This has to go too, and quickly; often, agri-commodity exports leave thin margins, occasionally even negative.

Following up, the Government should immediately redefine the role of Commodity Boards and export promotion councils (EPCs), and examine ways to strengthen them in the context of a competitive global market. Bureaucracy and rigidity must make way for flexibility and exporter-friendly approach. The Commodity Boards and the EPCs have to survive on merit while their work and guidance for stakeholders must be research-driven. Importantly, they have to become financially independent. The performance of some of the Commodity Boards and their heads leaves much to be desired. Professionals rather than administrators must manage these promotional agencies.

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