The Hindu Business Line : Export subsidy for pepper, cardamom gets Plan panel nod

THE Planning Commission has cleared the proposal to extend export subsidy for pepper and cardamom in a bid to increase exports on the one hand and to arrest the decline in domestic prices of these commodities on the other.

The Commerce Ministry is expected to issue the necessary notification to this effect soon, sources told Business Line. The total amount involved in the scheme would be some Rs 20 crore which would cover costs such as local transportation, processing and export freight, they said.

Around 50 per cent of the amount is likely to be given to the Kerala State Cooperative Marketing Federation (Marketfed), which had procured around 4,800 tonnes of black pepper at Rs 75 a kg when the market price was ruling at around Rs 60 a kg, towards transportation and processing costs.

The rest might go to exporters of pepper and cardamom towards freight subsidy, the sources said. The State Government is said to have demanded a subsidy of around Rs 20 a kg for pepper.

The WTO-compatible subsidy would make the Indian produce competitive in terms of price in the overseas markets. Besides, it would help regulate the supply, which in turn would arrest the fall in prices while the farmers would get a remunerative price, they said.

According to the State Government sources, if the Marketfed released the entire quantity in the domestic market at the prevailing price, it would not only land the Marketfed in heavy loss but also lead to a sharp fall in prices. Given this situation, the Government had decided to export the entire quantity.

But to make the prices competitive in the international market where pepper rules between Rs 55 and Rs 60, the Centre's subsidy support has become inevitable, they said.

Similar situation is prevailing in cardamom exports too. The Indian produce is out-priced in major world markets. Other producers are offering cardamom at prices much lower than that of the Indian produce leading to a sharp decline in exports.

The exports from the country, which stood at 3,272 tonnes in 1985-86 gradually dropped to 650 tonnes last fiscal as against 757 tonnes the year before.

Guatemala is said to be offering at almost half of the Indian price in the international markets, they said.

The comparative freight advantage enjoyed by other producers coupled with the cost involved in quality improvement has to be compensated, they said adding, "this could be possible by extending the WTO-compatible subsidy for exports of these commodities".

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