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Doing away with export restrictions on most farm products — as proposed in the agriculture export policy approved by the Union Cabinet recently — has hit a hurdle with many Ministries and Departments wanting the restrictions to continue on items such as onion, sugar and tomato.
“The agriculture export policy suggested banning export restrictions on all farm products barring a small list of sensitive items necessary for food security. The idea was to keep the list very small. However, in the inter-ministerial discussions to identify such items, there is a clamour for continuing restrictions on most items,” a government official told BusinessLine.
Buyers affected
The policy, announced in December 2018, envisages doubling farmers’ income and agriculture exports by 2022 through measures such as creating adequate infrastructure and removing export restrictions. India’s farm exports in 2018-19 are likely to be about $37 billion compared with $30 billion last year, as per government estimates.
Export restrictions, including minimum export prices and temporary export bans, are imposed on farm products from time to time by the government to shield domestic consumers from price increases. “But export restrictions also hit buyers and shake their confidence and hence the policy proposed that they be done away with and only some essential items be allowed to continue with the measures after due inter-ministerial consultations,” the official said.
To arrive at the list, a panel headed by the Commerce Secretary and senior officials from key Ministries and bodies including the Agriculture Ministry, Ministry of Consumer Affairs, Food and Public Distribution and the Food Safety and Standards Authority of India was set up.
“Those opposing the move say that if exports are not restricted when domestic prices of commodities rise steeply, there would be a backlash against the government even if those items are not essential for survival,” the official said.
Losing the market
The Commerce Ministry, however, argues that once an export market is lost, it is difficult to regain it as buyers may lose confidence and competitors may fill the space. Therefore, if farmers are getting a good price for their produce through exports and the farm item is not an essential item market forces should be given free play.
“There is merit in both the arguments. We have to take decision-making to a level where a lot of due diligence and discussion takes place. A committee at a sufficiently high-level may have to decide on this. This will take some time,” the official said.
The policy has already done away with export restrictions on organic and agro-processed products but these items hardly ever faced any restrictive measures.
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