In a global economy that is highly price and quality-sensitive, what strategy should India follow to boost Agri-exports which is crucial for doubling farmers’ income by 2022. (200 words)
Refer – The Indian Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 7 years
KEY POINTS
· Marine products, rice, meat, spices, cotton, fresh fruits and vegetables, sugar, coffee, groundnut, oil meals and cashews comprised more than 80 per cent of the country’s Agri-export basket.
Issues in Agri-exports
· Fall in global prices – Many of these commodities lost out on competitiveness, due to a fall in global prices.
· Restrictive export policies - Uncertain trade policies and the inherent “consumer bias” in these policies makes the trading environment unstable.
· Any rise in domestic prices almost immediately leads to the imposition of market restrictions and harms India’s image as a reliable supplier.
· This consumer bias in policy must be redressed and a balance should be struck between meeting the needs of food-insecure consumers and income-insecure farmers.
Strategy to boost Agri-exports
· The draft Agri-Exports Policy rightly identifies two steps:
i. Identify commodities in which India holds a global comparative advantage and
ii. Develop clusters in states to create value chains for these commodities.
Suggestions
· Change in mindsets – Restricting markets and compensating farmers through higher MSPs will be an inflationary and unsustainable solution.
· Instead of suppressing market prices for farmers to support consumers, the government should protect them through targeted unconditional income transfers.
· Efficient global value chains - The government must develop efficient global value chains and liberalise land lease markets across all states.
· It should encourage contract farming on a medium- to long-term basis.
· Exporters and processors must be encouraged to buy directly from farmer-producer organisations (FPOs).
· Private sector participation – Major investments are needed to create infrastructure for global and domestic value chains.
· The private sector can be an effective player in creating such value chains, but it needs to be enabled by institutional reforms.
· These investments could have a multiplier effect on the rural economy.
Way Ahead
· Meanwhile, policymakers should support Agri-exports while ensuring environmental sustainability.
· Exporting large quantities of water intensive crops are akin to exporting billions of cubic meters of water.
· The best way to correct this would be to gradually phase-out power and irrigation subsidies, and replace them with a direct income support to farmers, while letting the prices of power and water reflect its true value.
