Oct 28, 2014

Importing food when there is no shortfall in production. It only destroys farm livelihoods.

Potato dumped on the streets in Punjab. Not an unusual sight. -- Tribune photo

There has hardly been a year in memory when farmers have not thrown potato on the streets in protest against low prices. And yet, the government has allowed import of potato for the first time ever. While the official explanation is that the imports are to augment the domestic supplies and curb inflation, the fact remains that production of potato has been almost normal this year with an insignificant shortfall by a mere 2.3 per cent.

While the Ministry of Agriculture has directed Nafed to float tenders to ensure shipments reach by the end of November, potato crop from Punjab is expected to hit the market by the middle of November. The domestic market would be flooded by time the imports come in and I wouldn’t be surprised if farmers are once again forced to dump cartloads of potatoes on the highways. I therefore don’t understand the economic rationale of allowing the import of potato when there is hardly any drop in production. Experts say the Kharif crop has been good, and the winter crop that is expected in mid-November onwards is also expected to be normal. India is the third biggest producer of potato after China and Russia.

But then, under pressure from a strong lobby of economists, food inflation is coming in as a handy excuse to open up the Indian market for import of fruits, vegetables and milk products. This is exactly what European Union is demanding under ongoing negotiations of the bilateral Indo-European Union Free Trade Agreement.

The domestic potato chip, fries and flake industry is now pressing for removal of the 30 per cent import duty on potato to make the imports cheaper. Since Pakistan is not in a position to supply potato this year, and had resorted to duty-free potato imports continuously from India from March onwards with some 3,000 trucks crossing over daily from Wagah border, potato imports into India are expected mainly from Europe and Australia. The Economic Coordination Committee of Pakistan Cabinet has reportedly approved the duty-free imports of potato from India till Nov 15.

Potato is not the only victim of an ad hoc import-export policy. On a visit to a food processing unit in Sonepat district in Haryana, I was shocked when I was told that tomato paste is being imported in large quantities from China at a time when farmers were forced to throw tomatoes onto the streets for want of buyers. When food inflation was at its peak, reports of dumping of tomatoes by farmers had poured in from several parts of the country, including Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Karnataka and Andhra Pradesh.

With tomato prices crashing to Rs 2 (and at several places to Re 1 per kg) farmers had no choice but to feed it to cattle or to throw it away. Just in one month, between Aug 28, 2014 and Sept 28, 2014, India imported US $ 376,009 worth of dried tomato and tomato products (like paste, pulp and juice concentrate) from China, followed by US $ 94,057 worth of imports from Nepal, and US $ 44,160 from the Netherlands.

Not many know that the popular brands of tomato ketchup, tomato puree and even tomato juices that we consume at home are made from tomatoes imported from China, Nepal, Italy, USA and the Netherlands. In other words, we are inadvertently helping tomato farmers of the countries from where we import while our own farmers are left to die. The food processing industry obviously justifies the imports but what remains unexplained is if the objective of the industry is to source cheaper products from abroad why does the Ministry of Food Processing claim that agro-processing is a boon to Indian farmers?

Take the case of pasta. While huge quantities of wheat rots in godowns, Indian import of pasta from Italy has been growing at a phenomenal rate of 39 per cent per year. Since pasta is made from wheat, I don’t understand why efforts should not be made to produce pasta within the country rather than importing it. India’s import market for pasta has grown in ten years from Rs 3.39 billion in 2003-04 to Rs 17.22 billion in 2013-14. And again, pasta attracts an import duty of 40 per cent, and it is expected the import tariff would be reduced to 20 per cent after the Indo-EU FTA comes into effect.

How irrational food imports destroy domestic production is evident from the way India deliberately encouraged edible oil imports at the cost of its millions of oilseed farmers. These were small holders in the dryland regions of the country for whom oilseeds was a cash crop. Their livelihood has been snatched for the sake of economic benefit to edible oil producers in Indonesia, Malaysia, Brazil and United States.

It is true that edible oil import bill has multiplied over the past three decades. For the year ending 2012 (edible oil year is from Nov 2011 to Oct 2012, for instance), the imports touched 9.01 million tonnes valued at Rs 56,295-crore. Between 2006-07 and 2011-12, edible oil imports have risen by a whopping 380 per cent. Former Agriculture Minister Sharad Pawar often used to stress on the need to increase oilseed production so as to reduce the edible oil imports.

But what was not being told was that India had attained near self-sufficiency in oilseeds production by 1994-95, importing only 3 per cent of its edible oil requirements. After 1994-95, the import tariffs were brought down systematically as a result of which the imports grew. Against a provision of 300 per cent import duties, India allows zero tariffs at resent. Imports are now more than 50 per cent of the domestic requirement. So much so, that after having destroyed its own Yellow Revolution, a strong lobby of economists has been battling for encouraging cultivation of  environmentally-destructive palm oil plantations.

Worldwatch Institute has shown how palm oil monoculture adds to desertification, and also exacerbates global warming by releasing 10 times more carbon dioxide into the atmosphere than tropical forests. Unmindful of the ecological damage, Ministry of Agriculture plans to bring in 1.03 million hectares of forests – mainly by cutting down lush green  forests in Mizoram, Tripura, Assam, Kerala, Andhra Pradesh and Karnataka – and growing palm oil plantation to produce about four to five tonnes of edible oil. The economic rationale is beyond my comprehension. First destroy the oilseed producers, and then cut down forests to produce edible oils. A remarkable model of development indeed ! #

1. Helping imports, hurting farmers. Orissa Post. Oct 22, 2014

2. Sourcing local farm produce rather than imported concentrate.

3. No rationale behind potato imports. Hindustan Times, Chandigarh. Oct 26, 2014

4. आयात का औचित्य Dainik Jagran, Oct 25, 2014


Ben F said...

The face of India has changed after 1993. The then governments are working for wellness of rich and corporates not for poor and farmers. The pity thing is the government itself destroying our mother nature in the name economy and development. It dare to kill our own countrymen (green hunt) to serve corporates.

Sanjeev Sandal said...

The prediction based on crop weather modeling utilizing two or three year decade food production data and then correlating it with weather parameters such as rainfall, evaporation , air temperature etc help us in deciding the expected outcome before the start of the normal season. This approach will not only help us in taking the decision of export or import of that commodity but also will help us in incentives for higher production to farmers or minimum support price to farmers if production is less. This will also build a strong linkage between the agricultural experts, planners and farmer groups.