Dear Friends,
May I thank you for inviting me to speak to you today.We are meeting amidst the anxiety expressed by some quarters over the current round of trade negotiations. We are hoping that the trade in agricultural products become fairer after the negotiations and benefit the farmers, boost our food security and result in increased exports to our agricultural produce. We must not be alarmed, we have a record of tiding through even the difficult times of global recession. India remains one of the lesser affected countries in the current crises. Our fundamentals remain strong and set back to growth very manageable.
Today’s conclave gains special importance in the wake of economic slowdown and global recession, which has greatly influenced major economics of the world. Trade relating to agriculture and allied sector products assumes greater significance for a country like India which has a substantial share in the world market because of its largely agriculture based economy.
In value terms, both agricultural exports and imports have registered consistent growth over the past 15 years. The growth rates are, however, widely divergent. While, agricultural exports grew at an annual growth rate of 8.3 per cent, the imports grew at 14.8 per cent per annum. The ratio of agricultural exports to agricultural import has decreased from 6.2 to 3.0. However, value of exports continues to exceed the value of imports by a large margin. This trend clearly shows that the trade policy reforms initiated by the government have greatly accelerated globalization of agricultural sector of India.
The composition of agricultural trade has significantly changed between 1992 and 2007. The share of fruits and vegetables, flowers, cotton, sugar and molasses and livestock products has considerably increased in the agricultural export basket of India. However, the share of traditionally exportable items like tea, coffee and cashew nuts has declined. Foodgrains share in the agricultural exports by and large remained constant, through export of non-basmati rice has witnessed annual growth rate of more than 10 per cent.The global market for agricultural products is also a good indicator for the export potential.
It we see the growth of global market for agricultural products between 2000-2007, it has shown a significant upswing from US$553 billion to US$ 1127 billion registering a compound annual growth rate of about 10 per cent. India’s export share in the global market was only 1.4 per cent during 2007 with an export performance of US$16 billion. The share of agricultural exports to national exports was over 10 per cent during 2008-09, which clearly indicates that we have been able to meet domestic food requirement and also could export a whole host of agricultural products and processed food.Export cess, in force from 1940 has been repealed in 2006. The Vishesh Krishi Upaj Yojna has targeted export worthy products and given technical and capacity building support. Duty free imports of export enabling capital goods are possible in the EPCG scheme. Agri-export zones have been developed. Assistance to states for developing export zones is in operation. Capacity building to create competitiveness has been the mantra in the sector. Focus on the demand of organic products abroad has also been tapped.One crucial barrier to further enhancing our trade with the OECD countries is the high level of domestic protection they are offering their farmers. This is clearly distorting the potential to export. There are studies which show that corrections in OECD domestic support will benefit crops like Sugar and Cotton in India because of the comparative advantage while the corrections may be indifferent as far as rice and wheat farmers are concerned. This happens since the production of crops decline once domestic support are withdrawn in OECD and thus the cheaper Indian crops become dearer there. Overall Indian farmers stand to gain, as per our studies to 15-19% increased prices. This, friends, leaves two fronts for us to focus in trade development :1) Intensive competiveness based development in crops and products of identified potential.
2) Continued efforts to make global trade terms favourable for our exporters and farmers.Our efforts will be in this direction amidst the adverse drought we have this year. I have pleasure in affirming that the Union government will take all efforts to make Indian agricultural trade more earning and taking steps to drought proof the production in the coming session. I wish the function all success and will be pleased to hear more of your deliberations here today.Thank you very much.
Jai Hind.
