Time to reject US food imports
New Delhi June 30 I don’t understand. Why should India continue to import 50 per cent of its almond requirement from America? After all, almond is not a fruit tree that is not cultivated in India. While India’s almond production remains confined to the hilly states of Jammu and Kashmir and Himachal Pradesh, the bulk of the 97,000 metric tonnes of annual consumption is met from US imports.
US President Donald Trump has certainly initiated a global trade war by raising import duties on various products, but at the same time, he has provided a window of opportunity to make the much-needed corrections in international trade policy. Reports say incensed at Trump’s refusal to clamp down import duties on steel and aluminium, India has retaliated by raising import tariffs on 29 products that it imports from the US, including almonds, chickpea, walnuts and artemia, a kind of shrimp. In my opinion, raising import duties on agricultural commodities by India will provide the necessary incentive for increasing domestic production, which is directly linked to the livelihood security of millions of farmers reeling under distress. Importing food has always been viewed as importing unemployment.
While the import duty on almonds has been raised to 120 per cent, up from existing 100 per cent; walnuts, too, will attract an additional duty of 20 per cent. Similarly, apples will attract an import duty of 75 per cent, up from 50 per cent; chana and masur dal will now attract an additional 10 per cent duty, up from existing 30 per cent. Already enough damage has been done by liberalising farm imports. It is primarily because of the massive reduction in import duties combined with the slide in international prices that the imports of agricultural commodities had gone up to Rs 1,402,680,000,000 in 2015-16. The import bill alone is three times higher than the annual budgetary provisions for agriculture.
Take the case of pulses. While domestic production has increased by leaps and bounds, import of pulses continues unabated, thereby, resulting in an unprecedented price crash for farmers. Several estimates have shown that farmers have received 10 to 40 per cent less than the Minimum Support Price (MSP). While domestic production surged to a record 240 lakh tonnes in 2017-18, imports continue to pour in. During 2016-17, 66.08 lakh tonnes of pulses were imported, up from 57.97 lakh tonnes imported a year earlier in 2015-16. The decision to earlier raise import duties and prescribe fumigation standards for pulses import had already irked Australia, Canada, US, European Union and Japan, the main suppliers.
While the exporting countries threatened to drag India to the WTO dispute panel, India maintained that its unilateral trading actions were within WTO limits. I am therefore glad that President Trump has pulled the plug this time necessitating India to raise import tariff on chana and masur dal. In fact, not only for America, import duties on pulses should be raised across the spectrum. The basic objective should be to protect the domestic producer. In the US and Europe, it is the monumental farm subsidies that protect domestic farmers and at the same time pulls down the international prices as a result of which agriculture exports from developed countries becomes cheap.
Developing countries are in the process becoming dumping ground for cheaper and highly subsidised produce.
Walnut is a crop that primarily remains confined to Jammu and Kashmir, which has an overwhelming 90.30 per cent share in country’s production, followed by Uttarakhand, Himachal Pradesh and Arunachal Pradesh. While the domestic production of walnut has been sliding downwards or remains stagnant over the years, import of the California walnut has multiplied in the past few years. In 2014-15, US walnut shipments increased to 84,500 pounds of kernels. But the more India imported, the more the domestic production of walnut suffered. If only India had focused on walnut production in the Kashmir valley, it could have provided economic incentives to lakhs of youth. It should now use the enhanced duty protection to bring about economic transformation in the trouble-torn Kashmir valley.
Almonds, walnuts and apples are the three most important commercial crops of Jammu and Kashmir, Himachal Pradesh, Uttarakhand and Arunachal Pradesh. Because of the trade regime, which is based on providing more market access, the apple crop, too, has come under pressure. At present apples are being imported from 44 countries, whereas the apples produced in Himachal Pradesh and the Kashmir valley are going abegging. Already, the Himachal Pradesh Fruits, Vegetables and Flowers Association have been demanding import duties on apples to be doubled from the existing 50 per cent to 100 per cent. This is expected to provide protection to the Rs 3,000-crore apple economy of Himachal. In any case, the Washington apples being increasingly imported come with 106 pests and diseases, as per a study conducted by CABI in the UK. Non-tariff barriers, therefore, have also to be revoked to limit the import of inferior quality apples.
Trump has, in other, words given India a perfect opportunity to revive the cultivation of almonds, walnut and apples. This should not be seen as a setback to business but utilised as a policy space to resurrect agriculture. At a time when agriculture is passing through a terrible distress, reorienting international trade parameters to prop up the rural economy is the crying need.