Policy Response 1: Reverse Mercantilism (in Agriculture) ‡Spate of actions to restrict exportsand liberalize imports of food and related products

(also price controls) ±Indonesia: increase in export taxes on palm exports and elimination of tariffs on wheat and oils ±India: eliminated or reduced import duties on range of foodstuffs; imposition or extension of ban on exports of foods Korea: import tariffs on 82 "price-sensitive" items, such as wheat, corn, soybean, oil products, and other raw materials, will be lifted or lowered starting April 1v

Exposure to World Economy: Selected Countries (in percent of GDP)

Situation in India
Agricultural Exports of India ‡ Largest producers for many food products ‡ Indian food market: above INR 250 billion ‡ Value-added products: INR 80 billion ‡ Food exports: INR 1350 million ‡ A higher proportion of exports are to other developing countries

Exports from India

Snap-shot of the industry ‡ Growth rate of the food processing industry: 15 per cent ‡ Number of units in year 2004: 6607 ‡ Installed capacity: 2.5 MT ‡ Direct Employment: 270 thousands ‡ Contribution to GDP: 5 percent ‡ FDI that came in year 2004: INR 3.5 billion

Standard setting agencies
1. Bureau of Indian Standards: thenodal agency for standards in India 2. CODEX (India): the Indian wing ofthe international organization CODEX Alimentarius

Other agencies
y y y y Ministry of Food Processing Industries Export Inspection Council APEDA MPEDA

India¶s Production & Export spice

Including Fresh & Preserved

India¶s Strength in World Market
Qty in M.T

INDIAN AGRICULTURE
‡ Agriculture represents 22% GDP ‡ 126 million rural farming families engaged in Primary agriculture ‡ 234 million in agriculture sector ‡ Average farm size ± 1.41 Ha ‡ 90 % production - domestic use ‡ Export ± $6 billion (1.5% of total exports) ‡ 700 million people living in 683,000 villages

INDIAN AGRICULTURE
Million Ha ‡ Total Crops Planted annually -191 ‡ Total ha Available for Planting - 141 ‡ Ha cropped more than once - 50 ‡ Ha Rain Fed (61%) - 86 ‡ Ha Irrigated Land (39%) ± 55

CHALLENGES AHEAD
‡Population- : 1.15 B and growing

‡Small farm size : 1.41 ha ‡Yield/ ha : Low ‡Diminishing water resources ‡Malnutrition and undernourishment ‡Impact -Abiotic (drought, heat, salinity, cold and floods) and -Biotic (diseases-32% and insects-26%) stresses on yield / ha

Gujarat accounts for 7.1% of the total FDI received

Structural Changes in the Indian Economy, Sect oral Contribution to GDP (%) 1950-2007

Source: Government of India, Ministry of Finance (2004:S-5, 2007: A-5). Notes: All based on 1993-94 prices except for 2006-07, which is based on 1999-2000 prices #quick estimates

Thai Food/Agriculture Export Market Shares in 2007 (%)

Total 15,207 million $
2nd International Food Regulatory Summit 16-17 October 2008, New Delhi, Organized by CII

Spices Board fixes lower export target for 2008-09
For 2007-08, the Spices Board had fixed a target to export 3.8 lakh tonnes of spices worth Rs 3,600 crores. But, the actual performance was far higher. During the last financial year, India exported 117 per cent of the targeted volume and 123 per cent of the targeted value thus reaching a peak to 4, 44,250 tonnes worth Rs 4,436 crores. But for the current year, the Board has fixed a lower target to export 4.25 lakh tonnes of spices worth Rs 4,350 crores. This target is 20,000 tonnes lower than that exported last fiscal and would earn Rs 86 crores less. For some spices, the targets are more than last year¶s actual performance. The highest value of Rs 1,300 crores is targeted from mint products with an export volume of 21,500 tonnes. Last year, we received Rs 1,281 crores from the export of 21,100 tonnes mint products. Chilli is targeted to bring in the second highest revenue of Rs 1,000 crores from a shipment of 1.9 lakh tonnes. But, last year, chilli earned Rs 1,098 crores from 2.09 lakh tonnes. Pepper export target is 35,000 tonnes valued at Rs 520 crores which is the same as last year¶s actual achievement. Small cardamom target is to export 550 tonnes worth Rs 25 crores against last year actual of 500 tonnes worth Rs 24.75 crores. The Spices Board has fixed a lower target of 150 tonnes valued at Rs 15 crores for the export of vanilla in the current year, compared to the actual achievement of export of 200 tonnes valued Rs 17.75 crores in the last year.

Cashew export from India goes up by 39% in the first quarter
Cashew exports from the Country have registered a 39 per cent increase to Rs 779.69 crores in the April-June period of the current year. The quantity of export has registered 5.9 per cent increase form 28,876 to 30,578 tonnes. The unit price of cashew stood at Rs 254.98 per kilogram in April-June period as against Rs 194.13 per kilogram for the same period in the last year. The import of raw cashew nuts increased to 1,80,372 tonnes in the first quarter as compared to 1,58,777 tonnes. The value of imports touched Rs 693.41 crores as compared to Rs 412.69 crores in the first quarter of the last year.

Coffee exports rise by 6%
According to the Coffee Board, coffee exports have surged by six per cent to 1.50 lakh tonnes in the first seven months of 2008. The total provisional exports of coffee, including re-exports, in the first seven months of 2008 stood at 1.50 lakh tonnes, compared to 1.42 lakh tonnes in the previous year. The increase in exports can mainly be attributed to the incentives given by the Commerce Ministry, which helped exporters offset, to some extent, the rise in inland and overseas transport costs. The provisional re-export of coffee, which refers to the imported coffee components which get exported after value addition in the Country, has almost doubled to 14,597 from 7,528 tonnes, pushing up the Country¶s total coffee exports to reach the 1.50 lakh tonnes mark till the end of July. The provisional exports of coffee have inched up to 1.36 lakh tonnes from 1.34 lakh tonnes between January and July this year.

India¶s tea exports up 13.5% in the first half of 2008
India¶s tea exports for the first half of 2008 have shown a 13.5 per cent increase in quantity due to increased demand by Pakistan and Egypt apart from Russia. The crop shortfall in Kenya is also a reason for rise in tea export from India to a large extent. The total tea export during January to June period in 2008 touched 87.41 million kg compared with 76.97 million kg in the same period in the last year. If the same conditions sustain India could export a higher quantity compared to previous year.

Agri-exports of India surge by 38% in 2007-08
According to the agri-trade promotion body, APEDA, India¶s exports of agricultural and processed food products have increased by 38 per cent from Rs 20,986 crores during the year 2006-07 to Rs 28,909 crores during 2007-08. This is mainly due to the significant jump in the shipment of coarse cereals. The exports of cereals, excluding rice and wheat, have gone up by five-fold to about Rs 2,979 crores in 2007-08 compare to Rs 599 crores in the previous year.

Negative list in Indo-ASEAN pact finalized
The negative lists under the proposed free trade agreement (FTA) between India and Association of South East Asian Nations (ASEAN) would cover mostly agricultural products, processed food and fruit juices, natural rubber, textile and textile products, chemical and petro-chemical products and auto products. This means there won¶t be any tariff concessions for these products. However, imports under these negative lists would not exceed five per cent of total bilateral imports by India with any one of the ten members. The products so covered include honey, cut flower, vegetables such as potatoes, tomatoes, onion, garlic, quail-flower, carrot, cucumber, peas, beans, coconut and cashew nut. Fruits like bananas, pineapple, guava, mango, orange, lemon, grapes, water melon, papaya, apple cherries, grains like wheat, maize, rice, millet, groundnut, copra, oilseeds such as soyabean, cotton, sunflower, castor oil, sesamum and mustard seeds, bamboo rattans, milk andmilk products, fish and fish products, including tuna, shrimp, lobster and poultry and poultry products also come under the list. According to the officials of Commerce Ministry, all 10 members of ASEAN and India would maintain negative list of a maximum of 489 tariff lines. The Indo-ASEAN agreement is likely to come in operation by late 2009.

sorce Virtual University for Agricultural Trade
e-Newsletter of VUAT Harithavahini
Co-ordinated by: Kerala Agricultural University & Indian Institute of Information Technology & Management ±

A project of the Department of Agriculture, Government of Kerala IT-BT Complex, KAU Main Campus, KAU P. O., Thrissur
Kerala

Trade Relations between the EU and India

‡ The EU is India¶s most significant trading partner, accounting for nearly
20% of India¶s trading volume ‡ Indian exports constitute mainly textiles, clothing, agricultural products and chemicals; EU exports mainly capital goods, infrastructure support services and industrial equipment ‡ In monetary terms, Indian exports to the EU reached 18.9bn. Euro in 2005, EU exports to India 21.1 bn. Euro ‡ The EU is India¶s largest source of foreign investment, accounting for 1.1 bn. Euro in 2004 ‡ Substantial growth in trade in services: ICT sector, banking services, healthcare, medical outsourcing ‡ Significant role of retail and wholesale trade for employment generation This report examines the role of the vegetable industry as a key asset for productivity improvement, market development, income generation, and livelihood improvement in India. 1.1 Key statistics for India Statistics gathered from (FAOSTAT, 2007; Wiesmann, 2006) Land area: 3.2 million km2 Latitude: 8º4 to 27r6 N Longitude: 28r7 to 29r25 E Climate: Six broad types. Mainly tropical for most of the subcontinent except northeast and Himalaya foothills. Population: 1.14 billion Global Hunger 1981-41.2% > 1992- 32.7% > 1997- 25.7% > 2003Index: 25.7% Production1: 83.1 mt Area: 8.0 m ha (2005) Availability: 183 g/capita/day (2005 (provisional) - FAOSTAT, 2007) or 146 g/capita/day (2004-05 calculated from NSS data). Main crops: (area) ± chili, onion, eggplant, tomato, okra, cabbage, peas, cauliflower. (volume) ± eggplant, tomato, onion, cabbage, cauliflower, okra, peas, chili. Exports: 1.6 mt (fresh/processed) worth US$ 508 million*. Fresh: onions, mushroom, green peas, eggplant, okra (Working Group on Horticulture, Plantation Crops and Organic 1 Data in summary excludes potato. 8 AVRDC ± The World Vegetable Center Farming, 2007). Processed: gherkin, dried onion, frozen mixed vegetables to Bangladesh, Sri Lanka (Working Group on Horticulture, Plantation Crops and Organic Farming, 2007)

Imports*: 46,000 t (fresh/processed) worth US$ 25.2 million. Fresh: onion, garlic, cabbage and other brassicas. Processed vegetables: Wide variety, too numerous to list individually. * (includes chili, ginger) (2005 [provisional] FAOSTAT, 2007).

Table 1. Indian vegetable production, area harvested and trade, 1995-2005

Note 1: Potato, sweet potato and tapioca are included as vegetables in APEDA and IASRI data. Since processed fruits, other than mango pulp and chutney, are included under "Other processed fruits & vegetables" in APEDA and IASRI data, the total vegetables listed in this table are calculated without deducting these processed fruits. Note 2: Vegetables + dry chili + melons + ginger were included in FAOSTAT. Sources: Population, area and production, selected trade - FAOSTAT (2007) (accessed September 2007); other export data - APEDA (2007a); other import data - IASRI (2006).

Table 2. Vegetables and spice3 exports/import values (US$ ³000), 2001-2005

Source: ITC (2007)

Trade
Vegetable exports more than tripled by volume in the decade from 1995 to 2005 (FAOSTAT, 2007; APEDA, 2007a) and now represent about 2.5% of production (APEDA, 2007a) (Table 1). The value of exports of vegetables and spices almost tripled from 1999 to 2005. ITC data on export and import value for India 2001-2005 (Table 2) are generally higher than the data of FAOSTAT (perhaps ITC is capturing more of processed vegetable data) and suggest export value has doubled between 2001 and 2005 while imports have remained static, representing less about 5% of the value of exports in 2005. India is finalizing the planning for its 11th 5-year plan (Planning Commission, 2007a, 2007b, 2007c, 2007d, 2007e), and a productivity increase of 5% is proposed for the horticulture sector to contribute 19% of agricultural GDP (Mehta, 2007). The adoption of policies, including a focus on high-value horticulture such as vegetables coupled with trade and market reform, could contribute substantially to several of the plan¶s socioeconomic targets.

Exports
The Agricultural and Processed Food Products Export Development Authority (APEDA) has oversight of market development for Indian exports (APEDA, 2007a, 2007b). APEDA has developed HACCP certification and pesticide residue monitoring guidelines, and their effective implementation is critical for fresh and processed vegetable export development (APEDA, 2007b). A Special Agricultural Produce Scheme promotes incentives for the export of a range of Indian produce, including vegetables and value-added products grown and processed domestically. Exporters are eligible for duty credit of 5% of the B free-on-board (FOB) value of exports (Ministry of External Affairs, 2007). Recent export data (APEDA, 2007a; FAOSTAT, 2007) is shown in Table 6. In general the data from APEDA (2007a) is somewhat higher that that from FAOSTAT (2007). In 2005-06, fresh vegetable exports of 1.2 million tones were worth US$ 220 million, with 0.96 million tonnes of onions worth US$ 174 million, with mushroom, peas, eggplant, and okra as the other major commodities (Working Group on Horticulture, Plantation Crops and Organic Farming, 2007; APEDA, 2007a). Fresh vegetables are being exported out of Mumbai, mainly by air to the Middle East, with basic export requirements established by the government (MSAMB, 2007b). Table 6. Import and export statistics for Indian vegetables (and chili, ginger) showing data from two sources (APEDA and FAOSTAT).

Note 1: Temporal currency exchange rates from http://www.oanda.com/convert/fxhistory Note 2: Potato, sweet potato, and tapioca included as vegetables in APEDA data. As well, processed fruits, other than mango pulp and chutney are included under category of "Other processed fruits & vegetables" in APEDA data so processed vegetables listed in this table are calculated without deducting these processed fruits.

Agriculture

1. The fourth advance estimates for 2007/08, released by the Ministry of Agriculture and Cooperation, show that food grain output increased by 6.2 per cent to 230.67 million tonnes from 217.28 million tonnes (final estimate) in 2006/07. The output in both these years marked new record levels of production. 2. Output of rice was higher by 3.3 per cent at 96.43 million tonnes, while that of wheat increased by 3.4 per cent to 78.4 million tonnes. The biggest gain was in coarse cereals where production increased by 20.1 per cent to reach 40.73 million tonnes. Production of pulses was higher at 15.11 million tonnes, an

increase of 6.4 per cent, while oilseeds output rose by 18.7 per cent to a record level of 28.82 million tonnes. Output of raw cotton was higher by 14.0 per cent, with only sugarcane seeing a small (4 per cent) decline in production. 3. Higher levels of output, combined with restrictions placed on the export of these products, have helped keep domestic food prices from reflecting the sharp increase in international prices. In the case of edible oil, however, where India is a large importer, the situation is different. Despite the record output of oilseeds and reduction in import duty, the prices of edible oil, and hence of oilseeds, have increased significantly in the past months. Likewise in the case of cotton, large exports have helped equalise domestic and world prices, resulting in a sharp rise in domestic raw cotton prices. 4. The South West (SW) monsoon set in early this year. Rainfall was above normal in June, as also in the pre-monsoon month of May, in most parts of the country. However, in the month of July, rains were deficient in peninsular, central and western India. Weak rainfall in July generally has adverse implications for the prospect of the kharif (summer) crop. Above-normal rains in May and June have nevertheless raised sub-surface moisture availability which, combined with the resumption of rain since the fourth week of July 2008 in the affected areas, has the potential of significantly limiting crop damage. 5. In view of the above scenario, we expect that kharif foodgrain and oilseed output may be at about the same level as last year, while there may be some expansion in the (largely irrigated) rabi harvest. Market gardening (horticulture) and animal husbandry (dairy and poultry) have been growing rapidly for some years now, and we expect this trend to continue this year also. On this basis, we project that GDP originating in agriculture & allied activities is likely to grow by 2.0 per cent in 2008/09, less than what it has done in the previous three years. The lower growth projection is in part due to the base effect of very high growth in 2007/08, and the weak SW monsoon over peninsular, central and western India in July 2008.
Agri exports unscathed by meltdown At a time when the global financial meltdown has drastically impacted India¶s key exports like textile, gems and jewellery and other related sectors, the agricultural and processed food products export sector is expected to escape µunhurt¶. However, in case of exports of food products, the real worry is not the global economic slowdown but factors like frequent occurrences of bird flu in the poultry sector and significant appreciation of rupee against the US dollar. Besides, several importing countries have their own set of quality standards, which poses obstacles in augmenting exports. Although the latest data on exports are yet to be compiled, a senior official with Agricultural and Processed Food Products Export Development Authority (APEDA) has indicated that besides sectors like bovine meat and poultry products, there is no ³visible

impact´ of a global slowdown at present.³We are constantly monitoring the situation, the exports are expected to grow as per our target during the current fiscal,´ Asti Treaty, Chairman, APEDA. He also said that a large chunk of processed food exports is to Gulf countries which have been relatively unaffected by the financial meltdown. The country, which exported close to Rs 29,000 crore worth of agricultural and processed food items like buffalo meat, fruits and vegetables, pulses, basmati rice, among others during 2007-08, is expected to grow at least around 10% during the current fiscal. ³Being an essential commodity, we do not expect drastic drop in demand of these products,´ he said. According to APEDA data, during April- July 2008, the country has notched up agri exports worth of Rs 12,300 crore. The exports of agri food products during 2007-08 went to up to Rs 28,906 crore against Rs 21,150 crore achieved during the previous year, a sharp rise of more than 40%. However India¶s, share in the global trade of agri processed products is only about 1.6 %. Only 15 countries including Saudi Arabia, United Arab Emirates, United Kingdom, Bangladesh and South Africa account for more than 63% of the country¶s export of fruits, vegetables and other agri products. http://www.financialexpress.com/news/agri-exports-unscathed-by meltdown/399827/

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