No rationale behind allowing potato import
There has hardly been a year in memory when farmers have not thrown potato on the streets to protest against low prices. For decades now, I have watched a cycle of glut and low prices. And yet, the government has allowed import of potato for the first time ever. Writes Devinder Sharma.chandigarh Updated: Oct 26, 2014 08:22 IST
There has hardly been a year in memory when farmers have not thrown potato on the streets to protest against low prices. For decades now, I have watched a cycle of glut and 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 domestic supplies and curb inflation, the fact remains that the production of potato has been almost normal this year with an insignificant shortfall of a mere 2.3%.
At present, potato prices are ruling between Rs 30 and Rs 35 a kg.
While the agriculture ministry 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 mid-November. The domestic market would be flooded by the 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 mid-November onwards is also likely 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. Some economists have called for lowering import tariffs on fruits and vegetables by 50% to allow imports. Besides fruits and vegetables, they are demanding India to open up for chicken legs (which is a waste in America) and skimmed milk powder.
This is exactly what the 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 the removal of the 30% import duty on potato to make the imports cheaper. Potato imports into India are expected mainly from Europe and Australia.
Interestingly, the decision to import potato comes at a time when India has been merrily exporting potato to Pakistan all through the year. Pakistan had resorted to duty-free potato imports from India continuously from March onwards. An average of 3,000 to 4,000 trucks had been crossing over daily from the Wagah border. Since the production is low in Pakistan this year, the economic coordination committee of the Pakistan cabinet has reportedly approved the duty-free import of potato from India till November 15. Interesting, isn’t it? A month earlier, India was exporting potatoes, and will now resort to imports.
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 tomato onto the streets for want of buyers. When food inflation was at its peak, reports of dumping of tomato 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 Rs 1 per kg), farmers had no choice but to feed it to cattle or to throw it away. Just in one month, between August 28, 2014, and September 28, 2014, India imported $376,009 worth of dried tomato and tomato products (such as paste, pulp and juice concentrate) from China, followed by $94,057 worth of imports from Nepal, and $44,160 from the Netherlands.
Not many know that the popular brands of tomato ketchup, puree and even juices that we consume at home are made from tomato imported from China, Nepal, Italy, the US 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, then why does the ministry of food processing claim that agro-processing is a boon for 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 year. Since pasta is made from wheat, why shouldn’t efforts be made to produce it within the country? India’s import market for pasta has grown in 10 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%, and it is expected the import tariff would be reduced to 20% after the Indo-EU FTA comes into effect.
(The writer is a food policy analyst. Views expressed are personal)