The export graph

  • 14/06/1994

The export graph ALTHOUGH commerce minister Pranab Mukherjee maintains that India has good chances of cornering a sizeable chunk of the projected increase in world agricultural trade (up to 7 per cent, according to International Monetary Fund estimates) in the post-GATT era, there are overwhelming doubts about such claims.

The increase in trade volume is anticipated mainly from the reduction of subsidies in developed countries, which will lower their food production. According to Ashok Gulati of the National Council for Applied Economic Research (NCAER), India's exports of rice and wheat, marine products, processed food and vegetables are expected to rise, especially to southeast Asia and the Gulf region. According to NCAER, international prices of food commodities are expected to increase by 40-45 per cent.

But the UN Food and Agriculture Organization (FAO) predicts relatively small changes in the net export earnings of developing countries. Critics like former commerce secretary S P Shukla believe that the US and the European Union will maintain export subsidies and retain the domestic support. As a result, the international market will never be competitive enough for Indian farmers.

Even if subsidies are reduced and the prices of temperate crops such as wheat get pushed up, the FAO predicts that the volume of world trade in temperate zone products may not change much. Similarly, given the inelastic demand for tropical products, the volume of world trade in these commodities also may not change much.

There is the chance India can gain if it becomes a net exporter of wheat, rice and sugar. However, Jawaharlal Nehru University economists Deepak Nayyar and Abhijit Sen are doubtful. "With demographic pressure on land, neglect of agricultural investment and structural imbalances in Indian agriculture, it is unlikely that India will emerge as a large exporter of cereals, whether wheat or rice," they say.

Past trends are not encouraging. An UNCTAD report says that although India produced around 10 per cent of the world's agricultural output, her share in world trade in agricultural commodities was only around 0.6 per cent in 1989 and has been declining.

This was because India's exports have been restricted to build up domestic food stocks. So, will India's predicted increase in food exports in the post-GATT era be at the expense of domestic food security?

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