Commerce Ministry wants no price curbs on most farm exports
NEW DELHI, JANUARY 21: To establish India as a reliable supplier of agricultural commodities in the global market, the Commerce Ministry is planning to float a proposal for doing away with the practice of imposing export restrictions in the form of minimum export prices (MEP) for non-essential items such as onions, tomatoes and potatoes.
“The draft Agriculture Export Policy, which will be put up online for stakeholder comments soon, is likely to include a proposal to restrict the application of MEP to a small list of items essential for a person’s survival, such as rice or wheat, as a tool to contain domestic prices. On all other items, the proposal would be to do away with MEP altogether,” a government official told BusinessLine.
While the decision to do away with MEP for politically sensitive items like onions could be seemingly difficult for the Centre to take, the Commerce Ministry wants to have a discussion around it. “The Prime Minister is keen to improve India’s image in the global market. India has to take some tough decisions to make that happen. All stakeholders, including the Ministries of Agriculture and Consumer Affairs, would be welcome to give their comments and opinions on the matter,” the official said.
The Centre imposes MEP on items such as onions and potatoes from time to time when prices in the domestic markets surge; the MEP is intended to prevent prices from spiralling further. Often, the MEP is so high that it effectively acts as a ban on exports as there are no buyers for the commodity at prices above the threshold.
“If our farm goods exporters are not able to fulfil the commitments towards their buyers because of a sudden imposition of MEP, the buyers are left high and dry. Our exporters risk losing their buyers permanently,” the official pointed out.
There could be other ways to control rising domestic prices of commodities such as checking cartelisation by traders.
Draft policy by next month
The draft Agriculture Export Policy is likely to be made public next month.
Commerce and Industry Minister Suresh Prabhu recently said the proposed agri-product export strategy would change the export scenario in the country. It will double farmers’ income and also give them a choice of a large numbers of buyers for their items.