Archive for August, 2009

Asean pact not to hit Kerala’s products – Rubber traders’ body : Is it true?

Asean pact not to hit Kerala’s products: Rubber traders’ body

Kochi, Aug. 25 The Cochin Rubber Merchants Association said that most of Kerala’s products are well protected under the recently concluded India-Asean agreement, which is expected to boost the trade between India and the member countries to $50 billion within a year.

Mr N. Radhakrishnan, President of the Association, said in a statement that an impartial assessment of the entire structure will show that Kerala need not be unduly worried about the Asean Agreement.

Kerala must try to maximise the market share among the Asean countries by taking advantage of its natural resources, technology and skilled manpower. The promotional measures adopted by countries such as Vietnam in the agri field are worth emulating.

There is concern in Kerala about the implications of the agreement on the State’s agricultural and marine products. However, a closer look at the aspects of the agreement relevant to Kerala’s economy shows that the apprehensions are unfounded.

He pointed out that coconut, rubber, cardamom, turmeric, vegetables, vanilla, ginger, cashew kernels and black tea are placed under Exclusion List and the existing duty on these items will not be reduced until India agrees with the member countries. He said that tariffs on items under the Exclusion List shall be reviewed each year by the member countries with a view to improving market access. Coconut is placed under Exclusion List with a 70 per cent duty, which will not change till 2019.

Rubber is placed under the Exclusion List with a 70 per cent duty on latex and 20 per cent on others with no change till 2019. Duty on rubber can be reduced only if India opts for it, which is quite unlikely.

Cardamom is placed under the Exclusion List with a 70 per cent duty with no change till 2019. Ginger and turmeric are also placed under the Exclusion List with 30 per cent duty each with no change till 2019.

Tea is placed under Special Products with existing duty of 100 per cent which will be regressively reduced to 45 per cent by 2019. Kerala’s share of production is only 6 per cent.

Coir Yarn and Coir Products are placed under the Normal Track with a duty of 10 per cent which will be reduced to zero within five years. Our major exports of these products are to countries outside Asean, he said. Already there is an acute shortage for coir fibre due to the heavy fall in production of coconuts in Kerala. Import of coir fibre from Asean nations for reprocessing, value addition and exports will generate more employment in the State and also give a fillip to the coir industry.

Courtesy : thehindubusinessline

Remarks:

India is self sufficient in production of Natural Rubber compared with  consumption. Now near about 98%  of imports are on ZERO percent import duty which is more than 80,000 Tonnes per year. When the rubber market is with  surplus  stock, the market prices will come down far below International prices. The joint venture of bulk dealers  & manufacturers are harmful to farmers. Many of the bulk dealers are co-operative societies who don’t want share the profits to Govt. treasury. The fluctuations of market price only will hit on farmers income. Now ASEAN agreement is not reflecting on rubber prices, because prices are  higher than International from few months continuously. In future ASEAN will be harmful on reduced price at  Kerala market under the pretext of ASEAN on 20% duty of small quantity can keep away the Indian manufacturers  from Indian market with the maximum benefits of ZERO percent import duty.

Kerala is  increasingly depends on other States for edible products. The vast cultivation of Natural Rubber will effect on more areas of fields like rice, vegetable, coconut, bananas etc.

Kerala protests rise on Asean pact, CM tells PM they weren’t consulted

Kerala Chief Minister V S Achuthanandan says the views of state governments affected by the proposed Afree trade agreement with the Asean group of countries were not taken before the Centre decided to sign it. And state agriculture activists have asked MPs from Kerala to resign if the pact is signed, as a mark of their failure to represent the state’s interests.

In a letter to Prime Minister Manmohan Singh, the CM says ”it is a matter of serious concern that the views of the affected state governments were not taken into account while formulating a trade pact of this magnitude.’’

The opening line of the letter to the PM yesterday says: “ The state government has learnt from the media that the central government has decided to sign the much debated and widely criticised Asean trade agreement (which) has a number of provisions having far-reaching adverse impact on Kerala’s agricultural economy.” The decision to sign, he adds, comes even as the already liberalised import regime has distorted the market prospects of domestic coconut oil, pepper, etc.

When the decision came up before the Union cabinet last week, it was opposed within the government by ministers Jairam Ramesh, Vayalar Ravi and A K Antony, all from the state. While a delegation of Congressmen from Kerala led by legislative leader Oommen Chandy had also visited the Prime Minister to convey their opposition.

The matter has been sent to a Group of Ministers to assess the impact on Kerala’s growers. The letter further says the agreement will pave way for liberalised import of rubber, tea, pepper and edible oils. With liberalised imports, the prices of these are bound to crash, says the CM.

He also expresses concern about the import of sea food, saying it will throw more than a million people out of jobs in the fishery sector.

Agriculture groups say the Kerala government was justified in feeling left out of the consultation process on the FTA. Says R Sridhar, who helped draft the Paddy Act and is in a non-government working group on trade: “We would urge our MPs to resign from Parliament, if they are unable to protect the interests of Kerala’s farmers. He says that if farmers and local governments are not in control in determining the prices in the market, then farmers are going to be ruined and cash crop production would come to an end, as it would be a loss-making proposition.”

He says Kerala’s food security has already been compromised by a massive shift to cash crops, with 70 per cent of paddy lands now not recoverable. And denies that a negative list could provide protection to major cash crops in the state. The list will take the import duty to zero over a period of 10 years but after that there is nothing to protect the farmer.

Can we say rubber, tea, coffee productivity would be competitive in 10 years, he asks. “It is not possible because the conditions in which the cultivation is done is different in the Asean countries and not comparable. With the green revolution, paddy productivity could increase only by a tonne a hectare and so, with little incentives, not much can be expected from cash crops, he says.

Either don’t go for Asean or assess the impact and find means to protect the farmer. If a farmer is going to lose by the agreement, then let assessment be done as to how much should be paid to the farmer to buffer him from the loss, and how many farmers would need protection, says Sridhar.

Thomas Verghese, chairman of the Kerala State Prices Board, says it is a state subject and the Centre cannot enter into such deals, compromising the interests of the state’s farmers, without even consulting it. He says Kerala has borne the consequences of past treaties like the South Asian Free Trade Area Agreement in 2006. “If the price of a coconut was Rs 2 in 1960, it continues to be Rs 2 today. Can you show me any product whose price has remained static like this?”

He says that it is a livelihood crop for 3.5 million households and 6 billion coconuts are produced in Kerala. “Thanks to cheaply available palm oil from Malaysia and Indonesia supplied even through the subsidised public distribution system, coconut has completely lost out,’’ he says.

Similarly in the fisheries sector, most of the items covered under the agreement are those that can come from Thailand and are also produced in Kerala, thus exposing 20 lakh fishermen to risk.

He says there is no level playing ground in the matter of trade and hence equal rates cannot apply to commodities from ASEAN countries.

If pepper prodictivity is 380 kg per hectare in India, it is 1,000 kg per hectare in Vietnam and 3,000 kg per hectare in Indoniesia.

Courtesy: Business Standard