Post-WTO, farm imports in India outdo exports

The global agriculture trade regime under the World Trade Organisation (WTO), that came into force 10 years ago in 1995, has led to an increase in the import of farm products into India rather than boosting exports.

Barring the first three years after the enforcement of the agreement, agriculture imports continued to grow faster than exports. Between 1998 and 2000-01, the average annual import of farm products rose by about 64 per cent, while exports declined by 7 per cent. Though the last two years have seen some buoyancy in farm exports, imports have also continued to grow.

The impact of the WTO on India's agriculture has been studied by Dr Ramesh Chand, acting director of the Delhi-based National Centre for Agricultural Economics and Policy Research (NCAP). He has found that the first three years, after the implementation of the WTO agreement, witnessed a major spurt in agriculture exports.

The study estimates that the annual import of agriculture goods rose from $1,190 million in the three years preceding the WTO to $1,996 million in the first triennium after the WTO. In the same period, exports increased from $3,725 million to $6,530 million. But, this favourable trend in the initial years of the WTO did not last long and the next three years witnessed a whopping rise in imports and a slight decline in exports.

The study attributes the slow-down on agro-exports and sharp rise in imports to the decline in global prices of almost all major agriculture commodities after 1997.

This crash was due partly to the cyclical nature of international prices and partly due to increased global competition in agro-export because of liberalising trade. The situation was aggravated by an increase in the already high farm subsidies in the developed countries.

The Indian non-Basmati rice and wheat could not face global competition. The export of oilmeal, the second biggest export item after marine products, also suffered a set back due to a decline in global prices.

The export earnings from traditional export commodities like tea, coffee, spice and tobacco suffered mainly due to a sharp fall in international prices, as the quantum of exports in most cases did not drop.

Exports of marine products, livestock and horticulture items maintained the tempo of growth that was build up in the pre-WTO period. This implies that the post-WTO situation was favourable for the export of high-value food products.

In case of imports, liberalisation of trade in the initial years after the WTO did not result in any perceptible spurt because global prices were high. But subsequently, when global prices began to fall, India's imports started rising. The level of imports nearly doubled in the three years between 1996-97 and 1999-2000. This downturn in global prices continued even in the subsequent years.

The international prices of cereals in the years 2000 and 2001 were almost half of what they were in the beginning of the WTO-era.

The composition of items in the import basket indicates that edible oils accounted for the bulk of the increase in total agro-imports. The other items clocking significant increase in imports include pulses, spices, cotton, wood and wood products.

The study has also revealed that the spurt in the imports vegetable oils, and wood and its products has depressed their domestic prices, adversely impacting indigenous production.