A tightening of regulations for processing and export of groundnuts due to pressure from the European Union (EU) for better quality has hit the Rs 1,500-crore industry. Exporters are now lobbying for less stringent standards for exports to non-EU countries.
Groundnut exports to the EU declined to 664 tonnes between April 2009 and January 2010, from 12,589 tonnes in the corresponding period a year before. Exports to non-EU countries declined to 1,74,215 tonnes from 2,34,890 tonnes.
Last year, importers in the EU reported high levels of aflatoxin, a fungus, and returned a number of consignments. A concerned Agricultural and Processed Food Products Export Development Authority (Apeda), a body set up by the Union government for promotion and development of agriculture and allied products, came out with strict guidelines for exporting groundnuts to the EU countries.
| GROUNDNUT EXPORTS By volume (tonnes) | ||
| 2008-09 | 2007-08 | |
| EU | 15150 | 13837 |
| Non-EU | 282739 | 255754 |
| By value (Rs crore) | ||
| EU | 65.81 | 55.50 |
| Non-EU | 1173.20 | 998.58 |
Two trade delegations from the EU visited India last year and inspected laboratories, shelling units, transport facilities and godowns to ensure that the quality supplied was up to the mark.
The delegations suggested that Apeda ensure compulsory registration of the entire supply chain, including processing and shelling units. Apeda did so this March. It is now finalising rules for non-EU countries, likely to be introduced shortly. S Dave, director of Apeda, confirmed the work was on, but did not say when it would be done. Sanjay Shah, an industry veteran, said the norms should come soon.
While the EU monitors the entire supply chain before entering into a contract with Indian exporters, other countries are interested only in the commodity, not its origin and supply chain intermediaries. However, Apeda has brought shelling units as well as godowns and other storage facilities under a mandatory registration system to monitor the entire chain.
The immediate results has been a steep drop in exports. Trade sources fear exports to non-EU nations may also fall to near-zero.
“In the World Trade Organisation, every country follows uniform trade guidelines, which provides a global benchmark. India needs to adopt the same practices, sooner or later. Initially, traders will face some problems, but it will become a practice that will benefit exports later,” said Suresh Ramrakhiani, CEO of the Indian Oilseeds and Produce Export Promotion Council (IOPEPC), an industry trade body.
However, IOPEPC is also lobbying for easier norms for non-EU countries. Apeda sent draft guidelines to various trade bodies about a month ago, seeking their recommendations. IOPEPC, in its response, identified three major areas where government help was required. According to Nilesh Vira, chairman of IOPEPC, up to 30 per cent aflatoxin level, which is permissible for human consumption in India, should be allowed for exports to non-EU countries.
Second, processing units should not be brought under mandatory HACCP (Hazard Analysis and Critical Control Points) certification, as obtaining this in the food sector is a costly and time-consuming affair.
Units that work on wafer-thin margins cannot afford the huge investment on upgrading their machinery to HACCP standards. So, if the government makes this compulsory, they will have to shut shop.
“Therefore, we suggested that India’s aflatoxin level norm be extended for exports to non-EU countries’ exports or exporters should be allowed to decide the level mutually,” said Vira. IOPEPC has also recommended that the seven per cent moisture content that applies to India should apply to non-EU exports too.
