How to overcome trade barriers

Agriculture and food exports have always been an important part of the country’s foreign trade. In recent times, there have been a lot of fluctuations in exports of select commodities in food and farm categories. Though a single factor cannot be responsible for the fluctuations, the factor can be termed as a major one.

According to a study conducted by Exim Bank (Mumbai) and National Institute of Agricultural Marketing (NIAM), Jaipur, between 2009 and 2013, there have been several instances of loss in markets on account of different hurdles such as sanitary and phyto-sanitary measures (SPS), technical and tariff barriers, lacuna in foreign trade policy, etc. Most of the losses have been recorded in products such as meat, fish, crustaceans, molluscs, dairy products, bird’s eggs, honey, live trees, bulbs, flowers, ornamental plants, edible fruits and nuts, etc.

The study reveals some specific lost opportunities such as in Japan from 2008 onwards in export of cut flowers, which earned $291 million at one point of time. This loss has been witnessed on account of stringent quarantine measures followed by Japan.

There is a need for strong and effective actions to tackle the challenges faced by the food and agricultural exports industry so that exporters can again make their presence felt in the markets which have been lost. This calls for better and sustainable quality management of export products at production and post-production levels, supported by adequate policy intervention by the Government. An opportunistic approach needs to be adopted to tackle the issues.

There is need for addressing the issues related to SPS by adopting global standards and regulations. Need for strict inspection and supervision of exporting units is required during licence and post-licence periods. The Government has to play a vital role in regulating the adoption of better standards for production, processing, packing and transportation by processors and exporters. Though the adoption of standards is a costly affair for exporters, in the long run, these could fetch higher returns.

There are two types of SPS posed by various countries: SPS notification against any specific trade partner/(s) and SPS notification against all trading partners.

The Exim Bank-NIAM study reveals that Indian exporters are responding well to those SPS notifications which are raised specifically against India. It was also found that in the product for which a country is notifying specific SPS measures against India, its exports increased in the subsequent years.

However, SPS measures raised against all trading partners have not been addressed properly by Indian exporters. For such products, exports in the post-notification period dropped.

The SPS and tariff barrier issues causing damage to agricultural exports can be identified at different level of value chain of the product. These levels may be pre-production (planning for input), production, storage, transportation, processing, packaging etc. In order to identify the problems at specific level in value chain, there is need of establishing value chain for commodities of export interest.

For example, the SPS issues related to maximum residue limit of pesticides haveto be addressed at the farm level and the quality of the product has to be maintained at the transportation and storage levels. Similarly, issues relating to labelling requirement of a processed product have to be addressed at processor/exporter level.

Apeda and similar agencies need to play a proactive role in collection and dissemination of information related to SPS and trade barriers. Apeda should ensure that the exporters comply with the changing global norms.

All SPS and trade barriers are notified to the World Trade Organisation.

Along with Apeda, processing and exporting companies should keep regular track of these notifications in their information management system.

All countries notifying SPS or trade barrier measures should open a National Enquiry Point (NEP) so that exporters/importers and other stakeholders can get detailed clarification on the changed standards and regulation.

There is a need for ensuring a detailed enquiry of the issues from these NEPs to understand the situation to take effective action in addressing the issue.

In the entire value chain of a commodity, communicating with almost all the actors is easy compared to communication with farmers, who are dispersed over a vast geographical area.

Also, there is no certainty that a farmer will grow a particular product during different years.

Thus, maintaining a track of farmers is quite difficult. It is a difficult task to reach out to all farmers, though not impossible.

The NIAM, Jaipur, should take the responsibility of mapping the value chain of each export oriented crop.

It may help in intervening at different level of production and post-production activities.

Once the value chain is established, it may also help in promoting traceability of food and agro products.

The writers are associated with NIAM (Jaipur) and EXIM Bank (Mumbai)