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Harish Damodaran

New Delhi, Sept. 17 The Centre has no plans as of now to re-impose customs duties on agricultural products, many of which are currently importable at nil duty. This comes even as harvesting of the standing kharif crop is just about under way amidst a slide in global commodity prices triggered by continuing bad news from Wall Street.

“There is no proposal before us to review import duties. We have not yet applied our minds on the issue and neither is there any meeting of the Committee of Secretaries this week (which could potentially take it up),” a top Agriculture Ministry official told Business Line.

The Committee — headed by the Cabinet Secretary and comprising senior officials from the Finance, Agriculture, Food, Commerce and other relevant ministries — has been meeting almost every week to take stock of the domestic price situation following relentless inflationary pressures on the economy.

Over the last two years, the Centre has eliminated import duties on wheat, rice, maize, pulses, crude palm oil and de-gummed soyabean oil, while slashing that on skimmed milk powder from 15 to 5 per cent. Simultaneously, it has banned export of wheat, non-basmati rice, maize, pulses and all major edible oils, along with imposition of stock-holding limits.

But now, with cash-strapped international investors and speculative funds pulling out money from commodities and sending prices downhill, the focus of concern may gradually shift from consumers to farmers.

On Tuesday, wheat futures at the Chicago Board of Trade (CBOT) closed below $7 a bushel for the first time since August 20, 2007, while corn and soyabean prices, at below $5.40 and $11.40 a bushel, have fallen from their July 2008 peaks of $7.65 and $16.63 a bushel, respectively. Equally spectacular has been rice, with 100 per cent ‘B’ grade whites from Thailand easing considerably to $735 a tonne, from the record $1,080 levels of April.

At the same time, some of this concern has been moderated by the steep depreciation in the rupee. In the last one month alone, the rupee has fallen from Rs 43.23 to Rs 46.34-to-a-dollar, thereby neutralising some of the impact from the slide in commodity prices in dollar terms.

Moreover, in products such as rice, imports at zero duty are not feasible even if prices slump to $600 a tonne. In the case of wheat, imports present no immediate threat to farmers, as the current year’s crop has already been harvested and marketed.

The only real concern right now is on the edible oil front. On Wednesday, imported crude palm oil and de-gummed soyabean oil were quoted at $645 a tonne and $987 a tonne, cost and freight, respectively. Only a month ago, these were ruling at $820 and $1,150 a tonne, after having averaged highs of $1,244 and $1,455 in March and June, respectively. The export price of Indian soyabean meal, too, has dropped to $360-370 a tonne (free-on-board Kandla/Bedi for November-January delivery), from $480-490 in July-August.

With the country’s soyabean output this year projected to exceed the record 9.99 million tonnes of 2007-08, the plunge in world prices could not have come at a worse time, when harvesting of the crop has just about begun.

There are reports of soyabean of high moisture content (20 per cent plus) currently fetching Rs 1,500-1,700 a quintal in auctions at Mhow, Indore, Ujjain, Indore and a few other mandis in the Malwa region of Madhya Pradesh. Farmers, on their part, have refused to deliver at these rates, more so in the light of last year’s crop selling for Rs 2,500-2,600 a quintal.

Once harvesting picks up in the next couple of weeks, fears are being expressed about prices dipping below even the minimum support price of Rs 1,390 a quintal declared by the Centre for 2008-09.

More Stories on : Agriculture | Agricultural Policy | Excise and Customs | Exports & Imports

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