The Hindu Business Line : Fear of trade

To cope with the fears raised by free trade agreements, farmers and fisher folk should learn to compete well and efficiently, rather than plead for government handouts.

K.G. Kumar

Votaries of free trade have long expounded the virtues of unfettered movement of goods and services across borders in a global economy that has become irrevocably integrated. As a State that has long enjoyed trade links with several countries across the seas, Kerala has certainly benefited from such trade flows, especially of agricultural commodities.

Yet, in the current state of affairs of the global economy, which is still gasping under the twin clutches of a financial crisis brought on by predatory lending and the failure of regulatory mechanisms, and the larger systemic crisis of the economies of fundamentally free-market capitalist nations, free trade is fast becoming a bugbear for several people.

Thus it was no surprise to read of last week’s protests by sundry groups in Kerala against the Free Trade Agreement (FTA) that India has signed with the 10-member Association of Southeast Asian Nations (ASEAN). Two Ministers from Kerala – Defence Minister A.K. Antony and Overseas Indian Affairs Minister Vayalar Ravi – are said to have raised the matter at a Union Cabinet meeting, echoing fears that the pact would hurt cash-crop farmers in Kerala.

‘Negative list’

According to some newspaper reports, Union Commerce Minister Anand Sharma has assured Kerala’s political leaders that some agricultural and fisheries products from the State would be put on the ‘negative list’ to protect Kerala’s interests. Yet, in the absence of concrete action, farmers and fishermen in Kerala are particularly worried.

For instance, the Kerala Swathanthra Malsyathozhilali Federation (KSMTF, the Kerala Independent Fishworkers’ Federation) and Focus on the Global South, a regional research and campaign group based in south India, said in a recent statement that the FTA would have an adverse impact on the livelihoods of thousands of people in the fisheries and agriculture sectors, especially in Kerala, where a large number of people are engaged in fishing, fish marketing and processing.

Biggest threat

The biggest threat is likely to come from imports from Thailand, the world’s largest exporter of farmed shrimps, and Vietnam, the world’s eighth-largest seafood exporter.

According to the statement, the FTA is likely to permit zero-tariff imports of sardines, mackerels, anchovies and crabs, as well as cheaper imports of popular species such as cuttlefish, squid, shrimp, sole and pomfret. Should the FTA allow Thai fishing vessels access to Indian territorial waters, the result would be overfishing and depletion of fish stocks, especially since national fisheries regulatory legislation is scant or ineffectual.

The statement also pointed to Malaysia’s palm oil industry as a strong lobby for the FTA. As the world’s largest producer of palm oil, Malaysia will be able to flood the Indian market with duty-free palm oil, which, in turn, would depress domestic prices for local producers. The other sections in Kerala that are likely to be affected, according to the statement, include small-scale tea, coffee, coconut, rubber and pepper farmers.

Farmers’ opposition

The All-India Kisan Sabha has also opposed the proposed FTA, saying that India’s farmers would not be able to compete with other ASEAN nations in cash crops like rubber, coconut, pepper, coffee, tea and cashew, and other products such as coir and seafood.

Some of these fears appear to have a grounding in economic reality.

According to the Kerala State Planning Board, Kerala’s agricultural economy has been undergoing a structural transformation since the mid-1970s with the switchover of a large proportion of its traditional crop area, traditionally used to grow subsistence crops such as rice and tapioca, to more remunerative cash crops such as coconut and rubber. Today, of a gross cropped area of 27.69 lakh ha in 2007-08, food crops comprising rice, pulses, minor millets and tapioca occupy only 11.57 per cent.

Areca nut and coconut farmers in Kerala are complaining of a steep fall in prices, mounting costs of cultivation and an acute shortage of labour. During 2007-08, the area of coconut under cultivation declined by 70613 ha over 2006-07. The other major commercial crops that recorded considerable loss in area include cashew nut, ginger, pepper, areca nut, banana and tapioca.

Welcome, thus, was the recent announcement by Union Agriculture Minister Sharad Pawar of a Rs 1,000-crore subsidy on diesel to paddy farmers across the country whose paddy transplantation activities have been hit by delayed and erratic rain. Pawar also announced a budgetary subsidy of Rs 1,000 on diesel to farmers who relied on pump sets for irrigation.

These are only minor salve for Kerala’s farmers and fisher folk faced with the prospects of competing with imports from the ASEAN countries.

But they also need to realise that some of the solutions and counter-measures lie in their own backyards. Rather than plead for government handouts, they ought to also get the basics right – raise productivity, cut losses through better production processes, add value to their products, invest more in technologically innovative farming and fishing techniques, and learn to sell well in a cruelly competitive global market.

The writer can be contacted at kgkumar@gmail.com

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