Unfree to Sell: How Trade Restrictions Hurt Farmers
Farmers in India are subject to excessive regulations at every point of their profession. Rules limit the amount of land they can use, the people they can sell to, how much they can sell for, and even their ability to sell off their land. This protective attitude is amplified when dealing with the international trade of agricultural produce.
Nowadays, India remains a minor contributor to global agriculture trade. In terms of value, India only contributes 2.15% to the total share of global exports. This low share is due to India’s history as a country dependent on aid and the various protectionist policies that have discouraged agriculture trade.
The Agriculture Export Policy states that it is important for India to frame a stable and predictable trade policy with limited interference from the state so that a positive signal can be sent to the global market.
The policy lists down the following three aims that signal an intent of shifting away from agri-trade protectionism:
– providing assurance that the processed agricultural products and all kinds of organic products will not be brought under the ambit of any kind of export restriction;
– identification of a few commodities which are essential for food security in consultation with the relevant stakeholders and Ministries;
– liberalized import of agricultural products for value addition and re-export.
While export restrictions provide temporary relief as an emergency measure, their effects on consumer protection tend to disappear in the long run. These constraints tend to distort incentives for farmers who shift land and inputs away from commodities facing frequent bans and move them towards other products for which policy measures are predictable.