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Oilseed Sector Policy and Market Structure
Market Access After the Removal of Quantitative
Import Restrictions
Biotechnology Regulatory Policy
Economy-Wide Impacts of Domestic and Multilateral
Reform
Wheat Sector Policy and Market Structure
Poultry Sector Policy and Market Structure
India’s Impact on U.S. and Global Cotton
Trade
The Climate for Private Investment in Indian
Agribusiness
Oilseed Sector Policy and Market Structure
India was the world’s largest importer of vegetable oil
during the last 3 marketing years (2001/02-2003/04, October/September),
ahead of the European Union and China. Developments in the oilseed
and oilseed products sector are an important area of concern
for
both Indian policymakers and world commodity markets. The demand
for oil, rather than meal, has been the key driver of the sector
and, with relatively low annual per capita oil consumption of
about
11 kilograms (24 pounds), there is broad scope for continued
growth in vegetable oil consumption and trade. Policy interventions
in
the market have been substantial, including high tariffs on oil
imports, prohibitive tariff- and nontariff barriers for oilseeds,
and regulations restricting plant scale and technology use in
domestic
processing. Although the goal is to promote self-sufficiency
and protect small farmers, current policies have corresponded
with rising
imports, limited production gains, inefficient processing and
marketing, and heavy taxation of consumers. Future demand growth
and changes
in domestic and trade policies may have significant impacts on
global oilseed and product markets.
Recent ERS research has examined policies and performance in India’s
oilseed and oilseed products sector, and the extent to which more
open trade policies for edible oils in the 1990s have affected price
volatility in world and domestic markets. Ongoing research focuses
on analysis of alternate scenarios examining the potential impacts
of liberalization of imports of oilseeds and oils, and of increased
processing and marketing efficiency in the oilseed and oilseed products
sector, on Indian and global markets.
References
India's Edible Oil
Sector: Imports Fill Rising Demand, ERS.
Managing
Price Volatility in an Open Economy Environment: The Case of Edible
Oils and Oilseeds in India, International Food Policy Research
Institute, Washington, DC.
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Market Access After the Removal of Quantitative
Import Restrictions
After nearly 50 years of restricting most agricultural imports with
various quantitative restrictions (QRs), India began removing QRs
in the mid-1990s and, by 2001, removed QRs for virtually all agricultural
commodities. Although market access has improved and imports have
increased, agricultural imports are still affected by an array of
border and behind-the-border measures. Border measures include relatively
high tariffs, and sometimes stringent sanitary and phytosanitary
standards. Behind-the-border factors that constrain trade include
domestic marketing regulations and fees, weak transport infrastructure,
and a fragmented and inefficient domestic marketing system.
Recent ERS research has examined the role of border and behind-the-border
measures for India’s two major farm imports, edible oils and
pulses. Ongoing research will provide an indepth look at India’s
market for apples, with an emphasis on the marketing system and
costs for both domestic and imported apples.
References
India's Pulse Sector:
Results of Field Research, ERS.
India's Edible Oil
Sector: Imports Fill Rising Demand, ERS.
India's Poultry Sector: Development
and Prospects, ERS.
National
Trade Estimate Report on Foreign Trade Barriers, Office of the
U.S. Trade Representative, Washington, DC.
India Relaxes
Restraints on Agricultural Imports, Agricultural Outlook,
ERS.
Phase Out of Quantitative
Restrictions, Government of India, Ministry of Commerce.
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Biotechnology Regulatory Policy
In the United States and some other parts of the world, agricultural
biotechnology has allowed the development of innovative plant
technologies
that have reduced production costs and improved farmer incomes,
enhanced quality attributes desired by end-users, and provided
environmental
benefits in the form of reduced pesticide use. In India, however,
only one of the many available genetically modified (GM) genes—the
Bt gene used in cotton—has been approved for cultivation
by the Government of India. So far, the Government has been unable
to build consensus for a more transparent, science-based regulatory
framework to govern agricultural biotechnology, thus slowing
the development and spread of new GM varieties, compared with some
other countries.
Ongoing ERS research is studying the Indian regulatory system for
GM crops, estimating the costs and benefits of GM crop adoption,
and comparing these with estimates for other countries. The goal
is to provide information to inform the public debate on regulation
of agricultural biotechnology.
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Economy-Wide Impacts of Domestic and Multilateral
Reform
India made major economic reforms in the early 1990s that stimulated
stronger economic growth and reduced quantitative import barriers
for farm and nonfarm goods, which led to faster growth in trade.
Import tariffs, however, remain relatively high and domestic
policy
intervention remains significant, particularly in the agricultural
sector, which was not included in the 1990s reforms. It has proven
difficult to achieve political consensus on domestic and trade
policy
reform in agriculture because of the sector’s major contributions
to income, employment, and consumer welfare. (For more information
on India’s agricultural and agricultural trade policies,
see the policy chapter.) High levels of support
for agriculture in developed countries also make Indian policymakers
cautious in considering either unilateral or multilateral reforms
to agriculture.
Ongoing ERS research, using a global computable general equilibrium
model, is examining the relative impacts on India of 1) unilateral
domestic and trade policy reforms in agriculture and nonagriculture,
and 2) multilateral domestic and trade policy reforms in agriculture
and nonagriculture.
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Wheat Sector Policy and Market Structure
During the late 1990s, following decades of giving priority to achieving
cereal self-sufficiency, India accumulated large government surpluses
of wheat and rice and began to provide export subsidies to help
reduce stocks. The surpluses stemmed from hikes in price supports
and market prices, reduced distribution of cereals associated with
new measures to better target consumer subsidies, and the ongoing
diversification of consumer demand away from cereals. With the budgetary
cost of subsidies to the cereal sector rising and per capita consumption
declining, there is now a public debate on alternative policy options.
Options being debated include shifting price incentives towards
other crops, decentralizing procurement and distribution responsibilities
to state governments, and reducing the role of the public sector
Food Corporation of India in the market.
Current ERS studies are analyzing two aspects of India’s wheat
economy. One is examining the supply, demand, and trade implications
of alternative approaches for setting government support prices
and for managing cereal procurement and distribution through the
Public Distribution System. A second study is examining India’s
wheat marketing system to provide estimates of marketing costs and
the potential for gains in marketing efficiency.
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Poultry Sector Policy and Market Structure
India has one of the world’s largest and fastest growing poultry
sectors. Rising incomes have driven increased consumer demand, while
adequate domestic feed supplies and the spread of integrated poultry
production have boosted supplies of low-cost poultry meat. The continued
expansion of integrated production and availability of low-priced
domestic or imported feeds are likely to be critical to the future
growth of the industry, as well as to its international competitiveness.
Recent ERS research studied the structure and growth of the Indian
poultry industry, along with scenarios for its future growth.
Reference
India's Poultry Sector: Development
and Prospects, ERS.
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India’s Impact on U.S. and Gobal
Cotton Trade
India is among the world’s largest producers of cotton and
textiles, but global competitiveness has been constrained by domestic
regulation, and by trade restrictions under the internationally
negotiated Multi-Fiber Agreement (MFA). With recent reforms to domestic
policies and the phase out of MFA restrictions on December 31, 2004,
India’s role in world cotton and textile trade could expand.
Good quality raw cotton (free from trash and contaminates) is a
prerequisite in producing high-quality textiles and being competitive
in world markets. However, the International Textile Manufacturer’s
Federation has found Indian cottons to be among the most contaminated
in the world, suggesting that quality factors could limit India’s
ability to expand trade in both cotton and textiles.
Ongoing ERS research is studying the progress and potential implications
of reforms to India’s textile industry, and the extent to which
the combination of domestic reform and the end of the MFA may lead
to a significant change in India’s supply, demand, and trade
of raw cotton. An additional ERS study will examine the role of
quality characteristics in India’s cotton market, and the extent
to which the quality needs of the textile sector can be met by domestic
production, as opposed to imports.
Reference
The Forces Shaping World
Cotton Consumption After the Multifiber Arrangement, ERS.
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The Climate for Private Investment
in Indian Agribusiness
Despite faster growth and increased diversification in consumer
food demand, available data suggest only sluggish growth in Indian
farm output during the 1990s. Despite some gains in private domestic
and foreign investment in agriculture in the 1990s, there is growing
concern with the relatively low levels of both public and private
investment in agricultural production, processing, and marketing.
A number of factors have been identified that may be constraining
private investment, including regulations governing domestic movement,
storage, and marketing of major commodities, plant-scale restrictions
in food processing, and restrictions on contract farming and land
leasing.
Ongoing ERS research will attempt to provide an indepth analysis
of the climate for domestic and foreign private investment in several
agribusiness sectors, including oilseeds and oilseed products, fruit
and vegetable processing, poultry integration, and wheat and flour
marketing.
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