"Do you think India's membership in the ASEAN will spell

disaster for the traditional commodity farmers of Kerala?"

In my opinion India’s membership in the ASEAN will spell a great disaster for the traditional
commodity farmers of kerala.

Introduction

ASEAN (Association of South East Asian Nations) is an agreement with India and ASEAN
countries to import certain electronic as well as agricultural goods in to INDIA. The agricultural
products listed in the agreement include tea, coffee, rubber and pepper. Kerala is the major
producer of such goods in India. If such an agreement comes into action it will reduce the price
of such goods in turn affecting the farmers of Kerala and the economy as well.

India's share in international trade has increased from 0.7 percent to 1 percent, which is a
remarkable achievement, some say. In the meantime, lakhs of farmers in Kerala are being
adversely affected by reduction of import tariffs on edible oils, spices and other cash crops.

It was 1 year before the India-ASEAN free trade agreement came into existence. Even though
this agreement got signed on August 2009, it came into existence on January 2010. Majority of
people’s and farmers representatives were in great tension about this agreement as they feared
about the depreciation of their food and cash crops. But in practice the market price of almost all
crops increased.

Facts

• As per he ASEAN agreement, the tax and levies for export as well as import from India
to ten other countries will undergo a phase by phase reduction. In the year 2016 the tax
and levies for about 4000 products will become nil.
• The other ASEAN countries include Malaysia, Singapore, Indonesia, Myanmar, Brunei,
Vietnam, Philippines Laos and Cambodia. Apart from this India has made free trade
agreement with North Korea and Japan.
• Some products of India are kept preserved from the reach of this agreement to preserve
their value. There are 1259 such products.
• Agreement regarding the Services and Investments are yet there to be signed by India
with ASEAN countries.
• Prime Minister Dr. Manmohan Sigh and Minister of Commerce Anand Sharma told that
the rights and interests of the farmers will be kept preserved in all these agreements.

ASEAN and Kerala

Before the signing of this agreement the central government got lot of complaint from various
states including Kerala doubting the depreciation of farmers products. It is being said during
those times that, as the duty free import comes the market value for Rubber, Coconut, Aracanut,
Tea, Coffee and Spices will reduce. The present market situations show that all these fears were
wrong. A price comparison of 2009 and 2010 will clearly prove this. There is also no effect in
the price of fishes too.

Facts

• Kerala is definitely going to see the worst effects of it since a number of products
produced in Kerala feature on the list of the ASEAN agreement - these items include
pepper, rubber and coffee. If large-scale import is permitted, it would badly affect the
prospects of Indian goods. The farmers of Kerala are already witnessing competition
from ASEAN countries. Farmers have been facing a tough time even before this. A
majority of farmers have stopped farming altogether and have migrated to Gulf countries.
The farmers who remain go through hardships that put their lives at stake. But farmer
suicides don't even make the news anymore.

• Poor rains and the indiscriminate use of land are two major problems. Apart from that,
the UPA government's proposed Food Security Bill is another factor of concern. India is
slowly emerging as a services hub, and our food production is falling. If we consider this,
the ASEAN agreement is a good step forward in the right direction. By importing food
and other items, the government can control the price hike. But the government should
also consider the interests of the poor farmers and small-scale traders as well. In Kerala,
they have already started protesting against the agreement. State and central governments
should consider these issues seriously and should do everything to protect their interests
and save farmers from suicide.

• Minimum price guarantee and subsidies are the two measures that can be taken in this
regard. State policies should be in favor of farmers and should put pressure on the Centre
to protect the farmers of the State.

In the case of coconut

There are 40 lakh coconut farmers in Kerala who are being adversely affected by this reduction
of import tariffs of edible oils, ostensibly in order to contain inflation in the markets of northern
Indian states. The announcement of export subsidy for export of coconut oil in the Foreign Trade
Policy does not really help coconut farmers. The price of coconut oil in the international market
is around $675 per metric ton, or roughly Rs.27 per kilogram. On the other hand, the domestic
price of coconut oil stands at Rs.47.50 per kilogram, which exposes the hollowness of this
announcement. This is because the cost of production of coconut oil in India is higher than that
of Phillipines which is the major global producer of coconut oil. Further, Kerala which accounts
for 46 per cent of the coconut area in India is under the grip of the dreadful root (wilt) disease
and eriophid mite attack, which takes a heavy toll on the yield of coconut in Kerala.

Pepper

Similar is the case with pepper where the productivity is only around 320 kgs per hectare in
Kerala, whereas it is 1.2 tonnes per hectare in Vietnam and 2.3 tonnes in Indonesia. The age old
pepper gardens of Kerala sustain only senile pepper vines, which are also subject to quick wilt
disease, which accounts for more than 50 per cent fall in production. The removal of export
subsidy for pepper and the increase in the number of days (from 120 to 180) for holding the
imported pepper for oleoresin extraction has turned into another threat for the pepper farmers.
Since the production of pepper has reduced by half in Kerala, the domestic price of pepper
should have doubled.

Rubber

The productivity of rubber in Kerala is the highest in the world. According to Rubber Statistics
2006 published by Rubber Board of India, the mean annual productivity is 1726 kgs/ha, which is
highest in the world. For a long time now, domestic prices of rubber are much lower than
international prices. As of 9 July, the price of rubber in the international market was Rs.82.95 per
kg while domestic price was only at Rs. 74.25 per kg. Despite lower prices, import of rubber is
continuing. In 2004-05 India imported 68,718 tonnes of rubber which climbed further to 82,000
tonnes in the last financial year. This is because tyre manufacturers and other rubber industries
are importing rubber against advance license duty free. This is an advantage for them over
buying the domestic rubber, wherein they have to pay a rubber cess of Rs.1.5 per kg and a value
added tax (VAT) at the rate of 4 per cent and also excise duty. In spite of this, the central
government is considering reducing the import tariff to 5 per cent, which is a major cause of
concern.

Other products

The Tea and Coffee plantations also tell the same story. Overall, it is quite clear that in the
coming months, almost all the crops of Kerala - rubber, pepper, cardamom, ginger, turmeric,
coffee, tea and vanilla will face a similar crisis as in the case of coconut.

There are 40 lakh coconut farmers in Kerala who are being adversely affected by this reduction
of import tariffs of edible oils, ostensibly in order to contain inflation in the markets of northern
Indian states. The announcement of export subsidy for export of coconut oil in the Foreign Trade
Policy does not really help coconut farmers. The price of coconut oil
in the international market is around $675 per metric ton, or roughly
Rs.27 per kilogram. On the other hand, the domestic price of coconut oil stands at Rs.47.50 per
kilogram, which exposes the hollowness of this announcement. This is because the cost of
production of coconut oil in India is higher than that of Phillipines which is the major global
producer of coconut oil. Further, Kerala which accounts for 46 per cent of the coconut area in
India is under the grip of the dreadful root (wilt) disease and eriophid mite attack, which takes a
heavy toll on the yield of coconut in Kerala.

Conclusion

More than seven years have passed since the current agrarian crisis gripped Kerala. More than 80
percent of agriculture produce of the state is exported. Except rubber, productivity of most of the
perennial crops has been going down in the last few years. Along with the hike in cost of inputs,
farmers are unable to get a profitable price for their products. The prices of almost all the cash
crops, including rubber have crashed primarily due to the export-import policy induced by the
liberalization process and due to the conditions imposed as part of the WTO, FTAs (Free Trade
Agreements - Indo-SriLanka, Indo-Thailand) and SAFTA (South Asian Free Trade Agreement).

This is not all. While the Centre has never intervened to tackle price volatility, on the other hand
it is coming up with policy prescriptions that are pushing farmers out of farming. Take some of
the recent policies.

Perhaps the biggest threat to Kerala's cash crops will be on account of the ASEAN free trade
agreement, wherein India will have to drastically reduce tariffs on edible oil, pepper, tea and
coffee and by 2018, these have to be brought down to zero. ASEAN nations are also demanding
more number of agricultural products to be included in the zero-tariff list. They have not
conceded to India's offer to bring down tariffs by 50 percent and to bring this about effect this in
a phased manner by 2022.