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Business News/ Politics / Kerala parties fear cheaper cash crops may disrupt local supply

Kerala parties fear cheaper cash crops may disrupt local supply

Kerala parties fear cheaper cash crops may disrupt local supply

Graphics: Ahmed Raza Khan / Mint Premium

Graphics: Ahmed Raza Khan / Mint

Kochi: Concern is mounting across Kerala, home to large plantations of tea, coffee and pepper, over a free trade agreement (FTA) India recently signed with the Association of Southeast Asian Nations (Asean). The pact will lower tariffs over a 10-year period on these commodities.

Graphics: Ahmed Raza Khan / Mint

While political parties fear that cheaper versions of items on which import tariffs are to be reduced will flood the market and disrupt local supply, growers fear that the cheaper imports will upend their operations that have high labour and social costs.

The Congress party led United Democratic Front (UDF) has said it will seek a price stabilizing mechanism and the Left parties have public protests planned, including a human chain across the state.

The Communist Party of India (Marxist), or CPM, which is part of the ruling Left Democratic Front coalition government, is planning the human chain of over 700km—almost the length of the state—on 2 October, similar to one in 1987. The 1987 chain, meant to promote communal harmony, linked about 800,000 people.

The UDF, meanwhile, is struggling to justify the pact signed by the Congress government at the Centre and has said it will seek a price stabilizing mechanism in case prices of tea, coffee and pepper fall.

Growers fear the pact could spell disaster since India has a strong domestic market that could attract large inflows of low-tariff products from other nations, jeopardizing the domestic sector.

S. Ramachandran Pillai, CPM politburo member and president of the All-India Kisan Sabha, in an address to farmers late last week, said the pact was a big threat to Kerala’s agricultural sector whose strength was in its cash crops such as tea, coffee, pepper and rubber.

However, some view the concerns with scepticism. Abraham Benhur, chairman of Haritha Sena, an organization of farmers in Wayanad, a plantation district, said the FTA issue was being used as a political tool. “It is countries like Laos or Cambodia that should protest against the pact and not India, which is in a better position among the member nations."

At least two million people are directly involved with the plantations sector.

Raju Baby, secretary of Idukki district’s National Estate Workers’ Congress, affiliated with the Congress-led Indian National Trade Union Congress, refused to comment, saying there were “political issues" involved. However, he maintained that the government would ensure that workers would not be harmed.

Union finance minister Pranab Mukherjee, who was in Kochi on Sunday, said the pact would open new markets and there were enough safety measures, such as anti-dumping protection. “We have enough time to build our domestic sector and make it competitive in the international market," he said at a meeting organized by the Kerala state Congress committee.

There are, however, voices of dissent within the UDF. K.M. Mani, a Congress party member and revenue minister in the former UDF government, said the decision to subject the exclusive list of fixed tariff items, which includes rubber and cardamom, to annual review could be a blow to the state.

Mani said it was the responsibility of the Union government to support farmers by way of subsidy or other schemes when there are heavy imports leading to a price crash. The Indian Union Muslim League, another constituent of the UDF, has said that a meeting of the front had to be convened immediately to discuss the pact’s impact. Kerala accounts for nearly 90% of India’s annual rubber production of 850,000 tonnes and around 90% of the around 11,000 tonnes of cardamom.

R. Sanjith, head of commodities at the United Planters’ Association of Southern India, said unlike most Asean nations, India had a strong domestic market. Cheaper items from other member nations can pose supply problems for local growers, he said.

However, experts are not as sympathetic to the plantation sector, pointing out that such an agreement was bound to have a differential impact in a country with diverse commodities. “FTA or no FTA, Kerala’s plantation sector cannot afford to continue in the current pattern," said K.J. Joseph, fellow at the Centre for Development Studies, an autonomous research institute in Thiruvananthapuram. “With this FTA, it becomes all the more imperative for us to be internationally competitive. This pact has to be turned into an opportunity."

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Published: 25 Aug 2009, 09:40 PM IST
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