RSD/11th Plan/ WTO AND AGRICULTURAL POLICY IN KARNATAKA 11 th Plan Imperatives

RSD/11th Plan/ Why Get in to International Trade? Trends in Net Income from Agriculture Stagnated Domestic Markets are Exploitative and Market Margins are High Large number of Small and Marginal Farmers Agricultural Trade Scenario in Karnataka is Encouraging Agreement on Agriculture: Minuses and Pluses Implications of Agreement on Agriculture

RSD/11th Plan/ High and Low Points Low Points Large share of drought –prone area and meager supportive irrigation. Lack of capital formation. Large share of Small and Marginal Farmers Domestic Market imperfections both in the factor as well as product market. High density of low value crops with high risk. Information Asymmetry

RSD/11th Plan/ High Points Emergence of high-tech and High Value agriculture. Highly diversified sectoral Trade. Possibility of organising groups of small producers. Availability of Ports Enterprising and Innovative Farmers Proactive Polity and Bureaucracy

RSD/11th Plan/ Support of the Crop Economy Emergence of Floriculture and Horticultural crops in the State. Strengthening of traditional trade oriented crops: Coffee, Spices, Cashew, Groundnut, Grapes, Fruits, Rise of New trade oriented crops like: Rose Onion, Gherkin, Nigerseeds, Vanila Picking up of Agricultural Trade through KAPPEC The stagnation during the last decade: 1997 to 2006

RSD/11th Plan/ Table 1: Growth Rates in the Crop Economy: CropsAreaProductionProductivity Rice Ragi Jowar Bajra Maize Wheat Minor millets Total cereals Tur Total pulses Total foodgrains Groundnut Total oil-seeds Sugarcane Cotton Tobacco (Per cent per annum)

RSD/11th Plan/ Agricultural Trade Scenario in of Karnataka

RSD/11th Plan/ Karnataka’s Trade Performance Note: dat pertain to April 2005-December 2005 Source: Karnataka Agricultural Produce Processing and Export Corporation (KAPPEC) (Value in Rs. Crores)

RSD/11th Plan/ Agricultural Exports from Karnataka Coffee ProductsSilk ProductsCashew & Cashew KernelsAgricultural & Processed Food Products *

RSD/11th Plan/ Agricultural Exports from Karnataka SpicesTobacco/ BeediBangalore Rose Onion GherkinsFlowers *

RSD/11th Plan/

RSD/11th Plan/ Agreement on Agriculture (AoA) Market Access, Domestic Support and Exports Competition, Trade Related Investment Measures and Trade Related Intellectual Property Rights Make clear distinction between types of subsidies. Tariff reduction obligation on Developed countries-( by an average of 36 per cent over a period of 6 years) and developing countries – ( by 24 per cent over a period of 10 years) Agreement on Sanitary and Phyto-Sanitary (SPS) Measures provides ensuring the regulations given under the agreed rules

RSD/11th Plan/ Implications of AoA on the Karnataka Agriculture Sector Non Existence Level Playing Field – Small holdings and Weak farmers Spurt in cheap imports of agri commodities and its consequences on food security, disincentive to the producers and price fluctuations. Emergence and strengthening of foreign producers and traders Infrastructural bottlenecks as deterrents. Lack of Information and presence of touts

RSD/11th Plan/ Meeting the Challenges Creating Strong groups (Chain) out of Weak(!) Links Infrastructure as the Key Development intervention Competing in the Market with Collective Strength Information Dissemination Formulation of short, medium and long strategies to enhance the Export performance. More Number of Commodity based trade hubs established and managed by Farmers

RSD/11th Plan/ Favorable agro-climatic zones for varieties of crops. Comparative advantage in the yields of Rice, Jowar, Bajra, Sugarcane and cotton. Huge potential in exporting the commodities like coffee, cashew, cotton, sugar, tobacco, processed food products (fruits & vegetables), animal products, floriculture and coarse cereals Innovative and enterprising farmers Initiatives During 11th Plan: A SWOT Analysis: Strengths-

RSD/11th Plan/ Weakness- Non-availability of infrastructure like water, quality power supply and roads High land fragmentation and low productivity per unit area Existence of weak marketing information system. High Interest rates for Agriculture investment & export finance. Vast gaps in yield and technology transfers

RSD/11th Plan/ Opportunities- Comparative advantage in primary agricultural, horticultural products and processed foods, floriculture, and other primary forest products A three-point strategy of creating an incentive structure, providing infrastructure, facilitating a transparent system of export administration and reducing pre- export and post-harvest costs Ease of handling commodities through the International Airport and Mangalore and Karwar Sea Ports. Establishment of Farmers ’ Export Consortiums bring together the farmers with small quantity of exportable surpluses to reap the advantages.

RSD/11th Plan/ Threats- Import surges of agricultural products that in turn likely to create welfare loss and disincentives for domestic producers. MNCs are more likely to take advantages due to access to information about the world market. Emerging new forms of QRs in the garb of Sanitary and Phyto-sanitary measures On the negotiating platform of WTO, the partners from groups of countries (EU, Cairns Group) operate in unity among themselves whereas the opinion is divided among developing countries that makes the negotiations unsuccessful.

RSD/11th Plan/ Action Points for 11 th Plan Participation of the State in Policy Discussion at the Centre with Min of Commerce Identification of Priority commodities for trade needing particular attention. Coffee, Cashew, Silk and Other Produce. Identification of Special Products and Special Safe Guard Measures Establishment and strengthening of Commodity Boards with farmers ’ Initiative Understanding of the Special safeguard measures and Phyto sanitary measures Revitalization of the WTO Cell and Dissemination of Information and Establishment of Nodes of KAPPEC

RSD/11th Plan/