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World trade in agricultural commodities has been far less buoyant over the
second half of the decade of the 1990s, than was earlier predicted. Not
only have world prices of many such agricultural commodities slumped, but
even volumes of trade have not grown much, o the point where in the past
few years, the total dollar value of trade in many commodities has
actually fallen.
There are many reasons for this, including reduced or changing patterns of
food demand across the world. One important factor has been the growing
role of different types of national and international regulation – and
associated requirements for certification and labelling – in governing
agricultural trade generally. Such regulatory regimes attempt to balance
the health, safety and preference needs of consumers with the requirements
of producers. However, the balance is not an easy one, and all too often
the ones who are worst affected are small holding cultivators of
developing countries, who find that they are either unable to afford or
lack the technical expertise to undertake and fulfil, the complex
requirements of certification.
These issues are becoming especially important for Indian agriculture,
which is subject to growing competition (at the margin, and often implicit
rather than actual) from highly subsidised imports in the domestic market,
and a the same time increasingly has to deal with complicated regulatory
practices in the case of exports. As Charts 1a and 1b show, the share of
agriculture in total exports fell quite sharply even in the period between
1998-99 and 2000-01.
Chart 1a >>
Chart 1b >>
Chart 2 shows the value of exports (in US dollar terms) at the beginning
and the end of the decade. Many commodities remained relatively stagnant
in terms of exports, and this is confirmed by the rates of growth
indicated in Chart 3. On the other hand, some of the more buoyant exports,
such as coffee, spices, and fruits vegetables and pulses, are precisely
those in which certification and labelling are likely to play a growing
role in future in world markets.
Chart 2 >>
Chart 3 >>
Tables 1 and 2 detail the various types of regulatory measures that
proliferate in agricultural trade. It is evident that these are not only
complex and manifold, but also tend to vary a great deal between
countries.
Table 1 >>
Table 2 >>
International regulatory
regimes
The Codex Alimentarius
Commission is a joint creation of the Food and Agriculture Organization (FAO)
and the World Health Organization (WHO) to implement the Joint FAO/WHO
Food Standards Programme. The stated purpose of this is : (a) protecting
the health of the consumers and ensuring fair practices in the food trade;
(b) promoting coordination of all food standards work undertaken by
international governmental and non governmental organizations; (c)
determining priorities and initiating and guiding the preparation of draft
standards through and with the aid of appropriate organizations; (d)
finalizing standards elaborated as above and, after acceptance by
governments, publishing them in a Codex Alimentarius either as regional or
world wide standards, together with international standards already
finalized by other bodies, wherever this is practicable; (e) amending
published standards, after appropriate survey in the light of
developments.
The Codex has proved to be an important means of harmonising standards
with a view to satisfying consumers of different countries. Nevertheless,
it is true that the standards so specified often mean a substantial
increase in costs of cultivation/processing/distribution, which in turn
tends to increase concentration in this sphere of economic activity. It is
hard for agricultural small holders to meet or to prove that they meet
such standards.
Some foreign regulations
which affect Indian farm exports
There are many examples of
how regulation in other countries has affected the ability of Indian
exporters to access foreign markets. This example from Europe shows how
even relativelt small measures can have very far-reaching effects. The
European Union has brought in stricter quality legislations on imported
food products including animal feeds specially pertaining to permissible
levels of aflatoxin, hexane and pesticide residues and other harmful
foreign material that enter agricultural produce during post-harvest
handling and processing. This is expected to affect India's exports
negatively, particularly those of groundnut, cashewnuts, walnuts, pepper,
chilies, oilcakes and marine products.
Aflatoxins are potent carcinogenic, immuno-suppressive bio-chemicals
produced when the aspergillus fungus invades certain agricultural
commodities. They tend to pose very serious problems for many agricultural
commodities including maize, chilies, sesame and groundnut. The products
affected in this case include HPS groundnuts, extractions, spice oils,
essential oils, derived from flowers, etc. besides others.
In HPS groundnuts the
aflatoxin level has been brought down to 10ppb in raw nuts and 4 ppb in
consumer-ready processed nuts from 10-30 ppb allowed earlier. The levels
of aflatoxin in foodstuffs develop mostly when moist unsterilized
agricultural products, whether raw or processed, are stored in confined
space with improper air ventilation.
The aflatoxin level in HPS groundnut ranges from a low of 10 to over
130-150 and is linked to the quality of groundnuts. The lower count
groundnut generally is of better quality as it is picked by workers adept
at this job. The EU has set a maximum level of B1 aflatoxin at 5ppb for
nuts not
meant for direct consumption and at 2 ppb for
nuts meant for direct consumption. This is a very substantial tightening
compared to current norms in most other parts of the world. Earlier India
had set the B1 level at 30ppb and many countries including China, USA,
Vietnam and Argentina at 20ppb. This new norm is likely increase the price
of imported nuts substantially within the EU.
In addition, the EU has limited the levels of hexane in cocoa butter fat
and oil to 1 ppm, in defatted protein products and flours to 10 ppm,
defatted soyabean products to 30 ppm and cereal germs to 5 ppm. Already in
1997, the EU had reduced the permissible levels of residues in oil
extractions of various flowers and spices. The products cover exotic oils
derived from jasmine and tuberose, bud oils like cinnamon bark and
turmeric root, and seed oils like ajwain, star anise, cardamom, cumin,
coriander, fennel, fenugreek, kalonji, etc.
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