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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
India
The government of India assists agricultural export promotion through the Agriculture and Processed Foods Export Development Authority (APEDA) and the Marine Products Exports Development Authority (MPEDA). Together, government grants from export fees to these agencies were $6.1 million for 1995/96. India continues to operate quasi-governmental marketing boards under the Ministry of Commerce for tobacco, tea, coffee, and spices. Government funding from export taxes for the commodity boards is estimated at $5.2 million. Industry funding for APEDA, MPEDA and the commodity boards is estimated at $1 million in 1995/96. In addition, several private trade organizations are involved in export promotions, although promotion expenditures for these organizations are not available.
India continues its relatively high degree of intervention in agricultural trade, although it maintains a very low level of direct export subsidies. The government of India administers export quotas for many commodities, including wheat, coarse grains, sugar, cotton and dairy products. Until recently, imports of vegetable oils and grains were controlled by government monopolies. The State Trading Corporation of India (STC) is now the sole importer of vegetable oil and wheat for government programs, but the private trade is allowed to import non-tropical vegetables oils and private millers (but not traders) are allowed to import wheat.
In the early 1990s the government of India began to encourage the development of the agricultural sector by subsidizing inputs, eliminating taxes, allowing duty-drawback for food processors and maintaining import restrictions on most food products.
The government of India does not support its exports with direct export subsidies, but, in late 1995, reinstated a transportation subsidy for fruits and vegetables. The subsidy is valued at the lesser of $175 per metric ton or 25 percent of the air freight rate for fresh fruits or vegetable exports to the Middle East or Southeast Asia. For exports to Europe or the United States the subsidy is the lesser of $290 per metric ton or 25 percent of the air freight. Total subsidy spending was $742,000 in 1995/96 and $2.1 million for 1996/97.
The government of India also charges fees to exporters of agricultural products. The fees are credited to the Consolidated Fund of India (the Treasury). The Ministry of Commerce then awards grants to Indian promotion organizations such as APEDA, MPEDA and the Tea Board.
Government Agencies:
The principal government agencies involved in the development of agricultural exports are APEDA and MPEDA. Until a few years ago, APEDA, established in 1986, was a small agency which had very little impact on the development of agricultural exports. However, under new leadership and with a growing budget, APEDA has become a stronger advocate for overcoming domestic hurdles to exports and promoting India's products abroad. APEDA assists promotions of floriculture, fresh fruits and vegetables, processed fruits and vegetables, meat and meat products, dairy products, peanuts, cocoa products, cereal preparations, confectionery, bakery products, alcoholic and non-alcoholic beverages, and non-basmati rice. Over 50 percent of market development efforts are in the Middle East, followed by Europe, Japan, the United States, Indonesia and Malaysia. APEDA’s budget for 1995/96 for all activities was $4.7 million, but actual spending was just $2.7 million, of which $2.3 million was spent on export promotion. Nearly all of this funding came from a Ministry of Commerce grant. The 1996/97 budget was $7.5 million. APEDA is governed by 39 members of the public and private sectors and is staffed by 73 full-time government employees.
APEDA assists in the promotion and development of agricultural export industries; assists in the development of infrastructure to aid exports; registers exporters; establishes standards, specifications and improved packaging for exported products; improves the quality of foreign market promotional activities; collects statistics on exports; provides sources of market information for exporters; and sponsors exporter participation in international trade fairs. APEDA also rationalizes procedures in the Indian government for policies that affect exports
APEDA participated and helped Indian firms participate in a number of food shows. It was one of the chief organizers of the AHARA show in India, and organized delegations to trade shows in Chicago, Russia, Germany, London and Japan. APEDA led trade delegations to the EU to promote rice and flowers and to Jordan to promote wheat, rice and meat. It worked to open the Turkish market for buffalo meat and to ensure India would be approved to ship eggs to the EU. APEDA has announced that it will pay for pesticide residue tests for exporters seeking to export fresh fruits and vegetables to the EU. It is also developing a system for certifying Indian produce as organic.
The other government agency assisting agricultural exports is MPEDA, an agency of the Ministry of Commerce established in 1972 to develop and regulate the marine products industry with emphasis on export promotion. Primary promotion markets are Japan, the United States, the European Union, South East Asia and the Middle East. Principal products promoted include frozen shrimp, frozen fish, squid, cuttlefish and lobster. MPEDA’s budget for 1995/96 was $4.2 million, most of which came from government sources, particularly the Ministry of Commerce’s grant from export levy collections. Spending on export market promotion was $3.3 million. MPEDA also is involved with aquaculture, research, infrastructure and product development. The 1996/97 budget was $4.9 million.
MPEDA has trade offices in Tokyo and New York and is opening a new office in Bremen. MPEDA disseminates market intelligence to its members; works to resolve trade complaints and improve Indian quality; participates in trade fairs; and provides promotional material and export directories to its offices abroad and advertises in trade journals in Japan, the United States and Europe. MPEDA’s focus will continue to be quality and food safety.
Marketing Boards:
India continues to operate marketing boards for tea, tobacco, coffee, and spices. Board are quasi-governmental non-profit organizations under the Ministry of Commerce. Tea is the chief product promoted by a board. The 1953 Tea Act allows the government to collect fees on the exports of tea, from which a grant is made to the Ministry of Commerce for the promotion of tea and other activities to improve tea exports. The total budget for the Tea Board in 1995/96 was $10.6 million, only $3 million of which was spent export promotion. Funding for the Tea Board from the Ministry of Commerce was $4.5 million with the rest coming from the central government and other charges to producers and exporters. Funding for other export boards (coffee, spices, tobacco and cashews) is estimated at $10 million for 1995/96 of which only $2.2 million was spent on export promotion.
The ability of the boards to raise funds from industry has diminished in recent years. Some boards are no longer monopolies (coffee) and others are no longer required to register all exports (tobacco, tea). The Commodity Boards focus on development of the domestic industry by encouraging, monitoring, and regulating production while promoting exports and domestic consumption. The Boards also sponsor, assist, and coordinate scientific, technological, and economic research for the promotion of their respective industries.
Current export promotion efforts focus on developing new markets within the countries of the former Soviet Union, while expanding exports to other European countries. Market promotion activities include gathering production and trade information, participating in foreign trade shows, sponsoring trade delegations, assisting foreign buyers to locate sellers in India, organizing seminars and workshops, and promotion for Indian-origin commodities.
Private Trade Organizations:
Finally, several private trade organizations are involved in export promotion. They include: the Soybean Processors Association of India (soymeal), the Solvent Extractors Association of India (rapeseed meal, sunflowerseed meal, rice bran extraction), the Groundnut Extraction Export Development Association (peanut meal), the Indian Oil and Produce Exporters Association (peanuts and sesame seeds), the All India Cotton Seed Crushers Association (cottonseed meal), the All India Rice Exporters Association (rice), and the Livestock and Meat Exporters Association (meat and meat products). Most of the meal exporters focus on Europe, Southeast Asia, and Far East Asia. Rice exporters target countries in Europe and the Middle East. Meat exporters aim their promotions at the Middle East and Southeast Asia. The trade organizations collect annual membership fees. Under the Export/Import Policy of the government, some of these associations had been designated as Export Registering Authorities by the Government, which enabled them to collect an export registration fee. However, this authority was withdrawn at the beginning of the 1995/96 fiscal year, leaving these organizations with dramatically reduced budgets. Available information indicates that the total budgets of all these organizations is under $1 million and expenditures for export promotion total nearly $150,000.
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