Shippers left high & dry
due to policy changes on agri-exports
A group of dry bulker owners are
in two minds on whether the additional focus on shipments of agricultural
commodities would reap the desired dividends, especially at a time when iron ore
exports are in a sorry state and coal imports at a low ebb in the wake of the
depreciating value of the rupee against the dollar.
Although India is one of the
largest producers of food and non-food farm products, the flip-flop in
government policies has been a cause for concern for the trade since the
industry thrives on certainties.
It may be recalled that the
government's call for a ban on cotton exports a few months ago had evoked strong
protests from farmers, which snowballed into a massive agitation. This prompted
the government to revoke the ban due to fears of electoral losses.
The trade was ill at ease due to
the ban owing to apprehensions that it would result in loss of business, as
exports to China, the largest buyer of the Indian cotton, would become
The cotton industry feared that a
prolonged ban would force China to look for alternate supply sources, which in
turn would have a ripple effect on Indian cotton by pushing prices of the
While the ban would have
frustrated all efforts to create a stable capacity in the medium term, its
revocation saw China continuing its purchase of Indian cotton.
However, shippers are keeping
their fingers crossed as they are still unsure about the stability of government
The government also lifted the
four-year ban on wheat exports in July last year, after countries like Russia,
Australia and Canada began foraying into India's traditional wheat market.
On the sugar front, the
government's move to allow exports in excess of three million tonnes, as agreed
earlier, by eliminating quantitative curbs failed to cheer shippers.
While experts agree that the
flagging rupee against the dollar has rendered Indian sugar cheap in the global
market, they contend that this apparent decline in prices need not necessarily
lead to a quantum jump in exports due to several factors.
Firstly, they point out that
pushing sugar in the current global market may not be easy, given that there was
a glut, with excess output estimated at more than 9 million tonnes as compared
to the earlier projection of 8 million tonnes or so.They pointed that the easing
was just a temporary phase and the same could be brought back in case domestic
supplies were threatened.
Following a series of flip-flops
and delays, they said the government's recent hints that curbs could be
reimposed once exports touched a certain level have kept markets on edge.
The government did the same on
wheat and rice exports late last year, eliminating curbs but tacitly indicating
a limit if the situation so warranted.
Stating that the industry would
like to see India as a reliable supplier of agri-commodities in the global
market, shippers stressed that this would require stability in government
policies and predictability, which they today consider is a tall expectation.
Some shippers believe that the
current uncertainties with regard to exports of wheat, sugar and cotton can be
partially eliminated if India, with a frail rupee, enters into bilateral trade
pacts with countries in West Asia, Africa and SAARC. They feel that such pacts
will guarantee assured shipments and therefore business to trading firms.
Contending that shipment of agri-commodities is
not just about availability of shipping space or freight, experts point out that
there are many other critical factors such as mode of transport, port
facilities, connectivity, service contracts, contract negotiation, health
hazards, safety issues, labour, congestion and the global scenario. To cite an
example, they say that the high cost of procurement and transport to ports often
renders the free-on-board price of India's agri-exports uncompetitive in the
Source : Exim
News Service - NEW DELHI, June 26