The Hindu Business Line : Panel set up to review Price Stabilisation Fund

THE Government on Tuesday announced in the Lok Sabha that an Expert Committee under the Principal Advisor in the Planning Commission, Dr Pronab Sen, has been set up to review the Rs 500-crore Price Stabilisation Fund Scheme in order to "make it more useful and attractive to the growers".

This was stated by the Union Commerce and Industry Minister, Mr Kamal Nath, while responding to the calling attention motion moved by the Kerala Congress member, Mr P.C. Thomas, and Mr M.P. Veerendra Kumar (JD-S) "to the situation arising out of the steep fall in prices of coffee, tea, pepper, vanilla, cardamom and arecanut owing to the free trade agreements with neighbouring countries".

Stating that domestic prices of these plantation commodities move in tandem with international prices, Mr Nath refuted the suggestion that the free trade agreements with neighbouring countries such as Sri Lanka was responsible for the slidein prices. This, he described, as a "false notion".

He further said the bound import duty on these commodities could not be jacked up; nor there could be quantitative restrictions (QRs) on imports of these items as the country had lifted QR regime a couple of years ago.

He said sufficient safeguard measures do exist within the policy parameters to protect the producers' interests and the Government had been taking recourse to these measures to provide relief to growers.

When Mr Thomas sought extending export subsidy to more cash crops other than natural rubber, the Minister said this had to be looked into in the context of WTO as it had to be WTO-compatible. In any case, he said exports should be not be subsidised.

Responding to the plea for getting geographical indication (GI) to Malabar pepper as high-quality Indian pepper is blended with cheap imported variety and re-exported, the Minister said along with Darjeeling Tea, Alfonso mangoes, Malabar pepper for GIs would also be taken up during the Doha round of trade talks.

Listing out the situation of plantation crops, Mr Nath said in the case of coffee, in the current year, there had been an improvement in the domestic price especially in arabica coffee. In October 2004, the prices prevailed at Rs 80 per kg for arabica and Rs 37 per kg for robusta.

Since nearly 80 per cent of coffee is produced in the country was exported, the industry was dependent on global coffee prices and the regional trade pacts have not hit the price of coffee, he said.

Continuing with the Special Coffee Term loan which gave certain credit related concessions to coffee growers and to further mitigate their problems, a package for the coffee sector for debt reduction was under consideration, the Minister said.

On tea, he said, the average price of tea sold at the domestic auctions registered an increase this year and prevailed at about Rs 67 per kg in October.

He also said that free trade agreement with Sri Lanka or cheap import from Vietnam did not affect the tea prices as the total import of tea last year was roughly 8 million kgs against the country's production of 850 millions kgs.

He also listed out various promotional steps for tea and said that in a couple of days he would be convening a meeting of all tea/Coffee growing States' members of Parliament.

On pepper, he said unprecedented increase in prices of pepper during 1995-96 to 1999-2000 led to emergence of new producing countries such as Vietnam, which did not have a big domestic consumption base.

As there is a view that imports of pepper into India is also a factor in the fall of domestic prices, the Government of India is taking up the matter with Sri Lanka, he said.

Vanilla prices had increased to abnormal levels due to natural calamities in major producing countries such as Madagascar.

Decline in the prices of cardamom is reflective of global prices as also because of excess production In Guatemala, he said.

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