In the on-going tariff war between the US, China, India and the EU, as India hikes import tariffs on apples, walnuts and almonds imported from the US by 20% and 25%, Kashmir and Himachal Pradesh’s fruit growers sound somewhat upbeat.
Ziraat Times takes a look if consequent lower US import demand as a result of higher import tariffs would translate into higher prices for Kashmir apples and dry fruits and whether this situation would benefit the farmers and whether it is sustainable.
- India imports 1.60 lakh metric tonnes of apples annually from the US valued at around $160 million
- Overall, this year, India has imported over 7.7 million apple boxes (Valued at $118.3 million)
- Kashmir produced 17.26 lakh metric tonnes of apples in 2016-17
- The 45-day gap between the announcement and the implementation of the tariff structure may lead importers to buy products at lower duty, hoard, and then sell at the higher rates effective after August 4.
- India would look for newer import markets
- Currently, about 2 million cartons of Washington apples worth $40-50 million are en-route to India
Farooq Sopori and Ehtisham Malik
As India raised customs duty on almonds by 20 percent, walnuts by 20 percent and apples by 25 percent, there is a sense of muted jubilation among orchardists in Kashmir and Himachal Pradesh.
India formally wrote to the WTO about its decision of raising import duty on apples, walnuts and almonds imported from the United States last week. The decision will come into effect on August 4, 2018.
This quantum of duty reduction is much lower than the earlier suggested 100 per cent raise. Nevertheless, this would come as a breather for the growers of apples, almonds and walnuts in Kashmir who lately were facing stiff price and quality competition from these commodities imported from the US to India’s markets.
India in a letter to the World Trade Organisation (WTO) stated that the suspended concessions are substantially equivalent to the amount of trade affected by the measures imposed by the United States.
This move came as retaliation to Washington’s move to impose higher duties on Indian steel and aluminium exports.
In a way this is a collateral benefit. Ziraat Times spoke to the sector business leaders to understand how do they see this development and whether this would translate into any benefit to the farming community.
Lately, Kashmir apple, almonds and walnuts are facing stiff competition, resulting in less than expected returns for the farmers and fruit dealers. Production costs are growing steadily.
With the government of India raising import duty on these fruits, Kashmir farmers say that it would provide them with a cushion to do better sales wise as well as increase the prices of fruit which means good returns for them.
Chairman, Kashmir Valley Fruit Growers cum dealers union, Bashir Ahmad Basheer while welcoming the move told Ziraat Times that the government of India needs to do more by way of hiking import duty on import of fruits from other countries to give impetus to the local fruit industry.
“Instead of promoting foreign fruits, there is dire need to promote local production which would be good for the development of farming sector in J&K. As the government of India has set target of doubling farmer income by 2020, this step of raising import duty is a step in the right direction.”
But Mr Bashir is aware of the quality challenges with Kashmir’s fruits.
“We must acknowledge this fact that we are technologically far behind western countries in horticulture sector. When it comes to fruits, though our fruits taste better, imported ones have better presentation and good quality which stresses our sales and eats up our market share”, he said.
Mr Bashir believes that Kashmir walnuts have faced the brunt as a result of which walnuts were sold in open market at throwaways prices.
Director Horticulture Kashmir, Manzoor Ahmad Qadri believes the hiking of import tariff on US fruit imports was a “good decision which would help our horticulture sector.”
“Foreign apple is eating our share. By raising import duty on it, its prices would go up which would provide upper hand to our local fruits”, he believes.
However, the fact remains that while India has raised import duty on US apples, it is likely to import the deficit from other countries. Kashmir apples are only a small proportion of the market share in India today.
While terming the hike in import duty as a positive development, President, Sopore Fruit Mandi, Mushtaq Ahmad Tantray told Ziraat Times that “due to host of reasons we are not able to fully explore our potential in the horticulture sector.”
“As the government of India is signing free trade agreements with several countries it is eating our share in the Indian market. However this decision of raising import duty of USA produced apples, walnuts, almonds is a good step which would give us a breather. But more needs to be done to protect our local horticulture produce.”
“Though annually horticulture sector records Rs 5000 to 6000 crores turnover, but our actual potential is much larger. The reason for not fully exploiting our potential is lack of government support both at state and centre level”, he further said.
While noting that Kashmir apple constituted only 3 percent of world’s apple produce, Professor and Head, Division of Agricultural Economics, SKUAST-K, Shabir Ahmad Wani told Ziraat Times that while the decision of government to raise import duty is good for the horticulture sector, we lag behind in competition due to fact we are lagging in terms of technology and scientific interventions.”
Indiscriminate almond and walnut imports over the last few years have almost crippled walnut growers in Kashmir. Although there have been moments of price upsurge as well for the walnut, almond farmers in Kashmir are in distress.
President of the Dry Fruit Association, Kashmir, Haji Bahadur Khan echoes that.
“California walnut has hit lakhs of growers and traders in Kashmir. He said intense competition from imported walnut and almonds during last few years has led to nosedive in prices of Kashmiri walnuts and almonds in mandis and markets outside”, he told Ziraat Times.
“ It is a good sign that government of India has raised import duty on these fruits. As Kashmiri walnut giri is a natural organic product and we request government that walnut exports to India from other countries be restricted by levying huge import duty on them. This will help to save livelihood of lakhs of people especially marginalised growers in Kashmir who are already suffering huge losses as prices have dropped by more than 50-60 per cent,” Khan said.
Khan said lakhs of people are associated with walnut and almond production and trade across Kashmir division and some parts of Jammu.
India expects around USD 238.09 million of duty to be collected through the measure imposed on the US. In March, the US imposed 25 percent duty on certain steel products and 10 percent on aluminium products, which will help the US collect $241million of duty.
Kashmir’s fruit industry’s growth story
The production of fruits has increased from 16.36 lakh metric tonnes (MTs) in 2007-08 to 22.35 lakh MTs in 2016-17, thus an increase of 5.99 lakh MTs
“Area under fruits in J&K state has increased from 2.95 lakh hectares in 2007-08 to 3.38 lakh hectares in 2016-17,” J&K’s Economy Survey 2017 says.
The report states that growth of horticulture sector can be attributed to various initiatives taken by the centre government and state government like mission for integrated development of horticulture, Prime Ministers developmental package and high density plantation programme.
“Under these schemes, due attention is being given towards establishment of High Density orchards, better post-harvest management by establishment of fruit mandies and creating controlled atmospheric storage facilities in addition to establishment of Fruit/Vegetables Processing units, technological support, awareness/publicity initiatives, research and extension etc,” the report adds.
It further states that around 33 lakh people in the state of JK are directly or indirectly associated with horticulture.
“There are around 7 lakh families comprising of about 33 lakh people which are directly or indirectly associated with horticulture. Horticulture development is one of the thrust area and a number of program have been implemented in the past, resulting in the generation of higher incomes in the rural areas, thereby improving the quality of life in villages,” the report adds.
“Apple is the most important fruit crop of J&K State, about 48% of the area is covered under apple as per the horticulture census 2016-17. It is also important in terms of production (17.26 lakh Mts) and provides the maximum marketable surplus of about 30% of A grade, 40% of B-grade and 30% of C grade of prefalls and culled apples which accounts for substantial quantum of around 5.18 lakh Mts which needs to be exploited as raw material for processing industry. The increased production due to various developmental schemes yielded some good results and our export worth approx.Rs 6500 Cr were reported during 2016-17,” it adds.
J&K State is well known for its horticultural produce both in India and abroad. The state offers good scope for cultivation of horticultural crops, covering a variety of temperate fruits like apple, pear, peach, plum, apricot, almond, cherry and subtropical fruits like mango, guava, citrus litchi, phalsa and Ber etc, besides medicinal and aromatic plants, floriculture, mushroom, plantation crops and vegetables. Apart from this, well known spices like saffron and black zeera are also cultivated in some pockets of the state. As a result, there is a perceptible change in the concept of horticulture development in the state.