Explained: Our aam & their taang

Harish Damodaran explains what’s on the table along with mangoes, chicken legs and global trade.

Written by Harish Damodaran | Published: January 30, 2015 2:45 am

Days after a European Commission committee voted to lift the EU ban last May on the import of Indian mangoes, India this week appealed to the Dispute Settlement Board of the World Trade Organisation, seeking to overturn a WTO panel ruling that New Delhi’s ban on the import of US poultry products violated global trade norms. India had banned the imports in 2007; the US took it to WTO in 2012, which in October 2014 ruled India was being ‘arbitrary’. HARISH DAMODARAN explains what’s on the table along with mangoes, chicken legs and global trade.

What is common to the (now-lifted) EU mango ban and India’s ban on US poultry product imports?
Both represent ‘sanitary and phytosanitary (SPS)’ steps countries take to prevent entry of imported foods, ostensibly to protect their own human, plant and animal lives from harmful pests, microbes or additives. The EU ban on Indian mangoes — and on taro (arbi), eggplant (baingan), bitter gourd (karela) and snake gourd (parval) — was imposed in May 2014 after 200-odd consignments were found contaminated by “non-European fruit flies”. On January 20, the European Commission voted unanimously to lift the ban after the Commission’s Food and Veterinary Office (FVO), which visited India in September, reported “significant improvements” in certification systems and infrastructure to guarantee safe exports. Restrictions on the four vegetables remain until another FVO team’s visit and inspection.

In 2007, India imposed restrictions on US poultry product imports citing concerns over avian influenza. In October, the WTO ruled that the ban was discriminatory and lacked scientific evidence. It held the US had seen no outbreak of high pathogenic avian flu since 2004, while India, despite not allowing US imports, had recorded over 90 such outbreaks. On January 26, India appealed the ruling.

Are there commercial considerations in such restrictions?
Obviously. Most countries want to protect their farmers from imports and SPS measures often serve as non-tariff barriers. Moreover, conforming to SPS standards — mandatory vapour heat treatment or irradiation of fruits, engaging pre-clearance quarantine inspectors from importing countries, using new-generation proprietory pesticides leaving lower traces of residues, etc — imposes additional costs on exporters. European countries, in particular, are known for setting stringent phytosanitary certification requirements that render exports of most farm produce uncompetitive.

India is relatively new to this game. In the past, it relied on quantitative restrictions, or clamping exorbitant import duties on agri-products, which the new WTO-presided open global trading system does not permit. In the case of poultry meat, India’s fear is over American chicken legs flooding our market. In the US, consumer preference is for chicken breasts and there is practically no domestic market for legs. The bulk of it is frozen for exporting to other countries. One potentially large market could be India, where leg is probably the most popular cut of chicken.

In the aam and taang game, what is the volume of business at stake?
India’s annual mango production is 18-19 million tonnes (mt), of which exports are barely 55,000-60,000 tonnes — worth less than Rs 300 crore. Three-fourths of these are to West Asian countries. Shipments to the EU have at best been 4,000 tonnes, valued at Rs 50 crore. The impact of the EU ban has mostly been on sentiment, on consumers who have missed their Alphonso.

Chicken is different. India’s broiler meat production of 3.5 mt is way below the US’s 17 mt, and just a shade above the latter’s exports of 3.3 mt. Out of this 3.3 mt, frozen chicken leg quarters alone constitute over 1.8 mt — valued at $ 2 billion. The US Department of Agriculture sees India’s domestic poultry meat consumption growing to 6.4 mt by 2023. This is a market the world’s largest producer (India is a distant No. 5 behind Brazil, China and the EU) and No. 2 exporter (after Brazil) seeks desperately.

For all the latest Business News, download Indian Express App

  1. No Comments.