Impact of PTAs & FTAs on Kerala's Agri-sector

Impact of ISFTA

India Sree-Lanka free trade agreemant is the first bilateral agreement signed by india. This agreemnt is a having a far reaching imact on indian economy espesially for kerala. This has a direct imapct on the livelyhood of farmers of Kerala. The study reveals that, Indo-Sri Lankan FTA has resulted in higher levels of import of black pepper, which among other things have aggravated the distress of the pepper growers. 

Import from Sri Lanka rose from 2154 tonnes to 7928 tonnes, between 2000 to 2002.  It got stabilized around 6000 tonnes in the last couple of years.  But the sharp rise in other imports to above 50% is a disturbing trend which probably reflects rising imports by EOUs and re-exporters.  Part of this is reported to be marketed domestically.

Sri Lankan pepper is imported primarily for the use of oleoresin industry and extracting units. However part of it is released to the open market which results in depressing the domestic prices.  This has a very serious impact on the pepper farming community of Kerala leading to distress and suicides

Recent efforts by Government of India to put a ceiling on the duty free import at 2500 tonnes is a clear acknowledgement of the harmful impact on domestic prices and income levels of farmers.  In November, the Government of India decided to temporarily stop all imports during the current year. 

Although ISFTA was not entirely responsible for the present level of imports and the resultant farmers distress, it has played a crucial role in aggravating the crisis.  The experience of ISFTA in respect of black pepper is a good lesson to judge the likely impacts of the Indo-ASEAN FTA.

In fact, the impact of ISFTA was confined to very few sectors in agriculture.  In contrast, Indo-ASEAN will have much wider impact as there is high degree of commonness in respect of production base and trade interests between Kerala and certain members of ASEAN.  Hence, it is necessary to bestow greater care and attention on the following aspects in the trade negotiations with ASEAN.