In an exclusive interview with Riceoutlook magazine, Mr. Vijay Setia, former president of All India Rice Exporters Association and an Industry expert expressed views on various aspects of problems engulfing Indian rice industry and their possible solutions.
For the past several years rice growers, rice millers and rice traders are reeling under severe distress. Such a depressing scenario didn’t develop overnight. Mr. Setia stated numerous reasons for deteriorating conditions but appeared optimistic going forward of the rice industry as a whole.
Challenges facing Rice Industry.
Government policies regarding paddy cultivation and their interpretation thereof by officials and middlemen displayed lack of vision. The uneven tax patterns of the states and speculative business strategies of some traders and exporters gave rise to unhealthy competition which completely destroyed the level playing field of our farmers and industry alike. Biggest markets like UAE and Middle East, where the bulk of the rice is exported, saw a flooding of all sorts of businessmen both genuine and otherwise since last 5 years or so. Their emerged an atmosphere of unhealthy competition where one was pitted against the fellow countrymen vying for the larger selling pie at whatever cost. This gave way to the speculative environment fuelled by our banking system where KYC norms were not the order of the day. Huge undue LCs and limits were extended to the undeserving Exporters who were doing business far above their worth with diminishing margins. They would try to make up their profits by shipping lower quality of rice. These fly by night operatives not only affected the business of genuine exporters but also damaged Indian credibility. But things are coming around and we are seeing a lot of improvements going forward.
What in your view are the problems regarding the information by various agencies to the farmers at the start of the paddy season and it’s reaching the market?
Right now the farmers have to go to different places for government and non-government agencies to collect seeds, pesticides, fertiliser and information of Sowing cycles and other government schemes etc. It would be better if the Mandi yards are developed as a single window where all facilities are provided. Thereafter the paddy grower would get fertilisers, seeds, pesticides along with the market for their product at one place. Apart from this the farmer must get all information regarding variety of rice to be cultivated and pesticides used for various rice diseases like white fly etc from the authorized persons stationed at these Mandi Yards. This one stop shop minimizes their efforts but maximise their output. This kind of endeavor would eliminate middlemen and unqualified persons who give incomplete and wrong information to our farmers and often fleece them.
Genetically Modified (GM) rice
This is a very sensitive subject. One must have due diligence and research before one can make a decision over this. On one hand it is good that efforts are being made to bring out best yields with reduced levels of greenhouse emissions but on the other hand there is an issue of interfering with Nature. Apart from this we don’t enough data to know as to how it will affect soil. Just as is the case with BT Cotton, here too it would take time to reach a conclusion before it’s accepted by all.
Introduction of Goods and services Tax impact the rice industry.
GST will bring in the level playing field as far as the state tax parity is concerned. With GST in force whole of India will become one market and there would be swift movement of this perishable commodity. There should be a favourable impact of GST but since it is a regressive tax directly affecting the consumers it should be kept at reasonable levels. Also rice is a staple food which is mostly consumed by poor people therefore the rate of tax will be crucial to keep the inflationary pressure in check.
Steps to improve old markets and to develop new ones
India enjoys good market share in rice especially in Basmati therefore we must maintain this and improve it further so as to reduce our Current Account Deficit (CAD) .With unity among all stake holders of the industry we can lobby to influence our government to frame trade agreements with new markets like Great Britain which after Brexit is on the lookout of new partners. Also we can put pressure through our government to those countries like Iran which try and close rice trade whenever their importers choose to. There are lots of new markets to explore for rice trade through various associations which India is a part of like BRICS, SAARC etc.
Other Issues like FDI in Food retail and Development of food parks
Mr. Setia elaborated about the new policies like development of Special zones and mega food parks that would house new modern warehouses for safe storage of large quantities for long time so that there is minimal rotting of the crop. If given incentives – more corporates would invest heavily in this neglected sector and make swift shipping possible. A country where millions go without two square meals a day, wastage of food is criminal. With FDI coming in new avenues for the farmers would open where big business would buy directly from them at a good price eliminating middlemen who pocket most of the profit.