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Indo-Lankan trade pact will sound death-knell for Kerala economy, cry leaders

D Jose in Trivandrum

Coconut oil prices have crashed following panic in the market over the adverse impact of the Indo-Sri Lankan free trade pact, which allows for unrestricted import of the commodity.

The price fell by Rs 400 a quintal at the beginning of this week after politicians commented that the pact for duty-free import of more than 1,000 products from Sri Lanka would hit the Indian coconut market adversely.

The price declined from Rs 5,100 on Saturday to Rs 4,700 on Tuesday, in spite of higher demand on account of the Sabarimala pilgrim season and low arrivals in the market. The price had been hovering around Rs 5,000 for the last one month.

Trade circles fear that the price could fall further once imports from Sri Lanka start taking place.

They feel a revision of the minimum support price for copra has become inevitable in the light of these developments.

The minimum support price of Rs 2,900 fixed last year by the central government did not benefit coconut growers in Kerala as it came at the end of the harvest season.

The members of the Agricultural Price Commission, who visited the state recently, had already recommended a minimum support price of Rs 3,100 for the present season. But the Union agriculture ministry has not yet decided to notify the new price.

The state government had sought a minimum support price of Rs 4,000, taking into account the increase in input costs. The Kerala Coconut Development Board has recommended a minimum support price of Rs 3,900. Even a minimum support price of Rs 3,100 for copra might help sustain a price level of about Rs 4,650 for coconut oil.

Meanwhile, coconut growers and politicians in the state have expressed concern over the Indo-Sri Lankan free trade pact.

A K Antony, leader of the Opposition in the Kerala assembly, has urged Chief Minister E K Nayanar to lead an all-party delegation to to Prime Minister Atal Bihari Vajpayee when he visits Kerala on January 17, to sensitise him to the issue.

He said the treaty, which allows for liberal import of cash crops, has caused anxiety among Kerala farmers.

Antony said the treaty could spell doom for the state since most of the Lankan agricultural products like coconut, rubber and tea form the foundation of Kerala's agricultural economy.

Unless protective clauses are incorporated, the treaty will pave the way for unrestricted imports of these products in addition to marine products, which, he said, would shatter the state's economy.

Antony said the treaty could have been avoided if the state government had taken the initiative to appraise the Union government with its adverse impact on the state immediately after India volunteered to permit the import of more than 2,000 products on very low duty from SAARC member-countries.

The pact was mooted at the SAARC summit in Colombo five months ago. The opposition at that time had alerted the state government to mount pressure on the Centre against the step. But the ruling dispensation in Kerala did not bother to take it up at the time.

Antony urged the government to launch salvage operations by petitioning the Centre to incorporate provisions that would minimise the impact on Kerala's economy. He said Vajpayee's visit to the state on January 17 to commission the Kayamkulam thermal power project should be used to present their case.

He said the opposition was prepared to co-operate with the government fully as the matter is in the larger interests of the state.

It may be recalled that the Communist Party of India, a constituent of the ruling Left Democratic Front, had also urged the government to convene an all-party meeting to discuss the impact of the pact on farmers in the state.

The CPI state council said concerted political action is needed to oppose the pact.

CPI (Marxist) politburo member and All-India Kisan Sabha secretary S Ramachandran Pillai had also expressed concern over the trade pact. He alleged that the pact was formulated in such a way as to protect the interests of the North Indian oil lobby.

Economic experts feel the Indo-Lanka pact will be a big jolt to the coconut farmers in the state, who are already hit by the decline in prices and the root-wilt disease that has damaged the crop.

The rural prosperity of Kerala is closely linked with the fortunes of the coconut since it occupies the largest area (45 per cent) in net cropped area and supports the vast majority of the state's farming community.

The fall in price is attributed to a spurt in supply consequent to the expansion of output and area in not only Kerala but also the rest of India. The area under coconut cultivation in the rest of India has increased from 420,000 hectares to about one million hectares over the past few years. The total area under coconut in Kerala also increased from 660,000 to 910,000 hectares from 1980-81 to 1995-96.

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