Commodity MSP Plantation Sector

₹4,112.29cr budget allocation for plantations sector to achieve $400 billion exports

"₹4,112.29cr budget allocation for plantations sector to achieve $400 billion exports"

₹4,112.29cr budget allocation for plantations sector to achieve $400 billion exports for the period 2021-22 to 2025-26

The Central government has increased its allocation to the plantations sector significantly, believing that commodities such as tea, coffee, spices, and rubber can help achieve the $400 billion target for exports in 2021-22.

‘The Expenditure Finance Committee has confirmed a budget allocations of ₹4,112.29 crore for the plantation sector for the period 2021-22 to 2025-26, an increase of 65.42% over the MTEF period (2017-2020),’ said Anupriya Singh Patel, Minister of State for Commerce and Industry, on Monday.

Also Read: Thailand rubber plantation ‘leaf fall disease’ worries Indian growers

Patel told the 128th annual meeting of the United Planters’ Association of India (UPASI), that the government has approved the continuation of the tea development and promotion scheme from 2021-22 to 2025-26, with a financial outlay of ₹967.78 crore for overall tea sector development.

While the incentives for orthodox tea have been phased out, the emphasis has been on resolving the subsidy claims. She mentioned that the provision of ₹298.76 crore has been made for clearing subsidies in the tea plantation sector. More than a million people are directly employed in the tea industry, with nearly half of them being women. According to Patel, the small tea growers sector is establishing itself as a major player in the tea industry, with a 50.23% market share by 2020.

Increasing NR output

Patel stated that rubber plantation productivity has increased from 284 kg/ha in 1950-51 to more than 1,442 kg/ha today. Total Natural Rubber (NR) production is expected to be 7.80 lakh tonnes in 2021-22, and the government has taken steps to expand rubber plantations to non-traditional regions such as the North East.

With the goal of producing at least 75% of the country’s NR requirements from domestic sources by 2025, a project for supporting the development of new rubber plantations in North-East India and improving the quality of processed forms of rubber with a contribution of ₹1,100 crore from major tyre companies represented by the Automotive Tyre Manufacturers Association has been launched. She stated that the plan is to develop 2 lakh ha under rubber plantations in five years.

Patel stated that spice exports will reach a high of $4 billion in 2020-21, with exports of ginger, pepper, cinnamon, cardamom, turmeric, and saffron, all of which have known therapeutic properties, increasing significantly.

According to UPASI President Prashant Bhansali, the value of plantation commodities is estimated to be ₹54,840 crore in 2020-21, with export realisations of ₹12,470 crore. South India accounts for roughly half of the value of plantation commodities, while it accounts for 70% of exports.

Also Read: Heavy rains in coffee-producing states are expected to reduce crop size by 10%

Obstacles encountered

According to Bhansali, plantations in the South have been facing difficult times due to high production costs relative to price realisations. The Covid-19 pandemic has exacerbated the plantation sector’s turbulent times, resulting in severe cash flow issues.

Bhansali stated that restructuring all crop loans and development loans into a single term loan will benefit the sector and have a positive impact on its long-term viability. He also stated that the industry needs to be funded at lower interest rates in order to increase domestic production and improve global competitiveness. He stated that interest rates on all crops and development loans should be reduced to 3% and distributed to all plantations in accordance with the applicable scale of finance.

Bhansali also stated that the Remission of Duties and Taxes on Exported Products (RoDTEP) rates, which are significantly lower than the Commodity Boards’ recommendations, needed to be revised. The subsidised fertiliser for plantation should be linked to the actual acreage under cultivation and allocated on an annual basis.

Also Read: INFAM knocks courtroom looking for MSP for rubber crop

Furthermore, the archaic commodity acts enacted in the 1940s and 1950s are out of date and must be restructured to reflect market realities while considering an increased allocation to commodity boards.