Although India's exports of processed fruit and vegetable has increased from Rs 2,454.61 crore to Rs 2,502.28 crore in 2006-07 including the share of products like mango pulp Rs 505.83 crore, dried and preserved vegetables Rs 424.06 crore, pickles and chutneys Rs 293.59 crore, other processed fruits and vegetables Rs 508.15 crore and pulses Rs 770.65 crore, the Indian food consignments are rejected by the developed countries on regular basis due to Sanitary and Phyto-Sanitary (SPS) measures.
Also, in view of growing concern the world over regarding health and safety parameters of food items being imported, international standards on Food Safety Management Systems like HACCP, GMP, GHP have been developed as prescribed by several of India's trading partners such as the European Union.
According to experts, the SPS Regime ensures consistency in quality during all stages of production by adopting quality control drills and exercising control on raw materials and bought out components, manufacturing process, packing and final testing. Manufacturing and processing units, adjudged as having adequate levels of quality control in all these areas, are approved by the Export Inspection Council (EIC) based on the assessments. Units approved under this system are eligible to get certificate of export worthiness without further verification of the quality of the outgoing consignments by EIC and random spot check of the consignments are carried from time to time. Under the simplified inspection procedure, such units have been given the option, either to issue certificate of inspection of export worthiness on their own or to obtain certificate of inspection from EIC. EIC has introduced certification of product quality integrated with the systems approach. Currently, fish & fishery products, egg products and milk products are being certified under the above system.
The conclusion of the Uruguay Round of negotiations in 1995 and the emergence of the Agreement on Agriculture (AOA) raised the hope that developing countries' trade in agricultural commodities, be it primary or processed, would be less restricted, with increased market access leading to greater international trade. However, as these and other promises were far from being fulfilled it was resolved at Doha to take a comprehensive look at these issues.
Despite expectations that world trade would expand substantially after the formation of the WTO in 1995, overall merchandise trade as well as agricultural trade ironically shrank, against the backdrop of a sharp slowdown in the world economy. This was not surprising, given that developed countries dominate agricultural trade. Brazil is the only developing country among the 10 top exporters of agricultural commodities, while there are six EU members in the top. All 10 top importers of agricultural commodities are developed countries. However, this situation may change in future, as there is some evidence that developing countries are placing more emphasis on new agro-based manufacturing activities for export expansion.
Increasing agricultural exports from developing countries can have important benefits, as agriculture remains the major source of livelihood and food security for large sections of the population. If SPS measures become too stringent, the resulting contraction in agricultural exports would have a significant negative impact on such communities. Even the WTO has recognised this. It has also pointed out that the removal or relaxation of overly stringent SPS regulations could generate welfare gains to consumers. Obviously, in the global context, the majority of the producers falls in the developing country category and may not be able to effectively access the developed country markets if restrictions are very severe. The significance of SPS measures in today's agricultural commodities trade can be gained from the number of notifications circulated since the agreement came into force in 1995. Nearly 2,630 notifications have been circulated from 1995 to the end of 2001. During this period, the USA with 526 submitted notifications and Mexico with 175 were the most proactive trading countries in as far as SPS measures are concerned, experts added.
The fresh flow of notifications indicates that higher and more stringent SPS standards (that go beyond the international standards (Codex, etc.) are being imposed by individual countries to protect human as well as plant and animal health. The proliferation of higher and stringent food safety standards draws developing countries into an unknown territory of international trade for which they are ill equipped and unprepared. Interestingly, some of the more buoyant export commodity groups for India, namely, coffee, spices, fresh fruits and vegetables and pulses, will now have to reckon with more stringent certification and labelling provisions notified by the developed countries.
Producing for export also requires sensitivity to the changing demand scenario in the world market, which, in recent times, is greatly influenced by food safety standards. Therefore, the traditional wisdom that attributes the growth and importance of agricultural exports to lower capital per unit of output, shorter gestation period and strong backward and forward linkages requires a closer examination.
list of instances of selective application of SPS measures can be cited here to clarify how they have impacted on food exports from India. For example, Australia, China and Japan do not allow Indian mangoes and grapes on the ground that certain fruit flies are present. Ironically, China imposed a ban on grapes for a species of fruit fly that does not exist in India. On the other hand, USFDA allows entry to a fruits and vegetables consignment only after detailed tests of the production region. The Japanese stipulation of Vapour Heat Treatment (VHT) of fruits is yet another instance of SPS becoming the key non-tariff barrier. The technological upgrading to comply with VHT protocol is a story of investment of time and money for at least five years. This is in spite of the fact that success at the end is not assured. The introduction of a regulation by EU prescribing very low levels of Octratoxin-A (OTA) in coffee; method and sensitivity of estimating pesticide residue in vegetables, fruits, honey, etc. appear quite unreasonable. Another instance is the EU demand for the residue monitoring plans for the previous years in association with that for succeeding years. This stipulation will definitely deny access to the EU market for Indian agro products. The labelling stipulation in the importing country language too is a costly proposition keeping out Indian exporters. As a consequence of all these measures, costs are imposed on the exporting country without any expected commensurate return. To sum-up, the issues of food safety regulations for a country of India's size with a wide spectrum of agro-climatic dimensions require a detailed examination in a logical framework of different processes. The need for such an examination can be highlighted if one could visualise a food market output and export matrix or the volume-value matrix with the respective shares for the country. The SPS relevant exports have strong backward and forward linkages with deep ramifications. Finally, processed food product lines depend on a host of players in both exporting and importing countries, experts pointed out.
India has an elaborate system of quality inspection and certification before any product is being exported. In recent times, more rigour has been brought into this process and the domestic system is evolving in response to the reported number of rejections of exportable commodities.
In India, the Export Inspection Council (EIC)