INTERNATIONAL TRADE AND AGRICULTURE

International trade is the exchange of capital, goods, and services across

international borders or territories, which could involve the activities of the
government and individual.
In most countries, such trade represents a significant share of gross domestic
product (GDP). While international trade has been present throughout much of
history (see Uttarapatha, Silk Road, Amber Road, salt road), its economic, social,
and political importance has been on the rise in recent centuries. It is the
presupposition of international trade that a sufficient level of geopolitical peace
and stability are prevailing in order to allow for the peaceful exchange of trade and
commerce to take place between nations.
Industrialization, advanced technology, including transportation, globalization,
multinational corporations, and outsourcing are all having a major impact on the
international trade system. Increasing international trade is crucial to the
continuance of globalization. Without international trade, nations would be limited
to the goods and services produced within their own borders. International trade is,
in principle, not different from domestic trade as the motivation and the behavior
of parties involved in a trade do not change fundamentally regardless of whether
trade is across a border or not. The main difference is that international trade is
typically more costly than domestic trade. The reason is that a border typically
imposes additional costs such as tariffs, time costs due to border delays and costs
associated with country differences such as language, the legal system or culture.
INTERNATIONAL TRADE AND AGRICULTURE
Agriculture international trade means, the export of agricultural products and
produce in raw and processed form of food to the other countries.
Agriculture trade describes the free flow of agriculture products, production,
Technology, labour and other information throughout the worlds other countries.
With the LPG reforms, Liberalization, Privatation and Globalization a new path
has been opened for agriculture sector in the global market. In the past historical

times the agriculture had its importance only in the locality level but with the
innovations and other technologies now it has a great importance in global trade.
IMPORTANCE OF INTERANTIONAL TRADE
Trading globally gives consumers and countries the opportunity to be
exposed to goods and services not available in their own country.
Almost every kind of product can be found on the international market :
foods, fruits and vegetables etc.
Services are also traded.
Imports and Exports are accounted for in a countrys current account in the
balance of payments.
Global trade allows wealthy countries to use their resources more efficiently.
Global trade helps to increase the national income with exports.
International trade Extend sales potential of the existing products.
With the global trade Enhance potential for expansion of your business.
It also help to Stabilize seasonal market fluctuations.
Global trade also help to Reduce dependence on existing markets.
APEDA :- The Agricultural and Processed Food Products Export Development
Authority (APEDA) was established by the Government of India under the
Agricultural and Processed Food Products Export Development Authority Act
passed by the Parliament in December, 1985. The Act (2 of 1986) came into effect
from 13th February, 1986 by a notification issued in the Gazette of India:
Extraordinary: Part-II [Sec. 3(ii): 13.2.1986). The Authority replaced the Processed
Food Export Promotion Council (PFEPC).

In accordance with the Agricultural and Processed Food Products Export

Development Authority Act, 1985, (2 of 1986) the following functions
have been assigned to the Authority.
Development of industries relating to the scheduled products for
export by way of providing financial assistance or otherwise for
undertaking surveys and feasibility studies, participation in enquiry

capital through joint ventures and other reliefs and subsidy

schemes;
Registration of persons as exporters of the scheduled products on
payment of such fees as may be prescribed;
Fixing of standards and specifications for the scheduled products
for the purpose of exports;
Carrying out inspection of meat and meat products in slaughter
houses, processing plants, storage premises, conveyances or other
places where such products are kept or handled for the purpose of
ensuring the quality of such products;
Improving of packaging of the Scheduled products;
Improving of marketing of the Scheduled products outside India;
Promotion of export oriented production and development of the
Scheduled products;
Collection of statistics from the owners of factories or
establishments engaged in the production, processing, packaging,
marketing or export of the scheduled products or from such other
persons as may be prescribed on any matter relating to the
scheduled products and publication of the statistics so collected or
of any portions thereof or extracts therefrom;
Training in various aspects of the industries connected with the
scheduled products;

Such other matters as may be prescribed.

New developments in International Trade :The backbone of Indian economy is considered as 'agriculture'. It has an important
role in Indian economy though the share of agriculture in GDP is declining, it still

remains a significant contributor nearly 30 to 35% coming from this sector. It

provides livelihood for nearly two-thirds of our population. Agriculture provides
raw material for industrial growth and use e.g. sugar, jute, cotton, agro-based
industries such as food processing are gaining in importance.
Agriculture trade contributes 15% of total foreign exchange earnings. Broadly,
agricultural and agri-based products can be divided into three categories, they are
raw products, semi-raw products and processed and ready to yield products.
The major agri-exports of India are cereals, rice, basmati rice and non-basmati rice,
spices, oilcake, tobacco un-manufactured, tea, coffee and marine products. Lack of
market access in the developed market economy countries due to high tariffs and
pronounced Non-tariff barriers has bees acting as a deterrent for the exports. As
against agricultural exports, agri-imports constitute only a small proportion of the
countries total imports 5%.
Subsequent to the economic reforms initiated in June 1991, removing the
restrictions and protective licensing regime, free trade in a large number of items
has become the order of the day. With the removal of QRs on agricultural items
and urea the Indian farmer community has been placed to face stiff competition
from the developed nations.
Two-thirds of Indian farmers are in the small and marginal farmers cultivating two
hectares of land contrary to the popular perceptions given a level playing field.
These farmers are not able to compete with their western counterparts in
agricultural production and exports.
Each farmer in the developed countries gets on an average a subsidy of US $
29,000 a year. The US domestic support for farmers is US $ 25.5 billion in 1996
while the European Union it was US $ 85 billion. In the US and EU farmers
constitute less than 3% of the population in contrast India's domestic support to its
farmers works out to a negative US $ 23.75 billion in 1996 even after providing
fertilizer, electricity, irrigation and seed subsidies.
Added to all these things, the emergence of World Trade Organization (WTO)

In 1995 laid a specific set of rules in agriculture trade popularly known as AoA ,
which came into force on 1st Jan. 1995.
According to WTO norms, member countries are required to fulfill the following
commitments:
1. All non-tariff barriers are to be replaced by tariff barriers and tariffs will have to
be reduced by 36% by industrialized countries and 24% by developing nations.
2. Countries with closed farm market will have to import at least 3% of domestic
consumption of the product, raising to 5% over a period of 6 years.
3. Trade support to farmers will have to cut by 20% over a period of 6 years by
developed and by 13.3% by developed countries.
4. The value of direct export subsidy will have to be cut by 36.1% and the volume
of subsidized exports by 21% over a period of 6 years, while in the case of
developing countries direct export subsidies will have to reduce by 24% and the
quantity of subsidized exports will have to reduce by 14% over a period of 10
years.
Past Trends of Trade of Agricultural Products
The Balance of Trade from agriculture remains always positive since 1991. The
surplus generated in agricultural trade would help enhancing non-agricultural
imports, which would promote growth in all sectors of the economy. The main
destination of Indias agricultural exports include Saudi Arabia, UAE, Bangladesh,
Malaysia, USA, UK, Kuwait, Iran, Vietnam, Indonesia etc. The products that have
registered higher growth (CAGR) are -cotton raw including waste, castor oil, other
cereals, oil meals, gaur gum meal, poultry and dairy products, meat and
reparations, spices, fruits and vegetables etc. The products having high instability
inexpert are sugar, groundnut, jute, cotton raw including waste, rice other than
basmati, wheat, other cereals etc.
Total Agricultural exports show a continuous increasing trend since 1990
-91 to 2008-09. However the year 1999-2000 shows decrease in exports by
0.01percent, due to fall in export of rice other than basmati, wheat, and cotton etc.

We observe high growth of exports 1991-92, 1993-94, 1995-96, 2006-07, and

2007-08 due to rise in export of marine products, oil meal etc., whereas slow
growth was observed in the year 1999-00, 1997-98 and 1998-99. Percentage share
of exports was maximum in the year 1995-96, 1996-97and 1997-98, and that was
minimum in 2008-09. In the similar way trend analysis of 35 agricultural
commodities was done to understand the prospects of export