Will farm trade policy tweaks lift farmer incomes?

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Subscribe to enjoy similar stories. Last week, India initiated multiple changes in farm trade policies across crops like oilseeds, onion and basmati rice. Coupled with ample rains, this is likely to boost rural incomes in the kharif harvest season beginning October, and revive consumer demand.

Mint explains. Last week, India removed the minimum export price (MEP) of $950 per ton on premium basmati rice. The move—timed to the upcoming polls in Haryana, a major growing state—follows cooling local prices and the prospect of a plentiful kharif harvest beginning October.

The government also removed the MEP of $550 per ton on onions and cut export duty from 40% earlier to 20%. It also hiked import duties on all crude and refined edible oils to 27.5% and 36%, respectively, to guard the interest of oilseed farmers. This will pacify soybean farmers protesting against the recent crash in wholesale prices.

Read more: Micro Amul: Are farmer-run companies the next big idea in Indian agriculture? Data on kharif sowing shows that this year, farmers have planted a larger area with rice and oilseeds compared to the five-year-average. Due to ample rains this monsoon, production of these crops is expected to be robust. The easing of export restrictions will help basmati growers earn a better price.

Soybean prices are also expected to recover from the current lows due to the significant hike in import duties—and benefit farmers from Maharashtra which goes to polls later this year. If there are no major crop losses due to excess rains, farm incomes will improve. This will also lift rural wages and consumer demand.