What's Happening?
The nearly finalized US-India bilateral trade agreement has elicited varied responses from different segments of the Indian agriculture sector. According to NITI Aayog member Ramesh Chand, the sector has seen an average annual growth of 4.4% from 2014-15
to 2023-24, primarily driven by livestock and fisheries, which have experienced significant growth rates of 7.2% and 8.9%, respectively. However, the crops subsector has lagged behind with a 2.8% annual increase. The trade deal is particularly welcomed by the poultry, dairy, and aqua industries due to the potential for cheaper and better-quality feed ingredients from the US, such as red sorghum and distiller’s dried grains with solubles. Conversely, soyabean, maize, and sugarcane growers and processors are less enthusiastic, as the agreement does not offer concessions for American dairy or poultry product imports.
Why It's Important?
The trade agreement holds significant implications for the Indian agriculture sector, particularly for animal farmers who rely heavily on feed costs. By potentially reducing these costs, the deal could enhance profitability and sustainability for those involved in livestock farming, which is more labor-intensive and provides higher income shares for marginal agricultural households. This development underscores the importance of considering the diverse components within agriculture when analyzing policy impacts. The agreement could also influence the dynamics of agricultural trade between the US and India, affecting market access and competitive positioning for various agricultural products.
What's Next?
As the trade deal progresses towards finalization, stakeholders in the agriculture sector will likely continue to assess its implications. Animal farmers may prepare to capitalize on the benefits of cheaper feed imports, while crop growers may seek alternative strategies to mitigate potential disadvantages. Policymakers and industry leaders might engage in discussions to address concerns and optimize the agreement's benefits across different subsectors. Monitoring the agreement's implementation and its impact on trade flows and agricultural practices will be crucial in the coming months.
Beyond the Headlines
The trade deal highlights broader themes of equity and sustainability within agriculture. Livestock farming, being more labor-intensive, could contribute to rural employment and income generation, particularly for marginal households. The agreement also raises questions about balancing trade benefits with domestic agricultural priorities and the need for policies that support diverse agricultural activities. Long-term shifts in agricultural practices and trade relationships may emerge as stakeholders adapt to the new trade dynamics.
