After Aqua, Trump Tariffs to Hit Indian Farming Sector

US President Donald Trump hinting at more tariffs on Indian rice reminds of tariffs on the aqua industry, which faced a sharp decline in prices when he announced the tariff slabs in July.

The aqua industry which had been struggling with logistics’ expenditure and increasing input costs experienced a severe blow when tariffs were announced. The shrimp exports witnessed a decline in the global market following the announcement of tariffs.

In a similar manner, Trump’s statement on Indian rice imports, led to tanking of rice stocks on Indian bourses. According to reports, stocks of Kohinoor Foods, LT Foods, KRBL and Chaman Lal Setia Exports slipped as investors feared a fall in demand for Indian rice in the market.

Significantly, a large portion of the shrimp grown in India is exported to the US. Of the 4 lakh tonne shrimp cultivated in Godavari belt, nearly 3.5 lakh tonne gets exported. When new tariffs were imposed in July last year, the shrimp farmers in the twin Godavari districts faced a very tough time as they witnessed a steep cut in prices. Price of 100-count Vannamei shrimp which was near Rs 300 a kg fell to Rs 220 a kg, hitting the farmers hard.

Coming to rice exports to the US, the immediate reaction to Trump’s ‘dumping’ remark was negative and companies in the rice export business, specifically basmati, saw their stock prices plummet. It is worth mentioning that Trump’s comments come as India and the US prepare for another round of trade talks in New Delhi on December 10. At the same time, Trump also announed a $12-billion support package for American farmers, reinforcing his commitment and support to the agriculture sector in the country.

From August 1, the US had imposed a 25% tariff on Indian goods and then imposed an additional 25% tariff, citing India’s continued purchase of Russian oil, which he said was encouraging Russia’s war with Ukraine. Recently, he eased tariffs on many food products, to bring down rising US prices. Basmati rice was not included in the list of foods on which tariff was reduced.

Though India dominates other countries in rice exports, the US represents only a modest share of the market. India’s basmati rice exports to the US make less than 5% of India’s total basmati exports. But the US market is a high-income consumer market and a destination for premium basmati rice, and any disruption can have a significant influence on the trading sentiment.