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Subsidised Indian rose importation:

NZ: Legal case on rose subsidies to be explored

The New Zealand Flower Growers Association will host an important meeting at the Chateau on the Park, Christchurch 17-18 October. Foremost on the agenda is a forum with legal experts from Blackburn Croft on potential channels available to the New Zealand industry relating to the major influx in recent years of extremely low cost roses, in particular targeted at key selling windows.

Key aspects and background to the situation as regards New Zealand Growers will be fully discussed at the Christchurch event. It's likely that rose growers in particular who have been hit hardest by the Indian cut flower influx, will get valuable insights from the meeting and discussions

Some key points to be explored and evaluated with Blackburn Croft's key advisers as background for those considering attendance:

  • The Government of India has deemed floriculture as a sunrise industry and accorded the industry “100% export oriented status”. What this means is unclear but is a strong indication that subsidies will be used to promote exports. For example the Agricultural and Processed Food Products Export Development Authority (AEPDA)is responsible for export promotion and development of floriculture in India, grants subsidies for establishing cold storage, precooling units, refrigerated vans and green houses, and air freight subsidies for exports.

The Government plays a crucial role in physical planning, infrastructure creation, tax legislation and policies in respect of export oriented floriculture units through its various ministries and also provides subsidy through its specialized bodies like NHB and APEDA. The tax legislative measures that are favourable to the Indian Floriculture industry are as follows:

  • Zero import duties on import of plant materials and without the need of an import license.
  • Duty free imports on certain components of green house structure.
  • The National Horticulture Board (NHB) provides soft loans for infrastructure.
  • According to the US International Trade Commission (2011) the Government of India subsidises agricultural inputs in and attempt to keep farm costs low and production high. The intent of dual benefit to farmers in lower costs and pass on savings potentially to the consumer in the form of lower food prices, and inputs effectively on-sold to farmers at below market pricing, may be potentially if below the cost of production could be in the realms of an effective subsidy of 40-75 percent on fertilisers and 70-90 percent for irrigation and electricity
  • If ,as expected, these subsidies mentioned in the preceding paragraphs are shown to lower the export price of cut flowers then a duty to offset these cost distortions and increase the export price can be applied if an investigation by the Ministry of Business Innovation and Employment is successful. As mentioned there could also be a remedy against dumping. If both dumping and subsidisation are found then a duty rate is imposed such that the subsidy effects are not included in the dumping remedy.

Growers are urged to participate in the Christchurch meeting, to register attendance contact secretary@nzfga.org.nz


Source: http://growernews.co.nz


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