A Structural Threat to Jammu & Kashmir’s Agro–Horticulture Economy

A Structural Threat to Jammu & Kashmir’s Agro–Horticulture Economy

The interim India–US trade arrangement, as publicly outlined, represents not a routine tariff adjustment but a structural economic shift. Its implications for Jammu and Kashmir (J&K) are disproportionately severe. The region’s economy is consumption-linked, land-dependent and horticulture-centric. Any surge of low-priced agricultural imports into Indian markets weakens its production base. The deal, therefore, is not a neutral trade event. It is a direct economic stress multiplier for an already fragile mountain economy.


By Mehr un Nisa Rehman

Three core arguments establish this risk. First, tariff liberalization on U.S. agricultural and food products distorts market competition in favour of heavily subsidized American agribusiness. Second, J&K’s horticulture economy is price-sensitive, smallholder-driven and logistics-burdened, making it structurally incapable of absorbing price shocks. Third, downstream economic effects, employment loss, reduced rural liquidity and shrinking trade margins, extend beyond farms into the wider regional economy.


Trade Liberalization vs. Subsidized Agriculture

The trade framework indicates tariff reductions on a “wide range” of U.S. agricultural goods, including fruits, nuts, soybean oil and animal feed inputs. This move exposes Indian producers to competition from one of the most subsidized agricultural systems in the world. U.S. farmers benefit from federal farm support programs worth tens of billions of dollars annually through crop insurance subsidies, price support mechanisms and direct income support.This lowers production risk and stabilizes export pricing. Indian farmers operate under entirely different conditions. Input costs in India have risen sharply. Fertilizer prices, diesel, transport and packaging costs have all increased over recent years. Yet farmgate prices remain volatile.


The imbalance is clear. When subsidized output enters a price-sensitive market, it does not compete fairly. It undercuts. The result is price suppression. India has already witnessed a 34% year-on-year increase in U.S. agricultural imports, reaching nearly $2.9 billion during recent negotiations. This occurred even before deeper tariff reductions. A further easing of duties, particularly on products like soybean oil and fruit categories, is likely to accelerate inflows.


Why Jammu & Kashmir Is More Vulnerable Than Other Regions

Jammu & Kashmir is not an industrial buffer economy. It is agrarian and horticulture-led. While agriculture contributes around 16% to India’s GDP, it supports over 45% of India’s population. In J&K, dependency is even higher in rural districts. Horticulture is the backbone of the region. Apples dominate this structure.

·         J&K contributes roughly 70–75% of India’s total apple production.

·         The sector supports over 700,000 families directly or indirectly.

·         Horticulture generates thousands of seasonal jobs in harvesting, grading, packing and transport.

·         Apple trade drives rural cash circulation before winter months.

Unlike large mechanised farms abroad, J&K orchards are small and fragmented. Average landholdings are modest. Production costs per unit are higher due to terrain, labour intensity and transport from mountainous zones to mainland markets. Imported apples enter through ports with lower logistics burdens per unit. Even small price differences shift trader preference. A trader chooses cheaper stock if margins are higher and quality grades appear uniform.

This is not theoretical. Past episodes of Iranian, U.S. and other apple imports have already pressured local pricing.


Price Shock Dynamics in the Apple Market

Apple markets operate on narrow seasonal windows. A glut during harvest depresses prices sharply. If imported apples are available simultaneously at lower tariffs, domestic growers face a double squeeze: oversupply and undercut pricing. Local growers warn that cheaper imports “ruin” pricing structures. Their fear is rational. Apples are not a diversified risk crop in J&K. They are the primary income source. A fall of even ₹5–10 per kilogram at wholesale level can erase profit margins. Multiply this across millions of boxes and aggregate losses escalate into hundreds of crores.The demand argument that consumers buy more nuts or fruits so imports fill gaps, ignores price elasticity. Demand expansion does not automatically protect local producers. Traders prioritise margin and consistency of supply. Imports often arrive in graded, uniform packaging attractive to wholesalers.


Tariff easing on soybean oil and dried distillers’ grains (DDGs) does not appear, at first glance, directly linked to Jammu and Kashmir’s orchards. Yet the effect is indirect and economically significant. Lower duties on imported soybean oil reduce demand for domestic oilseed crushing and related processing activities across India. When imported feed inputs like DDGs become cheaper, livestock and poultry producers shift toward these alternatives because they offer lower input costs per unit of output. This substitution reduces demand for locally produced feed materials and weakens domestic agro-processing chains. Agricultural economies do not operate in isolation.


They are interdependent systems in which value addition at one stage sustains income at another. When import competition compresses margins in oilseed and feed markets, income contraction spreads across transporters, processors, traders and rural service providers. The reduction in profitability in one segment therefore dampens spending power elsewhere. That translates into lower demand for tools, packaging, fuel, transport services and local retail consumption. Even sectors geographically distant from major import points feel the impact through reduced liquidity circulation.


Structural Disadvantages of J&K Growers

These pressures intersect with structural disadvantages already faced by growers in Jammu and Kashmir. Producers in the region operate under cost and logistical burdens that imported commodities do not bear. Transporting fruit from mountain orchards to major wholesale markets requires longer transit routes and higher freight charges per unit. Cold storage and controlled-atmosphere infrastructure, though expanded in recent years, still does not match total production volumes. This creates seasonal gluts and forces distress sales when storage capacity saturates. Post-harvest losses remain a measurable concern, particularly in years of weather volatility.


Climatic variability, including untimely snowfall or rainfall, disrupts yield consistency. Pest management expenses have also risen as disease patterns shift with changing environmental conditions. These cost factors are embedded in the production structure and cannot be quickly reduced. Trade liberalisation does not address these inefficiencies. Instead, it exposes producers carrying these higher cost burdens to competition from suppliers operating with scale advantages, mechanisation and lower per-unit logistics expenses. The result is not efficiency correction but margin erosion.

Employment and Rural Liquidity Impact

The income consequences extend beyond orchard gates. Horticulture earnings underpin rural consumption cycles in Jammu and Kashmir. Harvest season revenue finances household expenditure for education, healthcare, housing repairs and winter necessities. A decline in apple prices or sales volumes therefore reduces the cash available in rural areas for the entire year. Lower orchard income directly translates into fewer hired labour days during pruning, harvesting, grading and packing. Reduced packaging demand affects box manufacturers and suppliers. Transport activity declines when fewer consignments move to wholesale markets.


Commission agents and traders handle smaller volumes, reducing turnover and earnings. These linkages form a multiplier chain. When income in a primary sector shrink, secondary and tertiary rural economic activities also contract. The slowdown becomes region-wide rather than crop-specific.The political response from farmer unions must be interpreted within this economic framework. Their description of the trade shift as a surrender reflects concerns about competitive asymmetry rather than rhetorical positioning. Small and fragmented holdings, characteristic of the region, cannot compete with large-scale, subsidized producers abroad.


This is not a hypothetical claim. It is consistent with global evidence showing that smallholder systems struggle when exposed suddenly to liberalized imports without compensatory support mechanisms. Government assurances regarding safeguards such as quotas or minimum import prices may offer theoretical protection. However, safeguards are only effective when activated promptly and implemented rigorously. Agricultural markets, especially perishable fruit markets, operate within tight seasonal windows. Delays of even a few weeks can depress prices irreversibly for an entire harvest cycle. Enforcement gaps or procedural lags therefore carry tangible economic costs.


The Red Line Debate

The debate over so-called red lines further illustrates the selective framing of sensitivity. Authorities emphasize that grains, dairy, poultry and certain other commodities remain protected. This may indeed shield some agricultural segments nationally. Yet in Jammu and Kashmir, horticulture, particularly apples, is equally sensitive in economic terms. The region’s comparative advantage lies in fruit production. It supplies a substantial share of the country’s apples and sustains hundreds of thousands of livelihoods. Excluding grains from concessions does not address the vulnerability of fruit growers. For an economy where horticulture functions as the primary income pillar, fruit cannot be treated as a marginal commodity. It is a strategic sector whose stability determines regional economic resilience.


Taken together, these factors indicate that the trade arrangement introduces asymmetric competition into a structurally fragile mountain economy. It favours producers benefiting from scale, subsidy regimes, advanced logistics networks and price stabilization mechanisms. Jammu and Kashmir’s producers operate with small orchards, higher transport costs and dependence on seasonal price stability.


In such conditions, even modest price undercutting from imports can depress farmgate rates significantly. The likely outcomes follow established economic logic: downward pressure on producer prices, contraction of household incomes for a large rural population, reduction in seasonal employment and a slowdown in associated trade and service sectors. Trade policy, therefore, is not an abstract diplomatic instrument in this context. It directly influences whether orchard-based livelihoods remain viable or enter a cycle of declining returns. Without robust tariff buffers or effectively enforced safeguards, the region’s horticulture economy faces a real risk of destabilization rather than adjustment.

 

The author is the head of the research and human rights department of Kashmir Institute of International Relations (KIIR). She can be contacted at the following email address: mehr_dua@yahoo.com, X @MHHRsays

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