Inherent rivalry between India and Pakistan keeps taking different forms at different times. Most of the times, its a political garb; at other times, it may come up on the sports turf or on the media through celebrity tussles. Lately, this rivalry has found a new breeding ground - farm lands.
Clashes over vegetable and cotton trade have spurred heated moots across trade circles in both the countries. The roots of this hostility can be traced back to the ban on Indian cotton exports.
Indian exporters, who were supposed to ship the entire contracted amount of cotton by December 15, were unable to do so because of delayed arrivals of cotton bales in domestic markets due to unseasonal rains in October and November. The Indian government, thereafter, imposed restrictions on cotton exports to stabilise domestic prices.
Pakistani traders, as expected, were vexed by the restrictions. The Indian export ban drove up international prices considerably due to concerns about supplies from India, and cotton prices in Pakistan, which follow international prices to a considerable extent, also spiralled as a result.
Came 2011 and Pakistan got a chance to launch its offensive in the trade battle with its neighbour. Initially, as rains in some parts of India destroyed a significant quantity of their onion crop, Pakistan began exporting the root crop to its counterpart, only to witness escalating prices of the vegetable at home. This prompted calls for an onion export ban in Pakistan.
India begged and pleaded, and ultimately, Indian traders, irked by Pakistans ban on onion exports, retaliated with a refusal to export tomatoes to Pakistan.
The political pressure of rising onion prices is so high on the Indian government - which is already battling high inflation - that the Indian Commerce Ministry has consented to revisit the cotton export ban if Pakistan would resume onion exports.
What the two countries are overlooking is the demand and supply situation of each commodity in their respective countries. Industry sources claim that floods have destroyed up to 40 percent of the onion crop in Pakistan; now, the crop situation can only be assessed when it is harvested around March.
At the same time, India was at a crossroads with respect to cotton because of the unexpected rainfall in the latter half of 2010. Now, however, cotton outlook for 2010-11 in India looks promising and meeting export orders should not be a very grave issue.
The bottom line is that the dynamics of commodity trade should be driven by supply-demand mechanisms of individual commodities rather than by the heated egos on both sides of the border.
The stock of available commodities should be properly assessed, following which, perhaps, commodity trade can be allowed with ceilings imposed on the quantum of export to the respective country.
Of course, this means enhanced monitoring of the movement of stock across countries, which the policymakers need to put an effort towards. Price distortions can then be levelled against a better appraisal of the local situation in both the countries.
And in the meanwhile, efforts should be made to ensure that trade relations between India and Pakistan aren based on emotional, tit-for-tat policy. Theres a need to view bi-lateral trade through a rational lens than an overrated sentimental one.