India’s Agricultural Exports Grow, despite Covid-19

India has consistently maintained trade surplus in the agricultural products over the years. India’s agricultural and allied exports during 2019-20 were Rs. 2.52 lakh Crores and imports were Rs. 1.47 lakh Crores, according to the Union Agriculture Ministry.

Even, during the difficult time of Pandemic, India took care not to disturb the world food supply chain and continued to export. The export of Agri and allied commodities during Apr,2020 – Feb,2021 were Rs. 2.74 lakh Crore as compared to Rs. 2.31 Crore in the same period last year indicating an increase of 18.49%.

The commodities which posted significant positive growth in exports were Wheat, Other cereals, Rice (other than Basmati), Soya meal, Spices, Sugar, Raw Cotton, Fresh Vegetable, Processed Vegetables, and Alcoholic Beverages etc.

Wheat and other cereals posted huge growth over last year, i.e., increasing from Rs. 425 Crore to Rs. 3283 Crore and Rs. 1318 Crore to Rs. 4542 Crore, respectively.

On specific demand from countries, NAFED has exported 50,000 MT wheat to Afghanistan and 40,000 MT wheat to Lebanon under G2G arrangement. India has witnessed tremendous growth of 727 % for Wheat export.

India has witnessed significant growth of 132% in export of (Non-Basmati) Rice. Export of Non-Basmati Rice has gone up from Rs 13,030 crores in 2019-20 to Rs 30,277 crores in 2020-21.

This increase in exports is on account of multiple factors, mainly being India capturing new markets namely, Timor-Leste, Papua New Guinea, Brazil, Chile, and Puerto Rico. Exportswere also made to Togo, Senegal, Malaysia, Madagascar, Iraq, Bangladesh, Mozambique, Vietnam, Tanzania Rep and Madagascar.

India also enhanced export of Soya meals by 132%. Soya meal has gone up from Rs 3087 crores in 2019-20 to Rs 7224 crores in 2020-21.

Other commodities of Agri& Allied basket witnessing significant increase in export during April, 2020 to February, 2021 as compared to corresponding period during 2019-20, have been Spices (Rs 26257 crore vs Rs 23562 crore; growth 11.44%), Sugar(Rs 17072 crore vs Rs 12226 crore; growth 39.64%), Raw Cotton(Rs 11373 crore vs Rs 6771 crore; growth 67.96%), Fresh Vegetable (Rs4780 crore vs Rs 4067 crore; growth 17.54%) and Processed Vegetables (Rs 2846 crore vs Rs 1994 crore; growth 42.69%) etc.

It may also be noted that the imports of Agri and allied commodities during April, 2020 – Feb, 2021 were Rs. 141034.25 Crore as compared to Rs. 137014.39 Crore in the same period last year witnessing a slight increase of 2.93%.

Despite COVID-19, balance of trade in agriculture has favorably increased during April, 2020 – Feb, 2021 to Rs. 132,579.69 Crore as against Rs. 93,907.76 Crore during the same period in 2019-20.

India ranks amongst the top 10 exporters of agricultural products in the world. According to the WTO’s World Trade Statistical Review 2020, the country’s share in global agricultural exports increased from 1.1% in 2000 to 2.2% in 2017, valued at $39 billion, but fell to 2.1% in 2019, valued at $37 billion. While the US witnessed a decline in its share of global agricultural exports from 13% in 2000 to 9.3% ($165 billion) in 2019, Brazil’s share increased from 2.8% to 5% ($89 billion), and that of China increased from 3% to 4.6% ($82 billion). In order to catch up with Brazil and China, India needs to bring about structural reforms in the agricultural sector, including a stable trade policy regime.

According to the Agricultural and Processed Food Products Export Development Authority (APEDA), during April-October 2020, India’s exports of top three agri-commodities, viz. basmati rice, non-basmati rice and buffalo meat, in terms of value (in dollars) grew by 9%, 104.4% and 10.5%, respectively, compared to the corresponding period of the previous year. The sharp rise in exports of non-basmati rice can be attributed to lower prices compared to that of major rice exporters, Thailand and Vietnam, and also because these countries stopped exports due to the lockdown.

Taking advantage of this, Indian non-basmati rice exporters have been able to meet the increasing import demands from China, Bangladesh and African countries.

However, economists are worried over the absence of a stable trade policy regime in India. In order to control prices in the domestic market, the government has, at different times, resorted to banning of exports of major agri-commodities, viz. rice, wheat, sugar and onion. Imposition of minimum export price (MEP) is another tool often used to tame inflation. These measures create uncertainty amongst importing countries, and deprive farmers of higher returns from their produce.

The Agriculture Export Policy (AEP), 2018, aims at achieving export target of $60 billion by 2022 and $100 billion within a few years, thereafter. This is indeed a humongous task, even under normal circumstances, and more so in the aftermath of Covid-19. Therefore, there needs to be a realistic resetting of the timeline to achieve the target. This would involve a paradigm shift from a business-as-usual approach to a well-calibrated, comprehensive, strategic and result-oriented agri-export policy and action plan. This would lead to tech-driven agricultural productivity gains across sub-sectors, resulting in higher output and marketable surplus for domestic and foreign markets.

Economist Debesh Roy suggests the following strategies for India to achieve the target of $100 billion of agri-exports within a reasonable time-frame, while also resulting in doubling farmers’ income:

—Majority of India’s agri-exports are low value, raw or semi-processed products. Therefore, the agri-export strategy should include integration of value-added agri-produce with global value chains (GVC), by adopting best agricultural practices involving productivity gains and cost competitiveness. It’s also imperative for India to reconsider joining the RCEP at an opportune time, and to enter into FTAs with the EU, the US and the UK.

—In order to boost exports of dairy products and make the dairy sector globally competitive, the central government needs to consider development of dairy export zones (DEZs) in collaboration with state governments. This could immensely benefit small dairy farmers, organised as farmer producer organisations (FPOs)/farmer producer companies (FPCs)/cooperatives, for supplying milk, and also for contract production of dairy products on behalf of major dairy producing companies, leading to cost efficiency and higher export revenue to dairy companies as well as significantly higher income to farmers.

—Linking of FPOs through contract farming arrangements with export-oriented food processing units of food parks created under the Pradhan Mantri Kisan Sampada Yojana, for producing processed cereals, fruits, vegetables, fish and marine products, would boost exports of processed food and raise income of small and marginal landholders and small fish farmers.

—With global trade in organic products estimated to be around $90 billion, there is a huge opportunity for exports of value-added organic products from India, which exported $689 million worth of organic food in 2019-20. Madhya Pradesh, Rajasthan, Maharashtra, the North Eastern Region (NER), Uttarakhand and Goa are major producers of organic products. It’s desirable to create Organic Product Export Zones (OPEZs) in these states and the NER, with common infrastructure for processing, standardisation, storage, logistics, and connectivity to ports and airports. Branding of products and registration as GI could further facilitate exports of value-added organic products. FPOs of organic farmers could be formed and linked to the OPEZs, to ensure higher income for farmers.

—Economic diplomacy and promotion of Brand India can play an effective role in increasing agri-exports.

—The AEP has recommended the establishment of Agriculture Export Zones (AEZs), to facilitate value addition of agri-commodities for increasing exports in a WTO-compatible manner. In order to ensure higher income for farmers, FPOs need to be linked to AEZs to supply SPS-compliant agri-products.

—Higher investments in R&D and technology, viz. the Internet of Things, artificial intelligence and blockchain, for improving agricultural productivity, resource-use efficiency and export competitiveness.

—Linking farmers/FPOs to the export market and skilling of surplus farmers for their absorption in agri-export value chains could be an important strategy to sustainably raise farmers’ income.

Concerted efforts by the central and state governments, Indian embassies, APEDA, EXIM Bank, NABARD, and all other stakeholders in the agri-export value chains are needed to address a whole range of issues pertaining to promotion of agri-exports, which could potentially propel India into the top bracket of agricultural exporters, and in the process facilitate doubling of farmers’ income within a reasonable time-frame, argues Roy.