India become an agricultural exports powerhouse
Source: By Santosh Sarangi: Mint
India has long been recognized as an agriculture powerhouse, but has performed much below its potential when it comes to agricultural exports. In spite of being the number one producer of dairy, mango, banana and second largest producer of cereals, fruits and vegetables, India ranks 10th among the countries with highest agricultural exports. Small countries like Belgium, Italy, Netherlands, etc. export much higher value of agricultural goods than us.
The coronavirus outbreak and the lockdown has spurred structural reforms in the agricultural sector. The Cabinet has recently approved amendments to the Essential Commodities Act, especially removal of stock limit on cereals, pulses, oilseeds, onions and potatoes will encourage people to invest in creating infrastructure and storage of the agricultural produce with a fair degree of certainty. The Cabinet also approved barrier free trade of agricultural products, contract farming arrangements with processors, aggregators, etc. The provision of ₹1 lakh crore for agri-infrastructure as part of the ₹20 lakh crore package will definitely help the farmers.
However, some people have rightly questioned whether these reforms would be sufficient to alleviate the farm distress and more importantly, would these lead to a greater integration with the global market and consequently enhanced agricultural exports?
If India has to ensure efficiency in production and productivity, then a series of reform measures, including higher agricultural exports, will have to be ensured. India’s agricultural exports went up from $17.82 billion in 2009-10 to $ 42.51 billion in 2013-14 and have again gone down to about $33 billion in 2019-20. A strong performance in agricultural exports has a number of positive externalities. Higher agricultural exports would mean better price realization for farmers, increased awareness regarding good agricultural practices and consequently, greater thrust on quality; an increased awareness of what consumers in other countries demand and thus, value addition, packaging, branding, etc.
Some of the reforms which need to continue for higher agri exports are as follows:
Continue reforms in various domestic policies scattered around in Departments like Agriculture, Animal Husbandry, Food and Consumer Welfare, etc. The focus on strengthening the quality regimen in the agriculture production system needs to be a continuous effort. The ICAR, Plant and Animal quarantine, Central Insecticide Board, FSSAI and BIS need to work in a coordinated manner to improve the quality of the entire food supply chain. The way in which Basmati rice faces barriers in EU on account of banned tricyclazole, increased frequency of inspection of shrimps exported to EU on account of detection of presence of banned antibiotics, etc. have made it imperative to focus on improving the quality.
Domestic policies and schemes would need to align with the disruptive changes that artificial intelligence, IoT, blockchain, etc. will bring to agriculture in the coming days. The policies relating to Minimum Support Price will also have to be made WTO compatible.
While reforms in APMC, allowing contract farming, etc. may address long standing concerns regarding fair price to farmers, the agricultural exports will not see a substantial jump unless issues relating to logistics are addressed. Whether it is farm gate storage infrastructure, transportation bottlenecks (including inadequate availability of reefer and CA containers) or the facilities and turnaround time at the port of exit, the poor logistics are estimated to add 6 to 8% to our FOB cost vis-à-vis developed countries like Germany, Singapore, Hong Kong, etc. Thus, a systematic initiative to address the logistic bottlenecks will not only make our agricultural exports hassle free but also allow them to be more competitive. In addition, developing right kind of sea protocol for perishables is crucial to increasing agri exports. The Philippines and Ecuador have developed sea protocols for 40 days and 24 days respectively for transportation of bananas whereas we are struggling to do it for 3 to 4 days.
India’s effort at market access and expansion of existing markets need a more coordinated approach between exporters and relevant government bodies. Currently, multiple departments/ agencies, for e.g. Ministry of External Affairs, APEDA, MPEDA, Plant Quarantine, FSSAI, Export Inspection Council and many others are involved in dealing with issues of market access request of other countries as well as pursuing India’s requests to other countries. Agencies like APEDA and MPEDA, which pursue market access request for India’s agricultural and aquaculture product, have no clue regarding market access requests of counterpart countries to India and, therefore, lack the flexibility to leverage other’s request to access India’s vast market with that of India’s requests which keep on pending for years.
It is also time now for India to think in terms of a unified body to handle all Sanitary-phyto sanitary (SPS) issues pertaining to agriculture. The USDA and USFDA in the US, the FSVPS in Russia are examples of bodies which deal with market access requests for imports as well as exports and are in a better position to make an effective quid pro quo.
In addition, when doing a bilateral trade negotiation, there are umpteen instances of making concessions in favour of other countries on foreign policy considerations. However, it is time now for India to leverage its huge market of 1.3 billion people to get the best bargain for itself, especially when it comes to getting market access for agricultural and aquaculture products.
The scouting of potential markets, tweaking products to meet specific consumer tastes and requirements need to be taken up in a scientific and sustained manner. Hitherto, most market outreach activities organized by Industry Associations largely targeted attending exhibitions for 2 to 3 years and making very small and incremental dent in the oversea markets. The kind of aggressive approach which Dilmah tea and Sri Lankan Tea Board have shown in promoting Ceylonese tea is a case in point and the winning sectors in agriculture arena (basmati rice, buffalo meat, tea, shrimp, processed products, Indian ethnic food, Indian Organic) need to initiate and sustain an aggressive campaign in select markets to grab a larger market share in those countries.
In a rather gloomy scenario caused by coronavirus, agriculture has been a shining spot with record food grain production in 2019-20. With varied agro-climatic conditions, large tracts of arable land, India has the potential to be the food basket for the world. The question is how soon and how systematically we are able to move in that direction. The time is now appropriate to reboot our agricultural exports – it will play a key role in ‘doubling of farmers’ income’.
