Agricultural Exports- India’s potential, initiatives, challenges and solutions

What is the News?

US Department of Agriculture(USDA) has forecasted 1.8 million tonnes of wheat and 14.4 million tonnes of rice to be imported from India. This will be the highest ever wheat export from India to the US in the last six years. Despite the Indian government’s various steps to improve agricultural exports, there are few challenges associated with the exports. 

Status of India’s agricultural exports:  

The 2019-20 Economic survey mentions a few important figures of India’s agricultural exports. Indian agricultural/horticultural and processed foods are exported to more than 100 countries/regions in the world.  

India is one of the 15 leading exporters of agricultural products in the world.  

India’s major export destination for agricultural products are the USA, Saudi Arabia, Iran, Nepal, and Bangladesh.  

India’s major agricultural export basket includes rice (both Basmati and non-basmati), spices, cotton, and wheat apart from this India also exports marine products and buffalo meat.  

As per APEDA (Agricultural and Processed Food Products Export Development Authority), India exported pulses worth US$ 163.90 million and dairy products worth US$ 89.50 million from April–September 2020. 

Initiatives to encourage Agricultural exports in India:  

Firstly, India encourages agricultural exports by creating a dedicated body named the Agricultural and Processed Food Products Export Development Authority(APEDA). The government created APEDA under the APEDA Act 1985.   

• • Under the Export Promotion Scheme of APEDA, the government is providing assistance to the exporters of agricultural products. 

Secondly, The Government has introduced a comprehensive Agriculture Export Policy in 2018. The policy aims to double farmers’ income by 2022 by doubling agricultural exports from the country. The policy also aims to integrate Indian farmers and agricultural products into the global value chain. 

Thirdly, The Government has also brought out a Central Sector Scheme – ‘Transport and Marketing Assistance for Specified Agriculture Products’. The scheme aims for assisting the international component of freight handling and marketing of agricultural products.  

Fourthly, As per the present FDI Policy, 100% FDI is allowed in the following activities of agriculture through the automatic route.  

However, the total agricultural export basket accounts for only a little over 2.15 percent of the world agricultural trade. This is because of various challenges associated with the exporting of agricultural commodities. 

What are the challenges associated with Agricultural exports?  

Firstly, The yield levels of the majority of crops in India remains much lower than the world average. This is compounded by fragmented landholdings. The average farm size in India is only 1.15 hectares.  

• • Majority of the Indian farmers belongs to small and marginal category. The agricultural products produced were used majorly for own consumption. 

Secondly, In India, no study has been conducted to assess the long term impact of exports on the agricultural and horticultural sector by the Department of Commerce.  

Thirdly, exporters of agro-commodities are not successful in due to uncertainty in the foreign trading regime  

Fourthly, The government’s pro-consumer bias in India’s farm policy is unfair. Indian government putting export restrictions on imported food items to prevent inflationary pressures in the domestic economy. This hurts Agricultural exports.  

• • The policy deprives farmers of higher prices in the international market and also adds an element of income uncertainty.   
  • For example, If the government is going to impose export restrictions when international prices are at a peak. Farmers would lose part of the incentive to cultivate exportable crops.  

Lastly, there is an International demand & supply situation, international prices and quality concerns also restrict India’s agricultural exports. 

How to improve agricultural exports?  

Firstly, the Government can provide Infrastructure status to agricultural value chains, such as warehousing, pack-houses, ripening chambers, and cold storage, etc.  

Secondly, As per NITI Aayog recommendation, the Government can create village level procurement centres. This will benefit small and marginal farmers to improve agricultural exports.  

Thirdly, Government can Re-invigorating agricultural research and education, this will increase lab to land connectivity.  

Fourthly, APEDA has suggested augmenting cargo handling facilities at airports, ports, etc. This will reduce the waiting time.   

Along with this government can create a Green channel clearance for perishable agro products in toll, air, and freight cargo stations.  

Fifthly, the Government can establish regional production belts. This can be achieved by linking the Mission for Integrated Development of Horticulture and Self Help Groups. 

Way forward: 

India occupies a leading position in the global trade of agricultural products. But the share can be improved to a greater level if certain bottlenecks are resolved. The key to doubling farmer’s income is not only focusing on internal agricultural productivity but also encouraging India’s global share in the agriculture export basket.