How India’s agricultural exports fell

Source: The post how India’s agricultural exports fell has been created, based on the article “Why agriculture may need a new export–import policy” published in “Indian express” on 10th May 2024.

UPSC Syllabus Topic: GS Paper 3-Agriculture – Marketing of agricultural produce.

Context: This article discusses how India’s agricultural exports fell by 8.2% in the fiscal year ending March 31, 2024, mainly due to government restrictions on exporting key items like sugar, non-basmati rice, wheat, and onions to protect domestic supply and control inflation.

For details information on India’s Agricultural Export Sector read this article here

Why did agricultural exports fall?

Reasons for the Decline in Agricultural Exports:

Bans on Key Commodities:

Government bans on sugar exports starting October 2023 reduced their value from $5.77 billion to $2.82 billion.

Non-basmati rice exports dropped from $6.36 billion to $4.57 billion due to restrictions imposed in July 2023.

Wheat exports were banned in May 2022, causing a sharp drop from $2.12 billion to $56.74 million.

Onion exports fell to 17.08 lakh tonnes worth $467.83 million following export restrictions.

Global Price Shifts:

A global crash in agri-commodity prices between 2013-14 and 2019-20 made India’s exports less competitive.

The FAO food price index dropped from 119.1 to 96.5 points, impacting export revenues.

Why did imports change?

Imports changed in 2023-24 primarily due to shifts in edible oil prices and pulses demand.

Global edible oil prices dropped after the Russia-Ukraine war, leading to a fall in India’s vegetable oil import bill to below $15 billion from over $20 billion the previous year.

Conversely, pulses imports nearly doubled to $3.75 billion, driven by high domestic demand.

The change in import trends was thus shaped by declining international oil prices and rising domestic demand for essential agricultural products like pulses.

What should be done?

Policy Stability: Farmers and traders require predictable policies. Sudden bans on key exports like wheat hurt market development and need careful consideration.

Temporary Tariffs: Introducing temporary tariffs instead of outright bans would better balance consumer and producer interests.

Support Crop Diversification: Encourage farmers to grow less water-intensive crops like pulses and oilseeds by maintaining reasonable tariffs. Current zero/low tariffs on imports of these crops counter efforts to diversify away from rice, wheat, and sugarcane.

Balanced Approach: Develop a policy that prioritizes both short- and long-term goals, supporting the farm sector’s growth while safeguarding consumer interests.

Question for practice:

Examine the factors contributing to the decline in India’s agricultural exports and the shifts in its import trends.