Topic: General Studies 3:
- Indian economy and mobilization of resources; Agriculture Sector
In News: Though the coronavirus pandemic hit all the sectors of the economy in the country, the growth in the export of agricultural commodities continues in the country.
- The export of Agri and allied commodities during Apr,2020 – Feb,2021 was worth 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.
There was a recovery in global prices — due to a combination of
- Demand revival from unlockdowns (opposite to what happened in April-May)
- Continuing supply chain disruptions (including from a shortage of shipping containers)
- Chinese stockpiling (in anticipation of a fresh corona outbreak during the winter)
- Dry weather in producer countries such as Thailand, Argentina, Brazil and Ukraine
How Agriculture exports have the potential to transform Indian farm sector?
In India, we are more constrained on the demand side than on the production side. And it is demand that’s also driving farmers’ income.
There are two sources of creating demand for agri commodities — domestic and global. Given the innate vagaries of the domestic value chain and subdued consumption sentiment, it is important to focus on the exports value chain. India now fares miserably compared to its global peers here. We are the world’s second largest farm producer, but the country doesn’t figure in the ranks of the top 10 exporters. India has, moreover, not leveraged its position as the second largest horticulture producer. Smaller countries such as Thailand and Egypt fare better than India in horticulture exports.
There’s a need to come up with a new model of growth through focused value chains. When it comes to exports, there are several key issues that affect the various stakeholders concerned. The most crucial are our farmers, who cultivate fractured landholdings and are often not updated on the global demand trends, whether it pertains to the varieties to grow or quality and the safety standards to be maintained. Further, even when they are, investing in post-harvest processing, cold chain or branding requires capital, which isn’t tenable for a small farmer. Thus, there is an imperative to bring scale to agricultural operations through, say, farmer producer groups or organisations (FPO).
Ways to further boost the Agri-Exports
- A ‘Public-Private-Farmer Group Partnership’ model could be the way ahead for pushing agri exports from India. This model can receive a boost through establishing crop-specific councils with representation from the Agricultural & Processed Food Products Export Development Authority, the ministries of agriculture and commerce, big FPOs, corporates and SMEs, with some experience and interest in developing agri value chains. These councils need to be adequately funded by the government for carrying out market research, building strong brands and setting up common infrastructure (the Basmati Export Development Foundation is a good model).
- 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.
Connecting the dots:
- By setting a goal to gradually open up all agri-produce to exports, the country can set an inspiring and exciting new horizon for itself. Do you agree? Elucidate.
- In India, organic farming has got huge export potential. Do you agree? Comment.