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Synopsis: Reforms that needs to be undertaken to achieve full potential of Agri exports in India
The pandemic-driven supply shortage of farm goods and the resultant inc in price in the global market had given India an opportunity to strengthen its Agri-exports.
Consequently, rice exports almost doubled to an all-time high of 9.5 million tonnes and those of wheat by over 2 million tonnes last year. But such bonanzas cannot be expected to endure for long.
In this regard, to support exporters, the government is planning to reintroduce transport and marketing support for agricultural exports.
It will help exporters to cope with high freight costs and other logistical constraints. But this step alone may not suffice to lift farm exports to the desired extent.
Other measures, aimed specifically at upgrading the quality and enhancing cost competitiveness of farm products, are equally vital.
How Agri exports have fared in India?
India has traditionally enjoyed a positive trade balance in agriculture, but the present level of Agri-exports is just around half the potential.
Farm exports in 2020 were around $42 billion, whereas the current potential, as assessed by the Agricultural and Processed Food Products Export Development Authority, is around $80 billion.
The country’s first dedicated Agricultural Exports Policy, announced in 2018, had set an even more ambitious export target of $100 billion.
The annual growth of Agri-exports, is merely 2.5% in 2020. This rate needs to go up substantially to provide an outlet to surplus agricultural produce and increase farmers’ income.
What needs to be done?
Need to diversify the range of products as well as export destinations: At present, only limited categories of agricultural products are shipped abroad. Example, rice (chiefly Basmati rice), meat (mainly buffalo meat), marine products (primarily shrimp), sugar, spices, certain types of cotton, and select vegetables and fruit. This range would need to be expanded to tap additional markets.
Public Investments in Agri infrastructure: A prerequisite for consolidating the country’s foothold in the agri-export market is to increase the infrastructure for post-harvest management, storage, and the transportation of export-bound farm produce.
Structural reforms: According to a joint report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and YES Bank the following reforms are suggested.
– Export-friendly policy environment
– World standard quality assurance facilities,
– A system to facilitate traceability,
– Greater private investment in the export-oriented Agri-processing industry.
– Need to enhance the export-worthiness of small farmers’ produce through value-addition.
– Backward and forward linkages small farmers to link them directly with processing units and exporters.
– Building Indian brands and project India as a reliable supplier.
Source: This post is based on the article “Focus on agri-exports” published in Business Standard on 22nd September 2021.