Agricultural Exports

Agricultural Exports

This article deals with ‘Agricultural Exports.’ This is part of our series on ‘Economics’ which is an important pillar of the GS-3 syllabus. For more articles, you can click here.


Introduction

India’s agriculture exports were worth $ 41.8 billion in 2020, constituting little more than  2.5% of the world agriculture trade.

Agricultural Exports

Analysis

Main exports Basmati Rice, Marine Products, Spices, Wheat, Sugar and Tea
Main export destinations USA, Saudi Arabia, Iran, Nepal and Bangladesh.

Importance of Agri-Exports

Importance of Agri-Exports
  • Addressing crash of prices due to glut/surplus: Farmers suffer during bumper crops. Exporting the surplus produce will help to maintain the prices.
  • It can help achieve the ambitious target of ‘Doubling farmer’s income till 2022‘. 
  • Agricultural exports will help India to earn Foreign exchange.
  • By integrating Indian agriculture with global value chains via agricultural exports, more jobs can be created.  


Issues with Indian Agro Exports

  • Lack of Stable Agricultural Trade Policy Regime: Indian Agricultural Policy is not stable. The government frequently change the policy to tame inflation, thus impacting the exports. For example, the government increases the Minimum Export Price (MEP), due to which certain Indian Agricultural Exports become uncompetitive in the world market.
  • Frequent rejections: Indian agro-products frequently fails to meet the phytosanitary and quality standards set by different countries, especially European Union and the USA.
  • Lack of value addition: India exports raw agriculture due to the underdeveloped Food Processing Industry. Hence, the rate of return is low. 
  • Lack of uniformity: Foreign importers hesitate to buy such products.
  • Infrastructure and Logistics: Poor connectivity of the landlocked production areas (E.g. Bihar, Jharkhand, North-Eastern states and hilly regions, etc.) to the ports is a stiff challenge.  
  • Constitutional Issue: “Agriculture” is a state subject, whereas “trade and commerce” is a Union subject under Schedule 7 of the Indian constitution. The two fail to collaborate to increase the agricultural export.

Agriculture Export Policy, 2018

Objectives

  • Double agricultural exports from $ 30+ Billion to $ 60+ Billion by 2022.
  • Double Indian share in world agro-trade from 2% to 4%.
  • Ensure that farmers benefit from the exports. 

Terms

  • Focus on ‘Bake in India’ on the lines of ‘Made in India’.
  • Diversify our export basket. E.g., Wild Herbs, Aromatic Oils, Medicinal plants etc.
  • Diversify the destinations and don’t just focus on Europe and US. 
  • Stable Trade Policy Regime and don’t change policies like Minimum Export Price on an ad-hoc and reactionary basis.
  • Reforms APMC Act like removal of perishables from APMC Act. 
  • Provide Infrastructure and logistic support by building Mega food parks, State of Art testing facilities etc.
  • Develop Farm to Port projects (like farm to fork).
  • A separate fund for promoting and marketing ‘Brand India in Agricultural products will be created.
  • Attract private investments in agro-export-oriented activities.
  • The Agro-start-up fund will be created.
  • The government will help exporters with Sanitary and Phytosanitary (SPS) issues via FSSAI, APEDA etc., so that the EU / USA doesn’t ban their products.