Agri Export

In 2022-23, the Agri-exports have reached $53.1 billion with a registered growth of 18%. India supplies more than 3% of world agri-export commodities.

• This has been rising in the last few years in absolute terms, but it is shrinking in proportion to India’s GDP. It is noted that agri-trade in the total agri-GDP has slid to 13.5%in 2020-21 from 20% in 2013-14.
• India became the 8^th largest agri-produce exporter due to robust exports of rice, cotton, soya beans and meat propelling the country in 2021. The rise in exports had been due to increased demand after the trade restrictions post-Russia-Ukraine war.

The government targeted an export of $60 billion target by 2022. However, this is highly unlikely to be achieved, since the supply is gradually being restored from Ukraine and Russia.

India’s position in the world

India falls in the top 10 world agri-exporters but is much behind the top exporters of the world, namely, the EU and the US, both of which export more than $800bn worth of agri-commodities. This is possible due to their export of high-margin commodities such as horticulture crops.

Brazil and China, the 3^rd and 4^th largest exporters, export more than $100bn worth of agri commodities. Further, China is also one of the largest importers of agri-commodities and focuses more on processing and value addition.

India’s Lack of Export Orientation: India prioritises consumption over exports. For example, India had imposed a ban on the export of wheat in May 2022, non-basmati rice in July 2023 and sugar from October 2023.

2022 Product-wise increase:

The export of rice:

India is now the largest exporter of rice in the world. It exported 40% of the world’s rice in FY 2022 – (20MMT out of the global market of 50MMT).

India exports two types of rice:

1. Basmati rice is one of the top export commodities. However, now there is an unusual spike in the export of non-basmati rice. In 2020-21, India exported 13.09 million tonnes of non-basmati rice ($4.8bn), up from an average of 6.9 million tonnes ($2.7bn) in the previous five years.
2. Non-Basmati rice: India exports non-basmati rice (mainly broken rice) to eastern and South-East Asian countries.

• China is the biggest importer of this rice, buying about 4 million tonnes a year. For long it has avoided purchases from India, citing quality issues. However, in 2020, it imported Indian rice at around 10% discounted rates than Malaysia, Thailand and Pakistan which are traditional exporters to China.
• India exports rice even to Thailand which rice exporting nation and to Vietnam, the world’s 3rd biggest exporter in 2020.

Other Agri-Commodities

• Wheat exports: Saw a 273% jump in FY 2022 – to 7MMT, which values $2bn up from $0.5bn in FY2021. FY 2023 Target is 10MMT.
• Other Cereals 142.1% jump in the export of other cereals.
• Fresh fruits and vegetables: registered a 6.1% growth in terms of USD.
• Maize: $800Mn + to Bangladesh, Nepal, Myanmar, Sri Lanka etc.

Meat and Animal Products

Export of meat, dairy and poultry products witnessed an increase of 31.1% in the first five months of the fiscal 2021-22.

• Indian buffalo meat is seeing strong demand in international markets due to its lean character and near-organic nature. The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.

Government’s Initiatives:

The has been encouraging agricultural exports to meet an ambitious target of $60bn by 2022.

• The Ministry of Food Processing Industries shows that the contribution of agricultural and processed food products to India’s total exports is 11%.
• Agriculture Export Policy: to diversify and expand the export basket so that instead of primary products, the export of higher value items, including perishables and processed food, be increased. The exporters of processed food confront difficulties and non-tariff measures imposed by other countries on Indian exports.

Agricultural Products Export Development Authority (APEDA)

It is a statutory organization formed in 1986 through the APEDA Act, 1985 under the Ministry of Commerce and Industry. It replaced the then-existing Processed Food Export Promotion Council.

• It has been undertaking most of the activities as per its mandate and scope of work allocated spanning its 14 product categories which mainly include the sector of fruits and vegetables, processed fruits and vegetables, animal, dairy and poultry products and cereals.
• Fight against Sanitary & Phyto-sanitary (SPS) measures: It has been handling issues concerning product safety and global promotion for all its product categories, compromising more than 800 tariff lines.
• Sensitizing its trade exporters about export requirements and also aiding in setting up of infrastructure facilities for common uses and as well as by the concerned member exporters for having export-oriented production for exports from the country.
• Quality development such as preparation of standards, procedures for identified potential products, development of residue monitoring protocol, recognition of laboratories & implementation of traceability systems, etc.

Achievements of APEDA:

• It has actively supported the Government in taking the export of agricultural products to $20.67 billion in 2020-21 from USD 0.6 billion in 1986 when it was founded.
• It also helped expand the export basket to 205 countries.
• The share of APEDA exports [Scheduled products under APEDA act] (USD 20.67 billion) constituted 49% of overall agri-product exports in 2020-21 out of which, Cereals and fresh horticulture comprised 59%, Cereal preparations and miscellaneous processed items 23% and animal products 18%.

Steps taken for export:

Aiming to take the export of agricultural products to a new level, APEDA promoted IT-enabled activities for

1. Ease of doing business in the promotion and development of exports from India.
2. Paperless office (re-engineering, digital signatures, electronic payment facility),
3. APEDA Mobile App, phase-wise delivery of online services, monitoring and evaluation, uniform access, and virtual trade fair to make governance more efficient and effective.
4. Vocal for local’: Keeping in mind Prime Minister Narendra Modi’s call for ‘vocal for local’ and ‘Atmanirbhar Bharat’, APEDA has been focusing on the promotion of exports of locally sourced Geographical Indications (GI) tagged as well as indigenous, ethnic agricultural products.
   1. New products and new export destinations have been identified and accordingly, the trial shipments have been facilitated.
5. GI products: 150 out of 417 GI tagged products are agricultural and food GI, out of which more than 100 registered GI products fall under the category of APEDA scheduled products (Cereals, Fresh Fruits and vegetables, processed products, etc).
   1. In 2020-21 and the current fiscal, some of the ethnic and GI-tagged products exported by India include dragon fruit, patented village rice, jackfruit, jamun, Burmese grapes, dehydrated mahua flowers, and puffed rice.
   2. GI varieties of mango, GI tagged Shahi litchi, Bhalia wheat, Madurai malli, Mihidana, Sitabhog, Dahanu Gholvad Sapota, Jalgaon banana, Vazhakulam pineapple and Marayoor jaggery, etc.
6. Ensuring ‘ease of doing business’:
   1. APEDA is working with the state governments to ensure traceability and market linkages for farmers to promote exports.
   2. It has been on ensuring the digitalization of land records and formalization of tenancy for the farmers, which helps in boosting exports.
7. A Farmer Connect Portal: On APEDA’s website for providing a platform for FPOs or Farmer Producer Companies (FPCs) and cooperatives to interact with exporters. Around 3,295 FPOs/FPCs and 3,315 exporters have been registered in the portal so far.
8. Blockchain solution:
   1. APEDA has integrated a Blockchain solution into its GrapeNet traceability platform. GrapeNet is a web-based certification and traceability software system for monitoring fresh grapes exported from India to the European Union.
   2. APEDA Trust Chain: a blockchain solution that helps track all the details of the export consignment, right down to the location of the vineyards. After the success of traceability implementation in the grapes sector, the same was replicated for other products such as peanuts (Peanut.net); Organic products (Tracenet) and meat products (Meat.net). The traceability systems for more products are being developed for further implementation.

India’s agri-export Potential

India can aspire to become a world reader in the agri-exports.

• Quantity of raw material available: India has 52% cultivable land, compared to 11% world average. It has the largest arable land in the world, the Largest livestock population, 17% of the Global milk share(largest) and 2nd the largest producer of Fisheries, Fruits & Vegetables, and Cereals respectively.
• Variety of raw material available: 20 Agro-Climatic zones, 46 of the 60 soil types exist in India. 15 of 26 major world climates in the world. India has a great diversity in culture, customs and cuisine.
• Stable inflation level and large domestic consumption: There is a large Consumer base which ensures that there is a constant demand and supply.
• Cheap workforce: potential for cheap production and export.
• Cultural diversity: India has a good Traditional knowledge in good conservation. This developed a variety of tastes for the world market.
• Large vegetarian population: This allows India an export of greater proportion of non-vegetarian food items to the world.
• Global agri-product inflation: The world economy is facing inflation in the food and agri-product market due to excess liquidity. India can utilize it to boost its exports. This has been the reason for the rise in the export of non-Basmati rice.
• New areas of utilization: There has been increasing demand by the industry for products such as sugarcane, oilseeds and certain plants like Jatropha for bio-fuel, lubricants and other industrial products. This can boost exports too.
• Indian buffalo meat is seeing strong demand in international markets due to its lean character and near-organic nature. The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.
• IPR protection: protections in terms of Geographical Indication tag help products like Basmati rice, silk/textile products, finished goods like Mysore Pak etc.

Challenges:

India lacks a comparative advantage in many items.

• Low-Value addition: Still Primary processed agricultural commodities form the majority share. The Ministry of Food Processing Industries shows that the contribution of agricultural and processed food products to India’s total exports is 11%.
• Domestic prices of processed food products are much higher compared to the world reference prices. The logistics cost adds 30% of the cost which is much higher than 6% in China.
• Mandatory pre-shipment examination by the Export Inspection Agency is lengthy and costly;
• Compulsory spice board certification is needed even for ready-to-eat products that contain spices in small quantities;
• Lack of strategic planning of exports by most State governments;
• Lack of a predictable and consistent agricultural policy discouraging investments by the private sector;
• Prohibition of import of meat- and dairy products in most of the developed countries;
• Withdrawal of the Generalised System of Preference by the U.S. for import of processed food from India;
• Export shipments to the U.S. require an additional health certificate; and
• Quality & Certification Issues: The Absence of an equivalency agreement with developed countries for organic produce.
• Too much rice & sugarcane – According to the agri-commodity export index: Rice tops with a value of $8.8 billion (21%), followed by Marine products, Spices, bovine meat & sugar ($2.8 billion). Rice & Sugar are well-known water guzzlers.
• WTO Issues: Excessive domestic stocks of sugar resulted in registering a case against India at the WTO.
• Practically Exporting water. Sugar takes 2000 litres for 1 kg of sugar production, Rice needs 4000 litres. This depletes the ground table.

Way forward:

• Nurturing food processing companies, ensuring low cost of production and global food quality standards, and creating a supportive environment to promote the export of processed food.
• Reputed Indian brands should be encouraged to export processed foods globally as they can comply with the global standard of codex.
• Focus on Food Standards: Indian companies should focus on cost competitiveness, global food quality standards, and technology, and tap the global processed food export market.

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