Why India’s Farm Exports May Face Headwinds?

What’s in today’s article?

• Why in News?
• India’s Latest Farm Exports
• India’s Latest Farm Imports
• What Are the Likely Risk Factors to India’s Farm Exports?
• Government Initiatives to Promote Agricultural Exports

  

Why in News?

• Both agricultural exports from and imports into India have scaled new highs in the fiscal year that ended March 31, 2023.

 

India’s Latest Farm Exports

• Government data show the value of farm exports in April-December (9 months) 2022, at USD 39 billion.
  • This is 7.9% higher than the USD 36.2 billion for the corresponding period of the previous year.
  • At this rate, the record USD 50.2 billion exports achieved in 2021-22 look set to be surpassed.
• Key Factors behind the increase in Exports –
  • The two big contributors to India’s agri-export growth have been rice and sugar.
  • India in 2021-22 shipped out an all-time-high 21.21 million tonnes (mt) of rice valued at USD 9.66 billion.
  • Sugar exports hit a record value of USD 4.60 billion in 2021-22, as against USD 2.79 billion, USD 1.97 billion, USD 1.36 billion, and USD 810.90 million in the preceding four fiscals.
  • This fiscal has seen a further surge of 43.6%, from USD 2.78 billion in April-December 2021 to USD 3.99 billion in April-December 2022.
• The exports of rice and sugar are well on course to touch, if not top, $11 billion and $6 billion respectively in 2022-23.

 

India’s Latest Farm Imports

• Similar to exports, the imports are also growing.
• The imports of agri produce stood at USD 27.8 bn in Apr-Dec 2022.
  • This is a growth of 15.4% over the USD 24.1 bn for Apr-Dec 2021.
• As a result, there has been a further shrinking of the surplus on the farm trade account.

 

Image Caption: India’s Agricultural Trade

• The growth in imports has come mainly from three commodities –
  • The first is vegetable oils, whose imports shot up from USD 11.09 bn in 2020-21 to USD 18.99 bn in 2021-22. Imports meet roughly 60% of India’s vegetable oil requirements.
  • The other three commodities are cotton, cashew and spices. 
• Key Factors behind the increase in Imports –
  • India’s cotton production has declined from 398 lakh bales in 2013-14 to a 12-year low of 307.05 lakh bales in 2021-22.
    • The effects of not allowing new genetic modification (GM) technologies after the first-generation Bt cotton are showing, and impacting exports as well.
    • A proactive approach is required in edible oils as well, where planting of GM hybrid mustard has been permitted with great reluctance.

 

What Are the Likely Risk Factors to India’s Farm Exports?

• Agri-exports in the current fiscal could face headwinds from two sources –
  • International Prices –
    • With two of the world’s largest exporters (Russia and Ukraine) of wheat and other crucial crops entering a second year of war, the food prices are likely to remain elevated.
  • Domestic Prices –
    • The second source is domestic, more specifically food inflation fears ahead of the 2024 national elections.
    • The Union government banned wheat exports last May.
    • This was followed by a ban on broken rice exports and the slapping of a 20% duty on all non-parboiled non-basmati shipments in September.
    • Exports of sugar have also stopped since this month’s start.

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Government Initiatives to Promote Agricultural Exports

• Promotion of exports of agricultural products is a continuous process.
• To promote agricultural exports, the Government has taken several steps at State/District levels.
• Agriculture Export Policy 2018 –
  • In order to boost farm exports, the Government introduced a comprehensive Agriculture Export Policy in 2018, with the following objectives –
    • To diversify our export basket, destinations and boost high-value and value-added agricultural exports including focus on perishables.
    • To promote novel, indigenous, organic, ethnic, traditional and non-traditional agri products exports.
    • To provide an institutional mechanism for pursuing market access, tackling barriers and deal with sanitary and phytosanitary issues.
    • To strive to double India's share in world agri exports by integrating with global value chain at the earliest.
    • To enable farmers to get benefit of export opportunities in overseas market.
• District as Export Hub Initiative –
  • Under the DEH initiative, products including agricultural products with export potential have been identified in all 733 districts across the country.
• Transport and Marketing Assistance for Specified Agriculture Products –
  • It is a Central Sector Scheme.
  • It aims at providing assistance for the international component of freight to mitigate the freight disadvantage for the export of agriculture products.
• Besides, Product specific Export Promotion Forums (EPF) for eight high potential agri products i.e., Grapes, Mango, Banana, Onion, Rice, Nutri-Cereals, Pomegranate, Floriculture & Plant material have been created.

 

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Q1) What are the top 3 wheat producing states in India?

Uttar Pradesh contributed 32.42% of the total wheat production in India. Madhya Pradesh contributed 16.08% of the total wheat produced in India. Punjab produced 15.65% of the total wheat in India. Around 64% of India's total wheat production is from these 3 states.

 

Q2) What are the top 3 cotton producing states in India?

Gujarat, Maharashtra and Telangana are the major cotton producing states which produce about 65% of cotton production in the country.

 

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Source: Why India’s farm exports may face headwinds