Agricultural shipments take a larger bite of exports pie

Written by Sandip Das | New Delhi | Updated: Nov 21 2013, 06:09am hrs
Thanks to a relatively stable export policy and a flourishing food processing/packaging industry, Indias agricultural exports have surged since 2010-11, enabling it to acquire a larger share of the countrys overall exports. From less than a 7% share in overall exports in 2010-11, the share of exports of agricultural and processed food products rose to 10.6% in 2012-13. That figure has more or less been maintained for the current year.

Of course, a recent setback in guar gum shipments has tempered the pace of the growth. The sharp rise in exports of Indias agricultural products has primarily been driven by rice, wheat, processed meat, fresh fruit and vegetables.

Exports are expected to be helped by dramatic farm-sector growth (5.2-5.7%, according to the Commission for Agricultural Costs and Prices, compared with last years 1.9%) likely this fiscal, due to the robust and somewhat even monsoon rainfall.

A commerce ministry official pointed out that unlike earlier, the government did not impose any ban on exports of commodities such as rice, wheat and onions since 2011 despite demands from many quarters. This, he said, helped India emerge as a key player in the global market for many key farm commodities, adding that the potential is yet to realised fully.

Notwithstanding sharp fall of 52% to R7,218 crore in exports of guar gum, which witnessed robust demand from US-based oil exploration companies in recent years, the countrys overall exports in the first two quarters of the current fiscal grew by 17% to R66,387 crore.

This has been mainly achieved through a sharp rise in rice (both Basmati and non-Basmati varieties) and meat products during the first half of the current fiscal. The country is all set to see a repeat of the 2011and 2012 target of 10 million tonnes of rice exports this year as well. In the last two years, India emerged as the worlds biggest exporter of rice, displacing traditional exporters like Thailand and Vietnam.

Our focus on value-addition through processing and stringent adherence to global standards has paid dividends. A stable policy regime of allowing exports of value-added agricultural products have created a market for our products, Asit Tripathy, joint secretary (agriculture), commerce ministry, told FE.

According to Agricultural and Processed Food Products Exports Development Authority data, the biggest share of Indias agricultural exports this fiscal has been of Basmati rice. The country earned more than R14,118 crore in the first half from Basmati rice shipments, up 57% over the same period a year ago, while in dollar terms Basmati exports grew 47%. India, the worlds top Basmati rice exporter, shipped aromatic rice worth more than R17,000 crore in FY13.

Shipments of non-Basmati rice rose by more than 39% to Rs 8,810 crore in the current fiscal. A commerce ministry official said rice exports have been rising steadily since the government lifted a four-year-long ban on non-Basmati rice exports in September 2011. Exports of rice stood at Rs 30,000 crore during the last fiscal and in the first half of this year, Rs 23,000 crore has been realised. Exports of meat products also saw a sharp rise of 56% to Rs 11,887 crore in H1 this fiscal.

Realisation from wheat exports saw a 56 % growth to Rs 5,681 crore in the first half. This was partly helped by a low base as there was a ban on wheat exports in the initial months of last year. The value of wheat exports last year stood at Rs 10,500 crore.

Other commodities that saw a substantial increase in exports in the first two quarters include dairy products (Rs 1,634 crore), pulses (Rs 1,018 crore), fresh fruit (Rs 1,784 crore) and fresh vegetables (Rs 1,970 crore).

Indian agriculture seems to have a greater comparative trade advantage than manufactured goods. This has been possible as the sector has responded by undergoing a structural transformation, Commission for Agricultural Costs and Prices chief Ashok Gulati said in a recent paper.