Whatever the reason for the muted government response, this has important ramifications for Indias agricultural exports. As the adjoining column points out, agricultural exports can touch $42 billion this year if the government stops its on-off policies towards farm exportswhile agricultural exports are expected to grow 13.5% this year, keep in mind merchandise exports fell 5.95% while services exports grew just 1.7% in the April-November period this financial year. In 2008, for instance, when global foodgrain prices flared, India couldnt export either wheat or rice due to a ban. When the ban was removed, and global prices rose sharply, rice exports reached a record 7.2 million tonnes in FY12 and 4.7 million tonnes in the first half of FY13; wheat exports touched 2.4 million tonnes in the first half of FY13.
Apart from not having on-off export policies, the other thing Indian policymakers need to concentrate on is to get Indias processing of fruits and vegetables up from the 6% or so levels that they are right now. Take anything you like, from tomato purees to dehydrated onions, and the price volatility is dramatically lower and, unlike in the case of raw vegetables, the difference between wholesale and retail prices is also much lower.