Rice & sugar to the rescue, even as overall exports stagnate

Apr 23 2014, 05:22 IST
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SummaryExports of farm items and allied products accounted for 14.4% of the country’s exports (of $312.35 billion) in FY14

Even as India’s overall exports are crawling, exports of farm items that have seen a phenomenal rise in recent years are keeping pace and increasing their share in the country’s foreign trade. Exports of farm items and allied products accounted for 14.4% of the country’s exports (of $312.35 billion) in FY14, compared with 13.9% in FY13 and 12% in the previous year. While a sustained rise in exports has been in evidence for the last two to three years in respect of many farm products, rice and, of late, raw sugar exports accelerated further.

India’s merchandise exports witnessed a drop in four out of the 12 months in the last financial year, and the annual growth was a mere 4% despite a low base (exports declined 3.2% in FY13). While a sharp increase in demand from the US and some countries in West Asia, Africa and Europe has led to a 29% annual increase in rice exports in FY14 to R42,668 crore, the country’s raw sugar exports jumped dramatically in the first half of the current marketing year that started on October 1.

India, the world’s second-largest sugar producer and the biggest consumer, exported 1.45 million tonnes of both raw and refined sugar during the October-March period (valued at close to R4,000 crore), compared with just 35,000 tonnes a year before. This time around, the jump in exports of sugar, which have traditionally been influenced by inconsistent government policies, was partly because mills scrambled to cash in on a subsidy for raw sugar production and also to reduce a glut in refined sugar.

As for rice exports, the demand for basmati, which accounts for over 65% in the overall value of export of this grain, is mainly from Iran, Saudi Arabia, the UAE, the US and Europe. Non-basmati varieties are in great demand in some African countries, including Benin, Senegal and South Africa, besides the US. That per-unit export realisation has also risen is evident from the fact that the increase hasn’t kept pace with the rise in rupee value of exports. Rice exports reached 10.4 million tonnes last fiscal, only marginally higher than shipments of 10 million tonnes in FY13.

Rice exports, in fact, have been rising steadily since the government lifted a 4-year ban on non-basmati rice exports in September 2011.

What triggered the export boom is also a relatively stable and liberal policy regime in recent years when it

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