Agricultural exports up, realisation down

By: | Updated: August 7, 2015 1:27 AM

The fall in global commodity prices may have helped ease the pressure on government finances, but it has taken a toll on the country’s exports, shipments of farm items and processed foods not excluded.

Indian economyExport of agricultural produce and processed foods, which had seen a phenomenal rise for a few years to FY14, shrank 4% in FY15 thanks to huge declines reported in the third and fourth quarters of the year. (Reuters)

The fall in global commodity prices may have helped ease the pressure on government finances, but it has taken a toll on the country’s exports, shipments of farm items and processed foods not excluded.

Export of agricultural produce and processed foods, which had seen a phenomenal rise for a few years to FY14, shrank 4% in FY15 thanks to huge declines reported in the third and fourth quarters of the year and plunged even more sharply (23%) in the first quarter of this fiscal. And the sharpest fall in Q1 exports of these items was witnessed in Basmati rice and buffalo meat, which make nearly half of the exports overseen by the Agricultural and Processed Food Products Exports Development Authority (Apeda).

That this is due to a fall in prices is evident from the fact that the value of Basmati rice exports declined 19% to Rs 6,780 crore in April-June this year, even as the volume of the aromatic rice’s shipments rose 15% to 1.1 million tonnes.

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“Our realisation from Basmati rice exports has declined sharply in the last couple of years, while volume-wise, the grain shipment has been rising steadily,” a commerce ministry official told FE.

Analysts said the downturn in the commodity cycle adversely impacted India’s exports of other agricultural items like tea, coffee and marine produce as well.

Ironically, the fall in export prices for farm products and processed foods comes at a time India is concerned about rising domestic foods prices. The Consumer Price Index (CPI) for June rose to 5.4% against 5.01% in May owing mainly to food inflation spurting to 5.48% in June compared with 4.8% in May. Prices of pulses and onions are ruling high in the domestic market. However, what would hold out hope for exporters is the prediction by analysts that global rice prices would likely surge by 10% to 20% in the next few months with an El Nino weather pattern gripping top producers in Asian producers of the grain.

The country’s agricultural and processed food products exports during first quarter of the current fiscal declined 23% to Rs 26, 112 crore from Rs 34,220 crore reported during the same period last year. According to the ministry official, average realisation from Basmati rice exports has fallen from $1,295 per tonne in FY14 to around $10,50 a tonne in the current fiscal. However in the case of non-Basmati rice, the realisation has increased by around 6% to Rs 3,864 crore in the April-June 2015 period compared with same period last fiscal. Overall, rice exports from the country declined 12% to Rs 10,644 crore in April-June this year while the volume of grain shipment increased 8% to 2.7 million tonnes.

Shipment of buffalo meat, the single largest export item from the agricultural sector in the last fiscal, has also declined by more than 11% to Rs 5,423 crore in April-June 2015. In the case of fresh fruits, the export realisation in the first quarter has fallen by more than 15% to Rs 883 crore while fresh vegetables shipments increased marginally to Rs 1,058 crore.

Meanwhile, Apeda has identified 20-odd clusters located across the country for sustaining growth in the exports of food products. These clusters include those for Basmati (Haryana and Punjab), buffalo meat (western Uttar Pradesh), grape and wine (Nashik region, Maharashtra), pomegranate (Satara and Pune regions of Maharashtra), dehydrated onions and garlic (Gujarat), poultry or egg (Namakkal, Tamil Nadu) and mango pulp (Uttar Pradesh and Maharashtra).

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