The country's farm exports are all set to drop for a second straight year, with products monitored by the Agricultural and Processed Food Products Export Development Authority (Apeda) expected to record a 25% decline in outbound shipments in the current fiscal, according to sources.
The country’s farm exports are all set to drop for a second straight year, with products monitored by the Agricultural and Processed Food Products Export Development Authority (Apeda) expected to record a 25% decline in outbound shipments in the current fiscal, according to sources.
The exports of dozens of commodities monitored by Apeda will likely touch $16 billion this fiscal, compared with $21.3 billion a year before, thanks primarily to a crash in global commodity prices, said the sources. Such products accounted for over a half of the country’s total farm exports in the last fiscal. Between April and November, the exports of such products dropped 27% from a year earlier to $10.6 billion, far worse than an 18.5% decline in the country’s merchandise exports during this period, showed the DGCIS data. Total farm exports could also fall to $30-33 billion in 2015-16 from almost $39 billion a year earlier, said the sources.
The plunge in farm exports couldn’t have come at a worse time for the country which has witnessed a contraction in goods exports for a 13th straight month through December. Once touted to have the potential to be a long-term driver of India’s goods exports, the agriculture and allied sector has been bugged down by elevated levels of domestic prices in times of a global crash caused by plentiful supplies and a demand slowdown.
Analysts said the high cost of production (especially following a second straight year of deficient monsoon that drove up input and irrigation costs), elevated levels of minimum support prices fixed by the government, low level of mechanisation due to small land holdings and less financial muscle of farmers have severely eroded India’s competitiveness in farm exports in times of a global economic slowdown. Consequently, prices of commodities ranging from cereals to fibre to dairy products and oilmeals have been mostly ruling higher than the global levels.
“The global commodity crash has hit us badly. Wherever we are net importer, we have gained, and wherever we are net exporter (for instance, agriculture), we have suffered. So while inflation has remained within the comfort zone, the drop in commodity prices have dragged down export value and hurt farmers the most,” said Ashok Gulati, chair professor of agriculture at ICRIER. With global supplies remaining abundant, Gulati expects farm commodity prices to stay subdued in the coming fiscal as well unless some weather problems crop up and worsen production prospects.