India's farm exports reversed a three-year slide and posted an over 14% rise to $38.2 billion in the last fiscal from a year earlier on robust demand for marine products and rice, showed the latest official data.
India’s farm exports reversed a three-year slide and posted an over 14% rise to $38.2 billion in the last fiscal from a year earlier on robust demand for marine products and rice, showed the latest official data. Interestingly, shipments of buffalo meat — the third-largest item in the farm export basket — posted a near-3% rise in value and a marginal rise in volume in FY18, despite a crackdown on illegal abattoirs in Uttar Pradesh last year.
What bolsters the notion of a recovery in farm export is the fact that, in volume terms, as many as 27 of the top 40 items that make up around 95% of total agricultural shipments registered a rise in FY18. In fact, export volume of six of the top 10 items accounting for around 70% of agricultural and allied product shipment rose in the last fiscal, vis-a-vis FY14 when farm export value had touched a record $43 billion. “This suggests our farm and allied sector exports in the last fiscal could have breached the earlier record if key commodity prices in the export market would not have remained subdued last fiscal,” a senior commerce ministry official told FE.
Analysts said the rise suggests many of our products are becoming competitive again due to a pick-up in prices in competing nations, even though global commodity prices are yet to recover fully.
Also, a strong show by the marine products segment continues to lift agricultural exports.
The rise in the outbound shipments of farm items exceeded a 10% expansion in the overall merchandise exports in 2017-18.
The good performance in farm exports couldn’t have come at a better time for the country that witnessed the first normal seasonal showers in 2017 after two successive years of a below-par monsoon. Once touted to have the potential to be a long-term driver of India’s goods exports, the agriculture and allied sector was periodically bogged down by elevated domestic prices in times of a global commodity crash — caused by plentiful supplies and a demand slowdown — and periodic curbs on the exports of certain items.
While the long-term potential is immense, high cost of production (especially in years of deficient monsoon), elevated levels of minimum support prices fixed by the government, lack of market reforms (removal of archaic APMC Act and the creation of an efficient alternative markets), low mechanisation due to small landholdings and inferior financial muscle of farmers have often undermined 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 often ruled higher than the global levels.
On top of these, frequent restrictions on exports of farm items in times of a spike in domestic prices have stoked considerable uncertainties in agri trade, although such fluctuations in trade policies have substantially eased in recent years. The government also plans to do away with the habit of restricting exports of at least organic and processed farm items.