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SANSAD TV: PERSPECTIVE- AGRI EXPORTS- RIDING HIGH

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Introduction:

India’s Agri Exports, which crossed a record 50 billion dollars for the year 2021-22. As per the provisional figures released by DGCI&S, the agricultural exports grew by 19.92% during 2021-22 to touch 50.21 billion dollars. Notwithstanding the various logistical challenges posed by the COVID-19 pandemic, the Agricultural and Processed Food Products Export Development Authority (APEDA), which works under the Ministry of Commerce and Industry, scripted a new history by exporting agricultural and processed food products to the tune of 25.6 billion dollars, which is 51% of India’s total agriculture exports of 50 billion dollars. The growth rate is remarkable as it is over and above the growth of 17.66 per cent at 41.87 billion dollars achieved in 2020-21.

Composition of agri-exports:

  • Rice ranks first in agri-exports, with around 18 million tonnes (mt) valued at $8.8 bn.
  • It is followed by marine products ($6 bn), spices ($4 bn), bovine (buffalo) meat ($3.2 bn), sugar ($2.8 bn), etc (see graphics).
  • Of these, rice and sugar raise concerns about competitiveness and environmental sustainability, as these are water guzzlers and heavily subsidised through cheap/free power for irrigation as well as fertilisers.
  • On top, sugar exports have been further subsidised to clear excessive domestic stocks.
  • This has led many sugar-exporting countries like Australia, Brazil, Thailand, etc, to register a case against India at WTO.

Changing export basket:

  • India’s agricultural export basketis changing from traditional commodities to non-traditional processed foods.
  • Traditionally, Basmati rice is one of the top export commodities. However, now there is an unusual spike in the export of non-basmati rice.
  • India’s livestock populationis largest in the world with 50% of the world’s buffaloes and 20% of cattle, but only about 1% of total meat production is converted to value added products.
  • Indian buffalo meat is seeing a strong demand in international markets due to its lean character and near organic nature.
  • The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.
  • In 2020-21, the export of poultry, sheep and goat meat, cashew kernels, groundnuts, guar gum, and cocoa products went down in terms of value and total quantity.
  • The export of processed food products has not been growing fast enough because India lacks comparative advantage in many items.
  • This may imply that the domestic prices of processed food products are much higher compared to the world reference prices.

 Measures needed for Agricultural Export Policy: Non-tariff measures:

The main objective of the Agriculture Export Policy is to diversify and expand the export basket so that instead of primary products, the export of higher value items, including perishables and processed food, be increased.

The exporters of processed food confront difficulties and non-tariff measures imposed by other countries on Indian exports. Some of these include

  • Mandatory pre-shipment examination by the Export Inspection Agencybeing lengthy and costly;
  • Compulsory spice board certification being needed even for ready-to-eat products which contain spices in small quantities;
  • Lack of strategic planning of exportsby most State governments;
  • Lack of a predictable and consistent agricultural policy discouraging investments by the private sector;
  • Prohibition of import of meat- and dairy based-products in most of the developed countries;
  • Withdrawal of the Generalised System of Preference by the U.S. for import of processed food from India;
  • Export shipments to the U.S. requiring an additional health certificate; and
  • The absence of an equivalency agreement with developed countries for organic produce.