Agricultural exports-imports

GS Paper 3

Syllabus: Indian economy, agriculture and related issues

 

Source: IE

 Context: Both agricultural exports from and imports into India have scaled new highs in the fiscal year that ended March 31, 2023.

 

Provisional data of Department of Commerce on agri imports-exports:

• Agricultural trade surplus (Exports – Imports): It has marginally dipped from $17.82 billion to $17.46 billion.
  • The surplus narrows further if one adds the import of fertilizers, which have risen from $14.17 billion in 2021-22 to $17.21 billion in 2022-23.

 

The drivers – global prices:

• The UN FAO’s Food Price Index (FPI) – a weighted average of world prices of a basket of food commodities over a base period value (2014-16 = 100) – remains high since 2020-21.
• It made India’s agri-commodities more globally price competitive.

 

Major export-import contributors:

 

 

Export profile:

• Basmati exports are mainly to the Persian Gulf countries, while non-basmati shipments are more diversified, spreading across –
  • Asia (Bangladesh, China, Sri Lanka, Malaysia, Vietnam, UAE and Iraq) and
  • Africa (from Senegal, Ivory Coast and Benin to Somalia and Madagascar).
  • It’s non-basmati that has made India the biggest rice exporter, ahead of Thailand.
• In sugar exports, the country has emerged as the world’s No. 2 exporter after Brazil.
  • Indian mills have built markets for both raw sugar (among refineries in Bangladesh, Indonesia, Malaysia, Saudi Arabia and Iraq) and
  • Regular plantation whites (in African countries, Afghanistan, Sri Lanka and China).
• Spices exports have stagnated since 2020-21.
• The exports of raw cotton, guar-gum (a thickening agent used in extraction of shale oil and gas) and oil meals, have declined.

 

Imports profile:

• Imports meet roughly 60% of India’s vegetable oil requirements, 10% of pulses.
• Imports of spices, cashew and cotton – commodities where India has traditionally been a net exporter – have shown a rising trend.

 

Concerns:

• Unfavourable regulatory regime:
  • Cultivation of GM Bt cotton and high global prices had enabled India to become the world’s top producer (ahead of China) and No. 2 exporter (after the US) of natural fibre.
  • But, as the government is not permitting new gene technologies, the country has turned from a net exporter to an importer of cotton.
• Domestic crop shortages: Specially in cotton, soyabean, guar-gum and oil meal.
• Spice imports going up are a reflection of reduced price competitiveness (vis-à-vis Vietnam in pepper and Guatemala in pepper).
• Export curbs: The government banned wheat exports, broken rice exports and slapped a 20% duty on all non-parboiled non-basmati shipments.

 

Government steps to promote agricultural exports:

• Agriculture Export Policy (2018): It aims to harness export potential of Indian agriculture to make India a global power in agriculture and raise farmers’ income.
• ‘District as Export Hub’ Initiative of the Department of Commerce would be utilised to achieve the objectives of Agriculture Export Policy.
• Transport and Marketing Assistance for Specified Agriculture Products – a Central Sector Scheme to mitigate the freight disadvantage for the export of agriculture products.
• Trade Infrastructure for Export Scheme (TIES)
• Market Access Initiatives (MAI) Scheme
• The Export Promotion Schemes of APEDA

 

Risks ahead:

• International prices: The latest FPI reading showing declining trends.
• Domestic food inflation, more curbs on exports and a further liberalisation of imports if the ensuing southwest monsoon season delivers subnormal rainfall.

Insta Links:

Importance of Agri exports