Agri-exports fall 17% to five-year low of $32.09 bn in FY16

Marine products, buffalo meat, rice including basmati have been top contributors to exports basket

Agri-commodities are not behind in keeping Indian exports low. Rather they have fallen to a five-year low in 2015-16 according to data provided by Agricultural and Processed Food Products Export Development Authority (APEDA).

From a pick of $42.84 billion in FY14, agri exports are falling but the fall was sharper with 17% decline in FY16 to $32.09 billion and except sugar and couple of other small items in top ten of the agri export basket, all commodities exports declined.

In FY13 Guar gum was top revenue generating export item in agri basket with $3.9 billion is now not even in top 10 list.

Marine products, buffalo meat, rice including basmati have been top contributors in exports basket and all have seen a significant fall in exports.

Ashok Gulati, former chairman, Commission for Agriculture Cost and pricing (CACP) said, "Rupee's comparative strength or higher real effective exchange rate of rupee, collapse in many agri prices globally and scarcity locally due to two successive draughts, volatile currencies changing equations of India's price parity in export market are among the key reasons for the falling agri produce exports."

On Guar gum he said that shale oil price have crashed globally in last two years which reduced demand for guar gum while Chinese players have also developed alternative synthetic material leading to fall in its demand from India.

Key reason for fall in buffalo meat exports was sharp fall in Brazil currency leading to their produce much more competitive than India. For basmati rice, Iran was virtually absent for almost a year and rice prices were also not attractive.

A senior official from APEDA however said that, "The agriculture exports from India have been falling mainly in value terms. As the global prices of commodities have been lowering, even the increase in volume of exports of agri commodities has not fetched us higher incomes. So the exports in value terms have dwindled. At the same time, the domestic prices of three major agri commodities in India; wheat, soya meal and maize have remained higher than international market in the last 18 months. This has also restricted the prospects of Indian commodity exports in the international market and we are out of market."

What needs to do to arrest the fall in agri exports? This is because it helps increasing farmers' income.

APEDA official quoted earlier said that, "In the present situation, we can only encourage exporters with more relaxed norms on the access to funds from organised sector."

Commerce ministry, according to the source, has asked all commodities boards to focus on increasing exports of commodities they are supervising. However some commodities like spices exports which is growing, has faced with several quality related issues. Several quality issues, such as adulteration in jeera and chilli, have been raised during the past two years by countries importing spices from India.

As a result, Indian trade has taken a huge hit and the spice industry has suffered losses. In order to tackle these problems within the industry and to make a strong case before the government, spice traders and exporters have come together to form a new body called 'Seed and Spice Stakeholder Association' (SSSA).

But that is not enough, Ashok Gulati says, "To oversee reforms in agri sector, and export is just one part of it, cabinet shall have a champion for agriculture."

His observation is timely as cabinet expansion is happening on Tuesday. He also advocates reforming agri marketing, creating an institution for agri research and boost investment in the sector.

Dr Ramesh Chand, NITI Ayog, who is also a champion for agriculture says that historically it has been observed that when global agri prices are high, India's share in global trade for agriculture increases and vice versa. Because global agri prices were trending low, there was less incentive for india to exports.

However, "We emphasise that there is need to reform agri marketing by promoting e-mandi program or national common market for agri product on electronic platform, pilots for which has started in almost 25 mandis. What is however needed is that states should participate in such central initiatives which is lacking many times."

For example most vibrant agriculture state Punjab has so far not participated in NAM project. Many states have yet not removed fruits and vegetables from APMC act.

Dr Chand also said Land lease act which we have suggested is another key for agri reforms which could bring more investment in the sector which eventually bring down cost of production and making our product competitive.