Boosting farm exports

Better infrastructure, improved awareness key to success

The draft strategy for boosting agricultural exports, put out by the Agricultural and Processed Food Products Export Development Authority (Apeda) for public comments, has arrived at an appropriate time. Over the last three years, farm exports have been falling -- from $42.9 billion in 2013-14 to $33.4 billion in 2016-17 -- and there is an urgent need to stop the slide. This trend is worrisome because India has transformed from a deficit to a surplus country in many agricultural commodities and it needs new markets for its surplus produce. The want of export outlets is, in turn, depressing local prices and exacerbating farmers’ distress. The recent rural unrest in the wake of a bumper harvest bears this out. Besides, exports are the most convenient means of boosting returns on farm produce, thus, contributing to the government’s efforts to double farmers’ incomes by 2022. Even at the present meagre level, exports account for nearly 13 per cent of the agricultural gross domestic product. Higher exports will not only lift the farm sector but will also affect the overall economy positively.

It is a matter of disquiet that the slump in farm exports is due largely to the government’s unstable external trade policies concerning agriculture. The frequent banning of exports and fiddling with export duties and minimum export prices are far from conducive to developing a stable export market. Several items of bulk shipments, including rice, wheat and sugar, are victim to such unwarranted policy swings. It also sullies India’s image as a reliable supplier and impels foreign buyers to look at other sources for regular supplies. Little wonder then that India has a minuscule share of 2.4 per cent in the global agricultural trade despite being one of the world’s largest producers of numerous agricultural commodities, most of which are competitively priced as well. With this being the ground reality, Apeda seems to have done well to make a strong pitch for stable agricultural export policies. It has also called for at least 10 to 20 per cent of domestic production to be exported each year. 

But this level of farm exports will need much spadework. Though a part of this task is to be carried out by Apeda itself, the government’s assistance to the private sector is imperative in several other areas. These include the post-harvest value chain, collection centres for perishable produce, quality testing laboratories, cold storages, fleets of refrigerated transportation and pack houses to undertake pre-shipment cleaning, grading, preliminary quality retention treatment and packaging of export-bound consignments. Some progress has, no doubt, been made in the creation of a network of cold warehouses but their number is still far lower than the required 42 million. Similarly, there is a huge paucity of pack houses which at present number only around 250 against the requirement of over 70,000. Moreover, the Centre and state governments need to take steps to educate farmers, livestock producers and fishermen in the safe and need-based use of pesticides and antibiotics to avoid presence of high levels of their residue in the produce, which often leads to rejection of export consignments. Apeda’s suggestion on reducing the goods and services tax (GST) on perishable export-bound cargo transported by air from the present 18 per cent to 5 per cent also merits consideration. Unless such issues are suitably addressed, agricultural exports are unlike to look up.