Agriculture exports dip in first quarter of FY24 on bans and curbs

India's agriculture exports reached a high of over $52 billion in the financial year 2022-23 (FY23), primarily led by strong exports of rice (basmati and non-basmati), sugar and coffee.

This was India's highest export of agriculture and allied products since 2015-16.

The rise came despite a significant dip in wheat exports in FY23 due to the export ban in May 2022 and limiting sugar exports to six million tonnes.

However, since the start of FY24, that is, from April to June, exports of agriculture and allied products have taken a hit mainly due to the stoppage of sugar exports and curbs on exports of rice, including a total ban on the export of broken rice.

The recent decisions to stop exports of non-basmati white rice and the imposition of a $1200 per tonne cap on basmati rice exports are expected to further dent agriculture exports.

Data shows that between April and June 2023, agriculture product exports dropped by almost 15 per cent compared to the same period last year (see chart).

 

Within this, while exports of plantation crops that include coffee, tea and rubber have seen steady growth, exports of agriculture products and marine items have dipped in the first quarter of FY24.

Experts said that with the uneven monsoon progress and pressure on the government to control domestic food prices ahead of elections in major states followed by the big general election of 2024, the government could be under pressure to impose more restrictions and curbs.

"I think, the first three months' agriculture exports have suffered due to the uneven monsoon and its impact on prices and also the ban on exports of wheat, rice and sugar. But, with the rains reviving, I feel that the overall exports might move up," Ajai Sahai, Director General of Federation of Indian Exporters Association (FIEO) told Business Standard.

He said one reason for his optimism is that the MEP of basmati rice levied at $1200 per tonne might be reviewed while exports of agriculture products in small packages and organic products haven't seen a big drop.

"With the monsoon reviving, pressure on the price front might ease a bit, also from here onwards, we don't have any big curb on exports in any item. Also, there is a possibility that basmati MEP might be revised and then the exports of agriculture products in small packets and organic products might see a good increase," Sahai said.

He said that there is a possibility that overall agriculture and allied sector exports in Fy-24 might cross $40 billion.

Higher Target

In 2018-19, the Central government unveiled an ambitious policy that seeks to double agri exports to $60 billion by 2022 and do away with arbitrary curbs on exports.

Aiming to push India into the list of the top 10 agri-export nations, the Prime Minister's Office has backed the policy.

While releasing the policy, the then Commerce and Industry Minister Suresh Prabhu said the policy ties in logistics support, a better trade regime, and states-led product development to connect farmers to global markets.

"Each state will have a designated department for the promotion of agricultural exports, apart from cluster-based development for specific commodities. We have also identified several seaports to serve as gateways for specific agri exports," Prabhu had said.

Despite India occupying the pole position in the global trade of these products, its total agri export basket still accounts for only a little over 2 per cent of world agri trade, estimated at a massive $1.37 trillion.

The policy mandated that the government finalise a list of essential agro-commodities.

All commodities will see restrictions in the form of a minimum export price, export duty or bans revoked.

The government had estimated a total outlay of Rs 14 billion for agricultural exports. This would be done by merging a myriad group of agricultural export schemes and incentives.

More recently, a high-powered panel of experts said that in specific reference to rice exports, that Centre needs to ensure that a higher pool of surplus rice is available to exporters by suitably modifying Food Corporation of India's (FCI) procurement strategies.

The panel was constituted by the 15th Finance Commission (FFC) to suggest measurable performance incentives for States to encourage agriculture exports as well as to promote crops that can help in high import substitution.