India’s rising agricultural exports offers a ray of hope in an otherwise vitiating overall export performance, primarily due to the Russia-Ukraine war, economic sanctions coupled with blockage of financial channels, economic slowdown and disruption of supply-chain(s).

 

The export of key agriculture commodities rose around 16 per cent in the first half of 2022-23 (April-September) over the corresponding year-ago period. This is good news as agriculture is not only the backbone of the Indian economy but is also the main source of livelihood for more than half the population.

 

Agri-export income often brings relief when other sectors of the rural economy face stress. In celebrating the performance of farm exports, it is important also to ensure that they are sustainable.

 

India’s agri-export strategy is based on “produce and sell” mentality — also known as commodity trading. However, it is time to shift from ‘commodity export’ to ‘product exports’. Firms that are into agri exports should evaluate what consumers want and, accordingly, leverage the value-addition programme in their commodities. For instance, rather than exporting rice in bulk, the focus should be on creating smaller but targeted products segments such as rice flour which is in high demand in Europe, especially the southern part where it is widely used to produce pasta, crisps, cereals and snacks.

 

Similarly, rice starch is required by the pharmaceutical industry, and is also used as a thickener in sauces and desserts. Rice sweetener is again a value-added product and is used in sugar syrups and honey.

 

Some aromatic varieties of Basmati rice are imported by breweries in Europe, especially by some prized beer manufacturers. Likewise, rice bran is in high demand as it is rich in Vitamin B6, iron and magnesium, and utilised in cereals, mixes, and vitamin concentrates.

 

Also, rice bran oil can be promoted as a treatment for decreasing blood cholesterol. Broken rice, rather than being exported in bulk to western African markets, can be alternatively marketed as rice flour and as a mixture for pet foods. There can be various other value-added ‘ready-to-eat’ products manufactured from rice.

 

As the international market for value-added products is constantly growing, it is time India moved faster towards export of agri products. The evolving marketplace and market forces offer a plethora of business opportunities in product differentiation and, influenced by rising customer demand for health, nutrition and convenience foods as well as productivity improvements by food processors.

 

While the shift to a product-driven export strategy will take time, it will eventually help absorb the shocks from domestic as well as the global markets arising out of problems related to stocking, fair and remunerative prices to farmer, distress sale, shelf-life issues, and food losses and waste. The agro-producers must look to cater to the needs of end-users. For example, bovine producers should focus on table-ready meat.

 

India’s 350-450 million strong middle-class is already shifting towards value-added products, courtesy urbanisation, affordability, nuclear families and constraint of time for cooking, especially for working professionals. Value-addition in agriculture can achieved by taking the following steps.

 

Measures ahead

First, by innovation, which in turn focuses on enhancing current processes, procedures, products and services or developing new ones, which can be used to add value to agri-products. Successful value-added products are generally specialised/technical and sell in markets which have low competition.

 

It is time to leverage policy interventions and bring in operational changes, including training and hand-holding of producers, for creating a business ecosystem for agri product exports. Value-addition can be achieved by promoting the industrial use of food products but only where we have non-utilisable surplus. Resultantly, the traditional crops can be turned into non-food goods using a number of inventive and innovative technologies — bio-diesel is a case in point.

 

Second, coordination, especially between producers and marketers of agricultural products, must be improved. Considering India’s small landholdings, horizontal coordination that aims to pool or consolidate people or enterprises from the same level of the food chain is one solution. For example, while focussing on vertical coordination to aggregate milk, vegetables produce or fruits, there is need to look at horizontal coordination which includes contract-farming, contractual sourcing, production sharing agreements.

 

Finally, India’s agriculture export policy has been vacillating between export bans/restrictions and minimum export price on one side and free trade on the other. This approach needs to be reviewed.

 

An abrupt ban on export of a commodity sends wrong signals to the global markets. A predictable and transparent agriculture export policy is the need of the hour to make India a reliable global supplier of value added agriculture products, which will certainly contribute to the goal of doubling farmers’ income.

 

Ram is a Professor at Indian Institute of Foreign Trade, New Delhi, and Surendar is an Associate Professor at FORE School of Management, New Delhi. Views are personal

 

India’s 350-450 million strong middle-class is shifting towards value-added products, courtesy urbanisation, affordability and nuclear families

India has urged Indonesia to allow import of buffalo meat via Medan port on its northern coast, instead of Jakarta citing physical proximity with India which could reduce cost of transportation.

 

Officials said that if exports of bovine meat is allowed through Medane port, located on the north of Indonesia instead of Jakarta, which is at the south of Indonesia, the shipment would see a significant spike. The distance between Medane and Jakarata ports is around 1,500 km.

 

Officials said that India has also asked Indonesia to increase the annual import quota for bovine meat currently fixed at around 0.1 million tonne (MT) substantially.

 

Indonesia is the fourth largest export destination for buffalo meat from India, the world’s second biggest meat exporter after Brazil.

 

In the current fiscal, India’s buffalo meat exports during April – November have crossed $ 2.1 billion, which is 4% less than the same period in 2021-22.

 

'We have requested Indonesia to open Medan port for import of bovine meat to make it more economical which would boost exports substantially,' M Angamuthu, chairman, Agricultural and Processed Food Products Export Development Authority (APEDA), told FE.

 

He said that Indonesia has been asked to release export quota on time besides increasing the volume of imports of buffalo meat from India.

 

Indonesia has currently approved 29 meat processing units located in Uttar Pradesh, Maharashtra, Telangana, Punjab, Bihar and Kerala for exports of buffalo meat from India.

 

Recently, a delegation from APEDA visited Indonesia to discuss steps to increase shipment of bovine meat from India.

 

Countries such as Vietnam, Malaysia, Egypt, Indonesia, Iraq, Saudi Arabia and United Arab Emirates are the key export destinations for the buffalo meat from India. Out of these top five countries — Vietnam (9%), Malaysia (8.7%), Egypt (8.1%), Indonesia (6.6%) and Iraq (3.9%) share in the meat export of $ 3.3 billion in 2021-22.

 

In volume terms, 1.1 MT of buffalo meat was exported last fiscal. India exports buffalo meat to around 70 countries.

 

There are 89 buffalo meat processing plants including six slaughter houses approved for exports of buffalo meat in the country.

 

Commerce ministry officials said that in the last decade, there has been a rise in demand of the Indian bovine meant across the globe due to its quality, nutrient values and risk-free as the buffalo meat is processed and exported as per the World Organization for Animal Health (OIE) guidelines for any risk mitigation.

 

Currently, only boneless buffalo meat is allowed for export from India. India is one of the world’s leading exporters of buffalo meat. The country has quality management, food safety management and environment management systems certified world-class meat processing infrastructure.

The Director-General of Foreign Trade (DGFT) has extended the ban on palm oil imports through Kerala ports until further orders. It has also extended import duty waiver on refined palm oil and palmolein oil.

 

Both the duty waiver and the ban on imports at Kerala ports were to end on December 31. The Government banned the import of palm group of oils through Kerala ports in 2007 to protect coconut growers.

 

The extension of the ban on palm oil imports reportedly comes on the Coconut Development Board’s request and various farmer organisations, fearing increased arrivals, especially when Indonesia lifted restrictions on palm oil imports. This may further depress coconut oil prices in the domestic market now ruling at Rs.139.

 

Stagnant consumption

Official sources said the Kerala’s annual edible coconut oil consumption is around 3 lakh tonnes in the last few years. However, consumption is almost stagnant even at low prices against the production of 5.56 lakh tonnes in 2021-22.

 

The Board has occasionally taken up marketing campaigns to increase consumption, citing its health benefits. However, industry sources pointed out that, of late, there was no generic promotion from the Board.

 

Cochin Port Users Forum had urged the DGFT to lift the palm oil import restrictions to shore up the port’s revenue. They pointed out that the government implemented the ban to curb the sliding of coconut oil prices with no desired results.

 

However, industry sources noted that there is no point in continuing with the ban through Kerala ports, as imported palm oil is still flowing freely to the state by road after unloading it at Tuticorin and New Mangalore ports.  

Prime Minister Narendra Modi, on Wednesday, lauded Ahmedabad's flower show and said it looks 'interesting.'

 

Replying to a tweet by Amdavad Municipal Corporation, PM Modi said, 'Looks interesting. Over the years, Ahmedabad's Flower Show has blossomed and drawn many people who are passionate about flowers and nature.'

 

Amdavad Municipal Corporation tweeted, 'This is the world of flowers. Ahmedabad Flower Show -2023. Come, enter a different delightful and fragrant world.'

 

The Ahmedabad Flower Show started way back in 2013 with an aim to make people aware of horticulture, nature and the environment. Citizens are educated on the subjects like how to do rooftop gardening, prepare gardens in offices, net houses, kitchen gardening etc, according to the Utsav website.

 

Ahmedabad Municipal Corporation (AMC) organises the flower show at Sabarmati Riverfront which attracts a large number of visitors, tourists and locals. It usually runs for two weeks and AMC also arranges special bus services to the venue from various parts of the city.

 

Seasonal and exotic flowers, plants, saplings, vegetable plants, bonsai, cactus and various variety of flower from across the globe is put on display. In the flower show, visitors have been able to see nearly 100 rose varieties from Kashmir and other parts of the country. Species like cymbidium orchid, hydrangea, guzmania, anthurium, orchid, Dutch rose, gerbera, petunia and others from Australia, Singapore and Thailand have also been on the menu.

 

The show offers colourful views of replicas of giraffes, butterflies, deer, flamingos, peacocks, Mickey Mouse and other animals and birds made from flowers. People can buy flower plants, fertilizers and tools for gardening and horticultural usage. Various painting competitions for children are organised to make them aware of nature. 

Urging farmers to adopt organic farming on a larger scale, governor Acharya Devvrat on Tuesday said that this will change the country’s destiny. Speaking to farmers at Anand Agricultural University, the governor said not only will this reduce the dependence on chemicals fertilizers, it will give farmers higher returns for their crops.

 

The governor, who has been leading a sustained campaign to promote organic farming, said possession of one cow can help farmers take up natural farming on 30 acres of land and farmers who have 30 cows can take up organic farming on one acre.

 

'There is a need to take up organic farming on mission mode. It will not only double but even triple farmers’ incomes. There is a misconception among farmers that there will be a reduction in output if they give up chemical fertilizers and adopt organic farming,' the governor said.

 

A large number of farmers from across the state also joined the interaction virtually, a release said. Devvrat gave a detailed presentation to farmers on the requirements of organic farming, adding that there are hundreds of farmers in Gujarat who have adopted organic farming and have seen a reduction in input costs .

As Australian Prime Minister Anthony Albanese is set to arrive in India this March to lock the India-Australia Economic Cooperation and Trade Agreement (ECTA) deal and upgrade the relationship between the two countries, the Australian High Commissioner to India Barry O' Farrell in an interview with ANI said that the visit will be an opportunity to advance the relationship between the two countries.

The two sides will carry out discussions on a variety of issues like clean energy, tech, digital trade and procurements.

 

'Prime Minister Albanese has made clear that he sees enormous opportunity at the Australia-India relationship and like Prime Minister Modi is seeking more ambition from officials for the relationship, what I foresee is the visit being an opportunity for him to advance that, recognizing that he is also expected to attend this year the G20 leaders meeting. But at the end of the day, the comprehensive strategic partnership which had a slew of agreements underneath it, everything from the defence side and critical minerals, skills, research and clean energy, are the areas that I think we see more ambition in. I also think things like sustainable development, things like clean energy and tech and I think digital trade and procurement will be issues that both sides would be seeking to explore', the Australian High Commissioner to India Barry O' Farrell told ANI.

PM Albanese announced last year that he will visit India next year in March to lock India-Australia Economic Cooperation and Trade Agreement (ECTA) deal and upgrade the relationship.

 

While addressing the presser, PM Albanese said, 'I will visit India in March. We'll take a business delegation to India. And that will be an important visit and an upgrade in the relationship that we have between our two nations.'

Further speaking on the India-Australia Trade deal, the High Commissioner said that the trade deal benefits both the economies and Prime Minister Modi's ambition of making India a Global Advanced Manufacturing Hub will become closer to reality.

'Well, the trade deal benefits both our economies, it boosts growth and creates jobs in both India and Australia by reducing tariffs on 96 per cent of Indian goods entering Australia, increasing up to 100 per cent in two years' time,' the High Commissioner said.

'We Australians benefit is India gets a bigger market. But more importantly in areas like liquid natural gas, in cotton and wool, we're providing those free of duty into India, which means the cost of production using those fabrics, for instance, for textiles becomes less, which makes your products more marketable in the world economy and the reduction in tariffs on critical minerals like lithium and Cobalt mean, the Prime Minister Modi's ambition of making India Global Advanced manufacturing Hub becomes closer to reality,' he added.

 

He further added that it's a win-win cooperation for both countries in terms of mobility because Australia understands the importance of not just educating young Indians, but giving them the skills needed to come back to India job ready.

The India-Australia Economic Cooperation and Trade Agreement (ECTA) recently entered force on December 29, 2022. Under the pact, Australia is offering zero-duty access to India for about 96.4 per cent of exports (by value) from the day the agreement is enforced.

India will benefit from preferential market access provided by Australia on 100 per cent of its tariff lines, including all the labour-intensive sectors of export interest to India, such as Gems and Jewellery, Textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices and automobiles.

On the other hand, India will be offering preferential access to Australia on over 70 per cent of its tariff lines, including lines of export interest to Australia, which are primarily raw materials and intermediaries such as coal, mineral ores and wines.

Talking about India's G20 Presidency, the Australian High Commissioner said that Australia welcomes India's G20 Presidency and that there's no country better placed in the world to manage the global crisis in the economy that we're facing than India.

'Australia welcomes India's presidency of the G20. There is no country in the world that better understands the importance of economic growth to the development of citizens. There's no country better placed in the world to manage the global crisis in the economy that we're facing than India is as part of the G20 process,' he said.

'As I've said before, prosperity delivers peaceful, prosperous outcomes. And what India is bringing to the G20 presidency as a perspective that we've not had before. From a country that has one world, one family initiative, a country that's determined to address sustainability, and a country that understands as I said, the importance of economic growth to the future of every citizen, not just within India, but across the world, we are happy with that', the Australian High Commissioner said.

The Sri Lankan government on Tuesday announced plans to import eggs in the wake of a 'domestic price war'.

 

Cabinet spokesman Bandula Gunawardena told reporters that a proposal was put forward to the cabinet to import eggs, and the cabinet, which held a meeting on Monday, approved the proposal, reports Xinhua news agency.

 

Gunawardena said egg price is high at the market resulting in a shortage, and Minister of Trade, Commerce and Food Security Nalin Fernando has been given the approval for import.

 

In the meantime, Gunawardena said, President Ranil Wickremesinghe has also instructed the relevant authorities to take appropriate measures to control the prices.

Days after sanctions-hit Russia became the first overseas country to start foreign trade in Indian rupee, about 35 nations have expressed interest in better understanding the rupee trade mechanism.

 

The India’s central bank – Reserve Bank of India, or RBI – in July 2022 set up India’s rupee trade settlement mechanism to attract interest from more countries.

 

After Russia, dollar-strapped Sri Lanka is expected to use the Indian rupee trade settlement mechanism.

 

Countries willing in rupee trade mechanism

 

Countries that are keen on rupee trade include neighbours such as Bangladesh, Nepal and Myanmar which have been grappling with a shortage of dollar reserves.

 

As per reports, Tajikistan, Cuba, Luxembourg and Sudan have also been talking to India about using the mechanism.

 

These four nations have shown interest in opening special rupee accounts called Vostro accounts and are waiting for partner banks in India to provide those facilities, a report by news agency Reuters had quoted two sources and an official document stating.

 

Meanwhile, Mauritius and Sri Lanka, who have also shown interest, have seen their special Vostro accounts approved by the RBI.

 

How trade settlement in rupee will help India?

 

Dealing and payments of most of imports, including crude oil, and several overseas transactions by India have to be paid in US dollar. The Asian nation has to sell INR (Indian Rupee) to buy USD to pay OPEC (Organization of the Petroleum Exporting Countries) for its oil imports.

 

Notably, INR is not fully convertible and therefore, it is often difficult to get buyers for it. On the other hand, USD has higher demand as compared to INR and its supply is controlled by the Fed.

 

With trade being done in rupees, RBI will not be required to find buyers for INR to sell USD in return. It, therefore, increases the demand for the Indian rupee and brings in savings that has been accumulated from not having to remit conversion charges to banks. The Indian government-led by Prime Minister Narendra Modi is exploring to do this with other nations.

 

India rupee trade settlement

 

India’s rupee trade settlement mechanism is a method of using INR instead of dollars and other big currencies for international transactions.

 

For importing and exporting goods and services, countries have to make payments in a foreign currency. Since the USD is the world’s reserve currency, most of the transactions are settled in dollars.

 

For example, if a buyer in India enters into a transaction with a seller from Denmark, he/she first has to convert rupee into USD to make payment.

 

The seller, after receiving those dollars, will have to get the amount converted into euro. Both the parties involved will incur the conversion expenses and bear the risk of foreign exchange rate fluctuations.

 

India has been reportedly looking to bring countries that are short of dollars into the mechanism.

 

Over the last few months, a firm dollar has been weighing on imports for several countries around the world, thereby, creating an immediate need for an alternative.

 

With the help of a vostro account, instead of paying and receiving US dollars, the countries can get the invoice of the goods and services made in Indian rupees if the counterparty has a Rupee Vostro account.

 

When an Indian buyer wants to make transaction in rupees with a foreign trader, the amount will be credited to this Vostro account. When the Indian exporter needs to be paid for goods supplied, this Vostro account will be deducted, and the amount will be credited to the exporter’s account.

 

For example, a bank of Denmark may approach an AD bank in India for the opening of Special Rupee Vostro account. After which, the AD bank will seek approval from RBI with details of the arrangement and post the approval granted by the India’s central bank, the Special Rupee Vostro account in the Indian AD bank by a Denmark bank will get operational.

 

The trade settlement between the two parties can then start in INR. Also, the exchange rate between the currencies of the two trading nations may be market determined.

 

Key takeaway

 

For a currency to be termed ‘international’ it has to be widely accepted across the world as a medium of exchange for trade. As per the RBI, trade settlement in INR would reduce dependency on hard currencies including the US dollar, euro and yen.

The government is going to procure 1 lakh tonnes of non-basmati rice to bolster the supply chain of the country’s main staple food against the backdrop of high inflation.

 

Two suppliers — one each from India and Singapore —have been selected by the food ministry through international tenders for supplying the amount of rice equally – 50,000 tonnes from per supplier – at a total estimated cost of Tk 423 crore, said the food ministry officials.

 

They said that the food ministry had submitted proposals to the cabinet committee on government purchases in the past week seeking approval to give import order to the suppliers.

 

The cabinet committee chaired by finance minister AHM Mustafa Kamal is likely to review the food ministry proposals in a meeting today. 

 

The food ministry selected Indian company Bagadiya Brothers Private Limited as it quoted lowest $393.19 for per tonne in an international tender participated by a total of four suppliers.

 

In another international tender, Singapore-based Agrocrop International Private Limited quoted lowest $397.03 for per tonne rice among three bidders to be selected by the food ministry.

 

The rice procurement is a part of the government initiative to collect 30 lakh tonnes of rice for the current financial year ending in July this year.

 

Of the overall collection target, one third will be imported while the rest from local rice growers.

 

According to the ministry officials, they have already struck deals on the government-to-government basis to import 7.3 lakh tonnes of rice.

 

They said that the rest of the amount would be imported through competitive bidding. Bangladesh’s rice import stood at 9.87 lakh tonnes in FY22.

 

Rice from the Indian company would cost Tk 42.07 per kilogramme and Tk 210 crore would be required for the total consignment while that from Singapore Tk 42.68 per kg and Tk 213 crore for the total consignment, said the food ministry officials.

 

One kilogramme coarse variety of rice was selling at Tk 46 to Tk 52, according to the Trading Corporation of Bangladesh’s daily update on retail market prices of essentials on Tuesday.

 

Despite claims by the government that the country has surplus amount of rice, the prices of the staple had been increasing unusually since 2020 pushing fixed-income people into difficulties.

 

Volatilities in price of rice and other essentials kept the inflation close to double digits over the past six months.

 

Against the backdrop of unusual hike in rice prices, the government slashed the rice import duty but prices continued to rise.

 

On Saturday, the Bangladesh Rice Research Institute revealed a study report blaming millers and big corporations for destabilisation of the rice market.

 

‘Millers make a profit of at least Tk 8 to Tk 14 on the sale of per kilogramme of rice,’ said BRRI director general Md Shahjahan Kabir while sharing the study findings in Gazipur.

 

On June 1, 2022, food minister Sadhan Chandra Majumder blamed Square Group, Pran Group, City Group, Akij Group, Bashundhara Group and ACI Group for the price hike of rice during the harvesting period.

The FSSAI has issued a draft with respect to the dimensions of vegan logo, which has been made mandatory under the labelling requirement of Vegan Regulations.

 

'The seller of vegan food either exclusively or as part of retail merchandise shall store and display such food in a manner distinguishable from non-vegan food,' reads the vegan regulation adding that every package of vegan foods, after the approval, shall carry the logo as specified by the FSSAI.

 

The FSSAI has sought comments from the stakeholders on the draft.

 

According to the vegan regulations, 'vegan food' means the food or food ingredient, including additives, flavourings, enzymes and carriers, or processing aids that are not products of animal origin and in which, at no stage of production and processing, ingredients, including additives, flavourings, enzymes and carriers, or processing aids that are of animal origin have been used.

 

Every package of vegan foods, after the approval, shall carry the logo as specified below