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Market News
India reaps high growth from agriculture, allied products in FY22.
Jan 13, 2022
An intense focus on securing market access abroad and promoting Indian goods saw dozens of new products including Himachali millets and Chandauli’s black rice being shipped from India to several new destinations such as the UAE, and Denmark
Agricultural laborer in Maharashtra.
India’s agriculture and allied exports grew at a brisk 21 percent in the first eight months of the current financial year despite broken supply chains and various challenges brought about by the COVID-19 pandemic. Exports were boosted by increased access to markets in the United States, European Union and the United Arab Emirates, and targeted efforts by the government to expand the global reach of processed food from India.
Commerce ministry data shows that exports of farm produce, both processed and unprocessed, climbed to $29.51 billion between April and November 2021. The government expects total exports from the sector to rise to $43 billion by March 2022.
The growth in farm produce exports was led by a sharp rise in the exports of non-basmati rice, other cereals, dairy items and sugar, all of which grew by at least 40 percent in the April-November period of 2021-22.
Data showed that while the global commodity supercycle played a part in raising the prices of non-food products such as tea, cotton and rubber, prices of food products have remained stable.
The vast majority of food exports showed growth in the volume of outbound shipments in tandem with higher foreign exchange earnings. This was especially true for the top three products in the agri export basket in the current financial year, namely non-basmati rice (46 percent growth), buffalo meat (6.5 percent) and sugar (39.8 percent).
Broad-based growth
A deep dive into the data shows that the latest growth has been broad-based. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), which tracks non-plantation crops, the export basket stood at $13.1 billion in just the first seven months of the current fiscal. The figure was $20.6 billion for the full 2020-21 financial year, which had gone up from $16.4 billion in 2019-20.
'Plantation crops like rubber and tea have well-established trading chains and are heavily invested in. But to build up global demand for products like spices, dairy, and vegetables and fruits requires coordinated efforts to open foreign markets for Indian goods. It is also crucial to promote them extensively and bring together both domestic and foreign industries. All this has been done in the past three years, and the results are now coming in,' said a senior APEDA official.
Exports of spices like ginger, pepper, cinnamon, cardamom, turmeric and saffron, which have known therapeutic qualities, have also grown substantially. Meanwhile, the Marine Products Export Development Authority (MPEDA) said that shrimp and prawn exports have already reached 88 percent of the total export value of last year.
A range of new products has also been shipped abroad for the first time in FY22. These include fresh vegetables and mangoes from Varanasi, black rice from Chandauli, oranges from Nagpur, banana from Theni, bhoot jolokia chilli from Nagaland, red rice from Assam and millets from Himachal Pradesh, among others.
The government has also significantly pushed exports of processed items such as honey, cocoa, fruit jams, and wine in which India hasn’t shared global expertise till now.
India has now become the ninth-largest honey exporter in the world, shipping out 7.36 lakh tonnes in the previous financial year with the US as the largest buyer at 80 percent.
'We are working in close collaboration with the state governments, farmers, and other stakeholders in the value chain to boost exports to other countries and regions such as the United Kingdom, European Union, and Southeast Asia. India is also renegotiating the duty structure imposed by various countries for boosting honey exports,' the APEDA official added.
The commerce department has also focused its efforts on parts of the country that have hitherto lagged behind, such as the landlocked Purvanchal region in Uttar Pradesh, which is now home to the Varanasi Agri-Export Hub.
Challenges remain
However, agri exports have continued to face logistics hurdles, especially the global shortage of containers. As the number of available containers plummeted, the average prices of shipments skyrocketed, leading to many overseas buyers canceling orders.
'The lack of refrigerated containers has pushed up freight charges to unsustainable levels, whereby the freight costs have become more than production value,' said Ajay Sahai, director-general and chief executive officer of Federation of Indian Export Organisations. This has particularly hit India’s seafood exports, which rest heavily on shipments of fish and prawn to European and West Asian markets.
Despite the government’s aim of boosting agri exports, the sector has seen growth in fits and starts, often outright contracting. In fact, non-plantation crop exports had been to the tune of $17.3 billion a decade ago in 2011-12, compared to $13 billion currently.
Low recall value for Indian products has also plagued the sector. Now, products with registered geographical indications (GI) have been specifically promoted by organising virtual buyer-seller meets with the UAE, the US and other nations. To ensure seamless quality certification of products to be exported, APEDA has recognised 220 laboratories across the country to provide testing services to a wide range of products.
Room for growth
India’s share in world agricultural exports stood at 2.1 percent in 2019, moving up from 1.71 percent in 2010. However, India’s rank in worldwide agricultural exports only crept up to 16 in 2019 from 17 in 2010, according to data released by the World Trade Organisation (WTO).
According to the United Nations’ Food and Agriculture Organisation (FAO), India is the largest producer of pulses (25 percent of global production), milk, and jute.
It is also the second-largest producer of rice, wheat, sugarcane, cotton, and groundnuts, as well as the second-largest fruit and vegetable producer, accounting for 10.9 percent and 8.6 percent of the world's fruit and vegetable production, respectively.
Interestingly, India also had the world’s largest cattle population as of 2019. According to the National Dairy Development Board, the total bovine population, including adult cows and buffaloes, stood at 302.2 million as of 2021. This makes the country’s cattle population even larger than that of Brazil, which has the largest mega ranches in the world, and the open cattle pens of western US. India is also home to 535 million livestock, mostly goats and sheep.
Now, rising income levels from agriculture have led to more investments in the sector and a stabilisation of the workforce. The agriculture ministry estimates that agriculture and allied sectors employed more than 50 percent of the Indian workforce. The percentage share of gross value added of agriculture and allied sector to India’s total economy stood at 20.2 percent in 2020-21, up from 18.4 percent in the previous year.
Subhayan Chakraborty has been regularly reporting on international trade, diplomacy and foreign policy, for the past 6 years. He has also extensively covered evolving industry and government issues. He was earlier with Business Standard newspaper.India reaps high growth from agriculture, allied products in FY22.
An intense focus on securing market access abroad and promoting Indian goods saw dozens of new products including Himachali millets and Chandauli’s black rice being shipped from India to several new destinations such as the UAE, and Denmark
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