By Debesh Roy
Achievement of the $5-trillion economy aim by India could be pushed by a couple of years from the original deadline of 2024-25, due to the pandemic-induced recession through 2020-21. Only a V-shaped recovery through 2021-22, and a sustainable development of 9% per annum more than the subsequent 5 years, can turbocharge the economy to touch the $5-trillion mark. The agricultural sector, which contributes 14.6% to the economy, desires to assistance this objective by focusing on private investment and exports, although targeting an annual agri-GVA development of 5%. A concentrate on reforms in agri-promoting and agri-exports, along with the promotion of higher-tech, digital and precision agriculture, is an acceptable recipe for transforming the agricultural sector, although doubling farmers’ earnings, inside a affordable time-frame.
India ranks amongst the leading 10 exporters of agricultural solutions in the planet. According to the WTO’s World Trade Statistical Review 2020, the country’s share in worldwide agricultural exports elevated from 1.1% in 2000 to 2.2% in 2017, valued at $39 billion, but fell to 2.1% in 2019, valued at $37 billion. While the US witnessed a decline in its share of worldwide agricultural exports from 13% in 2000 to 9.3% ($165 billion) in 2019, Brazil’s share elevated from 2.8% to 5% ($89 billion), and that of China elevated from 3% to 4.6% ($82 billion). In order to catch up with Brazil and China, India desires to bring about structural reforms in the agricultural sector, like a steady trade policy regime.
India’s agricultural exports skilled enormous fluctuations through the 10-year period 2010-11 to 2019-20. The 10-year CAGR was 1.7%. During the very first 5 years, 2010-11 to 2014-15, agri-exports elevated drastically from $24.4 billion (2010-11) to an all-time higher of $43.1 billion (2013-14), just before declining to $39.4 billion (2014-15), at a CAGR of 11.5%. The second 5-year period (2015-16 to 2019-20) witnessed a slump in agri-exports to $33 billion (2015-16), just before a steady enhance to $38.8 billion (2018-19), followed by a slide to $37 billion (2019-20). The CAGR through this period slowed down significantly to 3.7%, from the prior period (see graphics).
According to the Agricultural and Processed Food Products Export Development Authority (APEDA), through April-October 2020, India’s exports of leading 3 agri-commodities, viz. basmati rice, non-basmati rice and buffalo meat, in terms of worth (in dollars) grew by 9%, 104.4% and 10.5%, respectively, compared to the corresponding period of the prior year. The sharp rise in exports of non-basmati rice can be attributed to reduced costs compared to that of key rice exporters, Thailand and Vietnam, and also for the reason that these nations stopped exports due to the lockdown. Taking benefit of this, Indian non-basmati rice exporters have been capable to meet the rising import demands from China, Bangladesh and African nations.
However, what is worrisome is the absence of a steady trade policy regime in India. In order to manage costs in the domestic market place, the government has, at unique occasions, resorted to banning of exports of key agri-commodities, viz. rice, wheat, sugar and onion. Imposition of minimum export cost (MEP) is a different tool generally used to tame inflation. These measures make uncertainty amongst importing nations, and deprive farmers of greater returns from their create.
The Agriculture Export Policy (AEP), 2018, aims at attaining export target of $60 billion by 2022 and $one hundred billion inside a handful of years, thereafter. This is certainly a humongous activity, even beneath standard situations, and more so in the aftermath of Covid-19. Therefore, there desires to be a realistic resetting of the timeline to attain the target. This would involve a paradigm shift from a small business-as-usual strategy to a properly-calibrated, extensive, strategic and outcome-oriented agri-export policy and action program. This would lead to tech-driven agricultural productivity gains across sub-sectors, resulting in greater output and marketable surplus for domestic and foreign markets.
The following techniques are recommended by this author, for India to attain the target of $one hundred billion of agri-exports inside a affordable time-frame, although also resulting in doubling farmers’ earnings:
—Majority of India’s agri-exports are low worth, raw or semi-processed solutions. Therefore, the agri-export method really should involve integration of worth-added agri-create with worldwide worth chains (GVC), by adopting ideal agricultural practices involving productivity gains and price competitiveness. It’s also crucial for India to reconsider joining the RCEP at an opportune time, and to enter into FTAs with the EU, the US and the UK.
—In order to increase exports of dairy solutions and make the dairy sector globally competitive, the central government desires to look at improvement of dairy export zones (DEZs) in collaboration with state governments (see ‘RCEP: A White Revolution for Exports’, FE, December 7, 2019 https://bit.ly/39fHMEo). This could immensely advantage compact dairy farmers, organised as farmer producer organisations (FPOs)/farmer producer providers (FPCs)/cooperatives, for supplying milk, and also for contract production of dairy solutions on behalf of key dairy generating providers, major to price efficiency and greater export income to dairy providers as properly as drastically greater earnings to farmers.
—Linking of FPOs via contract farming arrangements with export-oriented meals processing units of meals parks produced beneath the Pradhan Mantri Kisan Sampada Yojana, for generating processed cereals, fruits, vegetables, fish and marine solutions, would increase exports of processed meals and raise earnings of compact and marginal landholders and compact fish farmers.
—With worldwide trade in organic solutions estimated to be about $90 billion, there is a enormous chance for exports of worth-added organic solutions from India, which exported $689 million worth of organic meals in 2019-20. Madhya Pradesh, Rajasthan, Maharashtra, the North Eastern Region (NER), Uttarakhand and Goa are key producers of organic solutions. It’s desirable to make Organic Product Export Zones (OPEZs) in these states and the NER, with widespread infrastructure for processing, standardisation, storage, logistics, and connectivity to ports and airports. Branding of solutions and registration as GI could additional facilitate exports of worth-added organic solutions. FPOs of organic farmers could be formed and linked to the OPEZs, to assure greater earnings for farmers.
—Economic diplomacy and promotion of Brand India can play an helpful part in rising agri-exports.
—The AEP has advisable the establishment of Agriculture Export Zones (AEZs), to facilitate worth addition of agri-commodities for rising exports in a WTO-compatible manner. In order to assure greater earnings for farmers, FPOs will need to be linked to AEZs to provide SPS-compliant agri-solutions.
—Higher investments in R&D and technologies, viz. the Internet of Things, artificial intelligence and blockchain, for enhancing agricultural productivity, resource-use efficiency and export competitiveness.
—Linking farmers/FPOs to the export market place and skilling of surplus farmers for their absorption in agri-export worth chains could be an crucial method to sustainably raise farmers’ earnings.
Concerted efforts by the central and state governments, Indian embassies, APEDA, EXIM Bank, NABARD, and all other stakeholders in the agri-export worth chains are required to address a complete variety of problems pertaining to promotion of agri-exports, which could potentially propel India into the leading bracket of agricultural exporters, and in the procedure facilitate doubling of farmers’ earnings inside a affordable time-frame.
The author is an economist