In response to the pandemic, the Center has encouraged investments in building storage and infrastructure for agricultural products with a reasonable degree of certainty. The Cabinet also recently approved a provision of 1 lakh crore for agro-infrastructure as part of the ₹ 20 lakh crore package which will help the agrarian economy.
India’s total share in world trade is only 2 percent, making agricultural exports only 2 percent of national GDP. As the country runs a food surplus, inefficiencies in the supply chain are hurting exports. In addition, the choice of seeds and cultivation practices make only a selected range of Indian crops competitive in the world market. By taking a close look at each product category and patterns of production and consumption, there are inefficiencies and reliability issues that need to be addressed before the country becomes a food export powerhouse.
India being the second largest agricultural producer in the world with 98 percent of agricultural products fully meeting the legally permitted upper limits for pesticide residues, makes its food products one of the safest products.
Agricultural exports in 2020 improved 43.4% to 16,229.3 crore from 2019 figures. The jump in export can be divided (in percentage) into peanuts (35 percent), refined sugar (104 percent), wheat (206 percent), basmati rice (13 percent) and non-basmati rice (105%).
During the same period, rice exports increased by 13.7%, from $ 3,359 million in April-August 2020 to $ 3,820 million in April-August 2021, and fruit and vegetable exports fees grew 6.1% in dollars.
Apart from that, the main contributors to the change have been grains, followed by poultry products. The figures estimate a significant 142.1% jump in grain exports, while meat, dairy and poultry products saw an increase of 31.1% from April to August 2021. In absolute terms , grain exports increased by $ 222 million in one year. – compared to the previous year, and exports of poultry and dairy products increased by $ 369 million during the same period.
However, the element of surprise was the dried fruits with cashew nuts which recorded a growth of 28.5% as its exports jumped from $ 144 million in April-August 2020 to $ 185 million in April. -August 2021.
On the other side of the spectrum, the Ministry of Food Processing Industries suggests that India’s total exports have an 11 percent contribution to agricultural and processed food products. In five years, the value of agricultural and processed foods has increased significantly, from $ 17.8 billion to $ 20.65 billion. This shows that the agrarian economy is taking a proactive stance towards the development of various processed foods.
The broad scope of Indian brands, value driven products and local quality is very likely to increase this share. The growing penetration of Indian food into the palates of the world is further contributing to this as the market for Indian value-added products now begins to expand beyond the diaspora and enter many traditional segments.
Road to the future
However, the country needs to address the following elements of the agri-food supply chain to become one of the world’s leading exporters:
– Agro-production practices
– Supply chain and logistics
– Streamline regulatory compliance practices
– Ensure transparency and traceability thanks to technology
– Develop products adapted to the overall palate.
The quality regime of the agricultural production system needs to be strengthened from start to finish, from seed selection to production practices, better planning and storage, to ensure a reliable and uninterrupted supply to global customers.
When it comes to logistics, be it transportation bottlenecks, on-farm storage infrastructure or facilities and turnaround times at the port of exit, poor logistics are estimated to add 6 at 8% at the free on board cost (FOB) compared to developed countries such as Germany, Singapore and Hong Kong. These should be removed step by step. In addition, developing the right maritime protocol for perishable goods is essential to increase agricultural exports. The Philippines and Ecuador have already developed such regulations for 40 days and 24 days respectively for the transport of bananas, while India is struggling for even short trips of 3 to 4 days. In addition, due to the skyrocketing logistics cost of sea freight, government support needs to be extended to more product categories.
It is necessary to think carefully about a unified body capable of managing all sanitary and phytosanitary (SPS) problems from a single window. The USDA and USFDA in the United States and the FSVPS in Russia are examples of how international authorities deal with market access requests for imports and exports, keeping them in a dominant position to make a adequate consideration.
National policies and programs should align with the disruptive changes that artificial intelligence, IoT and blockchain will make on the ground in the coming days for legislative changes to foster the potential increase. Minimum support price (MSP) policies will also need to be brought into conformity with the WTO. In addition, the agriculture sector administration will need to recognize the reality that global customers need a reliable and predictable supply that cannot be disrupted by sudden actions such as inventory control.
Finally, adjusting products to meet specific consumer tastes, researching potential markets and understanding requirements will also need to be approached in a scientific manner.
Being a developing country, the government will continue to rationalize its production towards domestic consumption. However, if the Center can advance reforms in the above direction, while maintaining support to farming communities, it can create space for widespread improvements in agricultural exports.
The author is co-founder and CEO of WayCool Foods and Products