Table of Contents
THE CONTEXT: In the fiscal year 2023-24, India’s agricultural exports declined to $48.9 billion, an 8% decrease from the previous year’s $53.2 billion, falling short of the ambitious $60 billion target set by the Narendra Modi government in 2022. This downturn marks a significant slowdown in the growth momentum of agri-exports under the Modi administration compared to the rapid growth experienced during the UPA government from 2004-05 to 2013-14.
ISSUES:
- Decline in Growth Rate: There has been a significant slowdown in the growth momentum of agricultural exports. During the UPA government (2004-05 to 2013-14), the annual average growth rate was 20%, but it dropped to a mere 1.9% from 2014-15 to 2023-24 under the Modi government.
- Failure to Meet Export Targets: The agricultural exports in 2023-24 amounted to $48.9 billion, below the target of $60 billion set by the government for 2022. This indicates a shortfall in achieving planned export objectives.
- Impact of Export Restrictions: The implementation of export restrictions and bans on key commodities like wheat, rice, sugar, and onions has adversely affected the agricultural export sector. These measures, primarily driven by concerns over domestic food inflation, have hindered the growth and potential of agri-exports.
- Global Price Sensitivity: The performance of India’s agricultural exports is heavily influenced by global price fluctuations. Exports surge when global prices are favorable but suffer when global prices decline. This dependency on international market conditions affects the stability and predictability of agricultural exports.
- Export Value Realization Despite Volume Drop: Despite a 27% drop in rice exports in volume from 2022-23 to 2023-24, the decrease in export value realization was only 6%. This suggests that while the quantity exported decreased, the value per unit increased due to global price changes, offering a nuanced view of export dynamics.
- Environmental and Resource Concerns: The agricultural practices associated with high-export commodities like rice involve significant water usage and are supported by subsidies on power and fertilizers, leading to ecological concerns, particularly in the Punjab-Haryana region. This raises questions about the sustainability of export-driven agricultural practices and the long-term viability of water resources.
THE WAY FORWARD:
- Diversification of Export Basket: India’s heavy reliance on a few commodities like rice, marine products, and spices for its export basket makes it vulnerable to global price fluctuations and policy changes. Diversification into high-value and value-added agricultural products can mitigate this risk. For instance, despite its small size, the Netherlands has become a leading exporter of agricultural products by focusing on high-value segments like flowers, seeds, and dairy products. India could similarly expand into organic farming, horticulture, and processed foods, which have growing demand in international markets.
- Policy Stability and Liberalization: The imposition of export restrictions and bans on key commodities like wheat, rice, and onions has been counterproductive, leading to uncertainty and reduced competitiveness. New Zealand’s approach to agricultural exports, where the government maintains a stable and liberal export policy, has fostered a robust agricultural sector. India could adopt a similar approach by minimizing interventions in the export market and ensuring policy stability to build confidence among farmers and traders.
- Infrastructure and Logistic Improvements: Poor infrastructure and high logistics costs have greatly impeded India’s agricultural exports. Investments in cold storage facilities, refrigerated transport, and efficient port handling can reduce post-harvest losses and improve the competitiveness of Indian farm products. The success of APEDA’s initiative to export bananas from Andhra Pradesh using refrigerated rail containers demonstrates the potential of such investments to open new markets and reduce transport costs.
- Leveraging Technology for Productivity: Boosting productivity through technological advancements is crucial for enhancing export competitiveness. Israel’s use of precision agriculture, drip irrigation, and water recycling technologies has significantly increased its agricultural productivity, making it a leading exporter of farm technology and products. India could focus on adopting similar technologies, including precision agriculture, fertigation, and improved seed varieties, to increase yields and reduce resource use.
- Market Access and Trade Agreements: Active engagement in bilateral and multilateral trade agreements can provide Indian agricultural products with better access to foreign markets. For example, the European Union’s trade agreements have opened new markets for its agri-food products. India could pursue similar agreements, reducing tariff barriers and addressing sanitary and phytosanitary measures to enhance its agricultural exports.
- Support for Small Farmers: Small farmers face significant challenges accessing export markets due to a lack of knowledge, resources, and scale. As mentioned in the Agriculture Export Policy, initiatives like farmer-producer organizations (FPOs) and cluster development can help aggregate produce, achieve economies of scale, and meet quality standards. Additionally, providing training and financial support to small farmers can enable them to tap into export opportunities and improve their incomes.
THE CONCLUSION:
The decline in India’s agricultural exports highlights the need for a strategic overhaul to boost agri-export growth. Addressing the challenges of global price fluctuations, restrictive export policies, and the ecological impacts of agricultural practices is crucial. Implementing policies that enhance productivity and sustainability could revitalize India’s agricultural sector, benefiting farmers and strengthening the economy.
UPSC PAST YEAR QUESTION:
Q.1 Explain the changes in cropping patterns in India in the context of changes in consumption patterns and marketing conditions. 2023
MAINS PRACTICE QUESTION:
Q.1 Critically analyze the impact of India’s agricultural export policies on the farming community and the overall economy. Discuss the role of global market dynamics and domestic policy measures in shaping the farm export trends in India from 2004 to 2024. Suggest measures to enhance the competitiveness and sustainability of India’s agricultural exports.
SOURCE:
https://indianexpress.com/article/opinion/columns/make-it-farmer-friendly-9324370/
Spread the Word