AGRI-EXPORTS – ECONOMY

News: Importance of agri exports — and what Govt can do to boost India’s farm trade surplus

What's in the news?

       India’s agriculture exports have grown 16.5% year-on-year in April-September, and look set to surpass the record $50.2 billion achieved in 2021-22 (April-March).

       Interestingly, even commodities whose exports have been subjected to curbs - wheat, rice and sugar have shown impressive jumps in shipments.

Key takeaways:

       Agri-exports recently touched an all-time high of $50.3 billion, registering a growth of 20 per cent over the preceding year.

       Since India being the world's biggest exporter of virtual water, it is necessary to look at exporting commodities like rice and sugar from an environmental sustainability perspective, despite getting an enormous gain from it.

Agri-export basket of India:

       India has been a net exporter of agri products since the economic reforms began in 1991.

       Among the key agriculture commodities exported from India were marine products, basmati rice, buffalo meat, spices, non-basmati rice, cotton raw, oil meals, sugar, castor oil and tea.

       The major export destinations were the USA, Saudi Arabia, UAE, Iran, Nepal, and Bangladesh.

       India’s agricultural export basket is changing from traditional commodities to non-traditional processed foods.

       Traditionally, Basmati rice is one of the top export commodities. However, now there is an unusual spike in the export of non-basmati rice.

       Indian buffalo meat is seeing a strong demand in international markets due to its lean character and near organic nature. The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.

       The export of processed food products has not been growing fast enough because India lacks comparative advantage in many items.

       However, its total agricultural export basket accounts for a little over 2.5 percent of world agricultural trade, coming at the huge cost of the environment. 

Concerns of environmental sustainability in agri-exports:

1. Virtual export of water:

       Being a water stressed country, India is the largest exporter of virtual water by exporting water intensive agri-commodities like rice and sugarcane, amounting to nearly 62 billion cubic metres of virtual water, having much of its need from ground waters affecting the local environmental conditions leading to water disaster.

2. GHG emissions:

       Rice production systems are among the most important sources of anthropogenic methane emissions, contributing to 17.5 percent of greenhouse gas emissions along with nitrous oxide generated from nitrogenous fertilizers causing environmental damage through global warming and climate change consequences.

3. Land degradation:

       The extensive agriculture along with over irrigation, overuse of fertilizers and faulty agricultural practice to gain high production leads to deterioration of soil and land making it harmful for future use.

4. Monoculture:

       Cultivation of rice and sugarcane largely leads to monocultural cropping along with excessive use of pesticides and fertilizers leads to the destruction of natural ecosystems, having a devastating effect on the biodiversity and the micro-climate.

5. Groundwater contamination:

       From agricultural fields, nitrogenous fertilizers leach into the soil and contaminate groundwater, thereby resulting in heavy metal pollution affecting the health of the ecosystem.

Need for re-examination of agri-export basket: Thus, the present agricultural exporting commodities have a very serious concern in terms of sustainability. Hence, it is the need of the hour to re-examine the agri-export basket of India as follows.

1. Diversification of export basket:

       It is high-time to move from traditional exporting commodities such as rice, sugarcane, buffalo meat which are water guzzlers to non-traditional products such as millets, perishables, fruits, etc to promote novel, indigenous, organic and environmentally friendly agriculture.

2. Value-addition:

       The Indian agricultural exports need to shift from primary agriculture (i.e. exporting of raw grains) to secondary agriculture (i.e. processed value added products) to integrate Indian agricultural exports with the transforming global supply chain to capture more markets.

3. Re-define agricultural export policy:

       Rather than supporting commodities by means of subsidies such as free provision of power, MSP, fertilizer subsidy as they are causing severe environmental damage, its high time to move towards agro-climatic regionalisation, thereby promoting one district-one agricultural product which is in nurture with locally available resources.

       In such a way the government can establish regional production belts through 'Cluster-based' approach through FPOs in respect to the climatic features.

4. Promoting organic exports:

       The government through its agency APEDA is making efforts to boost export of organic produce and products from the country through various initiatives such as National Programme for Organic Production (NPOP), Paramparagat Krishi Vikas Yojana (PKVY) and Mission Organic Value Chain Development for North Eastern Region (MOVCDNER) to promote the potential of regional specific organic agriculture, thereby promoting 'India Organic' brand across the global market.

WAY FORWARD:

       It is high time that the policymakers must revisit the entire gamut of rice and sugar systems from their MSP/FRP to their production in an sustainable manner by adopting environmentally sustainable practices such as alternate wetting drying (AWD), direct-seeded rice (DSR) and micro-irrigation to reduce the exporting of virtual water in the short term.

       To increase investment in agricultural research and development to improve productivity on a sustainable basis and improve farming practices for minimising carbon emissions.

       The long-term strategy should aim for promoting better diversification of our agricultural systems by incentivising and rewarding farmers to switch from rice and sugar to other less water guzzling crops such as millets, pulses and other perishables, etc. to conserve scarce water resources and to reduce greenhouse gas emissions and carbon footprint.

Thus, the Indian Government needs to re-examine its agri-export basket to reduce the damaging environment caused by the wrong choice of crop selection and cultivation practices in respect to the localised condition. Hence, it is high time now to harness the export potential of Indian agriculture, through sustainable policy measures, thereby making India a global power in agriculture.