INDIA’S AGRICULTURAL EXPORT POLICY - I

Science Magazine predicted India to become the most populous nation by 2030, and current estimates indicate, we have already peaked and touched 1.42 billion. The world population is 8 billion today and Science Magazine predicts it to touch 8.5 billion by 2030, while the chances are, it may happen sooner. From this springs our first agricultural priority of keeping agricultural production faster than population growth, year to year. Only then can we generate the required marketable surplus for exports which now has a target of $100 billion by 2030, a pretty tall order, unless drastic, overall improvements are made in a wide variety of parameters affecting agriculture.

Science Magazine also predicts that if the world population crosses 9 billion by 2040, which is likely to happen, it can stimulate food riots in several countries with climate change accentuating the problem. Some parts of Africa and the Middle East may become unfit for life, leading to mass migration, says Science Magazine. This again consolidates that the essence of an agricultural policy is first feeding our burgeoning population and then creating adequate marketable surplus, to ensure a robust backbone for our export policy and strategy.

India supports nearly 18% of the world’s population and 15% of livestock population, but accommodates these vast magnitudes on just 2.4% of the world’s land surface and 4% of the world’s water resources. India’s agricultural export policy announced last year recognizes this challenge. Yet it has to contend with not only creating surpluses from agriculture to meet global needs, it has also to locate the countries with deficit stocks, and create the logistics structure to exploit the exporting arena efficiently, effectively and comprehensively.

The Agricultural Policy appreciates the identification of agricultural goods that have high export potential based on 5 listed criteria like global trade, 5-year impact potential, India’s current competitiveness, scope for value addition and long-term market potential. It also mentions some of these commodities based on preliminary analysis which in a dynamic situation, is likely to change. The important stress in the policy is to have, both a strategic component bordering on infrastructure, logistics, state government involvement and a holistic approach, and an operational thrust focusing on cluster approach, value addition, strong quality regimen, R&D, private sector investments in production and processing and promotion of Brand India.

On the infrastructure issue the policy is appreciative of the fact that a need gap analysis is essential, and based on that it has rightly highlighted the following 4 logistics support –

1.  Modernization of major ports where agriculture traffic is large and bulk and container demands need to be met.

2.  Dedicated berths and jetties in sea ports for agriculture produce, especially perishable goods.

3.  Reefer wagons and other improvements in rail infrastructure so as to minimize delays on railway stations.

4.  Complete overhaul of airport infrastructure with quarantine facilities and refrigerated warehouses to handle perishable goods.

 $40 million of R&D fund was announced for joint innovation in agriculture, water, energy and technology between Israel and India for 5 years in 2017 with equal contribution from both sides. The idea was to capitalize on the Israeli technology globally known for its agricultural acumen. Networked research centers were to be created with strong academic and R&D linkages in both countries and joint research projects to enhance production and marketable surpluses. The Agricultural Policy is silent on progress in this regard, and now that 8 years have elapsed, a firm contribution from this fund should emerge, especially in areas where we have still not broken ground to achieve our export targets.

Partial survey in 150 districts, done 5 years ago, showed losses of 15% in 26 perishable items. Extrapolated for the whole country, experts estimated that 40% of the perishable goods perish in India causing huge loss to the farmers and the economy. The infrastructure implication is clear that we need cold storage facilities in all 766 districts of the country with special focus on 300 such districts, where no such facilities exist as of now, and therefore require quick mitigation. The Ministry of Food Processing, NITI Aayog and the involvement of the NRIs of their own native districts would be helpful in creating this preservation facility. This will conserve 40% of our fruits and vegetables, which then become available for exports, and hence a game changer for the economy.

The policy rightly admits that pesticides and chemical residues are affecting Indian exports, especially of Basmati rice, grapes, peanuts to mention a few. The EU has been the largest complainant on this issue. Hence, ICAR and several agricultural universities in India need to specifically focus on creating improved varieties of such commodities, establishing a good standards protocol, understanding of global sanitary and phytosanitary measures and technical barriers which are affecting our exports currently.

The policy warrants the state governments to take a proactive part since the agro climatic zones, and hence the cropping patterns are different in several states. Unfortunately, the agricultural departments in states have not professionalized with time. Unless each state does a SWOT analysis and commissions a demand-supply study of goods produced in its region for both domestic use and exports, this will remain an impediment as far as our trade and commerce is concerned. Hence, the forte of each state needs to be clearly established, with respect to its export policies and then an agency needs to be identified or created to shoulder the responsibility of boosting exports from the state. While some states mentioned in the policy document like Maharashtra, Karnataka, Gujarat have some institutions in place, there is still lack of coordination between them and central agencies like APEDA. Funds for various facilities to enhance exports need to be tapped by each state smartly. In fact, the ideal status would be for each State to have an export policy for agriculture looking into its huge potential, for example, orchids in Sikkim, spices in Kerala, oranges in Arunachal, mangoes in UP and cashew nuts in goa which can then coalesce into a National Agricultural Export Strategy.

The policy understands the importance of a cluster development approach in each state, so that all stakeholders can come together and brainstorm to resolve critical issues so as to enhance cultivable areas, productivity and quality, commensurate with the best international price that it can command.

The policy is quantitatively silent on horticulture tonnage which is essential to focus on upscaling production. India’s horticulture crops were 355 million tons in 23-24 of which India’s fruit production is only 108 million tons and vegetable 213 million tons. Here the major contribution required is through creation of good sapling material, which then is dependent on high quality seeds to be made available by the National Seeds Corporation, as well as big private players which have emerged over time. Only then we can expect doubling of our fruit production to about 220 million tons and vegetable production to 430 million tons by about 2030. Flower production is just about 3 million tons and is providing us exports worth 700 crores+ today. Floriculture has huge potential in UAE and US, and we have to create modern floriculture centers with tissue culture facilities and green houses to upscale quality production. Aromatic and medicinal plant production is about 1 million tons with a capacity to triple by 2030 if adequate and precise attention is given to its growth rates. Hence, we need a huge impetus in all these 4 areas for us to claim any sizable status with respect to horticultural exports.

One extremely useful contribution of the Agricultural Policy is to map major exportable goods with the concerned districts in each state so that a “unique product district cluster” is evident for all stakeholders to work on without any loss of time. The agricultural goods identified are mainly banana, pomegranate, mango, grapes, castor and orange, vegetables like rose onion, onion, potatoes, plantation crops like tea and coffee, spices like chilly, turmeric, cumin, pepper, cardamom and isabgol.

Another good feature of the export policy is to get into the domain of value-added exports, which brings it into the food processing sector where there is huge demand. Examining these possibilities, the policy identifies 5 processed food items and lists the potential markets which can be tapped to boost exports. Among these, biscuits and confectioneries, ethnic foods of India, cereal preparations, dehydrated and frozen vegetables and juice concentrates have been shortlisted with almost doubling of exports in 3 years.

I find few major omissions in the policy which have probably escaped attention because of lack of vital inputs. I will list them indicating their potential to be big items in our export basket.

1.  Cotton – Globally, India is the second largest producer and exporter of cotton. At the same time, it is one of the largest importers of extra-long staple cotton which has more fiber, is more durable and hence more profitable. It is not rocket science to develop this category of cotton variety and enlarge its production to meet the demand of nearly 2 million bales. This can become a great boon for meeting our domestic demand and allow us to further expand the export of short and long staples of cotton, provided all incentives are given to progressive farmers and infrastructure challenges are handled headlong. Many MNCs like Cargill, Ecom and Barnhardt cotton would then stop importing and concentrate on exporting India’s cotton, which is the cheapest and hence in great demand in Bangladesh, Vietnam and Russia. Cotton as a commodity has not been promoted on a mission mode and both agriculture and textile ministries need to put their act together, to maximize production and exports, since the demand is expanding daily.

2.  e-Chaupal network of ITC – The policy does not mention tapping of the huge infrastructure of 6500 e-chaupals created by ITC in 10 states, covering 40 thousand villages and 4 million farmers with the intent to raise it to 10 million farmers in the near future. If this system is capitalized because of its real time nature, it can free agriculture from unscrupulous middlemen, get the best price for the farmer and timely collection of produce for the exporter. Wheat, soyabean, coffee, pulses, millets, barley and shrimps are going to benefit from this, as also potatoes, which is the latest addition to the list. Buyers in 10 large states like MP, Haryana, Uttarakhand, UP, Rajasthan, Karnataka, Kerala, Maharashtra, Andhra and Tamil Nadu can utilize these items to add value through food processing.

3.  e-NAM Portal – 585 wholesale agricultural markets in India were supposed to be linked to an online portal called e-NAM. The stock position on a daily basis of all agricultural commodities would be visible online, so that bulk buyers and mills could get the required quantity timely for processing. In 15 states, this work has picked up well, especially in Andhra Pradesh where 1 crore bids were received annually. Aggregation is a problem in a country like India and e-NAM with an e-payments system is a move in the right direction. Hence, the agriculture ministry needs to focus on this regularly, along with the support of the commerce ministry, because the marketable surplus will emerge only from such aggregated efforts. It’s a pity that the budget of 2018 which announced 22 thousands rural haats to be linked to the e-NAM portal, are yet to see the light of day but e-NAM connectivity is, and will remain, the lever for revolutionizing agricultural production and exports.

Agriculture needs to become smart as the policy rightly proclaims, using “mobile apps for pest management, use of artificial intelligence for optimal cropping, drones for monitoring and spread of pesticides, laser land levelers, propelled sprayers, precision seeders and planters, transplanters for seedlings, multi-threshers etc.” How soon it gets smart remains to be seen, because the target of reaching $100 billion agri exports by 2030 depends on this. 

JK Dadoo 

IIM-A, IAS (Retd.)

Ministry of Agriculture & Farmers Welfare, Government of India Ministry of Commerce and Industry, Government of India Ministry of Road Transport & Highways - India Ministry of Ports , Shipping and Waterways (India) NITI Aayog The Agricultural and Processed Food Products Export Development Authority (APEDA) NATIONAL HORTICULTURE BOARD Federation of Indian Export OrganisationsÊ(FIEO) Cotton Corporation Of India Ltd

#agriculture #economy #exports