Tapping the Potential of Farm Export is the need of the hour

Tapping the Potential of Farm Export is the need of the hour

Posted on Posted in Agricultural Export

A study reveals that export of fruits and vegetables from India were below the export prices during the decade 2004-2014. In most cases restrictive trade policies ruined the chances of making most of the export/import opportunities. A perfect example to understand this is the 2007-08 global food crisis; even though the Indian products were highly competent with the global prices, rice, wheat and few other commodities were not allowed to utilize the trade opportunity to the fullest.

Also,72% of the time, the domestic prices of commodities such as rice, maize, mango,wheat, potato, banana and buffalo meat were exportable. Only 11% of the time they were above import parity prices and as such were competing with the imports.17% of the time, these commodities were considered as non-tradable. This was sue to the fact that their prices were between the relevant import-export reference prices.

According to the study titled ‘Price distortion in Indian agriculture’, prices of commodities such as groundnut, cotton, rice, buffalo meat, banana onion, and potato were 90%-100% time below their relevant export parity prices.

It also stated that the domestic prices of sugar and skimmed milk powder were above import parity prices most of the time.

However, the study also noted a positive impact on the exports of fruits and vegetables from India to be highly competitive. Although some of the commodities were prohibited from being exported due to restrictive trade policy, other agro-commodities saw better export opportunities.

The study also pointed at India’s inconsistency towards export policy. Restrictive export policies ensured that the domestic prices were low.This had a severe impact on the farmer’s interest as their prospect on getting higher returns globally were hampered.

However, export of fruits and vegetables from India and livestock such as buffalo saw a great opportunity from neighbouring countries like Nepal, Sri Lanka, Bangladesh,etc. Dealers of food grain and bulk commodities were competing on freight difference instead of commodity price difference.

The study also cited that the depreciating value of Indian Rupee against the US Dollar had a crucial role to play in the agricultural exports from India. While the percentage of agri-GDP increased from less than 5% (1990-91) to approximately 20% (2013-14), it is yet to reach its full potential. Therefore, the study had recommended several policy reforms such as allowing private dealers to have an integrated market, phasing out of built-in consumer bias in agricultural policies, etc.

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