Re-equipping the Indian agriculture sector to double exports
06 Mar 2020
2020 is the year of the farmer, with over 50% of the Indian population depending on Agriculture in India. Therefore, the Union Budget 2020 too emphasized on farmer’s issue largely, focussing on liberalizing the market, increasing farmers’ income, among others. One of the key enablers to the economy, implementation of the Agri Exports policy is being fast-tracked by a collaborative approach from the Government and allied bodies in 2020. In this direction, Agricultural and Processed Food Export Development Authority – APEDA, recently signed MoUs with various organizations to build capacity and enhance exports. With a tech-driven farm to fork approach, AI is also being used to revolutionize the sector and relieve farmer stress.
India’s exports of Agriculture and allied products including marine, buffalo meat, spices, basmati rice, coarse cereals, and fruits cotton, plantations, etc. for FY19 was US$ 18.7B down from US$ 22.7B in FY14, therefore formulating and implementing the Agri Exports policy was necessary. A lot of simple yet credible steps towards improving operations within the sector can go a long way in achieving the high target of doubling exports.
One such step can be around improving the shelf life of perishable products and export more value-added products higher up in the value chain e.g. mango juice instead of mangoes, to increase the value of exports. This gap from raw goods to processed goods can be filled with food packaging companies. This can unlock value for all supply chain participants – from farmers to manufacturers of packaging films to packaged food companies.
Technical barriers to trade and Sanitary and Phytosanitary – SPS issues have long weighed down Indian exports of Agricultural and allied products. We need to benchmark Indian export processes with global export leaders to overcome these barriers. To illustrate, Japan has a system to trace the ingredients of the food products ranging from fertilizers, seeds, farm, and all other intermediaries right till the time it reaches the final consumer. This helps in identifying sources of problems, if they occur, and helps in recall efforts which eventually reduces wastage, loss of export goods, and helps keep export reputation intact. Tracking and tracing are major issues for India’s exported goods as such systems are still elusive for Indian export processes. The Government and export promotion organizations need to support private players or adopt the PPP approach to help create such systems.
We need to look inward as well. The Government raised MSP for most Agriculture-based products by 40-70% over FY14-19. The international prices have not shown such a great increase in prices. With this trend continuing, Indian products are becoming comparatively expensive with time compared to global competitors. We need to work out a better solution for pricing mechanism. One solution is by reducing the pace of increasing MSP while at the same time ensuring that the farmer’s income continues to rise by limiting the number of intermediaries in the food supply chain and giving larger pie of the price paid by end consumer to the farmer. One other important area of action is to improve mechanization in farming and allied activities as the level of mechanization in Indian farming is much lower than developed countries and therefore offers scope for improvement. Improved mechanization will help in increasing productivity and reducing input cost which would automatically increase farm income while keeping our export price competitive.
Private firms can participate in the Indian Agri export growth story by identifying these problems and becoming problem solvers. They can innovatively combine global best practices with indigenous solutions. Big data and analytics can be leveraged to identify opportunities to ship value-added Indian products to international markets. They can also participate in Agri export sector advocacy to the Government for the benefit of the sector and stakeholders.
The Government can also continue its efforts to collaborate with other countries on reducing technical and tariff barriers for Indian exports. Thus, improving market access, especially into developed or newly industrialized countries will open avenues for Indian Agricultural exports.
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Authored by (at the time of writing):
Madhur Singhal, Leader, Agriculture Practice
Kaushal Patel, Member, Agriculture Practice
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