Post-pandemic resilience of Indian agri exports

Jayanti Kajale

During the pandemic, economic activity, especially trade flows across the globe, have been affected adversely. It is amply clear now that while there has been contraction of overall merchandise trade, global agri trade has remained much more resilient during the pandemic year 2020-21. In the case of India also, the figures indicate an increasing trend in value of agri exports during 2020-21. India has managed to remain integrated with global agri markets since the outbreak of the pandemic and benefited from this integration.

Rise in agri exports in 2020-21
The value of agri trade including agri and allied products in rupee terms which was around 2.52 lakh crores in 2017-18 and 2.75 lakh crores in 2018-19, dropped to around 2.52 lakh crores in 2019-20 due to lockdowns, but rose to around 3 lakh crores in the post lockdown period of 2020-21. This indicates that the pandemic created opportunities for our exports of agri products. It also underlines the need to maintain the pace of increase in exports for achieving the target relating to export growth.

Major commodity groups that led the growth in agri exports are food grains, spices, sugar, oilseeds sector products and horticultural products. Marine products and buffalo meat which were major items in the export basket till 2018-19 however registered a decline in the year 2019-20 and their exports could not reach earlier levels by 2020-21. Under food grains, though basmati rice has been the major item of export traditionally, exports of non-basmati rice have registered an increase after March 2020 as compared to the corresponding period of the previous year. As per the Agricultural and Processed Food Exports Development Authority (APEDA) data, our exports of non-basmati rice to a number of countries, including China, increased steeply. Wheat exports have risen by a massive 800 percent (over a small base) in value over the previous year, with Bangladesh accounting for 50 percent of total wheat exports. Export of sugar as well as spices has been increasing over the last 10 years and during the covid period as well. Other smaller commodity segments which registered considerable increase are horticultural and oilseed sector products.

Weaker supply chains
This rise in agri exports immediately after the complete lockdown is attributed to opportunities that the pandemic created for Indian agricultural exports to developing and a few developed countries, many of which were adversely affected due to the pandemic-enforced weaker supply chains. Adverse weather conditions in countries like China was another reason for higher demand. Shipments of cereals were sent to a number of new countries besides the regular destinations.

Our production in this period was adequate for supporting the incremental demand. Estimates for the years 2019-20 and 2020-21 show an increase in the production of all major commodity groups. Our food grain production has crossed record 300 million tons mark in 2020-21 and production of other commodity groups such as oilseeds, sugarcane and some horticultural commodities has also recorded an increase.

Looking ahead
The key question the positive export trends pose is whether these would be sustained in the post-pandemic period when normalcy is established. The agri export policy of 2018 envisages doubling of agri exports from US$ 30+ billion in 2018 to US$ 60+ billion by 2022. For this, in rupee terms, the exports would have to increase from around 2.75 lakh crores- level of agri exports in 2018-19 to around 5 lakh crores by 2022. Achieving this target by this year seems difficult. However, to reach this target in the near future, a number of policy measures need to be put in place.

Maintaining an overall stable export policy regime to provide incentives to agri exporters is essential. Arbitrary usage of trade instruments such as export bans and higher level of minimum export price of the commodity to be exported has frequently been observed, especially in case of commodities such as onion. The major objective of the government behind these has been managing the demand and supply imbalance and price levels in the domestic economy. These trade policy tools are often the easiest macro policy options available in the short run. However, this leads to disruption of exports and loss of trust in the international markets.

Apart from this, sustained efforts by government and non-government institutions are necessary for establishing Indian products in newly created foreign markets for various agri commodities such as food grains and for creating niche markets for growing agri product segments such as horticultural and oilseed sector products. Diversification of the agri export basket by tapping the diverse production basket is also vital.

Efforts at increasing our exports