Magazine

English Hindi

Index

Prelims Capsule

Economy

Agricultural Exports from India are sustainable or not?

Agricultural Exports from India are sustainable or not?

Relevance:

  • GS 3 || Economy || Agriculture || Agricultural Exports

Why in the news?

Agri-exports touched $41.8 billion in FY 2020-21, registering a growth of 18% over the previous year. Although, these exports fall much short of the target of $60 billion that the present government set out to achieve by 2022 but still 18% growth is commendable.

Agriculture export in FY 2020-21:

  • Agri-exports touched $41.8 billion in FY 2020-21, registering a growth of 18 per cent over the previous year.

  • Rice and sugar are notorious for consuming a lot of water. They receive substantial subsidies in the form of cheap/free electricity for irrigation and fertilisers, particularly urea.
  • The most serious issue about India’s rising rice and sugar exports is their long-term viability.
  • It is generally known that a kilogram of sugar consumes around 2,000 litres of water. India exported 7.5 million tonnes of sugar in 2020-21, suggesting that sugar alone shipped at least 15 billion cubic meters of water.
  • Farming techniques such as alternating wetting drying (AWD), direct-seeded rice (DSR), and micro-irrigation will need to be used quickly.
  • Indian agriculture was the most internationally interconnected, accounting for 20% of agri-GDP (exports + imports).
  • By FY2020-21, it had dropped to 13.5%, implying that India is becoming less globally competitive in exports and more protectionist in imports, presumably in the name of Atmanirbhar Bharat.
  • It’s past time for policymakers to reconsider the full range of rice and sugar systems, from their MSP/FRP to their ecologically sustainable production.
  • An export-led strategy must also invest in better infrastructure and logistics to reduce logistical costs.

Initiatives to encourage Agricultural exports in India:

  • India has established the Agricultural and Agricultural and Processed Food Products Export Development Authority (APEDA). The APEDA Act of 1985 was enacted by the government.
  • The government assists agricultural exporters through the APEDA Export Promotion Scheme.
  • In 2018, the government enacted a comprehensive Agriculture Export Policy. By 2022, the strategy seeks to quadruple farmers’ income by doubling the country’s agricultural exports. In addition, the strategy intends to bring Indian farmers and agricultural goods into the global value chain.
  • The government has also launched the ‘Transport and Marketing Assistance for Specified Agriculture Products’ Central Sector Scheme. The initiative seeks to help with the international aspect of agricultural product freight management and marketing.
  • Under the current FDI policy, 100% FDI is permitted in the following agricultural activities via the automatic method.
  • The whole agricultural export basket, on the other hand, amounts for just over 2.15 percent of global agricultural commerce. This is due to the numerous difficulties that come with exporting agricultural products.

Challenges associated with Agricultural exports:

  • Small and marginal farmer: India’s crop yields are still much below the global average for the vast majority of crops. This is exacerbated by landholdings that are dispersed. In India, the average farm size is barely 1.15 hectares. The vast majority of Indian farmers fall into the small and marginal farmer categories. The majority of the agricultural goods produced were for personal consumption.
  • No study on other agro sector: The Department of Commerce in India has not performed a study to examine the long-term impact of exports on the agricultural and horticulture sectors.
  • Uncertainties in the international trade: Due to the uncertainties in the international trade environment, agro-commodity exporters are not successful.
  • Export limits on imported food goods: India’s agriculture policy is unfair because of the government’s pro-consumer tilt. To avoid internal inflationary pressures, the Indian government has imposed export limits on imported food goods. This has a negative impact on agricultural exports.
  • No access to greater market:The approach denies farmers access to greater international market prices while simultaneously increasing income insecurity. If the government decides to implement export limits at a time when international prices are at their highest, for example. Farmers would lose some of their incentive to grow export-oriented crops.
  • Demand and supply:There is a demand and supply issue on the international market, as well as international pricing and quality concerns, which limit India’s agricultural exports.

Initiatives to encourage Agricultural exports in India: 

  • India has established the Agricultural and Processed Food Products Export Development Authority to promote agricultural exports (APEDA).
    • APEDA was established by the government under the APEDA Act of 1985, and it provides support to agricultural exporters through its Export Promotion Scheme.
  • In 2018, the government announced a comprehensive Agriculture Export Policy, with the goal of doubling farmers’ income by 2022 through doubling agricultural exports from India, as well as integrating Indian farmers and agricultural goods into the global value chain.
  • The government has also launched a Central Sector Scheme called ‘Transport and Marketing Assistance for Specified Agriculture Products,’ which intends to help with the international component of agricultural product freight handling and marketing.
  • Under the current FDI policy, 100% FDI is permitted in the following agricultural activities via the automatic method.

How to improve agricultural exports? 

  • Improve agriculture chain:The government may provide infrastructure status to agricultural value chains such as warehouses, packhouses, ripening chambers, and cold storage, among other things.
  • Village level procurement centers: The government can establish village level procurement centers, as recommended by the NITI Aayog. Small and marginal farmers will gain from this, since their agricultural exports will improve.
  • The government can re-energize agricultural research and education, resulting in improved lab-to-land connection.
  • Cargo handling facilities: APEDA has proposed improving cargo handling facilities at airports, ports, and other locations. This will shorten the time spent waiting.
  • Green channel clearance system: In addition, the government may establish a Green channel clearance system for perishable agricultural goods in toll, air, and freight cargo terminals.
  • Integrated Horticulture Development: The government has the authority to create regional production belts. This may be accomplished by tying the Mission for Integrated Horticulture Development and Self-Help Groups together.

Way forward:

  • The government can designate agricultural value chains as infrastructure, such as warehouses, packing buildings, ripening chambers, and cold storage, among other things.
  • The government might establish village level procurement centers, as recommended by the NITI Aayog, to assist small and marginal farmers and boost agricultural exports.
  • The government can re-energize agricultural research and education, resulting in improved lab-to-land connection.
  • APEDA recommends improving cargo handling facilities at airports, ports, and other locations to minimize wait times. In addition, the government may establish a Green channel clearance for perishable agricultural items at toll, aviation, and freight cargo facilities.
  • The government may create regional production belts by tying the Mission for Integrated Horticulture Development and Self-Help Groups together.

Conclusion:

In the worldwide commerce of agricultural products, India is a market leader. However, if certain bottlenecks are addressed, the share can be increased. The key to double farmer income is to focus not just on domestic agricultural production, but also on increasing India’s worldwide share of the agriculture export basket.

Mains oriented question:

It is past time to strike a balance between India’s agricultural exports and environmental concerns in order to ensure a long-term agricultural future. Explain (200 words)