Agricultural goods exports: Untapped potentialities galore

By Dr B K Mukhopadhyay

A recent CII-Mckinsay report located that farm products could change India’s agriculture landscape: mangoes, ba, potato, soybean and poultry are the five main farm products which could form the bedrock of rejuvetion in India’s agriculture and allied activities landscape in the next two decades.

‘This can be created by building a strong brand for these products in the intertiol markets, reducing wastage by almost half and doubling the per hectare yields’ according to the third Food and Agriculture Integrated Development Action Report titled: ‘India as an agriculture and high value food powerhouse: A new vision for 2030, prepared jointly by CII and McKinsey and Company.

In fact, economies that still attach top priority to the agriculture sector stand to gain in the aggregate sense in as much as the big market globally offers ample opportunity for such economies to cash in on the increasing demand pattern, which, in turn, is all set to continue.

Though most successful developing countries have not relied significantly on agriculture for export expansion and growth, yet growth in agriculture has a disproportiote effect on poverty in as much as more than half of the populations in developing countries reside in rural areas and poverty is much higher in rural areas than in urban areas.  As the things stand now: 57 percent of the developing world’s rural population lives in lower middle- income countries, and 15 percent lives in the least-developed countries. Even though historical trends show that agriculture’s share in GDP diminishes over time [2-3 percent in US as compared against around 17 percent in India] and the share of population in rural areas declines, there will still be more poor people in rural areas than in cities.

Potentialities remain largely untapped, especially considering India’s position in the globe, in as much as India ranks second in fruits and vegetables production in the world, after Chi. As per tiol Horticulture Database published by tiol Horticulture Board, during 2012-13 India produced 81.285 million metric tonnes of fruits and 162.19 million metric tonnes of vegetables. The area under cultivation of fruits stood at 6.98 million hectares while vegetables were cultivated at 9.21 million hectares.

India is the largest producer of ginger and okra amongst vegetables and ranks second in production of potatoes, onions, cauliflowers, brinjal, Cabbages, etc. Amongst fruits, the country ranks first in production of Bas (22.04%), Papayas (40.74%), Mangoes (including mangoes and guavas (32.65%).

FED clearly reminds that the vast production base offers India tremendous opportunities for export. During 2014-15, India exported fruits and vegetables worth Rs. 7474.14 crores which comprised fruits worth Rs. 2771.32 crores and vegetables worth Rs. 4702.78 crores.

Mangoes, Walnuts, Grapes, Bas, Pomegrates account for a larger portion of fruits exported from the country while Onions, Okra, Bitter Gourd, Green Chilles, Mushrooms and Potatoes contribute largely to the vegetable export basket.

The trends indicate that developing countries increased their share in manufacturing exports during the 1990s but saw little expansion in agricultural exports, barely maintaining their share of around 36 percent after losing market shares during the 1980s. All of their gains in agriculture during the 1990s came from expansion of their exports to other developing countries. Share of India’s agri-exports in the global trade in agri-commodities till now hovers around 1 percent! More than 48 percent of world agricultural trade is still accounted for by trade between industrial countries— about the same share as in 1980–81.

Major problems are required to be tackled at a quicker pace so as to ensure that the future prospects are far more brightened. Major problems that have been telling upon on this score may be summarized: lack of a broad raw material base in terms of the kinds and varieties of fruits and vegetables suitable in all respects for processing and their availability in commercial quantities at prices economical to the processing industry. Invariably, the cost of the raw material is high; low productivity and poor quality of the produce as compared to the very high levels obtained in the advanced countries affect processing and none of the processing units work to full capacity utilization. What is more; much of the produce taken up for processing is devoid of the quality attributes or characteristics required for processing.

Lack of a proper marketing strategy geared to meeting the raw material requirement of processing units and ensuring a sustaible export market for the processed products has been keenly experienced. Due to poor infrastructure in handling, transport, marketing and processing, horticulture, as an industry, has failed to register commendable growth in economies like India. Infrastructure stands tall to block the prospects - particularly transportation, road networks, and freight and cargo facilities [the freight rates in India are reported to be higher than those prevalent in some other countries, the very fact that does very little to improve our competitiveness], cold storage facilities, etc., coupled with idequate post-harvest magement affect the produce and products. Poor and inconsistent quality of processed products and idequate export promotion are also hindering the growth prospects [Vitamin C content in guava must be raised to expect better acceptance]. It is the residual rather than the fresh produce that is often taken up for processing, which has a bearing on quality.

Till now it is a fact that fruits and vegetables are generally constrained by poor price support, credit support and delivery system. Idequate supply of power, water and research and development support exist as no less constraints. The quality of packaging also leaves much to be desired – simply not market-oriented - in as much as importing countries demand specific packaging for each produce and the use of bio-degradable materials resulting in high cost of packaging.

Global market for these products is a tremendous one and it goes without saying that if systematically tapped there lies immense scope ahead especially for the least developing economies as the latter virtually depends on a handful of agri-commodities to earn foreign exchange. Of course the absolute advantages as well as comparative advantages must be fully reaped. For example India produces grapes twice a year – a rare advantage and gift of ture here which other leading producers do not have. Let us cash in on this hidden wealth!

(The writer, a noted Magement Economist and an Intertiol Commentator on Business and Economic Affairs, Director, Netaji Subhas Institute of Business Magement, Jharkhand, can be reached at m.bibhas@gmail.com)