Agriculture Industry

Farm exports defy overall trend in 2020, see 9.8 per cent growth

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05 February 2021, New Delhi, IN: The increase in agri exports is largely courtesy favourable world prices.

India’s overall merchandise exports have fallen 15.5% year-on-year during April-December. But the same period has seen its farm exports register 9.8% growth – thanks to agricultural production being relatively unaffected by the Covid-19-induced lockdown and a steep surge in global commodity prices.

Commerce Ministry data shows the country’s export of all goods during April-December 2020 at $201.30 billion, down from the $238.27 billion for April-December 2019. In contrast, exports of agri-commodities have risen from $26.34 billion to $28.91 billion for this period. And with imports simultaneously contracting 5.5%, the agricultural trade surplus has widened from $9.57 billion in April-December 2019 to $13.07 billion in April-December 2020 (see table).

The increase in agri exports largely courtesy favourable world prices. The United Nations’ Food and Agricultural Organization, on Thursday, released its latest Food Price Index (FPI) for January. That number, at 113.3 points (base year: 2014-2016=100), was the highest since the 116.4 of July 2014. Between May 2020 and January 2021, the FPI has soared from a 48-month-low to a 78-month-high!

Explained |In a mirror of economy, agricultural exports grow amid overall decline

International prices rising – due to steady normalisation of demand with most countries unlocking their economies after May and, at the same time, restoration of supply chains post-Covid not keeping pace – has made exports of many farm products from India competitive. That includes non-basmati rice, sugar, oilseed meals, cotton and even wheat and other cereals (mainly maize). In fact, the country was a significant exporter of wheat and maize last in 2013-14.


Green Shoots

Amid the farm protests, the Commerce Ministry data have two bright spots. The first is bumper crops, aided by good rains and extended winter. The second is global agri-commodity prices rising to a six-and-a-half year high, making exports competitive and imports costlier. Both should help boost farm realisations and incomes.

The current export revival is equally a result of dry weather conditions in major producing countries such as Argentina, Brazil, Ukraine, Thailand and Vietnam. Russia (world’s largest wheat exporter) and Argentina (No. 1 in soyabean meal and No. 3 in maize) have even announced temporary suspension or taxes on grain shipments in response to high domestic food inflation. Global prices have also been buoyed by Chinese stockpiling. The latter had stepped up imports of everything – from maize, wheat, soyabean and barely to sugar and milk powder – to build strategic food reserves amid geopolitical tensions.

India, on the other hand, hasn’t faced serious weather issues; both 2019 and 2020 recorded surplus monsoon rainfall along with timely onset of winter. Farmers harvested a bumper rabi crop during April-June, enabled by the government exempting agriculture-related activities from lockdown restrictions.  They look set to repeat the performance in the coming season as well, on the back of fully recharged groundwater tables and low temperatures conducive for high yields of wheat, mustard, chickpea and lentils. That should also help exports – notwithstanding the ongoing farm protests against the Centre’s recent agricultural reform laws.

Explained |How remunerative is farming in India? Here’s what data shows

The country experienced a sustained farm export boom during the previous United Progressive Alliance regime. Between 2003-04 and 2013-14, these zoomed from a mere $7.53 billion to $43.25 billion, basically rising on a bull run in global commodity prices. With a collapse of that boom, just about when the new Narendra Modi government took over, exports nosedived to $32.81 billion in 2015-16. They recovered somewhat to $39.20 by 2018-19, before falling again to $35.60 billion in 2019-20.

The current revival, if it sustains, can help prop up crop prices when the next rabi harvest is due from March. And that may be politically useful in a context of farm unrest.

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