INDIAN AGRICULTURE EXPORTS

1. Context

2. Drivers of Exports

• India in 2021-22 shipped out an all-time-high 21.21 million tonnes (mt) of rice valued at $9.66 bn including both non-basmati and basmati rice.
• In the current fiscal, the growth has been primarily led by basmati rice.
• Its exports have gone up by 40.3% in value (from $2.38 bn in Apr-Dec 2021 to $3.34 bn in Apr-Dec 2022) and 16.6% in quantity (2.74 mt to 3.20 mt) terms.
• The corresponding increases have been less for non-basmati exports.

• More spectacular perhaps is sugar. Exports hit a record $4.60 bn in 2021-22, as against $2.79 bn, $1.97 bn, $1.36 bn, and $810.90 mn in the preceding four fiscals.
• This fiscal has seen a further surge of 43.6%, from $2.78 bn in Apr-Dec 2021 to $3.99 bn in Apr-Dec 2022.
• India's exports of rice and sugar are well on course to touch, if not top, $11 bn and $6 bn respectively in 2022-23.

3. Imports

• The first is vegetable oils, whose imports shot up from $11.09 bn in 2020-21 to $18.99 bn in 2021-22, and even more during the first nine months of 2022-23 over the same period of last fiscal from $14.04 bn to $16.10 bn or 14.7%.
• According to the Solvent Extractors’ Association of India, India’s total edible oil imports rose from 13.13 mt in 2020-21 to 14.03 mt in the 2021-22 oil year (Nov-Oct) and increased further by 30.9% from 2.36 mt in Nov-Dec 2021 to 3.08 mt in Nov-Dec 2022.
• Imports now account for over 60% of the country’s estimated 22.5-23 mt annual oil consumption. 

• The second is cotton. India's cotton exports reached an all-time high of $4.33 bn back in 2011-12. It remained at reasonably high levels until 2013-14 ($3.64 bn), before plunging to $1.62 bn by 2016-17 and $1.06 bn in 2019-20.
• There was a recovery thereafter to $1.90 bn in 2020-21 and $2.82 bn in 2021-22.
• But during this fiscal, not only have exports collapsed to $512.04 mn in Apr-Dec (from $1.97 bn in Apr-Dec 2021), imports have soared from $414.59 mn to $1.32 bn for the same period.
• Thus, India has turned from a net exporter to a net importer of cotton.

• The third commodity is cashew. During April-December 2022, imports have posted a 64.6% rise to $1.64 bn from $996.49 mn in Apr-Dec 2021, even as exports of cashew products have fallen from $344.61 mn to $259.71 mn for the same period.
• A similar trend has been witnessed in spices, with exports de-growing and imports edging up.

4. Policy Implications

• The UN Food and Agriculture Organisation's Food Price Index- having a base value of 100 for the 2014-16 period averaged 122.5 points in 2012-13 and 119.1 points in 2013-14. Those were the years when India's agri-exports were at $42-43 bn.
• As the index crashed to 90-95 points in 2015-16 and 2016-17, so did exports to $33-34 bn.
• The exports recovery in 2020-21 and 2021-22 happened on the back of rising global prices and the FAO index averaging 102.5 points and 133 points in the two years.
• The index peaked at 159.7 points in March 2022, just after the Russian invasion of Ukraine.
• Since then, it has fallen every month, with the latest reading of 131.2 points for Jan 2023 the lowest after the 129.2 points for Sept 2021.

5. Expectations

• Going by past correlation, one can expect this to lead to India's farm exports showing in the months ahead.
• Moreover, this could be accompanied by increased imports, as was the case from 2014-15 to 2017-18.
• In the event, the focus of policymakers too may have to shift from being pro-consumer (to the extent of banning/restricting exports) to pro-producer (providing tariff protection against imports).

6. Way forward

• The government needs to do something about cotton and edible oils. India's cotton production has declined from a high of 398 lakh bales in 2013-14 to a 12-year low of 3.7.05 lakh bales in 2021-22.
• Clearly, the effects of not allowing new GM technologies after the first-generation Bt cotton are showing.
• A proactive approach is required in edible oils as well, where planting GM hybrid mustard has been permitted with great reluctance and is now before the Supreme court.

For Prelims