Agricultural exports grew 17.5 per cent to cross $41.8 billion in 2020-21, thanks to a good monsoon last year and the fact that the first wave of Covid-19 did not reach the rural areas like the second wave has this year. Nor did the Covid-induced lockdown affect the output. This year, farm exports were projected to grow 20 per cent. But the spread of Covid to rural areas has raised some questions over this projection.
Last year’s agri-export boom was led by non-basmati rice, with a record 13.09 million tonnes (mt) valued at $4.80 billion going out of the country. Together with 4.63 mt of basmati (again a record) worth $4.02 billion, it has further consolidated India’s position as the world’s biggest rice exporter.
The country also registered all-time-high exports of sugar ($2.79 billion), spices ($3.98 billion) and processed fruits & vegetables ($1.12 billion) in 2020-21. Other exports that did well included raw cotton (from $1.06 billion in 2019-20 to $1.90 billion in 2020-21) and oil-meals (from $827.9 million to $1.58 billion). India, last year, even became a significant exporter of wheat (2.09 mt) and maize (3 mt) for the first time after 2014-15.
Agricultural growth for 2020-21 is estimated at 3 per cent, even as the Indian economy contracted by 6.5 per cent. The farm sector’s standout performance in exports was in contrast to the country’s overall merchandise exports, which fell 7.2 per cent to $290.8 billion, from $313.4 billion in 2019-20. The last time that farm exports stood out was in 2013-14 at $43.25 billion of 2013-14. Again, this was due to a good monsoon and the high global commodities prices prevailing then.
However, though the Met Department has forecast a normal southwest monsoon, there are some new question marks over this year’s farm export output. If that happens, it would be a disappointing year for Indian farmers as the UN Food and Agricultural Organization’s world food price index hit an 83-month-high in April.
Shrinking shipments
Reports are coming in that this year, the tentacles of the pandemic are spreading to the rural hinterland – a fact that could hit the output and shrink shipments from India, at least temporarily. There could be some setback due to the current disruptions. Many ports are already reporting substantial drop in daily labour attendance for loading/unloading activity.
The number of vessels calling has also fallen in the last 10-15 days, as the owners are hesitant to load cargo from India. In Kakinada port, Andhra Pradesh, a major port for rice exports, only up to 20 barges (each of 400-500 tonnes) are being allowed to be loaded into vessels per day, as against 50-60 in normal times. Vizag port has, likewise, imposed restrictions on labour working time from 6 to 11 in the morning.
However, there is a view that such disruptions would be offset by the high international prices. Besides, India is rated as being the most competitive. White rice with 25 per cent broken grains is now being offered from India at about $360 per tonne, lower than the $470 from Vietnam and $490 from Thailand. Indian parboiled rice (with 5 per cent broken), too, is quoting at $370 per tonne, compared to $440 from Pakistan.
Many ports are already reporting substantial drop in daily labour attendance for loading/unloading activity. The number of vessels calling has also fallen in the last 10-15 days, as the owners are hesitant to load cargo from India
“Covid is a concern for now, but the prospects for both wheat and maize exports look good, as the international markets are supportive,” points out Amit Takkar, managing director, Conifer Commodities. Wheat sourced from Gujarat, Rajasthan and Madhya Pradesh at below the minimum support price of Rs19,750/tonne ($269) is being shipped out at about $280 per tonne, after adding costs of cleaning, bagging, transport and loading at Kandla or Mundra ports. This price is fairly competitive vis-à-vis wheat from Australia ($290-300), European Union/France ($300) or Ukraine/Russia ($270-280), especially for supplying to Bangladesh, the UAE and South-East Asian markets.
The government on its part does not appear to be worried as of now. After the India Meteorological Department predicted a ‘normal’ monsoon, the government has set a record target to raise food grain production by 2 per cent (y-o-y) during 2021-22 crop year, starting July. With prices of all rabi crops currently ruling either near or above the minimum support prices (MSPs) despite bumper harvest, the government is betting on next kharif crops to increase the overall agriculture growth.
India’s agricultural exports had zoomed from a mere $7.53 billion in 2003-04 to $43.25 billion in 2013-14 during the previous UPA regime, mainly because there was a bull run in global commodity prices, which ended just when the Modi government took over. Exports nosedived to $32.81 billion by 2015-16, before steadily recovering to $41.82 billion in 2020-21. The agricultural trade surplus, which had narrowed from $27.72 billion to $8.05 billion between 2013-14 and 2016-17 due to rising imports, has also rebounded to $20.19 billion in 2020-21.