India’s exports minus imports of farm commodities shrunk to $18.86 billion in 2014–15, after rising continuously and peaking at $27.72 billion in 2013–14. This is partly because of exports, which fell to slightly above $39 billion from $43.25 billion in 2013–14. The compound annual growth rate (CAGR) in agri exports in 2013–14 to 2018–19 has been 2.1 per cent, with fall in buffalo and cotton exports. In contrast, agri-exports grew from $17.92 billion to $42.86 billion in the period 2009–10 to 2013–14. Where agri-imports are concerned, they have risen in the last 5 years, since 2014–15, at the rate of 6.7 per cent annually. Hence, a lower trade surplus.
Reasons behind the shrinking agri trade surplus are, importantly, a less competitive currency, export quality issues, and poor policy decisions over the last 5 years. The fall in exports can be attributed to the crash in world prices following the end of a decade-long global commodity boom, which had contributed to a near six-fold jump in India’s farm exports—from a mere $7.5 billion to over $43 billion between 2003–04 and 2013–14.
This shrinkage in the farm trade surplus was also due to imports going up from $15.5 billion to $20.2 billion in 2018, largely on account of edible oils and pulses. In 2014–15, edible oil imports were valued at $9.67 billion and $2.79 billion for pulses. The fact that their imports were only $2.47 billion and $395.62 million, respectively, in 2004–05 points to the country’s growing lack of self-sufficiency in the two commodities.
India’s buffalo meat exports have also fallen in the last five years ($4.3 billion in 2013–14, $4.03 billion in 2017–18, and $3.5 billion in 2018–19). The fall in exports is because large buffalo meat buyers are now buying from Brazil. In fact, Indian buffalo meat exports have been losing to competition from Brazil and Australia due to lack of incentives given under the Merchandise Exports from India Scheme (MEIS).
India has exported less buffalo meat to its traditional customers, like Vietnam, Egypt, Malaysia, and UAE over the last few years.
Since 2018, China has shut down illegal Indian buffalo meat imports from Vietnam after discovering African swine fever in the shipments. In 2001, China banned direct import of Indian buffalo meat after an outbreak of foot-and-mouth disease (FMD) in India. Since then, Indian exports to China have been illegally routed through Vietnam. From 2018, Vietnamese buyers are not buying from Indian sellers.
Lack of incentives under the Merchandise Exports from India Scheme (MEIS) has resulted in Indian buffalo meat exporters losing out in competition to those from Brazil and Australia.
In raw cotton too, the exports from India have fallen from $3.6 billion in 2013–14 to $2.1 billion in 2018–19, owing to quality issues as a result of being handpicked by farmers, resulting in higher contamination. While the trash in Indian cotton is about 3 per cent, it is just 1–1.5 per cent globally, thus turning the buyers to West African countries and Australia.
Indian cotton has become more expensive now due to depreciation of the real vis-à-vis the US dollar and higher MSP for cotton in India. This had led large buyers like China to switch loyalties. Also, a poor monsoon in recent years and pest attacks like pink bollworm have reduced acreage and the exportable surplus.
In September 2018, India’s trade deficit slipped to a seven-month low of $10.9 billion as exports and imports witnessed the steepest fall in three years. Merchandise exports shrank 6.57 per cent to $26 billion, while imports dropped 13.9 per cent to $36.9 billion. In 2019, India’s agri exports are likely to be under continued pressure, as world demand and commodity prices show little signs of recovery.
Training of officials to boost exports Five officials from the Department of Agriculture, Cooperation and Farmers’ Welfare in India underwent specialised training in Australia, in 2019, to boost India’s agricultural exports. The aim was to learn how Australia’s biosecurity and export systems operate. The training focused on the use of biosecurity treatments—particularly, in-transit cold treatment—for the export of horticultural products such as table grapes.