• UGI USER
  • May 13, 2024
  • 15 Likes
  • 0 Comments

MAKE EXPORT POLICY FARMER FRIENDLY

SYLLABUS:

GS 3: Major crops-cropping patterns in various parts of the country, – different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers.

Focus:

  • Five months after implementing a restriction on onion exports due to anticipated shortages in the rabi harvest, India revoked the ban
Source: KNN India

Overview of Agricultural Export Trends

  • Decline in Export Value: Agricultural exports dropped to $48.9 billion in 2023-24 from $53.2 billion in 2022-23.
  • Failure to Meet Targets: The exports fell short of the $60 billion target set by the government.
  • Slowed Growth Rate: The annual growth rate reduced significantly from 20% during 2004-05 to 2013-14 to just 1.9% from 2014-15 to 2023-24.
  • Historical Comparison: Exports surged by nearly 500% from $8.7 billion in 2004-05 to $43.3 billion in 2013-14 but saw minimal growth thereafter.
  • Trade Surplus Reduction: The trade surplus decreased from $27.7 billion in 2013-14 to $16 billion in 2023-24.

Key Agricultural Exports

  • Rice: Tops the export list with $10.4 billion from 16.3 million tonnes, accounting for 21% of total agri-exports.
  • Marine Products: Second highest at $7.3 billion, making up 15% of exports.
  • Spices: Exported worth $4.25 billion, contributing 9% to the total.
  • Bovine Meat: Amounts to $3.7 billion in exports, representing 8%.
  • Sugar: Contributes $2.8 billion, which is 6% of the total agricultural exports.

Impact of Global Prices and Export Policies

  • Sensitivity to Global Prices: Export volumes increase with high global prices but fall when prices decline.
  • Export Restrictions: Bans and restrictions on commodities like wheat, rice, sugar, and onions have hindered export potential.
  • Impact of Bans on Prices: Restrictions led to price increases internationally, as shown by the rice export ban in 2022.
  • Optimal Export Quantity: Research suggests India should limit rice exports to 15-16 million tonnes to maximize revenue.
  • Export Duty Recommendations: Suggests a 15% duty on common and parboiled rice to balance domestic supply and export revenue.

Environmental and Economic Concerns

  • Water Usage in Rice Production: Each kilogram of rice requires 3,000-5,000 liters of water, raising sustainability concerns.
  • Subsidy-Driven Competitiveness: Heavy subsidies on power and fertilizers give an artificial advantage that may be ecologically harmful.
  • Exporting Virtual Water: Exporting rice also means exporting significant amounts of water, impacting local water resources.
  • Need for Sustainable Practices: Emphasizes the need for investments in precision agriculture and resource-efficient techniques.
  • Government Policies Impacting Farmers: Current export policies favor consumers and may harm farmers’ profitability.

Challenges in India’s Agricultural Export Policy

  • Restrictive Export Policies: Policies often prioritize domestic consumers, impacting farmers negatively and hindering export growth. For instance, the Minimum Export Price (MEP) set at USD 1,200 significantly restricts basmati rice exports.
  • Subsidy-Centric Schemes: Populist measures like loan waivers and subsidized utilities, while popular, can undermine fiscal discipline and the sector’s financial health.
  • Inadequate R&D Investment: Investment in agricultural R&D is low at around 0.5% of agricultural GDP. This underinvestment limits growth and innovation in agricultural production and exports.
  • Quality and Standards: Consistently meeting international quality standards poses a challenge. Issues like variability in quality and non-compliance with Sanitary and Phytosanitary (SPS) Measures restrict export opportunities.
  • Infrastructure Deficiencies: Lack of adequate storage, transportation, and processing infrastructure leads to significant post-harvest losses, affecting export competitiveness.
  • Global Competitiveness: Maintaining competitive pricing and quality is crucial as India faces stiff competition in the global market. Fluctuations in exchange rates further affect the competitiveness of Indian agricultural exports.
  • Environmental and Sustainability Concerns: Increasing exports while ensuring environmental sustainability is challenging. Overexploitation of resources, such as water for irrigation, can lead to long-term ecological damage.

Steps Forward for a Stable Agricultural Export Policy in India

  • Prioritize Farmer Welfare: Shift focus towards ensuring farmers are fairly compensated, linking their welfare directly to the success of agricultural exports.
  • Domestic Consumer Support: Maintain food security through targeted income support policies for vulnerable populations, instead of broad subsidy schemes.
  • Enhance Productivity: Boost competitiveness by doubling or tripling investment in agricultural R&D, modern seeds, efficient irrigation, and fertilizers.
  • Diversify Export Portfolio: Expand the range of export commodities and focus on value-added products to reduce dependency on a few staples.
  • Strengthen Quality Assurance: Implement rigorous quality standards and certification to meet international norms consistently.
  • Infrastructure Improvement: Invest in modern infrastructure like cold storage and processing facilities to minimize losses and improve export quality.
  • Adopt Advanced Technologies: Promote cutting-edge agricultural technologies and precision farming to increase productivity and sustainability.
  • Implement Sustainable Practices: Encourage practices like organic farming to ensure environmental sustainability alongside agricultural growth.
  • Adopt International Best Practices: Learn from global success stories in agricultural exports, negotiate favorable trade agreements, and reduce trade barriers to enhance market access.
Government Schemes to Promote Agricultural Exports in India

  • Operation Greens: This initiative focuses on stabilizing the supply and prices of key agricultural products like fruits and vegetables. It aims to curb price volatility, ensure fair compensation for farmers, and foster sustainable agricultural exports.
  • Market Access Initiative (MAI): MAI supports agricultural export promotion through participation in international trade fairs, capacity building, and market research. It assists Indian exporters in exploring and accessing new markets.
  • Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters (SAMPADA): This scheme is designed to modernize infrastructure within agro-processing clusters. It helps in reducing post-harvest losses, extending the shelf life of produce, and boosting the export competitiveness of Indian agricultural products.
  • National Horticulture Mission (NHM): NHM promotes sustainable horticultural practices such as organic farming, precision agriculture, and efficient water use. It supports the production of high-value horticultural exports.
  • E-NAM (National Agriculture Market): E-NAM is an electronic trading platform that connects farmers directly with buyers across India. It reduces the need for intermediaries, ensuring better prices for farmers and promoting sustainable practices.
  • Agri Export Zones (AEZs): These zones are set up across various regions to specialize in the export of certain agricultural commodities. AEZs provide supportive environments through improved infrastructure and technology, enhancing the export capacity of these zones.
  • Promotion of Organic Farming: The government promotes organic farming through specific programs that enhance the environmental sustainability and export potential of organic products.

Source:Indian Express

Mains Practice Question:

Examine the impact of India’s export policy on agricultural growth and farmers’ income. Suggest measures to make the export policy more farmer-friendly. (250 words)