IAS Gyan

Daily News Analysis

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

11th November, 2020 Agriculture

Context: India’s agricultural exports are up 4.6% year-on-year in dollar terms during April-September.

  • This comes even as the country’s overall merchandise exports for the same period have registered a 21.2% annual decline.
  • It also mirrors a larger trend — of the farm sector doing reasonably well amid an economy likely to contract by 9.5% in 2020-21 (April-March).

Rice on top

  • The star performer has been rice, with the value of shipments increasing by well over a third to $4.08 billion in April-September.
  • The growth has come more from the non-basmati rather than basmati segment .
  • India exports basmati rice largely to the West Asian countries (Iran, Saudi Arabia, Iraq, United Arab Emirates, Kuwait and Yemen), besides the US and UK.
  • The destinations for non-basmati are mainly West Africa (Benin, Nigeria, Togo, Ivory Coast, Liberia, Guinea and Senegal), East Africa (Somalia and Djibouti), UAE and Nepal.

  • Another agri-commodity that is on course to post all-time-high exports in 2020-21 is
  • Both rice and sugar exports are being propped up by rising global prices.
  • A third commodity whose exports have done well this year, and the prospects also look good, is

The broader trend

  • The general story in most agri-commodities is that world prices, which were hardening in the months just before the pandemic and then crashed with lockdown measures imposed by most countries, have since resumed their earlier trajectory.

  • This is captured by the UN Food and Agriculture Organization’s (FAO) Food Price Index (base year: 2014-16=100), which rose from 93.3 points in September 2019 to a 61-month-high of 102.5 in January 2020.
  • The recovery in global prices —a combination of demand revival from
    • unlockdowns continuing supply chain disruptions (including from a shortage of shipping containers),
    • Chinese stockpiling (in anticipation of a fresh corona outbreak during the winter) and
    • dry weather in producer countries such as Thailand, Argentina, Brazil and Ukraine — isn’t bad news for Indian farmers.
  • The overall agri-trade surplus has widened from $ 6.1 billion in April-September 2019 to $8.6 billion in April-September 2020.