Farm exports defy overall trend in 2020, see 9.8 per cent growth

While India’s overall merchandise exports have fallen 15.5% year-on-year during April-December, the same period has seen its farm exports register a 9.8% growth. This is thanks to agricultural production being relatively unaffected by the Covid-19-induced lockdown, and to a steep surge in global commodity prices.

Commerce Ministry data show the country’s exports of all goods during April-December 2020 stood at $201.30 billion, down from $238.27 billion in April-December 2019. In contrast, exports of agri-commodities rose from $26.34 billion to $28.91 billion for this period. With imports simultaneously contracting 5.5%, the agricultural trade surplus widened from $9.57 billion in April-December 2019 to $13.07 billion in April-December 2020 (see table on page 2).

The increase in agri exports is largely courtesy favourable world prices. The United Nations’ Food and Agricultural Organization Thursday released its Food Price Index (FPI) for January. That number, at 113.3 points (base year: 2014-2016=100), was the highest since 116.4 in July 2014. Between May 2020 and January 2021, the FPI soared from a 48-month-low to a 78-month-high.

International prices have risen due to both the steady normalisation of demand, with most countries unlocking their economies after May, and the restoration of supply chains post-Covid not keeping pace — making exports of many farm products from India competitive. That includes non-Basmati rice, sugar, oilseed meals, cotton and even wheat and other cereals (mainly maize). In fact, the country was a significant exporter of wheat and maize last in 2013-14.

The current export revival is equally a result of dry weather conditions seen by major producers such as Argentina, Brazil, Ukraine, Thailand and Vietnam. Russia (the world’s largest wheat exporter) and Argentina (No. 1 in soyabean meal and No. 3 in maize) have even announced temporary suspension of taxes on grain shipments in response to high domestic food inflation.

Global prices have also been buoyed by Chinese stockpiling. The latter had stepped up imports of everything from maize, wheat, soyabean and barley to sugar and milk powder to build strategic food reserves amid geopolitical tensions.

India, on the other hand, hasn’t faced serious weather issues; both 2019 and 2020 recorded surplus monsoon rainfall along with timely onset of winter. Farmers harvested a bumper rabi crop during April-June, enabled by the government exempting agriculture-related activities from lockdown restrictions. They look set to repeat the performance in the coming season as well, on the back of fully recharged groundwater tables and low temperatures that are conducive for high yields of wheat, mustard, chickpea and lentils. That should also help exports — notwithstanding the ongoing farm protests against the Centre’s recent agricultural reform laws.

The country had experienced a sustained farm export boom during the previous UPA regime. Between 2003-04 and 2013-14, these zoomed from a mere $7.53 billion to $43.25 billion, basically riding on a bull run in global commodity prices. With the collapse of that boom, just about when the Narendra Modi government took over, exports had nosedived to $32.81 billion in 2015-16. They had recovered somewhat to $39.20 billion by 2018-19, before falling again to $35.60 billion in 2019-20.

The current revival, if it sustains, can help prop up crop prices when the next rabi harvest is due from March. And that may be politically useful in the context of the current farm unrest.