COVER STORY

Ziraat Times Economic Analysis Team

On December 6, 2018, the Government of India approved ‘Agriculture Export Policy, 2018′ a maiden export policy for the farm sector, that aims at doubling agricultural shipments to over USD 60 billion by
2022.

The policy aims to boost exports of agriculture commodities such as tea, coffee and rice and increase the country’s share in global agri-trade.

Ziraat Times has analysed the draft policy and learns that except for apple, no other agricultural product with niche presence and production in J&K has been targeted for export promotion.

J&K’s  niche agricultural products like saffron, walnuts, almonds and diverse aromatic and medicinal plants, with huge export potential and commercial viability, are not included in the export development
strategy.

The exclusion of these niche products puts Jammu & Kashmir at a huge disadvantage, considering that there will be no incentive for the state government and potential producers of these products to develop
these products.

“The policy focuses on all aspects of agricultural exports, including modernising infrastructure, standardisation of products, streamlining regulations, curtailing knee-jerk decisions, and focusing on research and development activities”, an official at the Commerce Ministry told Ziraat Times.

The implementation of the policy will have an estimated financial implication of over Rs 1,400 crore. The policy is also expected to provide an institutional mechanism for pursuing market access, tackling barriers and deal with sanitary and phyto-sanitary issues.

What is for J&K in the Policy?

As part of the AEP 2018, 50 unique product-district clusters (provisional) have been identified for export promotion.

Srinagar, Budgam, Pulwama districts in Jammu & Kashmir have been identified for apple export promotion.

While there will be some public investment in further development of apples as export grade, the exclusion of other niche agriculture crops, particularly saffron, from export policy makes the commercial
development of these crops even more bleak.

The policy aims at an investment of Rs 350 crores in apple sector, which is expected to lead to import substitution worth Rs 1400 crores by 2025. As of now it is not clear how much of investment out of the
Rs 350 crore will be done in J&K state.

Additionally it also expected to produce enough surplus for export of Fresh Apples.

India’s Agri Exports in Global Context

World agricultural trade has been relatively stagnant in the last five years (2013-2017). The sharp drop in oil prices was a major contributor to softening of global agricultural commodity prices.

In similar vein, India’s agricultural trade1 dropped by -5% CAGR from US$ 36 Billion in FY13 to US$ 31 Billion in FY172 . However, a comparative analysis of India’s ten year agri exports reveals an
encouraging picture.

Indian agricultural exports grew at a whopping 9% compared to China (8%), Brazil (5.4%) and US (5.1%) between 2007 and 2016. During this period, exports of coffee, cereals, horticultural produce doubled;
while exports of meat, fish, processed products grew between three to five times.

Between the early-1970s and the late-nineties, India’s annual farm Gross Domestic Product (GDP) expanded from about $25 billion to over $100 billion. During this initial period, the growth was sluggish and it was largely cereals-centric, limited to wheat and rice.

However, between 2000 and 2014, the country’s agricultural production has surged from $101 billion to $367 billion, driven mainly by high-value segments such as horticulture, dairy, poultry and inland
aquaculture.

India’s export basket is a diversified mix led by marine products (US$ 5.8 Bn), meat (US$ 4 Bn) and rice (US$ 6 Bn) which together constitute 52% of its total agri exports. While India occupies a leading
position in global trade of aforementioned agri products, its total agri export basket accounts for little over 2% of world agri trade, estimated at US$ 1.37 Trillion.

Apart from global macroeconomic volatility, India’s domestic policies largely aimed at food security and price stabilization at times are also perceived as impeding trade, innovation and perversely food
security itself. Lack of consistent policies in the areas of farm production, support prices and R&D to inland transportation, exit point infrastructure and export restrictions have the potential to result in uncertainty among the stakeholders and loss of opportunity.

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It is proposed that the agricultural export policy must focus on promotion of value added, indigenous and tribal products. As highlighted in the previous sections, India’s export basket is dominated by products with little or no processing or value addition.

Stakeholders have recommended for financial support for commodities identified in the indigenous category which mainly fall under SHEFEXIL. These include non-forest produce, wild herbs, medicinal
plants, extracts, lac, guargum, essential oils etc.

Stakeholders have suggested to the union government a financial package for development and research on value added cashew products such as cashew apple jams and pastes, flavoured cashew, etc.

Import situation:

India imported about USD 25 billion worth Agricultural products in 2016-17. Main items of import are Edible oils (USD 11 billion), Pulses (USD 4.3 billion), Raw Cashew, Almond, Walnut and Pistachios (USD 2.2 billion), Wheat (USD 1.3 billion), Coffee, Tea and Spices (USD 750 million), Apples (USD 300 million), Cocoa (USD 230 million).

AGRI EXPORT POLICY- OBJECTIVE AND VISION

• The National Agriculture Export Policy is formulated in line with the vision to double the farmer’s income and increase the share of agricultural exports from present ~US$ 30+ Billion to ~US$ 60+ Billion
by 2022.

• To boost high value and value added agricultural exports, focusing on perishables. To promote novel indigenous, Organic, ethnic traditional and non-traditional categories.

• To provide an institutional mechanism for tackling market access barriers and deal with sanitary and phytosanitary issues.

• To become one of the top 10 exporting countries of agricultural products and strive to double India’s share in world agri exports.

• Focus on export centric clusters for integrated Commodity Focus Value Chain and Infrastructure Development.

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