Their argument is that with several countries showing some sort of aversion to Chinese goods and products, India’s farm exports have a great opportunity to capture markets that are dominated by China.
Moreover, if the country manages to smoothen the supply chains, handle the much-vaunted phytosanitary issues and clear port hurdles and other bottlenecks quickly, it has a good chance of boosting its farm exports, while the same cannot be said about other goods, which are seeing a slump in global demand.
In the case of commodities such as buffalo meat and allied products, industry players said that despite the massive drop the past two months, there is some hope on the horizon as demand from Indonesia, the Philippines and West Asia could start picking up by end-June or July.
Buffalo meat, rice, fruits and vegetables, pulses and dairy products comprised more than 60 per cent of the total value of India’s agriculture exports
in 2018-19, according to data from Agricultural and Processed Food Products Export Development Authority (Apeda).
However, in the case of fruits such as grapes and mangoes, the exports have seen a drop and there is little possibility of any big improvement, the performance of others such as rice gives some hope.
In April 2020, data showed that while the export of all other agriculture commodities was dropping sharply, rice (basmati and non-basmati) exports showed a marginal increase, albeit in rupee terms.
Though several experts said that the small rise is mainly due to the rupee weakening against the dollar, Ajai Sahai, Secretary General of Federation of Indian Export Organisation (FIEO) has a different take.
He says good demand from middle-eastern countries such as United Arab Emirates and Saudi Arabia, along with Russia, due to Ramzan, has pushed up rice exports while exports of all other commodities were falling.
Going forward, Sahai believes that not only rice, but exports of meat, marine products, fresh fruits and vegetables and floriculture could also show an uptick as people in several countries are looking to move away from Chinese food and eatables. So, India does have a chance to do well.
“I’m not saying things will improve today itself but from the second quarter of 2020-21, agriculture exports
could see an upward movement if India manages to replace China which is a major exporter of farm goods in some places,” Sahai said.
On the much-talked-about phytosanitary issues, Sahai agrees that there are problems, but believes that Indian exporters of late have become aware of the requirements and are increasingly trying to meet them.
“On a net-net basis, I think agriculture exports in 2020-21 will remain at around $38-39 billion and might not see a big slump,” he said.
Exports to Iran under a cloud
However, rating agency Icra in a statement issued on Wednesday said that subdued demand from Iran and weak outlook for the domestic hotels and restaurant industry due to the prolonged lockdown has clouded the basmati rice industry’s prospects in 2020-21.
Severe Covid outbreak during early 2020 in Iran, the biggest export destination, resulted in some disruption in supplies because of logistical issues amid lockdown, Icra said.
“With reduced availability of subsidised foreign currency to Iranian private importers, the extent of compensation by the country’s government to support imports of Indian basmati remains to be seen. Moreover, depletion of reserves rupee payment mechanism over the next few months remains a significant concern for trade with Iran. The above factors peg the outlook for exports during the current fiscal on a weaker footing, even as demand from other consuming nations like Saudi Arabia and other Middle Eastern countries may witness moderate growth, thereby limiting the extent of de-growth in exports during FY2021,” Anupama Arora, Vice President and Sector Head, Icra said in the statement.
Clearly, while rice exports to Iran remains under cloud, demand from Saudi Arabia and other Middle Eastern countries could offset the expected de-growth in exports.
Something, which Sahai also pointed out earlier.
Sugar may see sweet times ahead
Sugar is another commodity, which is seeing in uptick in demand after a brief lull due to the Covid crisis.
According to a Reuters report, exports from India have seen an upward trajectory in the last few weeks due to good demand from Indonesia and Iran as the rupee slid to a record low, increasing exporters’ margins from overseas sales.
“In the last few days, Iran and Indonesia were buying for May and June shipments, ”Reuters quoted Rahil Shaikh, managing director of trading company MEIR Commodities India as saying.
Indian sugar mills have already dispatched over 90 per cent of the 4.1 million tonnes of contracts signed for the 2019-20 season that will end in September. The Central government has allowed mills to export almost 6 million tonnes of sugar this marketing year.
“I feel agriculture exports are low hanging fruits which should be well supported by the government and instead of putting its energies on all items of exports government should identify 10-15 major items which have consistently performed well and boost their export potential,” said Fauzan Alavi, vice president of All India Meat and Livestock Exporters Association.
Alavi said that in each month India exports around 100,000-110,000 tonnes of buffalo meat which has dropped to just 50 per cent in the last two months due to COVID-19 lockdown, but is expected to improve from June onwards as almost all abattoirs have started working.
“More, important there is no dearth of animals. In fact, it is the other way round farmers are selling off their cattle as incomes from other sources have dried up,” Alavi said.
He said by the year-end he is hopeful that the country will manage to export 1.1-1.2 million tonnes of buffalo meat and products.
India annually exports buffalo meat worth over Rs 25,000-26,000 crore that is one of the biggest items in its agricultural export basket since several years.
“To ensure that farmers aren’t at a loss though we have abundance of animals this year, we have decided not to lower the purchase rate or else the rearers will be at a loss,” Alavi said.