India shifts export focus to processed fruits, vegetables for better gains

fruit and vegetables market, Inflation
India is gradually shifting its focus from the export of fresh horticulture products to processed ones for better realisation and to beat the stringent import quality norms set by West Asian and European countries.

Data compiled by the Agricultural and Processed Food Export Development Authority (Apeda) showed an over 15 per cent decline in export of fresh vegetables to $581 million during April-December 2017 from $686 million in the year-ago period. Export of processed vegetables, however, rose 3.9 per cent to $197 million during the period from $190 million in the same period last year.

Similarly, export of fresh fruits declined 4.3 per cent to $391 million during the first nine months of the current financial year from $408 million a year ago. Shipment of processed fruits and juices rose 8.3 per cent to $460 million during the period from $425 million in the year-ago period.

“Many countries have imposed stringent quality norms, which make it difficult for exporters of fresh fruits and vegetables, since most shipments are done by medium-scale traders. In case of processed fruits and vegetables, however, the involvement of the corporate sector brings with it an adherence to quality. Hence, shipping of fresh fruits and vegetables is gradually becoming challenging but exporting their processed variants is easier,” said Ajay Sahai, director-general and CEO, Federation of Indian Export Organisation.

Frequent policy shifts are also responsible for the decline in export of fresh vegetables. In November 2017, the government levied a minimum export price of $850 a tonne on onion, which contributes nearly half of India’s fresh vegetable exports. Besides, the demand for fresh fruits and vegetables from neighbouring countries, including Bangladesh and Nepal, has declined over the last few months.

The 18 per cent goods and services tax (GST) on air freight of fresh vegetables, which was removed recently, also affected exports during the first nine months of 2017-18.
food graph
“Apart from the increase in realisation, value-added products offer better shelf life. The government has also offered several benefits in terms of incentives on installation of plant and machinery for food processing.

This has encouraged processing of raw fruits and vegetables,” said an employee of Jalgaon-based Vaishno Fruit Company, an exporter of fresh and processed food.

The government has also introduced mega food parks for converting fresh fruits and vegetables into value-added products. Gradual increase in food processing is set to reduce damage after harvest, estimated at around 30 per cent of India’s overall farm production.

“India has grown significantly in the value-added product segment. But the decline in export of fresh fruits and vegetables has not been made up by value-added exports. For that to happen, we need to make efforts,” said Ajit Shah, president, Horticulture Exports Association.

In terms of quality, the European Union has released new pesticide residue limits for all agricultural commodities, which are difficult to meet at the farm level. Also, South Korea has issued a fresh inspection order for India’s drumstick exports.

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