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Subject: Agriculture

  • [pib] Nutrient Based Subsidy (NBS) for P&K Fertilizers

    The Cabinet Committee on Economic Affairs has approved the proposal of the Department of Fertilizers for fixation of Nutrient Based Subsidy Rates for P&K Fertilizers for the year last quarter of the year 2021-22.

    An aspirant from rural agrarian background is quite habitual to hear about NPK 10-26-26, 20-20-0-13 & 12-32-16. They often get to find the plastic gunny bags mentioning this!

    Nutrient Based Subsidy (NBS)

    • The NBS Scheme for fertilizer was initiated in the year 2010 and is being implemented by the Department of Fertilizers.
    • Under the scheme, a fixed amount of subsidy decided on an annual basis is provided on each grade of subsidized P&K fertilizers, except for Urea based on the nutrient content present in them.
    • It is largely for secondary nutrients like N, P, S and K and micronutrients which are very important for crop growth and development.
    • In India, urea is the only controlled fertilizer and is sold at a statutory notified uniform sale price.

    What is NPK?

    • So now that you know what the numbers on fertilizer mean, you need to know why NPK is important to your plants.
    • All plants need nitrogen, phosphorus, and potassium to grow. Without enough of any one of these nutrients, a plant will fail.
    1. Nitrogen (N): It is largely responsible for the growth of leaves on the plant.
    2. Phosphorus (P): It is largely responsible for root growth and flower and fruit development.
    3. Potassium (K): It is a nutrient that helps the overall functions of the plant perform correctly.
    • Knowing the NPK values of fertilizer can help you select one that is appropriate for the type of plant you are growing.

    What NBS provides?

    • Fixing MRP of NPK fertilizers: The scheme allows the manufacturers, marketers, and importers to fix the MRP of the Phosphatic and Potash fertilizers at reasonable levels.
    • Maintaining stock level: The MRP will be decided considering the domestic and international prices of P&K fertilizers, inventory level in the country and the exchange rates.
    • Inflation control: The NBS ensures that an adequate quantity of P&K is made available to the farmers at a statutory controlled price.

    Issues with NBS

    • Leaves urea: Urea which the most widely used, is left-out in the scheme and hence it remains under price control as NBS has been implemented only in other fertilizers.
    • Cost on exchequer: Fertilizer subsidy is the second-biggest subsidy after food subsidy.
    • Costs on Economy and Environment: The NBS policy is not only damaging the fiscal health of the economy but also proving detrimental to the soil health of the country.
    • Black marketing: Subsidised fertilizers is getting diverted to bulk buyers/traders or even non-agricultural users such as plywood and animal feed makers.

    Back2Basics: Soil Health Card (SHC)

    • Soil Health Card (SHC) scheme is promoted by the Department of Agriculture & Co-operation under the Ministry of Agriculture and Farmers’ Welfare.
    • An SHC is meant to give each farmer soil nutrient status of his/her holding and advice him/her on the dosage of fertilizers and also the needed soil amendments, that s/he should apply to maintain soil health in the long run.
    • SHC is a printed report that a farmer will be handed over for each of his holdings.
    • It will be made available once in a cycle of 2 years, which will indicate the status of soil health of a farmer’s holding for that particular period.
    • The SHC given in the next cycle of 2 years will be able to record the changes in the soil health for that subsequent period.

    Parameters of SHC:

    • N, P, K (Macro-nutrients)
    • Sulfur (S) (Secondary- nutrient)
    • Zn, Fe, Cu, Mn, Bo (Micronutrients)
    • pH, EC (Electrical conductivity) , OC (Organic content)

    Try this PYQ:

    The nation-wide ‘Soil Health Card Scheme’ aims at:

    1. expanding the cultivable area under irrigation.
    2. enabling the banks to assess the quantum of loans to be granted to farmers on the basis of soil quality.
    3. checking the overuse of fertilizers in farmlands.

    Which of the above statements is/are correct?

    (a) 1 and 2 only

    (b) 3 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

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  • What is Palk Bay Scheme?

    The Union Government is considering increasing the unit cost of deep-sea fishing vessels under the Palk Bay scheme to make it more attractive to fisherfolk.

    Palk Bay Scheme

    • The Palk Bay Scheme is the official scheme for diversification of trawl fishing boats from Palk Strait into deep sea fishing boats.
    • It is aimed at encouraging fishermen to take up deep-sea fishing and put an end to disputes arising between the India and Sri Lanka.
    • The project helps fishermen in the Palk Straits, who are not exposed to deep-sea fishing, to venture deep into the Indian Ocean, Arabian sea and other deep-sea areas to look for fish like tuna that are in high demand.

    Why need such a scheme?

    • Bottom trawling, an ecologically destructive practice, involves trawlers dragging weighted nets along the sea-floor, causing great depletion of aquatic resources.

    Key components of the scheme

    • The project aims to replace all trawler boats and introduce over 2,000 deep sea fishing boats in a course of five years.
    • The scheme, under the aegis of Blue Revolution scheme – is funded by the Centre – 50 per cent and state government – 20 per cent for a boat costing Rs 80 lakh.
    • Of the balance 30 per cent, 10 per cent is contributed by the beneficiary (fisherman), and the remaining 20 per cent is funded by banks.

    Must read:

    [Burning Issue] India- Sri Lanka Fishermen Issues

     

     

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  • Seeding a data revolution in Indian Agriculture

    In June this year, two significant documents relating to the Indian agriculture sector were released.

    What are the reports about?

    • The first is a consultation paper on the India Digital Ecosystem of Agriculture (IDEA) and the second on Indian Agriculture: Ripe for Disruption from a private organisation, Bain and Company.
    • Through their work, these reports have depicted the agriculture reforms announced by the union government as a game-changer in the agriculture sector.

    Challenges highlighted

    The major challenges of the agriculture sector are:

    1. Food Sufficiency but Nutrition Deficiency
    2. High import of edible oil and oilseeds
    3. Yield plateaus
    4. Degrading soil, Water stress
    5. Inadequate market infra/linkages
    6. Unpredictable, volatile prices
    7. Post-harvest losses, wastages
    8. Lack of crop planning due to information asymmetry

    Key takeaway: Way for doubling farmers income

    • These reports in short argues that benefiting from the huge investments into the agri-ecosystem, doubling farmers’ income targets can be achieved in near future.
    • The Indian agriculture sector in future will encompass farm to fork and pave the way for a single national market with a national platform with better connection between producer and consumers.

    The forecast

    • The Bain report is a data-based prediction on agri-business scenarios, anchored to the agricultural set-up at present and predicting its future trajectories in another 20 years.
    • It includes targeting the production of alternative proteins, and food cell-based food/ingredients and initiating ocean farming, etc.
    • The report has a ‘today forward– future back approach’ and predicts a drastic investment opportunity development by 2025.
    • The agriculture sector (currently worth $370 billion), is estimated to receive an additional $35 billion investment.

    The two enabling conditions for such investment opportunities are:

    1. Changes in the regulatory framework, especially recent changes in the Farm Acts and
    2. Digital disruption

    The IDEA of integration

    • Digital disruption: The blueprint of “digital agriculture” is similar to the digital disruption mentioned in the Bain report.
    • Integration: Eventually, the farmer and the improvement of farmers’ livelihood is the aim of the IDEA concept and it is proposed to happen through tight integration of agri-tech innovation and the agriculture industry.
    • Enabling conditions: To be precise, the IDEA concept profounds the creation of second enabling conditions (which is described in the Bain report).
    • Openness of data: The IDEA principles explicitly talk about openness of data, which means open to businesses and farmers, indicating the kind of integration it aims at.
    • Value-added innovative services: by agri-tech industries and start-ups are an integral part of the IDEA architecture.
    • Data architecture: The services listed in the document (to be available on the platform) are equally important data for farmers and businesses.

    A thread of digital disruption

    • The IT industry has opposition to IDEA mainly due to the ethics of creating a Unique Farmer ID based on one’s Aadhaar number and also the potential for data misuse.
    • Beyond the news coverage about the prospects of achieving the goal of Doubling Farmers Income on which the present government has almost lost its hope.

    Issues with these reports

    • The Bain report has not been widely discussed — at least in the public domain.
    • The assumptions used by authors especially for its ‘future back approach’, need more or less focusing on widespread food production in controlled environments.
    • The emission, energy, and other resource footprints and sustainability issues around these techniques are not adequately studied.

    Yet these reports are important

    • The report has convincingly demonstrated the business opportunity available in supply chains between farm to APMC mandi and mandi to the customer.
    • This can be realised with the support of digital disruption and the latest agriculture reforms.
    • Both these reports heavily rely on digital disruption to improve farmers’ livelihoods, without discussing how much farmers will be prepared to benefit from the emerging business.

    An unconvincing ‘how’

    • Digital divide: The fact is that a majority of small and marginal farmers are not technology-savvy.
    • No capacity building: That most of them are under-educated for capacity building is ignored amidst these ambitious developments.
    • Unrealistic assumptions: The Bain report relies on the general assumption that more investments into the agriculture sector will benefit farmers; ‘but how’ has not been convincingly answered.
    • Overemphasis on technology: Similarly, how the technology fix will help resolve all the issues of Indian agriculture listed at the beginning of the report is unclear in the IDEA concept.
    • Reluctance by farmers: These reports ignore the protest of farmers against the reforms without considering it as a barrier or risk factor resulting in a repealing of these new farm laws.

    Way ahead: Focus on the farmer

    • A data revolution is inevitable in the agriculture sector, given its socio-political complexities.
    • However, we cannot just count on technology fixes and agri-business investments for improving farmers’ livelihoods.
    • There need to be immense efforts to improve the capacities of the farmers in India – at least until the educated young farmers replace the existing under-educated small and medium farmers.
    • This capacity building can be done through a mixed approach through FPOs and other farmers’ associations where technical support is available for farmers.

    Conclusion

    • Considering the size of the agriculture sector of the country this is not going to be an easy task but would need a separate program across the country with considerable investment.

     

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  • [pib] River Ranching Programme

    The Union Minister for Fisheries, Animal Husbandry & Dairying, is set to launch the River Ranching Programme in Uttar Pradesh under the Namami Gange Programme.

    What is River Ranching?

    • River Ranching is a form of aquaculture in which a population of a fish species (such as salmon) is held in captivity for the first stage of their lives.
    • They are then released, and later harvested as adults when they return from the sea to their freshwater birthplace to spawn.

    Objective

    The key objectives of the program are:

    • To sustain and conserve the biodiversity in the river.
    • Facilitate regular stocking of fingerlings of cultivable carps to enhance productivity
    • Increase fish production
    • Enhance income and livelihood opportunities to communities’ dependent on these resources

    Why need such a program?

    • River ranching helps in achieving sustainable fisheries, reducing habitat degradation, conserving biodiversity, maximising social-economic benefits and would also remove factors causing pollution.
    • In this activity, different species of fish are released in the river, which destroy factors that increase the level of nitrogen.
    • These fishes will also aid in maintaining the cleanliness of the river as they feed on organic remnants.

    Where is the scheme being launched?

    • In Uttar Pradesh, about 15 lakh fish fingerlings of native carp species shall be simultaneously released into the river in 12 districts by the department.
    • These districts include Bulandshahr/Hapur, Hardoi, Bijnor, Amroha, Fatehpur, Kanpur, Badayun, Kaushambi, Prayagraj, Mirzapur, Varanasi and Ghazipur.
    • Four other states namely Uttarakhand, Orissa, Tripura and Chhattisgarh will also witness the launching of nationwide River Ranching program.

     

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  • [pib] National Digital Livestock Mission

    The Union Minister of State Fisheries, Animal Husbandry & Dairying unveiled the National Digital Livestock Mission Blueprint.

    National Digital Livestock Mission

    • The NDLM would be a digital platform developed by Dept. of Dairy and Animal Husbandry on the foundation of the existing Information Network for Animal Productivity and Health (INAPH).
    • It aims to create a farmer-centric, technology-enabled ecosystem where the farmers are able to realize better income through livestock activities with the right information.
    • The bedrock of NDLM will be the unique identification of all livestock, which will be the foundation for all the state and national level programmes including domestic and international trade.
    • The farmers will be able to effortlessly access the markets, irrespective of their location or holdings through this digital platform as a wide-range of stake-holders will be connected in this ecosystem.
    • This system will also include robust animal breeding systems, nutrition, disease surveillance, disease control programmes and a traceability mechanism for animals and animal products.

    Why need such mission?

    • The livestock sector has a unique combination of being the backbone of rural livelihood.
    • The growth would have been a lot better if there were concerted efforts to harmonise programmes across the country in order to create an ecosystem that is conducive for growth of the sector.
    • This has been the main idea behind the deployment of NDLM, keeping the welfare of the farmer at the core.

    Back2Basics: National Livestock Mission

    • National Livestock Mission is an initiative of the Ministry of Agriculture and Farmers’ Welfare.
    • The mission, which commenced from 2014-15, has the objective of sustainable development of the livestock sector.
    • NABARD is the subsidy channelising agency for following schemes, under Entrepreneurship Development & Employment Generation (EDEG) component of National Livestock Mission.
    1. Poultry Venture Capital Fund (PVCF)
    2. Integrated Development of Small Ruminants and Rabbit (IDSRR)
    3. Pig Development (PD)
    4. Salvaging and Rearing of Male Buffalo Calves (SRMBC)
    5. Effective Animal Waste Management
    6. Construction of Storage Facility for Feed and Fodder

     

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  • Revealing India’s actual farmer population

    Context

    Depending on the source, there is a wide variation in the number of farmers in India.

    What is the extent of variation?

    • The last Agriculture Census for 2015-16 placed the total “operational holdings” in India at 146.45 million.
    • The Pradhan Mantri-Kisan Samman Nidhi (PM-Kisan) scheme has 110.94 million beneficiaries.
    • National Statistical Office’s Situation Assessment of Agricultural Households (SAAH) report for 2018-19 pegs the country’s “agricultural households” at 93.09 million.

    What explains the variation?

    • This wide variation has largely to do with methodology.
    • The Agriculture Census looks at any land used even partly for agricultural production, the land does not have to be owned by that person (“cultivator”), who needn’t also belong to an “agricultural household”.
    • The SAAH report, on the other hand, considers only the operational holdings of agricultural households.
    • Members of a household may farm different lands.
    • The SAAH takes all these lands as a single production unit.
    • It does not count multiple holdings if operated by individuals living together and sharing a common kitchen.
    • Accounting for only “agricultural households”, while not distinguishing multiple operating holdings within them, brings down India’s official farmer numbers to just over 93 million.
    • Expansive definition: SAAH’s definition of “agricultural households” is expansive.
    • It covers households having at least one member self-employed in agriculture and whose annual value of produce exceeds Rs 4,000.
    • Such self-employment needs to be for only 30 days or more during the survey reference period of six months.

    So, what is the actual number of farmers?

    • The estimate of actual number is based on the following methodology.
    • The SAAH report gives data on agricultural household income from farm and non-farm sources, both state-wise and across different land-possessed/operational holding size classes.
    • From the above data, we can categorise “full-time/regular” farmers as those households whose net receipts from farming are at least 50 per cent of their total income from all sources.
    • The SAAH report also has state-wise estimates of agricultural households for each land-possessed size class.
    • By taking only those size classes in which the dependence ratios are higher than (or close to) 50 per cent, and adding up the corresponding estimated number of agricultural households, we are able to arrive at the total “full-time/regular” farmers for each state.
    • Following the above methodology, India’s “serious” farmer population, in turn, adds up to 36.1 million, which is hardly 39 per cent of the SAAH estimate.

    Policy implications of having actual numbers of farmers significantly lower than estimated

    • If the actual number of farmers deriving a significant share of their income from agriculture per se is only 40 million a host of policy implications follow.
    • Targeted policy: One must recognise that farming is a specialised profession like any other.
    • “Agriculture policy” should, then, target those who can and genuinely depend on farming as a means of livelihood.
    • Minimum support prices, government procurement, agricultural market reforms, fertiliser and other input subsidies, Kisan Credit Card loans, crop insurance or export-import policy on farm commodities will matter mainly to “full-time/regular” farmers.
    • Land size matters: The SAAH report reveals that the 50 per cent farm income dependence threshold is crossed at an all-India level only when the holding size exceeds one hectare or 2.5 acres.
    • This is clearly the minimum land required for farming to be viable, which about 70 per cent of agricultural households in the country do not possess.
    • Policy for labourers: What should be done for this 70 per cent, who are effectively labourers and not farmers?
    • Their problems cannot be addressed through “agriculture policy”.
    • The scope for value-addition and employment can be more outside than on the farm — be it in aggregation, grading, packaging, transporting, processing, warehousing and retailing of produce or supply of inputs and services to farmers.

    Consider the question “What explains the wide variation in the estimates of the number of farmers in India? What are the implications of such variations for agriculture policy?”

    Conclusion

    Agriculture policy should aim not only at increasing farm incomes but also adding value to produce outside and closer to the farms. A more sustainable solution lies in reimagining agriculture beyond the farm.

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  • PM-KUSUM

    Context

    The Union Minister of Power, New and Renewable Energy recently reviewed the progress of the PM-KUSUM scheme and reaffirmed the government’s commitment to accelerating solar pump adoption.

    Background

    • It was launched in 2019.
    • PM-KUSUM aims to help farmers access reliable day-time solar power for irrigation, reduce power subsidies, and decarbonise agriculture.
    • PM-KUSUM provides farmers with incentives to install solar power pumps and plants in their fields.
    • Three deployment models: Pumps come in three models: off-grid solar pumps solarised agricultural feeders, or grid-connected pumps.
    • Off-grid pumps have been the most popular, but the nearly 2,80,000 systems deployed fall far short of the scheme’s target of two million by 2022.
    • The other two models are also worth scaling up for they allow farmers to earn additional income by selling solar power to discoms, and discoms to procure cheap power close to centres of consumption.

    Challenges

    • Awareness challenge: Barriers to adoption include limited awareness about solar pumps.
    • Upfront contribution: The other barrier includes farmers’ inability to pay their upfront contribution.
    • Limited progress on two models: Progress on the other two models has been rather poor due to regulatory, financial, operational and technical challenges.

    Suggestions

    • Extend the scheme’s timelines: Most Indian discoms have a surplus of contracted generation capacity and are wary of procuring more power in the short term.
    • Extending PM-KUSUM’s timelines beyond 2022 would allow discoms to align the scheme with their power purchase planning.
    • Level playing field: Discoms often find utility-scale solar cheaper than distributed solar (under the scheme) due to the latter’s higher costs and the loss of locational advantage due to waived inter-State transmission system (ISTS) charges.
    • To tackle the bias against distributed solar, we need to address counter-party risks and grid-unavailability risks at distribution substations, standardise tariff determination to reflect the higher costs of distributed power plants, and do away with the waiver of ISTS charges for solar plants.
    • Streamline regulation: We need to streamline land regulations through inter-departmental coordination.
    •  States should constitute steering committees comprising members from all relevant departments for this purpose.
    • Financing farmers contribution:  There is a need to support innovative solutions for financing farmers’ contributions.
    • Many farmers struggle to pay 30-40% of upfront costs in compliance with scheme requirements.
    • To ease the financial burden on farmers, we need out-of-the-box solutions.
    • Grid-connected solar pumps: Current obstacles to their adoption include concerns about their economic viability in the presence of high farm subsidies and farmers’ potential unwillingness to feed in surplus power when selling water or irrigating extra land are more attractive prospects.
    • Further, the grid-connected model requires pumps to be metered and billed for accounting purposes but suffers from a lack of trust between farmers and discoms.
    • Adopting solutions like smart meters and smart transformers and engaging with farmers can build trust and address some operational challenges.

    Conclusion

    These measures, combined with other agriculture schemes and complemented by intensive awareness campaigns, could give a much-needed boost to PM-KUSUM.

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  • [pib] Crop varieties with special traits

    In an endeavor to create mass awareness for adoption of climate resilient technologies,  PM will dedicate 35 crop varieties with special traits to the Nation.

    About Crop Varieties with Special Traits

    • The crop varieties with special traits have been developed by the Indian Council of Agricultural Research (ICAR) to address the twin challenges of climate change and malnutrition.
    • Thirty-five such crop varieties with special traits like climate resilience and higher nutrient content have been developed in the year 2021.
    • These special traits crop varieties also include those that address the anti-nutritional factors found in some crops that adversely affect human and animal health.

    Which are these varieties?

    • Drought tolerant variety of chickpea
    • Wilt and sterility mosaic resistant pigeonpea
    • Early maturing variety of soybean
    • Disease resistant varieties of rice
    • Biofortified varieties of wheat, pearl millet, maize and chickpea, quinoa, buckwheat, winged bean and faba bean
    • Pusa Double Zero Mustard 33
    • Canola quality hybrid RCH 1 with <2% erucic acid and <30 ppm glucosinolates and
    • Soybean variety free from two anti-nutritional factors namely Kunitz trypsin inhibitor and lipoxygenase.

    Try answering the PYQ:

    The Genetic Engineering Appraisal Committee is constituted under the:

    (a) Food Safety and Standards Act, 2006

    (b) Geographical Indications of Goods (Registration and Protection) Act, 1999

    (c) Environment (Protection) Act, 1986

    (d) Wildlife (Protection) Act, 1972

     

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  • MSP is not the way to increase farmers’ income

    Context

    The recently released data for 2018-19 Situation Assessment Survey (SAS) of agricultural households paints a bleak picture for doubling farmers’ income.

    Background

    • Prime Minister Narendra Modi set out an ambitious target to double farmers’ incomes by 2022-23.
    • The Ashok Dalwai Committee made it clear that the target of doubling farmers’ incomes was in real terms.
    •  Required rate: The committee clearly stated that a growth rate of 10.4 per cent per annum would be required to double farmers’ real income by 2022-23.
    • The goal was to be achieved over seven years with the base year of 2015-16.
    • According to an estimate of farmers’ income for 2015-16 by NABARD in 2016-17, the average monthly income of farmers for 2015-16 was Rs 8,931.
    • However, unless a similar survey is conducted in 2022-23, we won’t really know what happened to the target of doubling farmers’ real income.

    Determining the growth rate of farmers income

    • As per Situation Assessment Survey (SAS) of agricultural households for 2018-19, an average agricultural household earned a monthly income of Rs 10,218 in 2018-19 (July-June) in nominal terms.
    • We have a similar SAS for 2012-13, when the nominal income was Rs 6,426.
    • In nominal terms, the compound annual growth rate (CAGR) turns out to be 8 per cent between 2012-13 to 2018-19.
    • Choice of deflator: If one deflates nominal incomes by using CPI-AL (consumer price index for agricultural labour), which should be the logical choice, then the CAGR turns out to be just 3 per cent.
    • If one uses WPI (wholesale price index of all commodities), the CAGR in real incomes turns out to be 6.1 per cent.
    • This vast difference is just due to the choice of deflator.
    •  However, there is another SAS that the NSO conducted for 2002-03.
    • When one compares CAGR in farmers’ real income (deflated by CPI-AL) over 2002-03 to 2018-19, it turns out to be 3.4 per cent (and 5.3 per cent if deflated by WPI).
    • A better method would have been to look at average annual growth rates (AAGR), if yearly data was available.
    • The AAGR for agri-GDP is available and at an all-India level, between 2002-03 to 2018-19, it turns out to be 3.3 per cent.

    Policy message about farmers income from SASs

    • One, the share of income from rearing animals (this includes fish) has gone up dramatically from 4.3 per cent in 2002-03 to 15.7 per cent.
    • Two, the share of income from the cultivation of crops has decreased from 45.8 per cent to 37.7 per cent.
    • Three, the share of wages and salaries has gone up from 38.7 per cent to 40.3 per cent.
    • Four, the share of income coming from non-farm business has come down from 11.2 per cent to 6.4 per cent.

    Way forward

    • Survey results indicates that the scope for augmenting farmers’ incomes is going to be more and from rearing animals (including fisheries).
    • There is no minimum support price (MSP) for products of animal husbandry or fisheries and no procurement by the government.
    •  It is demand-driven, and much of its marketing takes place outside APMC mandis.
    • This is the trend that will get reinforced in the years to come as incomes rise and diets diversify.
    • Those who advocate raising the MSP of grains and government procurement, irrespective of increasing grain stocks to more than double the buffer stocking norms, are living in the past — and advocating a very expensive food system.
    • That will fail sooner or later.
    • Wisdom lies in investing more in animal husbandry (including fisheries) and fruits and vegetables, which are more nutritious.
    • The best way to invest is to incentivise the private sector to build efficient value chains based on a cluster approach.

    Consider the question “Why the role of MSP in increasing the farmers’ income has been repeatedly questioned? What are the alternatives to achieve the doubling of farmers’ income?”

    Conclusion

    Too much focus on increasing MSP to increase farmers’ income is not helping the cause. What we need is an investment in animal husbandry (including fisheries) and fruits and vegetables.

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  • Agri exports in India

    Context

    The Indian government has been encouraging agricultural exports to meet an ambitious target of $60bn by 2022.

    India’s agri-exports

    • The Ministry of Food Processing Industries shows that the contribution of agricultural and processed food products in India’s total exports is 11%.
    • Primary processed agricultural commodities form the majority share.
    • India’s export earnings will increase by focusing more on value-added processed food products rather than primary processed agricultural commodities (Siraj Hussain, 2021).
    • From 2015-16 to 2019-20, the value of agricultural and processed food increased significantly from $17.8bn to $20.65bn.
    • The Indian agricultural economy is shifting from primary to secondary agriculture where the focus is more on developing various processed foods.

    Changes in India’s agricultural export basket

    • Traditionally, Basmati rice is one of the top export commodities.
    • However, now there is an unusual spike in the export of non-basmati rice.
    • In 2020-21, India exported 13.09 million tonnes of non-basmati rice ($4.8bn), up from an average 6.9 million tonnes ($2.7bn) in the previous five years.
    • Indian buffalo meat is seeing a strong demand in international markets due to its lean character and near organic nature.
    • The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.

    Challenges in Increasing agri-export

    • Lack of comparative advantage: The export of processed food products has not been growing fast enough because India lacks comparative advantage in many items.
    •  Domestic prices of processed food products are much higher compared to the world reference prices.
    • Non-tariff measures: The exporters of processed food confront difficulties and non-tariff measures imposed by other countries on Indian exports (Siraj Hussain, 2021).
    • Some of these include mandatory pre-shipment examination by the Export Inspection Agency being lengthy and costly.
    • Compulsory spice board certification being needed even for ready-to-eat products.
    • Lack of strategic planning of exports by most State governments.
    • Lack of a predictable and consistent agricultural policy discouraging investments by the private sector.
    • Prohibition of import of meat- and dairy based-products in most of the developed countries.
    • Withdrawal of the Generalised System of Preference by the U.S. for import of processed food from India.

    Consider the question “What are the challenges facing export of processed foods from India? Suggest the way forward.”

    Way forward

    • The main objective of the Agriculture Export Policy is to diversify and expand the export basket so that the export of higher value items, including perishables and processed food, be increased
    • Support to industry: The policy needs to nurture food processing companies, ensuring low cost of production and global food quality standards, and creating a supportive environment to promote export of processed food.
    • Focus on reputed brands: Reputed Indian brands should be encouraged to export processed foods globally as they can comply with the global standard of codex.
    • Indian companies should focus on cost competitiveness, global food quality standards, technology, and tap the global processed food export market.

    Conclusion

    India has competitive advantages in various agricultural commodities which can be passed onto processed foods. It has the potential to become a global leader in the food processing sector.

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