PERFORMANCE OF AGRICULTURAL EXPORT FROM INDIA

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2 Indo-Am. J. Agric. & Vet. Sci., 2014 ISSN D P Singh, 2014 Vol. 2, No. 1, March Meghana Publications. All Rights Reserved Research Paper PERFORMANCE OF AGRICULTURAL EXPORT FROM INDIA D P Singh 1 * *Corresponding Author: D P Singh drdpsingh.rau@gmail.com Agricultural exports witnessed an increase of Rs cr between and The policies of trade liberalization show a clear positive impact on exports of agricultural commodities from India. The share of total agricultural exports in total national exports was % in After that it declined continuously and accounted for 10.57% in The share of food grain groups in agricultural exports of India has shown an increasing trend with almost 4 times in 2000 to The share of food grains was 13.69% in It continuously fluctuates and reached up to 16.38% in Rice (basmati and non basmati) was major contributor, nearly 65%, in food grains group. Share of oil seeds exports in total agricultural exports was 13.64% with Rs cr in It continuously fluctuates and reached up to 14.50% with Rs cr in The share of horticultural commodities in agricultural exports was 6.31% with Rs cr value in It increased and reached 8.46% with Rs cr in The share of marine product was 22.22% with Rs cr value in It continuously decreased and reached 11.08% in , but in value terms it increase from Rs cr to cr. The share of spices in agricultural exports was 5.65% in It showed mixed trend and reached 6.89% in The share of beverages and tobacco was 13.40% in It decreased and reached 10.43% in The share of animal products was 5.87% in It showed mixed trend and reached 8.06% in The share of other agricultural commodities group was 19.22% in It showed mixed trend. It increased and reached up to 24.30% in This study provides many suggestions to the action at policy making, appropriate export promotion strategies and evolve ways and means of systematic growth of the agricultural commodities in international markets. Keywords: Agricultural exports, Policy making, International markets INTRODUCTION India s total agricultural product exports have a potentially large impact on world market. The Exports from India in value terms is about Rs. 846 thousand cr. Agricultural exports account for about 10.57% in total national exports and in 1 Department of Agricultural Economics, College of Agriculture, SKRAU, Bikaner. 39

3 , agricultural products valued at Rs cr were exported from the country. This indicates importance of agriculture in export sector. The agricultural commodities which have great role in India s agricultural export are cereals (mostly Basmati and non-basmati rice), coffee, spices, cashew, poultry and dairy products, and marine products are the prominent products of the country s total agricultural export. Meat and meat preparations, fruits and vegetables, floriculture and processed fruits and vegetables have recently shown strong growth in export. Indian agriculture exports have improved over the years in value terms but their share in total exports of India is declining continuously. The main reason behind this is better and faster development of secondary and tertiary sectors of the Indian economy as the country approaches on the path of development, ever increasing population of the country and stagnation in productivities of our major agriculture crops. Indian agriculture exports are mainly residual exports which mean that whatever is left after fulfilling the consumption requirement is exported. Such type of policy leads to large year to year instability in agriculture exports and their slower growth over the years. The Government of India, Ministry of commerce and Industry announces Export Import (EXIM) Policy after every five years. EXIM policy, in general, aims at developing export potential, improving export potential, improving export performance, encouraging foreign trade and creating favorable balance of payments position. The current EXIM policy covers the period The EXIM policy is updated every five year on March 31 and modifications, improvements and new schemes become effective from April 1 of every year. The policy aims are promoting exports and augmenting foreign exchange earnings and regulating exports wherever it is necessary for the purposes of either avoiding competition among the Indian exporters or ensuring domestic availability of essential item of mass consumption at reasonable prices. Keeping in view the above consideration research study entitled, Performance of agricultural exports from India was planned with specific objectives as: 1. To analyze the growth rate and the changes in the structure of export of agricultural commodities. 2. To analyze the instability in agricultural export. 3. To suggest suitable measures for improving export of agricultural export. METHODOLOGY Collection and Analysis of Data The secondary data regarding quantity, value and value of exported agricultural products overtime were collected from various publications and websites of Ministry of Agriculture, Govt. of India, Director General of Commercial Intelligence and Statistics, Ministry of Commerce, Kolkata for the period of 10 years (according to availability of data). The collected data were analyzed by using various statistical tools such as average, percentage etc., to achieve objectives of the study. Analysis of Growth Rate and Structural Change in Agricultural Export The growth rate of agricultural exports and of unit prices was arrived at using the exponential growth function of the form Y = ab t U t...(1) where, Y = Dependent variable for which growth rate is to be estimated / particular commodity group 40

4 a = Intercept exports overtime. b t u t = Regression coefficient and = Time variable = Error term The equation was estimated after transforming (1) as follows log y= log a + t log b + log u t...(2) Then, the percent compound growth rate (g) was calculated using the relationship g = (antilog of b 1) x (3) For structural change in agricultural export, the Commodities were classified into different structural groups on the basis of Director General of Commercial Intelligence and Statistics, Ministry of Commerce, and Kolkata methodology. In all eight commodity groups were formed. The commodities included in each structural group were as follows: 1. Foodgrain : Rice, Wheat, Pulses etc. 2. Oil seeds : Groundnut, castor oil, oil meal, etc. 3. Horticultural : Fruits and Vegetables commodities Seed, Fresh Fruits, Fresh Vegetables, Floriculture Products, etc. 4. Marine products : Marine products 5. Spices : Total Spices 6. Beverages and : Tea, Coffee, Tobacco Tobacco 7. Animal products : Poultry products, Dairy products, Meat and its preparation. 8. Others : Sugar, molasses, shellac and miscellaneous processed items, etc. Agricultural commodity structures were analyzed by estimating percentage contribution of these structural groups as well as important commodities in total earning of agricultural The commodity share in agricultural export of the economy towards major agricultural commodities exports were calculated as; Structure/commodity share where, CE in export = 100 TE CE = Commodity export during the specific period in value terms TE = Total export during the specific period in value terms INSTABILITY ANALYSIS To study the variability in agricultural export, coefficient of variation was used as a measure of variability. SD Coefficient of variation (cv) = 100 AM where, SD = Standard Deviation SD = Σ ( x x) n AM = Arithmetic Mean AM Σ = 2 ( x + x + x x ) 1 2 RESULTS AND DISCUSSION n 3 Growth Rate Analysis and Changes in the Structure of Export of Agricultural Commodities Growth Rate Analysis The total agricultural exports share in total national exports of India was 10.57% in A positive growth rate of basmati rice and n 41

5 other cereals represents growing exports of foodgrains. In absolute terms, the quantity of basmati rice and other cereals recorded a rise from and thousand tons in to and thousand tons in , respectively. Quantity wise India s foodgrain exports grew at compound growth rate of 10.98% for rice basmati and 47% for other cereals, whereas pulses, rice other than basmati and wheat showed negative growth rate of 4.10%, 9.20% and 71.80%, respectively. In value terms, it grew at a compound growth rate Table 1: Growth Rate of Different Agricultural Commodities ( to ) Group Commodities CGR Quantity F value Value F value Food Grain Pulses Rice Basmati * Rice other than Basmati Wheat * * Other cereals * * Oil seeds Groundnut ** * Castor oil ** * Sesamum oil * Niger seed ** Oil meal * Horticultural Fruits/vegetables seeds * Commodity Fresh fruits N A N A * Fresh vegetables N A N A * Processed vegetables N A N A * Processed Fruit Juice N A N A ** Floricultural Products N A N A * Marine products Marine Products ** Spices Total Spices * * Beverages & Tea * Tobacco Coffee * Tobacco unmanufactured * * Tobacco manufactured N A N A * Animal Products Dairy Product N A N A * Poultry Product N A N A * Meat and its Preparation N A N A * 42

6 Table 1 (Cont.) Group Commodities CGR Quantity F value Value F value Other Sugar Commodities Molasses Shellac Cashew nut shell liquid * * Cashew * Cotton raw including waste * * Jute N A N A Guar Gum * Paper/wood products N A N A * Miscellaneous Processed Products N A N A * of 3.30% for pulses, 20.57% for rice basmati, 0.02% for rice other than basmati and 49.60% for other cereals and wheat showed a negative growth rate of 67.81% (Table 1). During , the oil seed exports were thousand tons valued at crores and during , it had increased to thousand tons valued at crores. In absolute terms the groundnut, castor oil, sesamum oil, and oil meal exports registered a compound growth rate of 11.80%, 7.33%, 3.90%, and 13.10%, respectively, whereas niger seed export represent negative growth rate of 11.30%. In value terms groundnut, castor oil, sesamum oil, and oil meal exports registered a compound growth rate of 23.10%, 13.64%, 15%, and 20.10%, respectively, whereas niger seed export represent negative growth rate 4.20%, respectively. Thus, the Indian oil seed industry faced a changing scenario by exporting Rs cr in and approaching up to Rs cr in A positive growth rate of horticultural commodities represents a growing export market as given in Table 1 in quantity terms fruit/vegetables seed export is positive growth rate of 3.30%. Horticultural commodities export, in value terms grew at compound growth rate of 10.25% (processed fruit juice), 10.20% (fruits / vegetables seed), 21% (fresh fruits), 19.80% (fresh vegetables), 16.10% (processed vegetables), and 13.30% in (floricultural products) during last decade. In case of marine products exports, Indian marine product exports quantity grew at compound growth rate of 4.66%. In export value it grew at compound growth rate of 5.82% in It represents the positive growing exports markets of marine product. India spices export grew at compound growth rate 14.32% in quantity terms and 19.35% in value terms. It represents the growing exports market of Indian spices. In quantum Indian spices exports recorded a rise from thousand tons value at Rs cr during and increased to thousand tons value at Rs cr in Tea, coffee and tobacco are traditional export items of India. In case of beverages and tobacco exports tea, coffee and tobacco unmanufactured 43

7 represent a positive compound growth rate of 1.40%, 0.79% and 10.70% in quantity terms respectively. Whereas in value terms tea, coffee, tobacco unmanufactured and tobacco manufactured registered a positive compound growth rate 5.69%, 9.20%, 18.80% and 10.88%, respectively. Animal products exports share in total agricultural exports was 8.06% in and a positive growth rate of dairy product, poultry product and meat and its preparations were 23.60%, 14.20% and 18.80% in export value, respectively. It represents a growing export market of animal products. In case of other commodities exports, cashew nut shell liquid, cashew, guar gum and cotton raw grew at compound growth rate of %, 2.58%, 9.30% and 57.30%, respectively in quantity terms whereas sugar, molasses and shellac exports represent negative growth rate 3.11%, 7.40% and 0.70% in quantity terms. In value terms sugar exports grew at 2.52%, molasses 4.30%, shellac 2.40%, cashew nut shell liquid 23.10%, cashew 4.50%, cotton raw 58.60%, jute 6.40%, paper/wood products 17.20%, guar gum 15.50% and miscellaneous processed product 13.60%. During a positive growth rate of these commodities export represents a growing exports market of India. Changes in the Structure of Exports of Agricultural Commodities Changes in the structure of exports of agricultural commodities, all the exportable agricultural commodities were classified in eight groups, viz., Foodgrain group, Oilseed group, Horticultural group, Beverages and tobacco group, Marine products group, Spices group, Animal products group and Other commodities group. The commodities included in each of structural group were as follows: The first group was foodgrains group in which cereals like Rice basmati, Rice other than basmati, Wheat and other cereals and total pulses were included. Second structural group was oilseed group in which groundnut, castor oil, sesamum, niger seed, and oil meal were included. The horticultural commodities group included fruits and vegetables seeds, fresh fruits, fresh vegetables, processed fruit juice and floricultural products. The fourth structural group was marine products in which marine products were included and next was spices group in which total spices export from India were included. The beverages and tobacco group included tea, coffee, tobacco manufactured and tobacco unmanufactured. In the animal products group dairy products, poultry products and meat and its preparations were included. Last group was other commodities group in which remaining commodities like sugar, molasses, shellac, cashew nut shell liquid, cashew, cotton include waste, jute, paper/ wood products guar gum and miscellaneous processed products included, whose exports were irregular and in small quantities. In India like other developing countries, agriculture continues to be an important source of foreign exchange and revenue and for tapping the full potential of agricultural exports, it is essential that research and development should take place in such a way that it can have greater bearing on the production of a particular agricultural produce for the purpose of export on the one hand, and financial and fiscal incentives must be provided for exporting a particular produce after addressing all pre-harvesting and post harvesting concerns on the other. Table 2 shows the relative shares of different agricultural groups in the total agricultural export from India. Agricultural export witnessed an increase of Rs cr between and India s agricultural exports have continuously improved in over the period. The share of total agricultural exports in national export was 14.23% in After that, it continuously decline from 14.23% to 10.78% in and improve slightly to 12.05% in Later on it declined from 12.05% to 10.57% during The major factor behind the decline in total agricultural export was decrease 44

8 Table 2: Share of Different Agricultural Groups in the Agricultural Exports of India Food Grains Oil Seeds Horticultural Commodities Marine products Spices Beverages & Tobacco Animal products Others Agricultural Product Total Agricultural Export Value % Value % Value % Value % Value % Value % Value % Value % Value % in export of major agricultural groups such as Beverage and tobacco, Oilseed and Marine products together contributing 36.01% of total agricultural export during , whereas during these products provided a share of 49.26% in total agricultural export. However, the share of food grains, spices and animal products has increased from 13.69, 5.65 and 5.87% to 16.38, 6.89 and 8.06%, respectively between the decades and share of horticultural commodities has increased from 6.31 to 8.46% between the decades. The major problem for Indian horticultural export is lack of proper market institution and supporting infrastructure. INSTABILITY ANALYSIS IN AGRICULTURAL EXPORTS To study instability in the export trade of agricultural commodities of India over the period to , the deterministic components of total instability in exports was calculated by coefficient of variation in exports is quantity and value terms. The results are presented in Table 3. Food Grain Group The coefficient of variation with respect to export quantity of pulses and rice basmati was observed to be 46.14% and 35.68%, respectively during the study period to The instability with respect to export quantity of rice other than basmati and wheat were 62.63% and %, it showed a relatively high instability in exports of quantity of rice other than basmati and wheat. Oilseed The coefficient of variation of ground nut, castor oil, sesamum oil, Niger seed, and oil meal were 37.83%, 26.69%, 23.70%, 36.25%, and 41.47%, respectively. Ground nut and oil meal showed higher instability in value export 66.65% and 58.17% where as castor oil, sesamum oil and niger seed showed relatively stable in value exports with 46.96%, 47.35% and 29.30% during last decade. Horticultural Commodities Among the all horticultural commodities fresh 45

9 fruits, fresh vegetables and floricultural products showed a relatively higher instability than fruits/vegetables seeds, processed vegetables and processed fruit juice. The instability for these commodities was fruits/vegetables seeds 20.92% in quantity export and 33.96% in value export, fresh fruits 55.99% in value export, fresh vegetables 61.56% in value export, processed vegetables 44.37% in value export, processed fruit juice 39.06% in value export and floricultural products 51.23% in value export during last decade. Marine Products The coefficient of variation with respect to exports quantity of marine products during the Table 3: Instability in Different Agricultural Crop Group Commodities CGR Quantity Value SD A M CV SD A M CV Food grain Pulses Rice Basmati Rice other than Basmati Wheat Other cereals Oil seeds Groundnut Castor oil Sesamum oil Niger seed Oil meal Horticultural Fruits/vegetables seeds Commodity Fresh fruits N A N A N A Fresh vegetables N A N A N A Processed vegetables N A N A N A Processed Fruit Juice N A N A N A Floricultural Products N A N A N A Marine products Marine Products Spices Total Spices Beverages & Tea Tobacco Coffee Tobacco unmanufactured Tobacco manufactured N A N A N A

10 Table 3 (Cont.) Group Commodities CGR Quantity Value SD A M CV SD A M CV Animal Products Dairy Product N A N A N A Poultry Product N A N A N A Meat and its Preparation N A N A N A Other Sugar Commodities Molasses Shellac Cashew nut shell liquid Cashew Cotton raw including waste Jute N A N A N A Guar Gum Paper/wood products N A N A N A Miscellaneous Processed Products N A N A N A study period to was observed to be 15.57% in quantity exports and 15.54% in value exports. The instability of marine products was relatively low as compared to other commodities. Spices The instability with respect to exports quantity of spices during the study period to was observed to be 39.29% and 59.98% in exports value. It showed a relatively low instability in quantity and high instability in exports value. Beverages and Tobacco The coefficient of variation with respect to exports value during the study period to of Tea, coffee, and tobacco manufactured were 21.45%, 30.22%, and 40.97% which showed relatively low instability. Tobacco manufactured showed 69.42% coefficient of variation which showed higher instability in export value during study period. Animal Products The coefficient of variance with respect to exports value of animal products during the study period to was observed to be poultry products 37.05%, dairy products 67.45% and meat and preparation 57.61%. The poultry products were stable and dairy product and meat & preparations were relatively more instable as compared to poultry products. SUMMARY Agriculture is one of the strongholds of the Indian economy and it accounted for 13.9% of Gross Domestic Product (GDP) in (Economic Survey 2012). Agricultural production is likely to increase significantly and has a projected growth rate of 2.5% during the for the 47

11 GDP of agriculture and allied sectors. India s total agricultural product exports have a potentially large impact on world market. Total agriculture products exports are Rs cr which contributes 10.57% share in total export in (Ministry of Agriculture). The agricultural commodities which have great role in India s agriculture export are cereals (mostly Basmati and non-basmati rice), coffee, spices, oil meal, cashew, poultry and poultry products, and marine products. The Government of India, Ministry of Commerce and Industry announces Export Import Policy after every five years. The EXIM policy is updated every five year on March 31 and modifications, improvements and new schemes become effective from April 1 of every year. India s EXIM policy aims at developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payments position. CONCLUSION 1. In EXIM policy ( ) emphasis were more on globalization, liberalization, delicensing, automatic licensing and reduction in custom duties. 2. In EXIM policy ( ) emphasis were more on destination diversification and product specification through special export zones and agricultural export zones. 3. Rice (basmati and other than basmati) are major exportable food grain of India. The share of rice (basmati and other than basmati) was more than 65% in total food grain exports during last decade. 4. The share of horticultural exports was 6.31% in and 8.46% in This was a promising export group of India, but its export growth is slow. India s poor performance in world market is because of its inadequate infrastructure for production and marketing of horticultural, special floral crops for exports. 5. High cost of production and absence of cold chains for perishable commodities like flower, fresh fruits/vegetables, etc., made the size of exports for these commodities were very small. SUGGESTIONS FOR IMPROVEMENT OF AGRICULTURAL EXPORTS 1. To increase the export potential of India, the concept of Agricultural Export Zone attempts to take a comprehensive look at a particular produce/product located in a contiguous area for the purpose of developing and sourcing the raw materials, their processing / packaging, leading to final exports. Thus, the entire effort is centered on the cluster approach of identifying the potential product, the geographical region in which these products grown and adopting an end to end approach of integration the entire process right from the stage of production till it reaches the market. 2. In study period there is no fixed trend in agricultural export so Government should amend the exim policy for growth and stabilization in agricultural export. 3. Government should provide subsidies for adopt technological up gradation and mechanization. Reducing the cost of agricultural commodities production with technological up gradation and increasing in mechanization. 4. Government should make negotiations regarding bilateral agreement between India and other countries and thereby the trade risk can be minimized. 5. Action needs to be taken to offer exportable agricultural commodities at competitive prices than other exporting country so as to capture the market. 48

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