In a mirror of the economy, agricultural exports grow amid an overall decline

Context

• India’s agricultural exports are up 4.6% year-on-year in dollar terms during April-September.
• This comes even as the country’s overall merchandise exports for the same period have registered a 21.2% annual decline.
• Commodity-wise foreign trade data from the department of commerce shows exports of farm goods from India during April-September at $18.12 billion, 4.6% higher than the $17.32 billion for the first half of 2019-20.

Rice on top

• The star performer has been rice, with the value of shipments increasing by well over a third to $4.08 billion in April-September.
• The growth has come more from the non-basmati rather than the basmati segment.
• Total exports this fiscal are expected to surpass the previous record of 12.7 million tonnes ($7.8 billion) achieved in 2017-18.
• India exports basmati rice largely to the West Asian countries (Iran, Saudi Arabia, Iraq, United Arab Emirates, Kuwait and Yemen), besides the US and UK.
• The destinations for non-basmati are mainly West Africa (Benin, Nigeria, Togo, Ivory Coast, Liberia, Guinea and Senegal), East Africa (Somalia and Djibouti), UAE and Nepal.

Sugar:

• Another agri-commodity that is on course to post all-time-high exports in 2020-21 is sugar.
• Indian mills shipped out almost $2 billion worth of the sweetener in 2019-20, whereas they have already done $1.4 billion during the first six months of this fiscal.
• Both rice and sugar exports are being propped up by rising global prices.

Cotton:

• A third commodity whose exports have done well this year, and the prospects also look good, is cotton.
• There are projections by the trade of the new cotton year’s exports hitting 70 lakh bales — the highest since 117 lakh bales in 2013-14. The driving factors here are the depreciation in the rupee and global prices (of the benchmark Cotlook ‘A’ Index) recovering to around 77 cents per pound, from their early-April lows of below 60 cents.

The broader trend

• The general story in most agri-commodities is that world prices, which were hardening in the months just before the pandemic and then crashed with lockdown measures imposed by most countries, have since resumed their earlier trajectory.
• This is captured by the UN Food and Agriculture Organization’s (FAO) Food Price Index (base year: 2014-16=100), which rose from 93.3 points in September 2019 to a 61-month-high of 102.5 in January 2020.

Reasons for high agricultural exports from India:

• The recovery in global prices — courtesy a combination of demand revival from unlockdowns (opposite to what happened in April-May), continuing supply chain disruptions (including from a shortage of shipping containers), Chinese stockpiling (in anticipation of a fresh corona outbreak during the winter) and dry weather in producer countries such as Thailand, Argentina, Brazil and Ukraine — isn’t bad news for Indian farmers.
• As a result, the overall agri-trade surplus has widened from $ 6.1 billion in April-September 2019 to $8.6 billion in April-September 2020.