India’s general merchandise exports have fallen 15.5% year-on-year throughout April-December. But the identical interval has seen its farm exports register 9.8% progress – because of agricultural manufacturing being comparatively unaffected by the Covid-19-induced lockdown and a steep surge in world commodity costs.
Commerce Ministry knowledge reveals the nation’s export of all items throughout April-December 2020 at $201.30 billion, down from the $238.27 billion for April-December 2019. In distinction, exports of agri-commodities have risen from $26.34 billion to $28.91 billion for this era. And with imports concurrently contracting 5.5%, the agricultural commerce surplus has widened from $9.57 billion in April-December 2019 to $13.07 billion in April-December 2020 (see desk).
The improve in agri exports largely courtesy beneficial world costs. The United Nations’ Food and Agricultural Organization, on Thursday, launched its newest Food Price Index (FPI) for January. That quantity, at 113.three factors (base yr: 2014-2016=100), was the best because the 116.four of July 2014. Between May 2020 and January 2021, the FPI has soared from a 48-month-low to a 78-month-high!
International costs rising – on account of regular normalisation of demand with most international locations unlocking their economies after May and, on the similar time, restoration of provide chains post-Covid not conserving tempo – has made exports of many farm merchandise from India aggressive. That consists of non-basmati rice, sugar, oilseed meals, cotton and even wheat and different cereals (primarily maize). In truth, the nation was a major exporter of wheat and maize final in 2013-14.
Amid the farm protests, the Commerce Ministry knowledge have two vivid spots. The first is bumper crops, aided by good rains and prolonged winter. The second is world agri-commodity costs rising to a six-and-a-half yr excessive, making exports aggressive and imports costlier. Both ought to assist increase farm realisations and incomes.
The present export revival is equally a results of dry climate situations in main producing international locations resembling Argentina, Brazil, Ukraine, Thailand and Vietnam. Russia (world’s largest wheat exporter) and Argentina (No. 1 in soyabean meal and No. three in maize) have even introduced non permanent suspension or taxes on grain shipments in response to excessive home meals inflation. Global costs have additionally been buoyed by Chinese stockpiling. The latter had stepped up imports of every part – from maize, wheat, soyabean and barely to sugar and milk powder – to construct strategic meals reserves amid geopolitical tensions.
India, then again, hasn’t confronted critical climate points; each 2019 and 2020 recorded surplus monsoon rainfall together with well timed onset of winter. Farmers harvested a bumper rabi crop throughout April-June, enabled by the federal government exempting agriculture-related actions from lockdown restrictions. They look set to repeat the efficiency within the coming season as properly, on the again of absolutely recharged groundwater tables and low temperatures conducive for prime yields of wheat, mustard, chickpea and lentils. That also needs to assist exports – however the continuing farm protests towards the Centre’s current agricultural reform legal guidelines.
The nation skilled a sustained farm export increase throughout the earlier United Progressive Alliance regime. Between 2003-04 and 2013-14, these zoomed from a mere $7.53 billion to $43.25 billion, principally rising on a bull run in world commodity costs. With a collapse of that increase, nearly when the brand new Narendra Modi authorities took over, exports nosedived to $32.81 billion in 2015-16. They recovered considerably to $39.20 by 2018-19, earlier than falling once more to $35.60 billion in 2019-20.
The present revival, if it sustains, may help prop up crop costs when the following rabi harvest is due from March. And that could be politically helpful in a context of farm unrest.