Agri Business

Farm exports hit by glut, currency volatility

Vishwanath Kulkarni Bengaluru | Updated on March 12, 2018 Published on April 09, 2015


However, buffalo meat, non-basmati rice, vegetables, cocoa products exports up

After seeing consecutive growth for past five years and scaling a new high, India's farm sector and allied product exports are poised for a decline for the financial year ended March 2015.

Bearish global commodity prices induced by a worldwide glut, volatile currencies in competing countries and delay in the Government's decision making on announcing sops impacted exports, experts said.

According to the provisional estimates, the agri and plantation sector exports stood at $29 billion or ₹1.77 lakh crore for the April-February 2015 period, lower than corresponding last year. For 2013-14, the exports stood at $34 billion or ₹2.04 lakh crore.

Unviable exports

Commodities ranging from wheat, basmati rice, oilmeals, guargum, sugar, dairy and tea among others have seen a decline in shipments over last year, while products such as buffalo meat, non-basmati rice, fresh vegetables and cocoa products have registered an increase.

“Going by the trend there could be a ten per cent drop in exports for fiscal 2014-15,” said Tejinder Narang, grains trade analyst.

“The inability on the part of Indian exporters to compete with their global counterparts on the price front combined with the inflexibility of the government to pare prices – mainly wheat, contributed to the decline in exports,” Narang added.

Except for the non-basmati rice, the domestic prices of other commodities such as corn, oilmeal, dairy products (skimmed milk powder), sugar ruled higher than the global prices for most part of the year making exports unviable.

Besides, the depreciation of currencies such as Brazilian Real and the weak Euro against the dollar also contributed to the slowdown in exports.

Basmati woes

Basmati shipments dropped by close to a tenth at around 3.5 million tonnes in 2014-15 against the previous year's 3.8 million tonnes.

The decline was mainly on account of Iran, the biggest buyer of the Indian aromatic rice, which stopped purchases in the recent months on higher domestic crop.

“We may end up exporting about 10 lakh tonnes in 2014-15 as against 14 lakh tonne in the previous year,” said Rajen Sundaresan, Executive Director, All India Rice Exporters Association.

Apart from the lower volumes, the Basmati export earnings were likely to be lower on account of lower realisations as the average price was $1,100 a tonne in 2014-15 against $1,250 in the previous year.

Sugar exports sour

In case of sugar, the Government announced the continuation of subsidy on raw sugar only in February this year, about four months after the crushing season had started.

“In case the Government had announced the subsidy of ₹4,000 per tonne in October-November, about 12-15 lakh tonnes of sugar would have been exported. So far, only 1.5 lakh tonne has been exported this season,” trade sources said.

Exports of sugar and molasses in value terms were down by 34 per cent in the financial year 2014-15 till end-February over previous year. Similarly, the exports of dairy products and wheat were down by close to 50 per cent.

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Published on April 09, 2015
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