Commodities

Efficient management of rice and sugar production surplus is critical

G Chandrashekhar Mumbai | Updated on July 30, 2021

By exporting large quantities of these water-intensive crops, the country is actually shipping water

Despite pandemic-related restrictions and supply chain disruptions, the country’s agricultural exports touched a new high of $41.26 billion in 2020-21 — an increase of about 17 per cent from $35.15 billion in the previous year.

Coming at a challenging time, this record deserves to be recognised and commended.

There is a smug feeling within government circles over India breaking into the top ten of the world’s agricultural commodities exporting nations. While we must enjoy the moment and compliment those who worked towards this achievement, a closer scrutiny of the export data is revealing, and somewhat disconcerting.

Marine product export, which shows the highest foreign exchange earnings among agri-goods, declined sharply in 2020-21 to $5.96 billion from $6.72 billion in the previous year. In case of buffalo meat, export earning was a tad lower in 2020-21 at $3.17 billion ($3.20 billion).

Rice (basmati and non-basmati) and sugar are big gainers in export. Rice export tops the chart in 2020-21 with cumulative earning of $8.82 billion ($6.40 billion). The other stellar performer sugar brought earnings of $2.79 billion ($1.96 billion).

The government has also highlighted the surge in export earnings from raw cotton ($1.89 billion), oilmeals ($1.57 billion) and wheat ($0.55 billion) in 2020-21.

Water-intensive crops

Without taking away any credit, two points deserve attention. The rupee actually depreciated by about 5 per cent in 2020-21 compared with the previous year. Obviously, a weaker rupee has helped in boosting export earnings.

But, a significant matter of national concern is the large increase in rice and sugar export. The two crops (paddy and sugarcane) are water-intensive. The looming water shortage in the country is well recognised. The government’s own think-tank NITI Aayog has flagged this issue. By exporting large quantities of rice and sugar, the country is actually exporting water. It is a waste of natural resource that’s becoming increasingly scarce.

In case of sugar, there is a clear production surplus to the extent of 5-6 million tonnes. This is sought to be exported so that domestic prices are not depressed. Far from being competitive, our sugar exports are subsidised, something that has attracted international attention. There is a complaint against India’s subsidised sugar export at the World Trade Organization.

Cane acreage: Ethanol holds the key

In addition to export, to manage the surplus, ethanol production and bending with petrol is sought to be promoted. In this case, we are converting food into fuel. Why do we produce large sugar surplus and then struggle to cope with the surplus through subsidised export and fuel production?

Very simply, there is a strong case — as recommended by NITI Aayog — for reducing sugarcane acreage from the present 5.4 million hectares and producing only a modest surplus that can be managed efficiently.

Rice production and export is intriguing. Paddy is cultivated on approximately 45-47 million hectares in two seasons. According to government statistics, our rice production touched a record 120 mt in 2020-21.

While promoting premium Basmati rice export is understandable, production and management of humungous quantities of other rice varieties deserves a strategic policy approach given the country’s poor nutrition status. Like sugar, the case for reducing the area under non-Basmati rice (paddy) is compelling to the extent that we generate only a modest surplus, and not struggle to deal with massive surpluses.

Export of water-intensive commodities like rice and sugar actually flies in the face of well known sustainability principles. Our agricultural production and export policies deserve a serious review.

The author is a policy commentator and agribusiness specialist. Views are personal.

Published on July 30, 2021

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