Commodities

Weak rupee partially contributed to Q1 agri-export value growth

G. CHANDRASHEKHAR | Updated on September 07, 2020 Published on September 07, 2020

But lot needs to be done on tapping the potential offered by export markets, especially pulses export to Bangladesh and Sri Lanka

Increase of farm goods export by as much as a quarter in value terms during the peak national lockdown period of April-June quarter is a commendable performance. Exporters deserve to be complimented for fighting against odds – inadequate availability of lorry transport, labour and port facilities – to push their shipments.

Usually, April-June period is when shipments of agri commodities such as grains and oilseeds peak because exporters are keen to beat the onset of the South-West monsoon. During the rainy season, there is the risk of quality deterioration as also logistics disruption.

Currency depreciation

Be that as it may, a closer scrutiny of the latest export data reveals something not communicated. The comparison is between export value realised during April-June quarter this year and the same quarter last year 2019 in rupee terms.

Interestingly, between the first quarter of 2019 and corresponding period in 2020, the rupee has depreciated by as much as 10 per cent. From an average of around 68.5 to a US Dollar in Q1 2019, the rupee has moved lower to 76.0 in Q1 this year. No wonder, when expressed in rupee terms, the export value this year appears attractively higher; but the reality of currency depreciation cannot be glossed over.

A realistic picture of export performance will be known if we compare Q1 2019 and Q1 2020 export performance in dollar terms. It is also necessary for the government to share volume data and unit value realisation in both rupee terms and dollar terms. It would then allow people to come to their own conclusion about agri-export performance.

Pulses, sugar exports

Close to 95 per cent of the increase in Q1 export in value terms is accounted for by two commodities — non-basmati rice and sugar. It is well recognised that sugar export from the country is not on own merit or intrinsic competitiveness of the commodity, but is highly subsidised in order to reduce domestic inventory burden.

It is interesting that pulses export is beginning to pick up. Shipments of both chickpea and pigeon pea have shown a sharp rise during the last quarter, albeit from a low base. However, we are far short of the potential offered by export markets and have done nothing to consciously promote pulses export.

Slack promotions

Bangladesh and Sri Lanka together import nearly 20 lakh tonnes of pulses annually. These two should be our easy target markets; but stakeholders – Commerce Ministry, promotional agencies and trade bodies – have not bothered to cultivate these geographically proximate markets. Remotely located origins such as Canada and Australia happily service our neighbours.

The bilateral trade agreement with Bangladesh and Sri Lanka has remained on paper. This writer believes, India has the potential to export at least 500,000 tonnes of pulses annually; but a conscious effort is required to cultivate overseas markets.

Higher exports will support domestic prices and bring some relief to beleaguered growers. More often than not, domestic rates are well below the minimum support price assured by the government.

The author is a policy commentator and agri-business specialist. Views are personal.

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Published on September 07, 2020
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