Business of Agriculture March April 2019 Edition | Page 32

IMPACT OF DOMESTIC AND
GLOBAL DEVELOPMENTS
ON EXPORT OF INDIAN AGRICULTURAL COMMODITIES
By: Mr Pushkar Mukewar *
I
India’s export
of agri-
commodities
is low in
relation to
production and
it contributes a
relatively small
component
of GDP and
overall exports
ndia is primarily an agrarian economy with more
than 70 percent of the rural population relying
on agriculture and allied industries for survival!
According to the Food and Agriculture Organization
(FAO) of the United Nations, India is the world’s
largest producer of milk, pulses, and jute; and is the
second largest producer of rice, wheat, sugarcane,
groundnut, vegetables, fruits, and cotton. Thus, it
would be logical to assume that the country is also
among the leading exporters of agricultural products
worldwide, particularly agricultural commodities.
Though this assumption is logical – but unfortunately
it is incorrect!
India’s export of agri-commodities is low in relation
to production and it contributes a relatively small
component of GDP and overall exports. One of the
reasons for this could be that a large chunk of India’s
farm output goes towards feeding the large and
growing population. However, that argument seems
weak, especially when you compare India’s exports
with Brazil or Thailand, where exports are much
higher in relation to the population.
So, what exactly could be the underlying reason for
India’s low agricultural exports? The actual answer
is a mix of various factors such as: low productivity
per hectare; a history of consumer-driven policies; a
patchy record of bargaining on the international level;
and insufficient infrastructure in the food processing
and transportation sectors.
Self Sufficiency at the Cost of Exports
Agri-commodities are often called ‘soft’ commodities.
These are generally referred to commodities that are
grown and cannot be stored for long periods such
as: rice; wheat; oilseeds; etc., compared to hard
commodities like metals, semi-precious stones, etc.
One of the reasons behind the exports of agri-
commodities being tricky is because a country’s
32 Business of Agriculture | March-April 2019 • Vol. V • Issue 2
production has to feed its own people first. Being a
British colony, until independence, India exported vast
quantities of cotton, oilseeds, and even food grains.
This was done by the British to mainly feed their own
people and companies. In the pre-independence era,
plenty of evidence found on how Indian farmers were
forced to grow the crops that the British wanted to
export for their business benefits or to keep their
army and people full. The cotton from India and Egypt
went to factories in Birmingham and Lancashire, and
the finished products from there were sent back
to India at inflated prices. Post-Independence, the
Government of India finally started focusing on ‘Self-
sufficiency’ in food, which meant that exports took
a back seat. In fact, the government, at one point in
time, actually banned future trading on selective agri-
commodities in order to ensure adequacy of goods
for the domestic population. Even today, if there is a
shortage of any agri-commodity in India, for example,