Increased Farm Exports

• 05 Feb 2021

Why in News

According to the Ministry of Commerce and Industry, farm exports have registered 9.8% growth for the period of April-December 2020.

• Previously, the government of India launched the Remission of Duties or Taxes on Export Product (RoDTEP) scheme replacing Merchandise Exports from India Scheme (MEIS) to further improve exports.

Key Points

• Data for April-December 2020:
  
  • Overall merchandise exports: Registered 15.5% fall.
  • Farm exports: Registered 9.8% growth.
    
    • Overall merchandise exports include all the goods manufactured in India while Farm exports include only the agricultural products.
• Reasons For Growth in Farm Exports:
  
  • Rising International Prices:
    
    • Normalisation of Demands:
      
      • Due to steady normalisation of demand with most countries unlocking their economies after May 2020 and, at the same time, restoration of supply chains post-Covid not keeping pace has made exports of many farm products from India competitive.
      • That includes non-basmati rice, sugar, oilseed meals, cotton and even wheat and other cereals (mainly maize).
      • Earlier, the United Nations (UN) Food and Agricultural Organization (FAO), released its latest Food Price Index (FPI) for January 2021, which showed that the FPI has increased from a 48-month-low to a 78-month-high.
    • Chinese Stockpiling:
      
      • Global prices have also been increased by Chinese stockpiling.
      • It had stepped up imports of everything – from maize, wheat, soyabean and barely to sugar and milk powder – to build strategic food reserves amid geopolitical tensions.
  • Dry Weather of Different Countries:
    
    • The current export revival is equally a result of dry weather conditions in major producing countries such as Argentina, Brazil, Ukraine, Thailand and Vietnam.
    • Russia (world’s largest wheat exporter) and Argentina (No. 1 in soybean meal and No. 3 in maize) have even announced temporary suspension or taxes on grain shipments in response to high domestic food inflation.
  • India’s Surplus Monsoon:
    
    • India, on the other hand, hasn’t faced serious weather issues; both 2019 and 2020 recorded surplus monsoon rainfall along with timely onset of winter.
  • Agriculture Exempted from Lockdown:
    
    • Farmers harvested a bumper rabi crop during April-June, enabled by the government exempting agriculture-related activities from lockdown restrictions.
• Significance of Rising Exports:
  
  • If it sustains, it can help increase crop prices when the next rabi harvest is due from March 2021. This may be politically useful in a context of farm unrest.
  • It will help in achieving the USD 5-trillion economy goal by India.
  • It will help achieve an ambitious target of doubling farmers' income by 2022.

Source: IE