India prepares to maintain the export growth momentum with the advent of a new farm bill and participation from private players like Adani Group, ITC, Cargill, Pepsi, ITC, in the agriculture sector.
The new farm bill aimed at revolutionizing the Indian agricultural sector, will upscale farm sales and increase production in tune to the pressing opportunity of surging food prices globally. The food price index by the Food and Agriculture Organisation, which tracks several food items, such as grains, meats, sugar and vegetable oils, has touched its peak level in this decade. Comprehending the situation with proper institutional and infrastructure support, a consequent boost in the agricultural exports will not only render a requisite upswing to the sector but will also increase farmer’s income. India has a window to target a few commodities with a comparative edge to make a footmark in the export market, while the trend will probably continue for another 2 to 3 years catering to the pent-up demand from the dwindling pandemic.
The major policy alteration is definite to impact the enormous sector. However, the structural changes brought by the new farm bill demand executional zest from private players like Adani Group, Cargill, and ITC etc.
“We need private sector investment in technology and infrastructure for Indian agriculture to realize its full potential and compete better in the global marketplace,” said Siraj Chaudhry, CEO and Managing Director, National Collateral Management Ltd (agriculture services company).
The expanded horizon facilitated by the new farm law and private players like Adani, ITC and Cargill seizing the situation and expediting infrastructure and institutional support, has led to the growth of agri exports by 17.34 per cent in FY21. Although the market was valued at $41.25 billion in FY21, the growth is not stable as it hung around $38 billion in 2017-18 and 2018-19, while it dropped to $35.16 billion in 2019-20. For India to achieve the $60 billion target by 2022, the exports will have to surge by 45 per cent this year.
As pointed out by Amitabh Kant, CEO at NITI Ayog, less than 10 per-cent of the total produced food is processed in India, while the nation endures a loss of around 900 billion rupees annually, owing to the wastage from insufficient cold storage.
However, much before the new farm bill, Adani Group, ITC, Cargill amongst other private sector enterprises, perceived the setback and started building scientifically designed silos for the Food Corporation of India (FCI) to eliminate food wastage.
The new reforms have also enabled easier trade of procured yield to other states or abroad. The increased production will boost revenue and exports, while farmers will cash on more stable incomes. The sector demands substantive investments and a well-rooted export promotion policy.
“Overall, the reforms should benefit farmers and encourage contract farming,” stated by analysts at Motilal Oswal Financial Services Ltd. in a report. “As private sector participation increases over the years, the Indian agriculture sector’s supply chain and infrastructure would improve.”
Owing to the government’s One District-One Product (ODOP) initiative, every district can utilize local agro-ecologies to develop one specialized export-oriented product.
For example, Chandauli’s (Uttar Pradesh) black rice and Varanasi’s mangoes have a high demand in the international markets. A niche-based ecosystem can be developed around these markets of export products. Some of the already existing export markets include millets to Denmark, Suvarnareka and Banganapalli mangoes to South Korea, jamun and jackfruit to the UK and flavoured jaggery powder and red rice to the US.
On the other hand, US, Bangladesh, China, Vietnam, UAE, Nepal, Malaysia, Saudi Arabia, Iran and Indonesia are the biggest agricultural products markets for India.
The framework for an expanded and augmented export market for India has been laid down by the new farm bill. Adani Group, PSGC technologies among other private sector players are extending the executional work to further the undertaken agenda.
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