Higher margins could push farm exports to FY22 level despite ban: experts

Actual agriculture exports in FY22 were $47.41 billion, up almost 19% over FY21. This was among the highest ever agriculture exports in value terms by India

India reached a new milestone of almost $50 billion of agriculture exports in 2021-22, with wheat, sugar, coffee, dairy products and rice showing stupendous growth over the previous year.

However, with curbs now being imposed on exports of several items that led the FY22 surge, there are doubts in some quarters about the country’s ability to maintain the same pace of overseas farm shipments in FY23.

For the record, actual agriculture exports in FY22 were $47.41 billion, up almost 19 per cent over FY21.

This was by far among the highest ever agriculture exports by India, but the big question is whether or not the same pace can be maintained in FY23.

Ajay Sahai, Director General of Federation of Indian Export Organisations (FIEO) feels it can.

“Agriculture exports will remain buoyant in FY23 despite restrictions on exports of some commodities as food prices will continue to move north, and demand supply global mismatch will only aggravate due to the Ukraine-Russia conflict. We expect our value added farm exports to do well and their share in overall agriculture exports to improve as we have yet to cover a significant distance in this regard. The sector requires freight support and a revamped TMA (Transport and Marketing Assistance) scheme to maintain the bottom line of exporters,” Sahai told Business Standard.

In April 2022, the first month of FY23 fiscal, exports of agriculture and allied activities were estimated at about $4.78 billion, or 21 per cent more than the same period last year, data showed.

In May 2022, the Centre banned wheat exports, imposed curbs on sugar exports and, according to some reports, could even look at imposing some sort of curbs on rice, though, nothing on that has been decided yet.

Wheat export ban

In FY22, India exported a record 7 million tonnes of wheat, worth $2.12 billion.  By value this was 274 per cent more than the same period last year.

But in FY23, a report by Origo Commodities showed that in May, before the ban, India’s wheat exports stood at 1.13 million tonnes, down from 1.46 million tonnes in April 2022.

Total exports between April and May, 2022 were about 2.59 million tonnes--almost 2 million tonnes higher than the same period last year, the report said.

Had the exports not been banned, India could have shipped 8-10 million tonnes of wheat. This now looks to get curtailed to 4-4.5 million tonnes or even less if the government does not allow all the wheat contracted for exports to be shipped out of India.

A key reason for the abrupt ban on exports announced on May 13 was that as on June 1, 2022, wheat stocks in the Central pool were pegged at about 31.14 million tonnes, or 48.3 per cent lower than the same period last year.

This was the lowest stock since June 2008 when it was at 24.12 million tonnes.

Sugar

In the case of sugar, the Centre had, last month, for the first time in six years, capped sugar exports to 10 million tonnes for the current (2021-22) season that ends in September, to prevent a drawdown in stocks and a surge in domestic prices later in the year.

The country, the world’s biggest sugar producer and the second-largest exporter (Brazil is the top exporter), has contracted around 8.5 million tonnes for exports in the 2021-22 season that started in October.

Of that, about 7.1 million tonnes have been shipped till May 15.

“The limited objective of the government is that by the time the 2021-22 sugar season ends in September, India will have adequate stocks to meet three months’ consumption (till December). Or else it might have to import sugar, which will be embarrassing and inflationary,” a senior industry official aware of the move had then said.

India consumes 2-2.5 million tonnes of sugar a month.

Till last financial year, India had exported sugar worth $4.60 billion, up 65 per cent from the same period last year.

Rice

Though the Central government has categorically denied that there is any move to stop export of rice from India, traders remain apprehensive because of rising food inflation and sudden curbs announced during the past few months.

India exported 21-22 million tonnes of rice in FY22 (both basmati and non-basmati), worth over $10 billion. Rice is one of the main items of agricultural exports from India and has seen a stupendous rise the past few years.

Yet, experts remain hopeful.

“I think we will be able to reach at least last year’s levels of around $47 billion in agriculture exports despite the ban as the Russia-Ukraine war will improve per unit realisation of several items. So, despite the total quantities might be less, the per unit realisation of exports will be good this time as international markets are favourable,” Gokul Patnaik, chairman Global Agrisystems Pvt Ltd and former head of Agriculture and Processed Food Products Export Development Authority (APEDA) told Business Standard. 

Table: Agriculture exports in $ billion

Crop	Plantation	Agri & Allied Products	Marine products	Total
FY22	1.77	37.87	7.77	47.41
FY21	1.49	32.51	5.96	39.96
FY20	1.58	26.21	6.72	34.51
FY19	1.66	28.61	6.80	37.07
FY18	1.81	27.78	7.38	36.97
Change (FY21 to FY22)	18.79	16.49	30.37	18.64

Source: Ministry of Commerce