Date: 06/01/2023

Relevance: GS-3: Issues relating to poverty and hunger, Food processing and related industries in India-scope and significance, supply chain management

Key Phrases: Russia-Ukraine War, Economic Sanctions Coupled With Blockage Of Financial Channels, Economic Slowdown, Disruption Of Supply-Chains, Commodity Trading, Contract-Farming, Contractual Sourcing, Production Sharing Agreements.

Why in News?

• India’s rising agricultural exports offer a ray of hope in an otherwise vitiating overall export performance, primarily due to the Russia-Ukraine war, economic sanctions coupled with blockage of financial channels, economic slowdown, and disruption of supply chains.

Key Highlights:

• The export of key agriculture commodities rose around 16 percent in the first half of 2022-23 (April-September) over the corresponding year-ago period.
• This is fortunate as agriculture is not only the backbone of the Indian economy but is also the main source of livelihood for more than half the population.
• Agri-export income often brings relief when other sectors of the rural economy face stress.
• In celebrating the performance of farm exports, it is important also to ensure that they are sustainable.

Prospects of Value-Added Products:

• The evolving marketplace and market forces offer a plethora of business opportunities in product differentiation and, influenced by rising customer demand for health, nutrition and convenience foods as well as productivity improvements by food processors.
• India’s 350-450 million strong middle-class is already shifting towards value-added products, on account of urbanisation, affordability, nuclear families, and constraint of time for cooking, especially for working professionals.

Need To Shift From Commodity Export To ‘Product Exports:

• India’s agri-export strategy is based on the “produce and sell” mentality also known as commodity trading. However, it is time to shift from ‘commodity export’ to ‘product exports’.
• Agri export firms should evaluate what consumers want and, accordingly, leverage the value-addition programme in their commodities.
• As the international market for value-added products is constantly growing, it is time India moves faster towards the export of agri products.
• While the shift to a product-driven export strategy will take time, it will eventually help absorb the shocks from domestic as well as the global markets arising out of problems related to stocking, fair and remunerative prices to farmers, distress sale, shelf-life issues, and food losses and waste.

Catering To Demand For Value Products In The International Market:

• The focus should be on creating smaller but targeted product segments rather than exporting rice in bulk and the agro-producers must look to cater to the needs of end-users such as-
• Rice flour: It is in high demand in Europe, especially the southern part where it is widely used to produce pasta, crisps, cereals, and snacks.
• Rice starch: It is required by the pharmaceutical industry, and is also used as a thickener in sauces and desserts.
• Rice sweetener: It is again a value-added product and is used in sugar syrups and honey.
• Aromatic varieties of Basmati rice: These are imported by breweries in Europe, especially by some prized beer manufacturers.
• Rice bran: It is in high demand as it is rich in Vitamin B6, iron and magnesium, and utilised in cereals, mixes, and vitamin concentrates. Rice bran oil can be promoted as a treatment for decreasing blood cholesterol.
• Broken rice: Rather than being exported in bulk to western African markets, it can be alternatively marketed as rice flour and as a mixture for pet foods. There can be various other value-added ‘ready-to-eat’ products manufactured from rice.
• Bovine producers: They should focus on table-ready meat.

Measures for Value-addition in Agriculture:

1. Bringing in Innovations:
   • By innovation, which in turn focuses on enhancing current processes, procedures, products, and services or developing new ones, can be used to add value to agri-products.
   • It is time to leverage policy interventions and bring in operational changes, including training and hand-holding of producers, for creating a business ecosystem for agri product exports.
   • Value-addition can be achieved by promoting the industrial use of food products that have a non-utilizable surplus.
2. Improving coordination between producers and marketers of agricultural products:
   • Considering India’s small landholdings, horizontal coordination that aims to pool or consolidate people or enterprises from the same level of the food chain is one solution.
   • For example, while focusing on vertical coordination to aggregate milk, vegetables produce or fruits, there is a need to look at horizontal coordination which includes contract-farming, contractual sourcing, production sharing agreements.
3. Reviewing India’s agriculture export policy:
   • India’s agriculture export policy has been vacillating between export bans/restrictions and minimum export price on one side and free trade on the other. This approach needs to be reviewed.

Conclusion:

• An abrupt ban on the export of a commodity sends wrong signals to the global markets.
• A predictable and transparent agriculture export policy is the need of the hour to make India a reliable global supplier of value added agriculture products, which will certainly contribute to the goal of doubling farmers’ income.

Source: Hindu BL

Mains Question:

Q. A predictable and transparent agriculture export policy is the need of the hour to make India a reliable global supplier of value added agriculture products, which will certainly contribute to the goal of doubling farmers’ income. Elucidate. (150 words).