High global prices, in turn, helped boost the competitiveness of India’s farm exports that grew from just over $ 7.5 billion in 2003-04 to $ 43.2 billion in 2013-14. High global prices, in turn, helped boost the competitiveness of India’s farm exports that grew from just over $ 7.5 billion in 2003-04 to $ 43.2 billion in 2013-14.

Falling exports and rising imports — this has been the story of the country’s agricultural trade over the last three years, notwithstanding the Narendra Modi government’s ambitious Make in India initiative.

Between 2013-14 and 2016-17, India’s exports of agricultural commodities have dipped from $43.2 billion to $33.8 billion, even as imports have climbed from $15.5 billion to $25.6 billion (see table). The resultant trade surplus — the country has always been a net exporter in farm products — has narrowed down from $27.7 billion to a mere $8.2 billion over this period. The above adverse movement of $19.5 billion, courtesy both reduced exports and increased imports, has mainly had to do with global prices. The United Nations’ Food and Agriculture Organisation’s Food Price Index (FPI; base period 2002-04=100) soared from an average of 97.7 in 2003 to 229.9 in 2011. The index fell subsequently, but remained well above 200 levels even in the next three years: 213.3 in 2012, 209.8 in 2013 and 201.8 in 2014.

High global prices, in turn, helped boost the competitiveness of India’s farm exports that grew from just over $ 7.5 billion in 2003-04 to $ 43.2 billion in 2013-14. The surge, significantly, wasn’t powered by the items making up the country’s traditional agri-export basket: Coffee, tea, spices, cashew, tobacco, marine products, oil meals, etc. While these did grow, the real drivers, however, were commodities not as high-profile or major foreign exchange earners before the start of the century. We can single out five such dynamic, “non-traditional” export items: Buffalo meat, guar-gum, raw cotton, basmati rice and maize (corn).

The story of buffalo meat – India emerging from nowhere to become the world’s No. 1 beef exporter, displacing Brazil – is well known. A fourteen-fold jump in exports, from $341 million to $4.8 billion in the span of a decade, owed itself to both rising global prices (especially during 2009-14) and modern integrated slaughterhouses that could process and supply a relatively cheaper product (buffalo meat sells at a discount to regular cattle beef) to low- and middle-income developing countries in Southeast Asia, West Asia and North Africa.

No less spectacular a tale is guar-gum, whose exports shot up from a measly $110.5 million in 2003-04 to — hold your breath — $3.9 billion in 2012-13. The underlying stimulus here was the shale boom in the US. The said gum, extracted from the seeds of guar or cluster bean (a hardy legume crop grown mostly in Rajasthan), is used as a thickening agent in the fracking fluid injected into shale rock formations at high-pressure to create cracks and allow gas/oil to flow through them. As hydrocarbon drilling services firms like Halliburton, Schlumberger and Baker Hughes began stockpiling guar-gum during the boom, its prices and exports from India also spiralled.

The last decade saw India also emerge as the world’s largest exporter of rice (ahead of Thailand and Vietnam) and No. 2 in cotton (after US). Equally amazing was corn. In 2000-01, the country hardly shipped out 32,500 tonnes of this feed grain worth $5.97 million. By 2012-13, these numbers had touched 4.79 million tonnes and $1.31 billion, respectively, with the Kosi-Seemanchal belt of Bihar and Odisha’s Nabarangpur district becoming major sourcing centres for multinational traders despatching the grain to Indonesia, Malaysia and Vietnam via Kakinada and Visakhapatnam ports. In all the three commodities, exports were also enabled by production-boosting technology — Bt transgenics in cotton, high-yielding single-cross hybrids in maize and the blockbuster Pusa-1121 basmati variety in rice. But all this is now history. The end of the decade-long global commodity boom has also engendered a collapse of India’s agri-exports.

In 2016-17, guar-gum exports were valued at only $467 million. Oil-meals, likewise, brought in barely $800 million, compared to $3 billion-plus in 2012-13, while cotton exports have shrunk 62 per cent over their 2011-12 high of $4.3 billion. Annual corn shipments, too, are down to around $150 million. These can be primary attributed to international prices: At their peak, corn and soyabean futures at the Chicago Board of Trade quoted at $8.49 and $17.94 per bushel on August 10, 2012 and September 4, 2012, respectively, whereas they are currently trading at $3.67 and $9.13 per bushel. The ruling benchmark Cotlook ‘A’ Index price of 87.20 cents a pound is a fraction of its corresponding all-time-high of 244 cents on March 8, 2011.

But it isn’t exports alone. Declining global prices have also pushed up imports and made the latter cheaper. This can be seen, for instance, in wheat, where India has turned from an exporter to the tune of $1.93 billion in 2012-13 and $1.57 billion in 2013-14 to an importer of $1.27 billion during the fiscal gone by. Even more striking is soybean. In 2012-13, the country exported soybean meal valued at Rs 14,155.97 crore, as against the corresponding Rs 7,611.05 crore imports of soya oil. By 2015-16, however, meal shipments had plunged to Rs 1,511.69 crore, whereas soyabean oil imports had spurted to Rs 19,419.01 crore. Thus, from a net exporter of Rs 6,544.92 crore, India became a net importer of Rs 17,907.32 crore in respect of this commodity complex.

The ultimate cost of the external terms of trade turning unfavourable — the latest FPI reading of 168 for April 2017 is well below the record 238 reached in February 2011 — is being borne by the farmer. Domestic soybean prices in the last three years have come down from Rs 4,000-4,500 to Rs 2,500-3,000 per quintal levels. At the height of the shale boom, spot prices of guar-seed in Jodhpur scaled an unprecedented Rs 30,432 per quintal on March 21, 2012. The same rates today are in the region of Rs 3,450!

The global bull run in agri-commodities, no doubt, benefited farmers in India. One proof of it is tractor sales, which rose from 1.90 lakh units in 2003-04 to 6.34 lakh units in 2013-14. But, as boom has given way to bust, the resultant impact has been seen in sales plummeting to 4.94 lakh units in 2015-16, before recovering somewhat to 5.83 lakh last year. Without a turnaround in international commodity prices, doubling of farm incomes and Make in India (more exports, less imports) vis-à-vis agriculture might remain elusive goals.

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