Agricultural exports touched $41.8 billion (bn) in FY21—a growth of 18% over FY20 bringing cheer in government circles.
Juxtaposed against a target of $60 bn the Modi government had set out to achieve by 2022, it falls much short.
From a strategic point of view, the key issue is whether this rate can be sustained?
Composition of agri-exports:
- Rice ranks first in agri-exports, with 17.7 million tonnes (mt) valued at $8.8 bn.
- It is followed by marine products ($6 bn), spices ($4 bn), bovine (buffalo) meat ($3.2 bn), sugar ($2.8 bn), etc (see graphics).
- Of these, rice and sugar raise concerns about competitiveness and environmental sustainability, as these are water guzzlers and heavily subsidised through cheap/free power for irrigation as well as fertilisers.
- On top, sugar exports have been further subsidised to clear excessive domestic stocks.
- This has led many sugar-exporting countries like Australia, Brazil, Thailand, etc, to register a case against India at WTO.
Rice and Sugarcane:
- Rice is a staple food for the overwhelming majority of the population in India.
- It is a kharif crop which requires high temperature, (above 25°C) and high humidity with annual rainfall above 100 cm.
- In the areas of less rainfall, it is grown with the help of irrigation.
- In southern states and West Bengal, the climatic conditions allow the cultivation of two or three crops of rice in an agricultural year. In West Bengal farmers grow three crops of rice called ‘aus’, ‘aman’ and ‘boro’.
- About one-fourth of the total cropped area in India is under rice cultivation.
- A major player in the worldwide sugar trade, India produced 33 million metric tons in 2017/2018. The nation is seeing record levels of sugar production and is set to overtake Brazil as the highest sugar producer.
- India’s sugar production rose 11.5% during the 2014 to 2015 season on bumper cane production. This increase in production led to an extensive surplus in Indian sugar with mills struggling to pay fair wages to workers.
- South India has tropical climate which is suitable for higher sucrose content giving higher yield per unit area as compared to north India.
Becoming water-stressed due to surge in Rice and Sugar exports:
- Our main concern with the surging rice and sugar exports is on the sustainability front.
- India is a water-stressed country with per capita water availability of 1,544 cubic-metres in 2011, likely to go down further to 1,140 cubic-metres by 2050.
- One kg of sugar invariably has virtual water intake of about 2,000 litres. Exporting 7.5 mt of sugar implies exporting at least 15 bn cubic-metres of water.
- In case of rice, irrigation requirements for one kg vary from 3,000-5,000 litres, depending upon topography.
- If we take an average of 4,000 litres, and assume that half of this gets recycled back to groundwater, exporting 17.7 mt of rice means virtual export of 35.4 bnn cubic-meters of water.
- Together rice and sugar exports imply India exported over 50 bnn cubic-metres of water.
A long-term strategy should aim at conserving scarce water resources, reduce carbon footprint, with lower tariffs.
Any sustainable strategy for rice and sugar exports must ensure these are produced with much less water by adopting appropriate farming practices such as alternate wetting drying (AWD), direct seeded rice (DSR), drip irrigation, etc.
Closer evaluation of non-basmati exports reveals another interesting fact: These exports are actually sourced not only below-MSP, but also below the average mandi prices in the country, after one adjusts for freight from mandi to port and loading charges at the port.
Saving Water with Alternate Wetting Drying (AWD):
Alternate Wetting and Drying (AWD) is a water-saving technology that farmers can apply to reduce their irrigation water consumption in rice fields without decreasing its yield.
In AWD, irrigation water is applied a few days after the disappearance of the ponded water.
Hence, the field gets alternately flooded and non-flooded. The number of days of non-flooded soil between irrigations can vary from 1 to more than 10 days depending on the number of factors such as soil type, weather, and crop growth stage.
Direct Seeding of Rice:
Direct seeded rice (DSR), probably the oldest method of crop establishment, is gaining popularity because of its low-input demand.
It offers certain advantages viz., it saves labour, requires less water, less drudgery, early crop maturity, low production cost, better soil physical conditions for following crops and less methane emission, provides better option to be the best fit in different cropping systems.
It is high time that policymakers revisit the entire gamut of rice and sugar systems, from their MSP/FRP to their production and procurement, ensuring ‘more crop per drop’.
In case of rice, procurement will have to be limited to the needs of PDS, and within PDS it is high time to introduce the option of direct cash transfers.
All these will go a long way to promote better diversification of our agri-systems, better use of our scarce water supplies, lesser GHG emissions, save on unproductive use of financial resources locked up in burgeoning grains stocks with the FCI.
And all these savings can be used for doubling investments in agri-R&D to improve productivity on sustainable basis and improve farming practices for minimising carbon emissions.
An export-led strategy also needs to minimise logistics costs by investing in better infrastructure and logistics.
Only then one can ensure sharing the returns of these investments with farmers to give them better deal in terms of higher and more stable incomes.