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Reversal Of Fortunes: From net farm exporter to net importer -Harish Damodaran
-The Indian Express

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

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.

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