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Agricultural Trade Trends April-September 2023


Recent data from the Department of Commerce reveals a decline in India’s agricultural exports, registering USD 23.6 billion in April-September 2023, down from USD 26.7 billion in the same period in 2022. Concurrently, agricultural imports also decreased from USD 19.3 billion to USD 16.2 billion, leading to a slight reduction in the agricultural trade surplus.


GS III: Agriculture

Dimensions of the Article:

  1. Factors Contributing to Decline in Agricultural Exports (April-September 2023)
  2. Impact of Global Prices on India’s Agricultural Exports
  3. Consequences of Declining International Prices for Indian Agriculture

Factors Contributing to Decline in Agricultural Exports (April-September 2023)

Government Restrictions:

  • Bans and restrictions on key commodities like wheat, rice, and sugar.
  • Prohibition of broken rice exports in September 2022.
  • Imposition of a 20% duty on white non-basmati grain shipments.
  • Complete ban on exports of white non-basmati rice in July 2023.

Sugar Export Policy Changes:

  • Shifting sugar exports from the “free” to the “restricted” category.
  • Introducing caps on the total quantity of sugar that can be exported annually.

Global Price Softening:

  • Decline in global prices following the peak reached after Russia’s invasion of Ukraine.

Impact on Trade Surplus:

  • Resulting in a notable decrease in India’s agricultural trade surplus during April-September 2023.

Impact of Global Prices on India’s Agricultural Exports

Correlation with UN Food and Agriculture Organization’s Food Price Index (FFPI):

  • Strong correlation between India’s agricultural exports and global price trends.
  • Notable changes in the FFPI influence the value of India’s agricultural trade.

Historical Trends:

  • Agricultural exports in India closely follow FFPI fluctuations.
  • Decline from USD 43.3 billion in 2013-14 to USD 35.6 billion in 2019-20 aligning with FFPI drop (from 119.1 to 96.5 points).
  • Subsequent rise in exports as FFPI reached unprecedented levels in 2022-23.

Expectations for 2023-24:

  • Anticipated decrease in the value of both agricultural exports and imports in India.
  • Despite the easing of supply disruptions from the Russia-Ukraine conflict.

FAO’s Projections:

  • The Food and Agriculture Organization’s (FAO) supply and demand brief for 2023-24 projects global ending cereal stocks.

Consequences of Declining International Prices for Indian Agriculture

Cost Competitiveness Impact:

  • Lower international prices reduce the cost competitiveness of India’s agricultural exports.
  • Increased vulnerability of Indian farmers to imports.

Sector-specific Challenges:

  • Cotton Sector:
    • Cotton exports from India witness a significant decline.
    • Imports surge by 2.5 times from 2021-22 to 2022-23.
  • Edible Oils Sector:
    • India’s edible oil imports more than double between 2019-20 and 2022-23.
    • Surge attributed to soaring global prices post the war in Ukraine.

Continued Imports Despite Price Collapse:

  • Prices of crude palm, soybean, and sunflower oil collapse globally.
  • Imports continue at a low 5.5% duty, contributing to trade challenges.

Government Priorities and Impact on Agriculture:

  • Government’s focus on controlling food inflation, especially before national elections.
  • Prioritization of consumer interests over producers’ concerns.
  • Unhindered imports of edible oil and pulses, coupled with export restrictions on cereals, sugar, and onions.

Impact on GDP Growth:

  • Neglecting concerns of manufacturers and producers negatively impacts GDP growth.

-Source: Indian Express

December 2023