A low-hanging fruit, but worth its weight

Incremental diversification of India’s export basket was overdue, and the fact that farm produce figures in the list of high-growth items is heartening. The economy must reduce its export concentration – in IT services to select markets such as the US – and manufacturing offers the most viable alternative. Manufacturing exports are, however, capital-intensive and require policy support. Primary goods like bananas are, literally, low-hanging fruit in the export game and can deliver quicker turnarounds. The lower capital intensity makes the export effort more inclusive. It also achieves geographical diversification that mitigates climate risks. Yet, such exports need to be handheld for them to acquire scale, achieve quality and gain market access.

India is a big entity in the food market, both in terms of import requirements and export potential. Its farm policies have favoured select crops, such as cereals, which dominate agricultural exports. This orientation results in heavy import dependency on crops over which the country has not gained food security, such as plant-based proteins and edible oil. Both factors can be leveraged to push newer farm exports like horticulture and dairy. These segments have a lower water dependency, which makes production and export more sustainable. Principally, though, exports address India’s immense waste of fruit and vegetables that contribute to high domestic food prices.

It may be early days, but diversification of farm exports can restore some balance to the internal market shaped by price support, patchy irrigation and inadequate warehousing. India’s farm economy has been distorted by state intervention directed more towards consumer interests than farmers. Exports offer a wider variety of farmers a market-driven solution to agriculture. Resistance to reform of agricultural marketing at home can be deflected using buyers whose food prices are not GoI’s responsibility. This addresses India’s inherent policy contradiction that adds to distress on its farms.

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