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Low commodity prices, poor offtake depress farm exports

Worried about the decline in farm income, policy makers are exploring new markets to offset demand fall in traditional destinations.

Low global prices

But, for most items, where export fall has been due to dampened global prices, things are likely to improve only when prices harden.

“We are categorising items on the basis of the reason for decline and planning action accordingly. We are also in touch with all our Embassies and High Commissions on how to improve agriculture exports in specific countries,” a Commerce Ministry official told BusinessLine.

For products such as bovine meat, dairy, spices and tea, where the export fall is mostly due to saturation and fall in demand in traditional markets, the Commerce Ministry has stepped up efforts to tap new markets through bilateral engagement and road-shows, the official said.

For instance, exports of bovine meat fell 15 per cent in 2015-16 to $ 4.06 billion as China clamped down on imports through Vietnam.

Tapping new geographies

To offset the fall this year, New Delhi has warmed up to Indonesia, which is a big market for bovine meat presently monopolised by Australia.

“We held bilateral meetings and organised road-shows in the country. It seems to have paid off as a top Indonesian official recently stated that the country would import meat from India,” the official said.

The Commerce Ministry has also planned road-shows in different parts of China later this year to help build public opinion in favour of importing bovine meat from India.

“We know that our efforts to tap new markets will be productive as we have already tasted success with tea. When we realised that demand for tea had become static, we focussed on expanding to Iran, Russia and Iran by organising buyer-seller meets. It has paid off and tea exports have now started growing,” the official said.

Russia has also recently agreed to buy dairy products from India, a development that could push up dairy exports which fell 28 per cent to $181 million in 2015-16.

Global repercussions

But, for items such as guargum, wheat and rice, where earnings are low because of falling global prices, there is not much option for the government other than wait for prices to harden for at least a few commodities this year.

“In case of rice and guargum, we have shipped more quantities last year, but the export realization is low because prices have fallen sharply. Hopefully prices would firm up this year as some countries, such as Brazil, are expected to face drought,” the official said.

Source: http://www.thehindubusinessline.com/economy/agri-business/low-commodity-prices-poor-offtake-depress-farm-exports/article8637498.ece