Need for India to focus on standards-driven, value-chain centric agricultural export competitiveness – Part – I

Although India is among the world’s largest producers of rice, milk, spices, fruits, fisheries and several horticulture products, its share in global agricultural exports remains modest at around 2.2 per cent. With vast production capacity the country still struggles to fully translate its agricultural strength into sustained global competitiveness, it is pointed out.

The challenge therefore is no longer, merely about producing more, but about building:

1. Resilient;
2. Traceable;
3. Standards-compliant, and;
4. Globally integrated agricultural value chains.

International Trade Scenario

International Trade increasingly revolves around:

1. Quality assurance;
2. Sustainability;
3. Food safety, and;
4. Logistics efficiency.

Taking note of this, India therefore must move beyond the traditional farm-to-market approach, toward a modern farm-to-global-market framework.

At the core of this transformation lies the strengthening of the value chain.

Nature of Indian Agriculture

Indian agriculture continues to be fragmented, dominated by:

1. Smallholders, and;
2. Weak aggregation systems.

A substantial share of the agricultural produce passes through multiple intermediaries before reaching processors or exporters, eroding:

1. Farmer margins, and;
2. Compromising consistency in the quality.

Not only that, in several commodities, post-harvest losses remain significant due to:

1. Inadequate cold chains, a supply chain that uses refrigeration to maintain perishable goods;
2. Storage infrastructure, and;
3. Grading systems.

This fragmentation becomes particularly costly in export markets, where buyers demand:

1. Uniformity;
2. Traceability, systems that help in tracking the journey of farm produce from its origin to the final destination, and;
3. Reliable delivery schedules.

Countries competing with India in agri-food exports such as Vietnam, Thailand, Brazil, and the Netherlands are said to have invested heavily in integrated supply chains linking:

1. Farmers;
2. Processors;
3. Logistics providers;
4. Certification agencies, and;
5. Exporters.

As such, India’s agricultural competitiveness will increasingly depend on whether it can replicate similar ecosystem efficiencies.

Observations of a National Council of Applied Economic Research (NCAER) Study

Evidence from a NCAER study on Agro-processing Cooperatives and Institutional Financing highlights the Structural Weaknesses in India’s agricultural value chains.

The study, covering 304 cooperative units across states including Assam, Gujarat, Kerala, Maharashtra, and West Bengal, found that Marginal and Small farmers continue to sell a major share of their produce to private traders due to:

1. Weak aggregation systems, and;
2. Inadequate storage infrastructure.

As a result, farmers often fail to benefit from favourable price movements, even during bumper harvests.

The study also observed that, nearly 34 per cent of surveyed Agro-processing units were operating below optimal capacity because of:

1. Irregular raw material supply;
2. Shortage of skilled manpower;
3. Weak market demand, and;
4. Limited access to modern machinery.

Role Farmer Producer Organisations (FPOs), Cooperatives, and Agri-tech Platforms can play in the transformation

The NCAER Study underlines the urgent need for:

1. Stronger Producer Organisations;
2. Cooperative Processing Systems;
3. Warehousing Networks, and;
4. Integrated Supply Chains, to improve India’s export competitiveness.

According to the study, Aggregation at the producer level, not only improves bargaining power, but also facilitates:

1. Standardisation;
2. Contract farming;
3. Digital traceability, and;
4. Certification compliance.

Strengthening linkages between farmers and food processing industries is considered equally important, especially for high-value exports such as:

1. Fruits;
2. Vegetables;
3. Marine products;
4. Spices;
5. Dairy, and;
6. Organic produce.

Challenge posed by shifting global trade barriers,  From Tariffs to Non-tariff barriers

Stronger value chains however alone, it is opined, are not sufficient, if barriers to market access continue to constrain exports. It is observed in this connection that, Global trade barriers are increasingly shifting away from Tariffs toward Non-tariff measures, particularly:

1. Sanitary and Phytosanitary (SPS) regulations relating to the health of plants, especially with respect to the requirements of international trade: and;
2. Technical Barriers to Trade (TBT).

Technical Barriers is a category of non-tariff barriers to trade, the widely divergent measures that countries use:

1. To regulate markets;
2. Protect their consumers, or;
3. Preserve their natural resources.

However, they can also be used:

To discriminate against imports, in order to protect the domestic industries.

These standards govern:

1. Pesticide residues;
2. Food safety;
3. Animal and plant health;
4. Packaging norms;
5. Traceability, and;
6. Sustainability practices.

Effect of SPS notifications and Trade-related standards on India’s Agricultural exports

Studies indicate that, SPS notifications and trade-related standards, can significantly reduce agricultural exports from developing economies by increasing compliance costs and uncertainty.

 For Indian exporters, SPS compliance has emerged as one of the most critical bottlenecks.

It must be noted that:

Export consignments from India have periodically faced rejections in advanced markets due to issues relating to:

1. Residue levels;
2. Contamination, or;
3. Documentation gaps.

Such incidents not only cause immediate economic losses, but also affect long-term credibility in the international markets.

The issue in case of India, according to the experts, is that:

India’s compliance ecosystem remains uneven across regions and commodities, resulting in many small and medium exporters lacking access to:

1. Internationally accredited laboratories;
2. Real-time testing facilities;
3. Traceability systems, and;
4. Technical advisory support.

The problem according to them is that:

Compliance is often treated as an end-stage formality, rather than being embedded throughout the value chain.

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