A global glut of farm produce is suppressing exports and threatening to make the lives of Indian farmers even more difficult than they are now, according to media reports. The low price of agricultural commodities is bad news for the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government of Prime Minister Narendra Modi in an election year.
The centre's interim budget proposal to give cash compensation of Rs 6,000 for a hectare of land to small farmers by way of direct cash transfer into their bank accounts will do little to improve their plight and could influence rural voting, observers say.
India's exports have plunged by about 46 per cent in volume due to burgeoning international inventory that has put pressure on the prices and driven stockists to delay off-take, the reports say.
India's wheat exports dropped to 135,284 tonnes valued at $35 million in the first three quarters of the financial year from 249,702 tonnes valued at $72 million during the corresponding period in the previous year, according to data that the Agricultural & Processed Food Products Export Development Authority (Apeda) has compiled.
Exports of non-basmati rice fell by 14 per cent by volume and 16.4 per cent in value due to heavy international supply. Market sources report a decline in the export of basmati rice, groundnut, fresh fruit, and buffalo meat, during the first three-quarters of the current fiscal. However, government circles express optimism for the last quarter of FY19.
"India's agri commodity exports declined for the nine-month period ending in December due to weak global prices. With global prices having already started recovering, agri exports from India are all set to move up," the Business Standard website quoted Anup Wadhawan, secretary in the Department of Commerce, as saying.
Price realisation from most agri commodities fell following the global glut. The average realisation for wheat fell from $288 a tonne in April–December 2017 to $257 a tonne for the same period this fiscal, while that for groundnut fell from $1,057 a tonne to $966 a tone, according to the report.
The United Nations Food and Agricultural Organisation (FAO) has pegged world cereal production at 2,611 million tonnes for 2018-19, against 2,659 million tonnes in the previous year. The global consumption is estimated at 2,658 million and a huge spillover from the previous year is likely to keep prices down.
The Modi government, facing a general election in a few months, announced a bevvy of populist measures to woo back the rural voters who seem to have deserted the BJP in the recent state elections forcing the party to sit in the opposition in three major Hindi heartland states. Congress president Rahul Gandhi, who heads the opposition United Progressive Alliance (UPA), has also focused energies on farmers with the states the party won waiving a huge chunk of farm loans.