Horticulture: Can be a Foreign Exchange Spinner

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The fruit exporters are presently hopeful that demand for Indian mangoes, grapes, bananas and pomegranates would rise. This year India expects to export more to Japan, the US and Europe. Incidentally, it may be mentioned here that even Mauritius has been opening its market for Indian mangoes, while grape exports to Europe bears hopeful signs.

It is a well-known fact by now that optimum exploration of horticultural crops’ potentialities increases the diversity of the production system, which, in turn, promotes agricultural and ecological sustainability, while contributing to domestic food production.

For developing economies there remain reasons to be proud of. India is the second largest producer of vegetables and fruit in the world, with the UAE, the Netherlands, UK, Russia and Saudi Arabia being top destinations for export of fruit.

Heat Is On

Yes - shipment of fresh fruits has witnessed an increase at a time when India’s overall exports have declined. Overall exports have fallen fruit exports have picked up, when India exported its first consignment of grapes to Canada and pomegranates to the US very recently; it offered a ray of hope for the otherwise dismal exports scenario of the country. Exports of fresh bananas, fresh pomegranate hold promises.

In the recent past also grapes topped the fruit export chart for 2014-15 with shipment touching 107.3 thousand tones valued at Rs 1,086 crore. Last fiscal, export of grapes from India rose around 80 percent year-on-year to close to 2 lakh tones (During this period, export of grapes from Nasik nearly doubled to 1.08 lakh tones, becoming the largest contributor to the increase]. No doubt, grape exports increased due to development of new markets in Canada, Australia and Russia along with a rise in production due to adoption of international certification like The Thompson and Global GAR which are among the key requirements for exporting grapes to European markets.

No doubt, the uptrend to timely rains that led to a better crop of fruit in 2015-16, and India’s adherence to the technical standards lay down by developed countries. Though untimely rains caused damage last year; this time this was not the case. This season has been good for India’s main fruits.

Tackling the Problems Urgently

Though the latest trends indicate increasing demand pattern in the agriculture sector major problems loom large: lack of a broad raw material base in terms of the kinds and varieties of fruits and vegetables suitable in all respects for processing and their availability in commercial quantities at prices economical to the processing industry. Invariably, the cost of the raw material is high; low productivity and poor quality of the produce as compared to the very high levels obtained in the advanced countries affect processing and none of the processing units work to full capacity utilization.

What is more: of the produce taken up for processing is devoid of the quality attributes or characteristics required for processing. Lack of a proper marketing strategy to meet the raw material requirement of processing units and ensuring a sustainable export market for the processed products has been keenly experienced.

Due to poor infrastructure in handling, transport, marketing and processing, horticulture as an industry has failed to register commendable growth in economies like India. Infrastructure stands tall to block the prospects – particularly transportation, road networks and freight and cargo facilities (the freight rates in India are reported to be higher than those prevalent in some other countries, the very fact that does very little to improve our competitiveness), cold storage facilities, etc. coupled with inadequate post-harvest management which affect the produce and products. Poor and inconsistent quality of processed products and inadequate export promotion are also hindering the growth prospects. It is the residual rather than the fresh produce that is often taken up for processing, which has a bearing on the quality.

It is a fact that fruits and vegetables are generally constrained by poor price support, credit support and delivery system. Inadequate supply of power, water and research and development support exist as no less constraints. The quality of packaging also leaves much to be desired – simply not market-oriented – as importing countries demand specific packaging for each produce and the use of biodegradable materials resulting in high cost of packaging.

Why Not Target a Brighter Tomorrow?

The global market for these products is a tremendous one and it goes without saying that if systematically tapped there lies immense scope ahead, especially for the least developing economies as the latter virtually depends on a handful of agri-commodities to earn foreign exchange. Of course, the absolute advantages as well as comparative advantages must be fully reaped. For example, India produces grapes twice a year – a rare advantage and gift of nature which other leading producers do not have.

Especially, trade in fruit and vegetable products has been among the most dynamic areas of international agricultural trade, stimulated by rising incomes and growing consumer interest in product variety, freshness, convenience, plus year-round availability. Undoubtedly, advances in production, post-harvest handling, processing and logistical technologies — coupled with increased levels of international investment - have played a facilitating role.

Specifically, for developing countries, trade in these products has been attractive in the face of highly volatile or declining long-term trends in the prices for many traditional export products. This is also a fact simultaneously that in spite of the fact that many developing country suppliers have entered the field (process is on: Venezuela, Bangladesh in mango market), relatively few have achieved significant, sustained success, which, in turn, adequately reflects the fact that the industry is intensely competitive plus rapidly changing.

What is more, these commodity markets de facto exhibit a complex political economy – domestically and internationally. Undoubtedly, the arcane nature of many policy interventions in these commodity markets and the many heterogeneous interests exacerbate this complexity. It must be agreed upon that identifying superior policy options is not difficult, but what is pertinent on this score is the fact that the feasibility of reform depends on the power of vested interests and the ability of governments to identify tradeoffs and possible linkages that will allow them to pursue multiple goals (food security, income transfers, expansion of domestic value addition etc.) more efficiently.

No less is the importance of the fact that consumers’ preference for selected horticultural crops can be enhanced via value addition as well as promoting diversified uses. Keeping in view their high nutritive value, development of new products by linking research organization with SME would help boost the demand for these products.

Finally, market intelligence system in the region needs to be established/ strengthened for the faster dissemination of marketing information to the producers, traders and consumers.

Dr B K MukhopadhyayDr B K Mukhopadhyay is a noted Management Economist and international commentator on ongoing business and economic trends and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.


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