Authors: K.Usha 1, Nimisha Sharma*1 and Tanushree Debnath1
1 Principal Scientist, Division of Fruits and Horticulture Technology, IARI, New Delhi
The Indian economy is in the throes of a crisis, which, though not akin to 1991, has proved to be intractable so far. Over past few years the value of rupee to dollar has come down. The series of measures announced by the Reserve Bank of India were aimed at encouraging forex inflows, and thereby reverse the downtrend in the value of the rupee vis-a-vis the dollar and other currencies. Soon it was felt that other measures that stimulate export growth were needed to revive the economy.
Rupee recovered from a record low of Rs.57.32 to below Rs.55 for a while, with active intervention of the monetary authorities, however forex scenario is quite volatile. It is a tough task to increase exports by over 20 per cent in dollar terms in 2012-13 as the prospects for achieving a high level of exports of agricultural products are not encouraging. Despite this the export growth was satisfactory at 23.6 per cent in 2011-12 (according to RBI data). However the trade deficit was at a record $189.7 billion in 2011-12 against $ 130.14 billion in 2010-11. It is postulated that exports should increase by 20 per cent in 2012-13 presumably under the impression that the depreciation in the value of the rupee would get reduced after the measures taken to stimulate forex inflows bear fruit. Hence continuous efforts and strategies will be required to stimulate the export growth and industrial output.
It is too early to estimate how exports will grow as there are many imponderables. It also remains to be seen whether the volume of exports can be improved to hit the target of $ 350 billion, and the trade deficit contracted suitably, particularly when the contribution of agricultural products to exports growth may not be of the dimensions of 2011-12. The economy has the requisite resilience and the growth recession can be reversed if confidence in the outlook for the rupee is restored and forex inflows get augmented.
Potential of Fruits for Exports
India is the second largest producer of the fruits in the world after China. Apart from the natural factors of soil and climate, it is located geographically close to important world markets which favour export of fresh fruits and fruit products. Fruit sector thus not only helps in improving productivity of land, generating employment, improving economic conditions of the fruit growers and entrepreneurs but also in enhancing exports and foreign exchange earnings and above all providing nutritional security to the consumers. Fruit crops thus provide a better alternative for diversification in view of higher returns available from them. Some of the most prominent fruits which are cultivated in India include banana, citrus fruits, mango, apple, papaya, pineapple, guava and grapes. Of the temperate fruits, apples, plums, peaches, almonds and apricots are grown in abundance. One of the best things about fruit is; it can be consumed as fresh or dried or processed into several products through value addition and therefore makes a variety of fruit and fruit products more readily available all year round.
Fresh fruits and processed fruit products have a high income elasticity of demand. As income goes up, demand rises rapidly, especially in the middle-and high-income groups in developing and developed countries. In developed countries, the growing concern for health and nutrition has caused consumer preferences to shift from high-fat, high-cholesterol foods, such as meat and livestock products, to low-fat, low-cholesterol foods, such as fresh and dry fruits. Also, there is an increasing tendency in developed countries to diversify the diet by consuming a wide variety of fruits, a change partly stimulated by the increase in international travel and communications. This, in turn, has led to an increase in imports of new and non-traditional fruit products, especially from the tropical developing countries.
Fruit Exports-Current Situation
India's exports of fruits are rising but they still remain abysmally low when compared with production. In fruits, India stood first in the global production of Bananas and Mangoes, fourth in Guava, fifth in pineapples, sixth in oranges, tenth in apples and seventeenth in grapes. The major fruits exported from India are mango, grapes, orange, apple, banana and mosambi. The major share of India’s exports of fresh fruits goes to Bangladesh, Nepal, UAE, UK and Malaysia. The export of fresh fruits and processed products, have risen 24 per cent in value terms to Rs 8,241 crore in 2011-12 over Rs 6,638 crore in the previous year. The shipments of fresh fruits were up 48 per cent at Rs 736 crore (Rs 496 crore). The exports of fresh grapes increased to Rs 603 crore (Rs 428 crore), while walnuts increased to Rs 231 crore (Rs 166 crore). The exports of fresh mangoes stood at Rs 210 crore (Rs 165 crore). The effect of growth in export of fruits on the Indian market does not seem to be visible as the share of exports of fruits were only 0.55 per cent of their total production in 2010-11(Source: Minister of State for Commerce and Industry). In spite of being one of the largest producers of fruits in the world, India's share in the value of world exports in many fruits is ridiculously low at much less than one per cent. The quantity of fruits exported and value in rupees received from exports are shown in Table 1. There is still a huge unexplored and unexploited potential in terms of specific fruit products and their quantities. Also important is that where we export to increase the exports. There are still several untapped markets particularly in developing countries which can be exploited to improve the fruit exports.
Constraints for Fruit Exports
The low share in exports vis-a-vis production is because of high domestic consumption, fragmented food supply chain, small land holdings, lack of appropriate infrastructure, high cost of logistics, difficulties and high international transportation costs. A large volume of our fruits are exported to SAARC and ASEAN Nations and countries in Gulf. Buyers from these countries are not quality conscious and hence export price is also not attractive. The major constraints of marketing fresh fruits and processed fruit products include lack of marketing institutions to safeguard the farmers’ interest and rights over their marketing (e.g. cooperatives), lack of coordination among producers to increase their bargaining power, poor product handling and packaging, imperfect pricing system and lack of transparency in market information system. But with new marketing initiatives, the post-harvest losses and wastage due to poor infrastructure facilities such as storage and transportation are reduced to a considerable extent, yet a lot needs to be done in this sector.
Strategies to Enhance Export Competitiveness
Fruit crops are perennial and once planted will remain in the field for several years. In the 21st century, success in commercial production and sales by small and marginal farmers will likely depend on their ability to focus on high-value, specialty crops targeted at specific niche global markets. Given the fact that there exists a good international demand for certain fruits and fruit products, and to exploit the ample export potential of fruits, efforts are needed to convince the fruit growers to grow premium varieties that can fetch high price to their produce. A shift in cropping pattern in favour of growing premium varieties, educating the growers on production under the contract system, good fruit cultivation and cultural practices and creating a promotional campaign to increase productivity, production of quality fruit, processing, focused research, policy initiatives, high efficiency inputs, establishing the required linkages in the area of post-harvest infrastructure like packing house facility with pre-cooling chambers, increased facilities for irradiation and vapour heat treatment, better loading and weighing facilities, better road links, reefer vans, special refrigerated trains for transporting fresh fruits and fruit products on a larger scale from place of production to processing units, airports or seaports, financial assistance from banks, improving the market information system by making available latest and extensive market information to all growers and exporters through the use of internet facilities, mobile phones, television, radio, feed-back of information between the market and growers to enable production constantly oriented towards consumer demand, will help in achieving strategic positioning, meeting global standards, challenges of competition in world trade market, and long-term success and profitability to the small and marginal fruit growers.
Hence the fruit growers and business owners need to identify global market opportunities, niche areas, successfully differentiate their products, establish brand loyalty by labelling to uniquely position their products in the eyes of the consumers, achieve global market penetration and increase market share in order to remain competitive, profitable, and economically viable in this changing and challenging world trade market. This is not an easy task. Hence there is a need to strengthen export oriented production of focus crops in selected production clusters. Indian government should encourage and promote contract farming for export of fruit produce to quality conscious developed countries by making arrangements to provide planting materials, critical farm inputs, production and plant protection technology, post harvest management protocols, specifications for packaging materials, labelling and supply schedules to the contract farmers by the overseas buyer. Domestic fruit growers benefit from such exports not only in terms of better price realization but also in overcoming barriers caused by technology gaps, input gap and gap of market intelligence.
Developed countries where the costs of production are escalating are likely to shift their production bases to countries like India. In order to encourage this, India has to attract foreign direct investments (FDI) through appropriate policy modifications including changes in land laws and taxation laws. Foreign direct investment in multi-brand retail would help in establishing backward-forward linkages to increase exports and benefit the farmers. This will also create jobs in these sectors and enhance their capabilities as retail buyers buy in bulk for their global re-distribution. Chile has been largely benefited with multi-brand retail in pushing its exports of wine and fruits across the globe. Indian fruit growers will be able to access the world market as efficient producers-sellers linkage would be established which would be more remunerative for producers. Indian farmers receive only 30 per cent of the price paid by consumers as compared to 50-70 per cent in developed markets. A structured retail would, therefore, enable better price discovery.
Managing Global Operations
The term ‘globalization’ describes businesses process in which geographic distance becomes a factor of diminishing importance in the establishment and maintenance of cross border economic, political and socio-cultural relations.
There are four developments, which have spurred the trend toward globalization. These are:
1. Improved transportation and communication technologies;
2. Opened financial systems;
3. Increased demand for imports; and
4. Reduced import quotas and other trade barriers.
Global markets impose new standards on quality and time. Fruit growers and fruit business owners should not think about domestic markets first and then global markets later, rather it should think globally and act locally. Also, they must have a good understanding of their competitors. Some other important challenges of managing multinational operations include other languages and customs, different management style, unfamiliar laws and regulations, and different costs.
Export Support Infrastructures
Presently, developing infrastructures for exports of perishable fresh fruits and fruit products through seaports, air ports, inland ports and land custom stations has not been given due attention under Horticulture Development Programmes. At times, long queues of trucks carrying cargo of perishables for export to neighbouring countries through inland ports and procedures adopted by custom authorities and shipping lines in dealing with perishables cause delay and corresponding deterioration of quality of the export produce. Schemes of Govt. of India under National Horticulture Mission (NHM), National Horticulture Board, and Technology Mission for Integrated Development of Horticulture in North-East and Himalayan States, APEDA etc. which support to boost horticulture sector in the country should give due attention to provide warehousing facilities for perishables at seaports, land custom stations, dry docks and air cargo centres.
Adoption of EurepGAP (now GlobalGAP) standards by fruit growers for cultivation of grapes and other fruit crops such as pomegranate has led to increased market acceptance and higher volumes of export as well as higher price realization. Fruit exports in the years to come would depend on adoption of international standards of quality safety and hygiene. The stringent standards prescribed by developed countries for contaminants and maximum residue limits (MRLs) for pesticides are a challenge for the producers and processors. Special infrastructures need to be designed and introduced for training export-oriented clusters, service providers, entrepreneurs, potential exporters and fruit growers’ organizations regarding production of quality produce for meeting quality standards of consignment in export destination, maturity standards for harvesting the produce and grades set by regulation bodies such as AGMARK, CODEX, GlobalGAP, export procedures, opportunities and strategies that enhance export competitiveness. Indian fruit exporters thus, need to organise themselves as a collective group rather than as individuals to face global competition and build competitiveness to emerge as dependable suppliers of quality products on a sustained basis. The Indian economy can be placed on the growth path only if there is an increase in the forex inflows as in 2007-08. This can be made possible through our concerted efforts to increase fruit exports in the coming years.
Table 1: Quantity and Value of Fruit Exports during 2011-12
|Country||Product: Sapota (08109030)||Product: papayas fresh/dried(08072000)||Product: Grapes, fresh (08061000)||Product: Bananas, plantains (08030000)||Product: Guavas (08045010)||Product: Lemons (Citrus & limes (08055000)|
|China p rp||1||44|
|Congo p republic|
|Egypt arab republic||68,000||22,92,658||21,883||4,30,499|
|United arab emirates||12,16,441||2,02,28,620||82,92,796||9,27,79,048||1,01,41,522||62,42,85,325||1,51,33,609||37,94,20,734||1,05,597||25,48,475|
|Vietnam social republic||2,77,200||3,88,90,304||6||530|
Source: DGCIS Annual Export (Quantity in Kg and Value in Rupees).
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