Budget '24: Four-fold rise in farm exports over 3 years `possible'

Budget 2024: Finance Minister Nirmala Sitharaman will unveil the first Union Budget of the Modi 3.0 government in the third week of July. The upcoming budget is likely to be an extension of the interim budget presented in February 2024. In the run-up to the event, the finance minister held several pre-budget consultations with representatives of various sectors in June.

Among the key sectors, India's agriculture sector is expected to grow at the rate of 6% percent in the current fiscal 2024-25 (FY25). Experts say that the farm and agri sector has grappled with strenuous challenges such as drought, adverse weather conditions, the impact of climate change, and inflationary pressures.

According to most industry bodies, key technological interventions, robust rural infrastructure, private sector engagement, market liberalization, and efficient resource utilization will ensure a strong and reliable future for India's agriculture sector and its farmers. Here's what leading industry leaders expect from the upcoming Interim Budget 2024 to strengthen India's agriculture sector

 Higher agri exports

The exports of agri and allied products should be increased to the level of $100 billion in the next three years from the current level of around $25 billion (FY 2023), according to PHD Chamber of Commerce and Industries (PHDCCI). The current markets of agriculture exports are confined to the Middle East, Africa,  South East Asia, and South Asia, besides a limited presence in the USA and European Union. 

The key export destinations are Bangladesh, UAE, Saudi Arabia, USA, and Vietnam, accounting for over 30 percent of exports. There is a need for expansion to new and unexplored markets, according to experts.

There is an over-dependence on certain limited products, which requires considerable diversification. This leads to exports heavily skewed in favour of Cereals (50 percent), other processed food (19 per cent), animal products (15 percent, processed vegetables/fruits (eight percent), and marine products (19 percent). PHDCCI suggested that new products must be explored where India has a comparative advantage.

The export of non-basmati rice reached $6.35 billion in FY 23, but exports may decline due to export restrictions imposed during a shortfall in production. The approach should be to create a buffer stock in critical export items and avoid restrictions as much as possible, according to the industry body.

Long-term credit for farmers

The industry body said that there is a need to strengthen access to credit for long-term loans to enhance growth and productivity in the sector and farm incomes. It is also crucial to minimise wastage from the current level by augmenting storage capacities and upgrading the warehouses.

To support farmers and raise incomes, PHDCII suggests that Farmer Producer Organisations (FPO)/ cooperative models with small-scale farmers should be developed to explore crop diversification and hybrid crops with risk coverage for income support.  Given the global demand for wheat and yield impact from high temperatures, experts advise expanding wheat cultivation in cooler regions.

Strong rural infrastructure

Infrastructure is a critical driver of agricultural growth. Focusing on building rural infrastructure, including roads, bridges, storage facilities, cold chains, and veterinary services, can significantly reduce post-harvest losses and improve market access for farmers in remote areas, according to industry experts. These would lead to increased participation in global agriculture and food exports.

Minimise climate change impact 

A survey conducted by the Forum of Enterprises for Equitable Development (FEED) in collaboration with Development Intelligence Unit (DIU), revealed that the main causes of crop damage were drought (41 percent), irregular rainfall, including excessive/ non-seasonal rains (32 percent), and early withdrawal/late arrival of monsoons (24 percent).

According to the report, nearly 43 percent of the surveyed farmers lost at least half of their standing crops. Rice, vegetables, and pulses were particularly affected by uneven rainfall. The marginal farmers, those with less than one hectare of land, constitute the largest segment of India's agricultural sector, representing 68.5 percent of all farmers, but own only 24 percent of crop area.

"Climate change is no longer a threat on the horizon. It is here and now. The unprecedented summer heat is a clear indication of this crisis. Developing an adaptation strategy is not optional but essential. We need to promote climate-resilient agricultural practices, diversify livelihoods, and improve access to financial services and technical advice," said Sanjeev Chopra, Chairperson, FEED.

As many as 80 percent of marginal farmers in India have suffered crop losses due to adverse climatic events over the past five years. The report highlighted significant gaps in support systems for marginal farmers. Around 83 percent are covered under the PM Kisan Samman Nidhi scheme, but only 35 percent have access to crop insurance, and 25 percent receive timely financial credit.

The survey found that two-thirds of the marginal farmers affected by extreme weather events adopted climate-resilient agricultural practices, including changes in the sowing time and methods, crop duration, and water or disease management strategies.

However, 76 percent of those who adopted these practices faced challenges such as lack of credit facilities, physical resources, small land holdings, and high up-front costs. While 21 percent of the marginal farmers have cold storage within 10 km of their village, only 15 percent have used these facilities.

Allocation

Experts also recommended enhancing the budget allocation for the Agricultural and Processed Food Products Export Development Authority (APEDA) from ₹80 crore to ₹800 crore to boost farm exports. They also suggested establishing district export hubs and launching a National Goat and Sheep Mission.

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