Dr. Syama Prasad Mookerjee Research Foundation

EcoAgri Policy Diary

This section deals with the latest issues of the Indian agriculture economy and required policy inputs. Indian agricultural economy faces several challenges that need to be address by specific policy interventions. Following are the some recent issues of Indian agriculture have been covered in our new section of EcoAgri Policy Diary.

  1. Drought and Floods and Indian Sugar Industry:

Recent drought and floods have made an impact on sugar production.  Sugar production states have been affected by floods especially Maharashtra which is the second larger sugar-producing a state in India. In the 2019-20 sugar production is likely to fall by 19%, hit by drought and floods.

Policy interventions: Since Maharashtra is a significant sugar-producing states drop in production will play a crucial role in determining the country’s total sugar production for the 2019-20 season. Maharashtra state’s agro-economy is largely dominated by the sugar industry, if there are no productions then all sugar mills from the state won’t be operational this year due to non- availability of sugarcane. There is strong nexus between sugar mills and rural economy especially in terms of employment generations. Sugar mills provide direct and indirect employment to lakhs of people in and around sugar mills. There must be policy intervention to operate all sugar mills in the state.

  1. Unseasonal rainfall and Indian Agriculture Economy:

Recent unseasonal rainfall adversely affected in Maharashtra, Telangana, and Madhya Pradesh. The crops like soybean, cotton, paddy, maize, jawar, bajra and ragi and high-value horticulture crops such as grapes, pomegranates and vegetables have been damage.

Policy Intervention:  Due to crop damage productions and exports will be reduced down significantly and farmers may suffer heavy losses.  Since rain continued harvesting is getting delayed that will impact prices especially crops like Onion. Overall, the food industry needs a strategic approach.  State governments must offer financial assistance to farmers against crop damage and also they must get compensation from insurance. There must be a crop-wise impact assessment in terms of cultivation, production, consumption, processing, export, import, and employment generations, etc.

  1. US, China Trade War and Indian Agriculture Economy:

 Trade war between the US and China is benefitting India to raise export especially agriculture export. The on-going trade war between the US and China will help India to tap export opportunities in both the countries in areas such as garments, agriculture, automobile and machinery, according to trade experts. US has broadly targeted intermediate components from China, particularly machinery and electronics, whereas China is targeting American automotive and agricultural products including Soybean. These areas offer huge opportunities for India.

India’s Approach:

India will benefiting through increasing exports to the China, US  and a shift of foreign direct investment (FDI) to India. However, to substantively benefit from this situation, India requires a strategic approach to convert this opportunity into a major gain. India needs to focus on becoming a new powerhouse as a global hub for exports, with a major positive impact on competitiveness and job creation.

China’s merchandise exports are almost the same as India’s GDP. Even a 10% shift from Chinese exports to Indian exports would imply over 75% increase in Indian exports. India needs to develop a strategy and vision for itself and the world to make this a reality. Its recent tepid export performance suggests that investment from large global companies is the transformative path for India, provided certain key points are kept in mind.

Federation of Indian Export Organisations (FIEO) said the trade war between the US and China is benefitting India.  China is also more willing than ever before to provide better market access to India on a wide range of agriculture and processed food products. India would be getting better access to Chinese market as China would like to prove to its citizen that the tariff war has little or no impact on it. It is a golden opportunity for India to increase presence in Chines market. If we adopt right marketing strategies, Indian agricultural and processed foods can create place for themselves in Chines market.

(The author is a Agricultural and Natural Resources Economist)