Fruit exports: Can largest producer India storm the global market

india can boost fruit exports
In trade negotiations with the US, UK, EU, and Australia, the Indian side must seek the removal of trade barriers and call for better market access for its fruit exports.

India’s agriculture exports grew 17.34% to $41.25 billion in 2020-21, jumping after remaining stagnant in the previous three years. A statement from the department of commerce noted a huge growth in the export of cereals, non-basmati rice, wheat, millets, maize, and other coarse grains. The trade data of the first three months of 2021-22 revealed the highest merchandise exports in a quarter at $95 billion, which was 85% and18% higher than the volumes registered in the same period of 2020-21 and 2019-20.

The data underlined high growth percentages recorded in exports of rice, other cereals, spices, cashew nuts, fruits, and vegetables in April, May, and June. The trend in export growth prompted the government to announce an ambitious target of $400 billion exports for 2021-22. India is a leading producer of many agriculture commodities such as dairy products, cereals, spices, fruits, vegetables, rice, wheat, and cotton. But it still has a moderate 2.2% share in global agriculture exports. In 2003-13, agriculture exports climbed from just over $5 billion to $39 billion, however, the growth could not be sustained thereafter. Agri exports has remained stable since 2014-15.

The Agriculture Export Policy 2018 looked to harness the export potential of Indian agriculture by promoting organic, ethnic, and indigenous products with a focus on high value-added produce and perishables to achieve food security and better income for farmers. The policy stressed the need for diversification into new products and perishables as traditional farms produce like rice, wheat and marine products accounted for more than 50% of the total farm exports from India.

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India’s fruit exports: An overview

The Economic Survey 2020-21 identified agriculture as the sole bright spot amid the economic crisis triggered by the Covid-19 pandemic. The sector faced several adversities as the harvesting season clashing with the lockdown period. This led to a shortfall of working hands due to reverse migration, and a shortage of logistic support. Despite all this, agriculture sector clocked a growth of 3.4% in 2020-21, becoming the only sector that grew during the pandemic crisis.

A growth rate of 3.4% hardly reflects the potential of India’s agriculture sector. Though it managed impressive growth in some areas, the sector has been a major underachiever viz-a-viz its huge potential. For an agriculture powerhouse like India, it is necessary to have markets both within the country and abroad to help the farmers realise reasonable returns for their produce. A growing domestic market does provide decent returns on investment, but overseas markets and linkages with the global value chains can lift farmers’ incomes substantially.

Currently, the top 10 export commodities from agriculture and allied sectors are marine products, basmati rice, buffalo meat, spices, non-basmati rice, cotton, oil meals, sugar, castor oil, and tea. The list does not include horticulture products like fruits, vegetables, or dairy products for which India is among the top two producers. The supply chain management for such perishable products integrating producers, transporters, warehouses, processors, and distribution channels is vital to ensure that products are distributed at the right time with minimum wastage.

Unfortunately, the supply value chain management for fruits and vegetables has not received the attention of policy makers. It is found to be dependent on non-scientific modes of transportation and storage, leading to huge losses to farmers and consumers. The current supply chain also involves many intermediaries that corner a major share of profits. These issues need to be addressed systematically to achieve success in the global market.

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India well placed to be a major player

India is the second-largest producer of fruits behind China, and also a front runner in production of bananas, papaya, mango, coconut, areca nut, and cashew nut in the world. In 2019-20, fruits production in India was estimated at 99.07 million tonne against an annual global production of 883 million tonne.

India’s share in global tropical fruit production is also impressive at 30%. According to FAO data, India has a meagre 0.5% share in global trade, despite having a share of 10.9% in fruit production. This looks abysmal as about 9% of all fruits grown are traded globally. Currently, UAE, the Netherlands, Saudi Arabia, Bangladesh, the US, UK, and Russia are the top destinations for Indian fruit exports.

The vast production base of fruits assisted by agrarian culture and diverse climate types offers India tremendous opportunities for exports. The total fruit production in the country has seen an impressive growth of 230% since 2001-02. However, the share of fruits in agriculture exports has been a modest 3-5% in recent years. The Agriculture Export Policy 2018 admits that India is unable to export its huge horticultural produce due to a lack of uniformity in quality, standardisation, and its inability to curtail losses across the value chain.

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Fruits Production and Trade: Global scenario

In 1970s, the US was the largest producer of fruits with India and China holding fourth and fifth ranks. After 1985, China climbed up the ladder to become the largest producer of fruits. Today, China, India, Brazil, the US, and Mexico are the top five fruits producing countries, with China and India accounting for approximately 27% and 12% of global production in quantity terms.

Increasing per capita income, ensuring quicker transportation, improved preservation technologies, development of standards, and more and more free trade agreements between nations/ regions have led to substantial growth in the volume and range of fruits being traded globally. The total global fruit trade market has grown by an average of 75% over the last 10 years, increasing from 45 million tonne in 2010 to around 78 million tonne in 2019, much faster than other agricultural commodities. The four most significantly traded tropical fruits are bananas, pineapples, avocado, and mango. Interestingly, out of these four, India is the top producer of bananas and mangoes.

The global fruit trade has not only seen an increase in volumes and value, but the variety of fruits being traded has also grown creating more opportunities. The countries that benefitted from this trend are Mexico, Peru, Vietnam, Turkey, and Thailand. According to Fresh Plaza Asia, Southeast Asia is recording fast growth in the global fresh fruit market. The largest importers of fruits are the EU, the United States, and Japan. The US imports more than 50% of the fruits it consumes. In 2019, its import basket was worth $16.4 billion.

While avocados, bananas, and grapes are America’s three most popular imports, the other fruits imported into the US are pineapples ($714.4 million), lemons, limes ($691.9 million), guavas, mangoes ($658.2 million) and watermelons ($410.2 million). The countries geographically closer to the US namely Mexico, Chile, Peru, and Canada are the main sources. Interestingly, Vietnam is steadily expanding its presence in the US fruits market for mangoes.

The EU not only offers a large market for fruits, currently estimated at 15 million tonnes of fresh fruits annually, it also provides the exporters a stable market with high returns. The market has witnessed growing demand for fruits such as bananas, avocados, citrus fruits, mangoes, pineapples, and grapes. The demand is met through imports from Peru, South Africa, Morocco, Egypt and Mexico. India has also entered the EU market in recent years with a modest export value of $282 million in 2020-21, half of which came from grapes.

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Global fruit consumption on the rise

The quantum jump in fruit consumption across nations can be attributed to diverse factors, some of which are listed below:

  1. Fall in the percentage of people living in extreme poverty. As per the World Bank statistics, the extreme poverty rate dropped from nearly 36% to 10% between 1990 and 2015. The rate is estimated to have fallen to 8.6 % in 2018, resulting in increased food consumption. Fruits that provide essential vitamins, minerals, and dietary fibre are becoming an essential component of the daily diet of people across countries.
  2. The emergence of a middle class in Asia and other developing regions who can afford healthy foods has pushed the demand for fruits in all seasons. On an average, the consumption of fruits in China saw a fourfold increase during the period 1960-2000, a period of enormous economic transformation.
  3. The share of urban population in developing countries increased from 35% in 1990 to 54% in 2020. Increasing urbanisation impacts not only the consumption level of different foods, but consumption patterns too. Surveys conducted have confirmed that the per capita consumption of fruits in urban areas was twice as much as in rural areas.
  4. Due to quicker and improved transportation, people in high-income countries have also developed taste for exotic fruits available in far-off countries, leading to demand for import. US consumers buy fruits grown in tropical countries. Even in India, several new fruits are available in the markets today.
  5. Some fruits like apples, and melons are available in the market during off-seasons, largely due to technological advancements in storage and transportation.
  6. With more awareness, consumers have changed their preferences opting for more fresh or frozen fruit compared with artificially preserved canned fruit or even juice. According to an analysis by RaboResearch, around 80% of all fruits grown globally are sold as whole fresh fruit.

India’s prospects at fruit exports

The current status of production and trade of fruits wherein India is a dominant producer must be studied to understand export opportunities for the country.

Bananas: The most-traded fruit globally is also the most produced, estimated at around 120 million tonne valued roughly at $31 billion. The international trade of bananas generated $14.7 billion in 2020, up from $10.7 billion in 2016 (Source: https://www.worldstopexports.com/). The European Union accounts for 32% of total global imports, followed by the US (25%), the Russian Federation (8%), Japan (6%), and China (5%).

Banana remains America’s most commonly consumed fruit, though produced on a limited scale. However, the country meets its requirement through supplies from Caribbean islands and Latin America. Bananas are also becoming increasingly popular in Europe. Ecuador with an annual export of $3.3 billion is the largest exporter (Source: https://www.statista.com). This South American country exported bananas worth $642 million to Russia, thus exploding the prevalent myth that banana’s perishable nature is a hindrance in long-distance transportation.

Banana cultivation in India has shown impressive trends in production with more acreage of land being added resulting in 14-fold increases in the last 50 years and more than 3-fold increases in the last 25 years, but the largest producer with an annual production of 32 million tonne had a negligible share of 0.61% in global trade. It exported bananas valued at $99 million in 2020-21 mainly to countries in West Asia.

Mango: India is the largest producer of mangoes, its national fruit. Yet its share in the international trade is less than 1%. The total export realisation from mangoes was a meagre $139.70 million, including mango pulp exported to South Asian neighbours and the Gulf region. The global trade of mangoes is growing at a rate of 5% since 2010. North America and the EU, the two largest markets, are mainly served by Mexico and Peru. India’s exports of the fruit to the US are less than $10 million compared with $658.2 million worth of mangoes imported by the US last year.

Papaya: In 2019, India’s share in global production of papaya was the highest at 6.05 million tonne out of the global output of 13 million tonne. The other leading producers are Brazil, Mexico, Dominican Republic, and Indonesia. In trade terms, Mexico is the largest exporter of papaya in the world and practically all of its exports go to the United States. The US, Germany, Portugal, and Canada are the leading importers, cumulatively importing papaya of value $ 215 million in the year 2020 against a global trade of $337 million (Source: tridge.com).

Its international trade is still limited with less than 3% of the fruit is internationally traded much less than kiwifruit (39%), avocado (34%), banana (18%), and apples (10%). Generally, the retail prices for papayas are high in importing countries compared with other tropical fruits, the reason being the need for air transportation due to its delicate nature which increases selling price by up to 20%.

Guava: A cheap fruit with good nutrition value, guava offers an affordable option for common people in developing countries. India, the top producer, harvested around 45% of the world’s total production of 55 million tonne, only a minuscule part ($1.27 million in 2020-21) of which is exported. The US, EU, and West Asian countries are the largest importers of this fruit. Impressive growth in import of fresh guavas by the US, the largest consumer, has been noticed in recent years.

Challenges to fruit exports

An important sub-sector to agriculture, horticulture, has grown rapidly in India, contributing over 30% to the agriculture GDP. Fruits, a high-value category, constitute an important segment of the horticulture business and offer an option for cultivation to farmers to raise their income, both from domestic sales and export. A Niti Aayog publication states that with just around 3.7% of the total cultivation area utilized, fruits output in value terms had a share of 10.36% of the output of the total crops.

The key reasons why Indian fruits don’t reach export markets in substantial quantity are the lack of quality and safety practices in production and packaging. To overcome the challenges, it will need a paradigm shift in approach towards agriculture business, backed by technology. The strategy of ‘farm to fork’ transformation needs to be extended to “laboratories to farmland to consumer, some of which are listed below:

i. Research room efforts:

a. Application of tissue culture for clonal propagation of the desired type of pathogen-free plants to improve the quality and nutrition of fruits.

b. Efforts to develop and produce fruits and varieties that are in demand in large overseas markets and to increase their shelf-life.

ii. Plantation site:

a. Proper selection of fruits variety for plantation

b. Using plantation techniques such as High-Density Plantation (HDP).

iii. Productivity:

Although the average productivity of fruits in India is closer to the world average, at 11.7 tonne per hectare, it is only half the productivity in the US at 22.2 tonne per hectare, India’s growth in the overall production of fruits is more due to increases in the area of cultivation and not enhanced productivity. Thus, a scientific assessment of the nutrient requirement of fruit trees is called for assessing nutrient and irrigation requirements for increasing their productivity.

iv. Training:

Technical support and training to the farmers for educating them on adopting best practices to increase their fruit’s quality and productivity.

v. Post-Harvest Infrastructure:

1. Adequate cold storage facilities are available for just about 10% of India’s horticulture production. As per Economic Survey 2020-21, the lack of modern sorting and grading facilities leads to post-harvest losses of up to 6-18% in fruits. In particular, multi-commodity storage near the farms is required. According to an estimate, in Tamil Nadu, the largest producer state of bananas, the wastage rate is around 30% for lack of post-harvest infrastructure.

2. More facilities for irradiation, vapour heat treatment (VHT), and hot water treatment, to maintain quality standards of fruits to increase the export to developed countries.

3. Encouraging and promoting investment including FDI in specialised transport infrastructure and food testing and inspection infrastructure near the farm.

4. Application of approved fruit and vegetable coatings to prevent oxidation, moisture transfer, and pathogen growth in fruits during transportation needs to be encouraged.

vi. Application of digital tools:

The challenge to meet food and nutritional requirements of 9.7 billion people by 2050 is a tough one in light of the constraints such as land availability and increased cost of farming inputs. Increasing fruits output could be achieved by deploying advanced digital tools. Besides high yield seeds and fertilisers, digital tools are capable of helping farmers — both big and small — in decision making for more efficient and effective resource use while maximising yields.

It will help in the right management of the soil to meet the needs of the tree such as moisture level, nutrient content, and also for weed and pest control. Smart farming or the application of IoT in the orchard, is the most awaited change agent in India to meet the twin challenges of food security and farmers’ welfare.

vii. In FTA negotiations with the US, UK, EU, and Australia, the Indian side needs to flag issues for removing trade barriers and facilitate market access enabling it to integrate into the global value chain of fruits trade. With import norms for fresh fruits becoming stringent regarding the use of agrochemicals and pesticides, raising awareness among producers about these issues is equally important.

(Krishna Kumar Sinha is an industrial policy and FDI expert based in New Delhi. His last assignment was as an industrial adviser in the department of industrial policy and promotion, DIPP, currently known as DPIIT, under the ministry of commerce and industry of the government of India.)

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