Potential for Export of Horticultural Produce from India

Rajat K. Baisya

India produces good quality fruits and vegetables that compares well with the produce of any other country in global trade. India, therefore, can become a significant player in global trade in horticultural produce.


I have been closely studying the supply chain efficiency of our horticultural produce particularly in Maharastra during my involvement to organise regular supply of fresh horticultural produce for the cash & carry store we have set up in Mumbai. The Maharashtra farmers sell their horticultural produce in various regulated markets set up by state APMC. One needs to have a license to trade in those markets and also a separate license to store and sell those fresh horticultural produce. I have observed that we produce good quality fruits and vegetables that compares well with the produce of any other country in global trade. India, therefore, can become a significant player in global trade in horticultural products. Globalisation, however, has made world trade on horticultural produce fiercely competitive for the last few years.

In terms of total production, India is the fruit and vegetable basket of the world. World production of fruits and vegetables stands at 550 million tonnes and 910 million tonnes respectively. This is equivalent to USD 60.6 billion of fruits and USD 44.7 billion of vegetables growing at a CGAR of 12.36% and 12.68% respectively. India is the second largest producer of fruits and vegetables only second to China. India now produces about 64 million tonnes of fruits and 126 million tonnes of vegetables, which is about 12% and 14% of the world production respectively. We produce 54% of the world’s mango, 23% of banana, 24% cashew nuts, 36% of green peas and about 10% of world’s onion. Maharashtra alone produces 25% of the country’s banana followed by Tamil Nadu (20%) and Andhra (10%) and Karnataka (10%).

Although we produce large quantity our export performance is insignificant. India’s share in world exports of fruits and vegetables is less than 1.5%. However, between 2004 and 2007 our export has grown at a CAGR of 20.61% for fruits and 7.21% for vegetables. Over 90% of our fruits and vegetables go to West Asia and East European countries. In 2007-08 India’s export of vegetable stood at USD 627 million. In terms of value, mango stands first in case of fruits and onion in case of vegetables. Volumes have been talked about why our performance in global trade is so dismal which has been largely attributed to huge wastage (stated to be around 40%) and lack of infrastructure facilities. Of late, however, potatoes and okra are showing good promise in export market.

APMC market in Vasi in Navi Mumbai is well organised. I had visited this market number of times. When I first saw some exotic variety of chilli, which are very large, round in shape and having dark red or yellow colour as well as broccoli I thought those were imported. But when I made enquiries I was told that those are locally produced in green house conditions. Quite sometime ago I had visited a vegetable and fruit market as well as flower market in the heart of the city of Amsterdam. Vasi market, although designed in wholesale format resembled like Amsterdam market in terms of number of variety of fruits and vegetables are offered for trade. Vasi market supplies mainly to Mumbai city and also exports. Many exporters have their stock points as well as offices and repacking stations located within the market premises.

Total exports of horticultural products from India during 2007-08 were USD 1072 million and this basket includes fresh mango and grapes as well. Maharastra has exported grapes to the world market and offers good potential for banana as well. This has to be an integrated effort. Only making attempts at trading level will not succeed. Corporate sector had tried that earlier and failed miserably. Tata Group had set up an independent company near Mumbai airport for packaging and exporting of fruits like mango and orange from Nagpur region in Maharashtra. Although logistically they were close to the production centres and airport and also was having modern packaging facilities and experienced people to manage that but still it did not make the venture financially viable. They had to close down later. While I was working in Escorts we tried to start trading Pineapple sourcing those from Siliguri in West Bengal to Italy. We had a long-term contract signed with the largest fruits and vegetable cooperatives in Italy. The business, however, did not move beyond despatching first consignment which itself ran into problems on account of the fact that fumigation was not done properly at airport although certificate was issued to this effect. And we lost the money on the first consignment itself and on the top of it had to pay for fumigation and destruction of stock at the importer’s end. We realised that this was not for large corporate and withdrawn from the trade. These instances are glaring examples that the system has not been working. Sending stock to East European countries and to West European countries would not mean the same thing, as the rules regarding phytosanitary conditions and certificates would be different. The traders therefore, had to go through a lot of training before venturing into the trade of exporting new varieties to new customers.

The total system orientation therefore, is essential to develop this trade, which would call for involvement of multiple agencies. Immediate basic need is to arrest the losses by developing and implementing modern harvesting as well as post harvest technologies. And most importantly having cold chain to extend the life of the fresh produce is necessary. If someone looks at the installed capacity of cold storages in the country and the capacity utilisation one would find that existing capacity of our cold storages are not fully utilised. And at the same time we need cold storages to prevent post harvest losses. The reason being cold storages are located mostly near cities and therefore its utilisation is limited to the surplus brought to city for sale in seasons. We don’t have cold storages close to harvesting areas to be used by farmers. Secondly, cold storage charges are high and sometimes do not make sense to hold stock to be sold later and more particularly so when there is uncertainty of the eventual price that farmers can get out of it. There is also a need to extend credit facilities to farmers to pay the cold storage charges as and when the stocks are taken out for sales and not before. And most importantly the whole supply chain has to be integrated and in absence of that the mechanism will not work. This is not the job of one agency but a holistic approach is required involving multiple agencies including government and regulatory agencies.

There is another issue that we need to tackle with respect to farm level productivity. Our productivity is too low to compete at international market. The scientific and research community must address this issue. It makes ample sense to focus on certain crops where we can definitely make a difference such as onion, potato, pineapple, mango, banana, grape etc and not exhaust our energy in trying out everything. It is the Brazilian model for citrus orange that we should try. If they can take the leadership position in orange we can possibly become number one in certain product categories. Such identified products have to be totally integrated keeping the cost low and managing the whole chain properly holds the key.

-- This article was first published in "Processed Food Industry" monthly magazine.




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