Indian agri exports to depend heavily on normal monsoon to come close to $50 billion mark achieved last year



Grape exporter Nitin Agrawal encountered some odd weather events this season. His vineyards in Nashik and five other districts in Maharashtra received excess rainfall in November and December, and then in January, the temperature dipped so much that he had to delay harvesting. Agrawal, MD of Euro Fruits, engages some 250 farmers and exports about 7,000 tonnes of grapes to the UK and Europe annually.
He says the change in weather affected the quality of grapes, particularly their taste. Agrawal isn’t alone in being buffeted by unusual weather. This year, large parts of the nation, mainly north, central and western India, saw early spells of heatwaves, reducing the production of wheat, vegetables and fruits. Agricultural scientist and retired vice-chancellor of Punjab Agricultural University, Baldev Singh Dhillon, estimates that the unusually high temperatures in March and early April reduced wheat production by 5-6 quintals per hectare, meaning a 10% loss in productivity, apart from losses in horticulture. These early spells of heatwaves and an asymmetrical pattern of rainfall have cast a shadow on India’s momentum on agri exports.
To add to that, GoI’s unexpected move on May 13, banning wheat exports, a measure intended to tame the spiralling food inflation, has come as a big blow to exporters. With the rising demand for and price of wheat across the world, exporters were focused on wheat to earn some extra dollars. Wheat fetched $2 billion, or 4% of India’s agri-exports, last fiscal. All eyes are on the India Meteorological Department’s (IMD) stage-2 forecast of southwest monsoon (June to September) on May 31.

In its stage-1 prediction, issued in mid-April, IMD said there would be normal rainfall in most parts of the country. “True, there was deficient rainfall in north, western and central India in March and April. March, in particular, was very bad. In the first few days of May, though, rainfall has improved (14.7 mm as against a normal of 15.1 mm between May 1 and 9),” Mrutyunjay Mohapatra, director-general of meteorology, IMD, tells ET, adding that the deficient rainfall was mainly due to ineffective western disturbances passing over north and west of India. He says high pressure (meaning anticyclones, resulting in warm and dry weather) in Gujarat, Rajasthan, parts of Maharashtra and central India led to a massive heatwave.
“There was deficient rainfall in north, west and central India in March and April. In the first few days of May, rainfall has improved. But the level of pre-monsoon showers is no indication of what may come as a monsoon. There is no correlation between the two””— MRUTYUNJAY MOHAPATRA, DG of Meteorology, IMD
The database of the forecaster for March and April shows there was good rainfall in northeast as well as peninsular India — particularly Kerala, Tamil Nadu and south Karnataka — when the rest of India was reeling from a severe heatwave. But Mohapatra clarifies, “The level of pre-monsoon showers is no indication of what may come as monsoon. There is no correlation between the two.”
A normal monsoon is the only hope for Indian farmers and agri-exporters facing uncertainties from all quarters — be it the weather gods or policymakers taking tough calls to rein in price rise. It is also essential for India to touch the record $50 billion mark of agri-exports, achieved in 2021-22. Last year, rice contributed $9.65 billion, wheat $2.19 billion, sugar $4.6 billion and other cereals $1.08 billion to exports totalling $50 billion.
“Early heatwaves have impacted wheat and some of our horticulture commodities, yet India will surpass $50 billion of agri exports this year,” a commerce ministry officer had said before GoI banned wheat exports. Once the export ban was announced last week, the officer conceded that commerce ministry will have to revise its target as wheat is a critical component in India’s export basket. The Agricultural and Processed Food Products Export Development Authority (APEDA), the apex farm export body under the ministry of commerce and industry, has not officially announced its agri-export target for the current year. GoI’s export target of farm produce last fiscal year was $43 billion, but the nation surpassed it, clocking over $50 billion. Had the wheat ban not been imposed, GoI in all likelihood would have upped the target to around $55 billion for this fiscal year.
“The current decade (2021- 30) will see near-normal monsoon and then we will move into the wet epoch. It is likely that the coming 3-4 decades will be wet (high monsoon rainfall)”— PULAK GUHATHAKURTA, Head, Climate Research Division, IMD-Pune
With the ban in place, maintaining last year’s level of $50 billion would be a reasonable objective. With the rising prices, wheat would have brought in more dollars than the $2.2 billion it reaped last fiscal year. In April, India exported wheat worth about $480 million, which is 22% of exports for the entire FY22. Export figures between May 1 and 13 are not yet known. Before the ban, New Delhi had set a target of 10 million tonnes of wheat exports for 2022-23, of which almost one-third was to be shipped to Egypt, a new market for India. Egypt, one of the biggest importers of wheat, had recently announced that it would purchase the commodity from India as its overall supply got hammered due to the Russia-Ukraine war.
The two warring nations used to supply 80% of wheat (valued at $2 billion in 2021) to Egypt. GoI’s wheat export ban has a few relief clauses. For example, the ban will not apply to cases where letters of credit were issued before the notification on May 13. In other words, prior commitments by private parties would be honoured. Government-to-government exports for meeting food security will be permitted. Meanwhile, on May 17, GoI further diluted its earlier order, saying wherever wheat consignments were handed over to customs for examination and were registered into their systems on or prior to May 13 will be allowed to be exported.
In a press statement, the commerce ministry also informed that it has allowed an Egypt-bound wheat consignment under loading at Kandla port after it received a special request from the Egyptian government. At the time of the notification, 17,160 tonnes of wheat to be shipped to Egypt from Kandla port, out of a full consignment of 61,500 tonnes, were unloaded. The dilution of the order means no wheat would have to be returned from the port.
India’s wheat exports surged dramatically during the last couple of years. In pre-pandemic 2019-20, wheat exports fetched a mere $6 million. In 2021-22, the exports were valued at $2 billion, a more than 330-fold rise. Now, with wheat exports being banned barring exceptional circumstances, non-basmati rice, which was the top forex earner among all agricultural commodities in 2021-22 ($6.1 bn in value), has to step up this year as well.
India also has to increase the shipment of other products that have a potential for upsizing — e.g., organic cereal, millets, select horticulture products plus some value-added items — to keep its agri-export momentum going. For most of these items, a good southwest monsoon is critical. Estimates on other economic indicators, including Gross Domestic Product (GDP) and inflation, will depend on IMD’s monsoon forecast. It will also determine the course of an already volatile stock market.
MONSOON PATTERN
Dr Pulak Guhathakurta, head of climate research division at IMD-Pune and one of the few scientists to analyse monsoon data for over a hundred years, tells ET that he has spotted what he terms multi-decadal epochal variability. For instance, after five decades of good monsoon (as per decadal average for 1921- 1970), there was a dry epoch for the next half a century (1971-2020). So what does this mean for the southwest monsoon’s behaviour over the next 50 years? “The current decade (2021- 30) will be near-normal and then we will move into the wet epoch. It is likely that the coming three-four decades will be wet,” says Guhathakurta.
If we analyse the monsoon data of the last two decades, 2002 was the worst year, a complete drought, while 2019 received the highest monsoon rainfall. Also, there was normal monsoon in the last three years— 2019, 2020 and 2021— helping India increase its kharif production. Meanwhile, during the peak of the Covid pandemic, many nations in the Persian Gulf and Africa stockpiled food grain, opening a window of opportunity for Indian farm exporters. Several businesspersons struck while the iron was hot.
The export of non-basmati rice, comprising 12% of total value of agri exports in 2021-22, is testimony to this. However, while non-basmati rice exports multiplied, the export of basmati rice, a premium item, slipped by 15% last year. Exporting less basmati (3.9 million tonnes in 2021-22) was a setback for India. Delhi’s loss is Islamabad’s gain, as Pakistan is the only other basmati-growing nation in the world. The problem surfaced last year when most Middle Eastern nations, India’s prime basmati rice market, started following stringent norms on pesticide residue. In Europe, too, India’s share of basmati has tumbled. If India has to rebound, farmers will have to produce not only more basmati but also have a disciplined regimen of pesticide use.
AgenciesDECADAL VARIABILITY IN ALL-INDIA S-W MONSOON RAINFALL
Vinod Kaul, executive director of All India Rice Exporters Association, says a good monsoon year is indispensable for enhancing paddy cultivation as well as for recharging water tables across north India, particularly Punjab. According to estimates for 2021-22, total food grain production in India was 316 million tonnes, an increase of 5.32 million tonnes from 2020-21.
India is the world’s second largest rice producer, next only to China. At Vidisha in Madhya Pradesh, Ashutosh Sharma, an agricultural exporter and CEO of India , is banking on a normal rainfall. He says farmers cultivating 1,500 hectares of land in and around Vidisha are connected with his venture, adding that their loss in wheat needs to be compensated with kharif crops. “There has been a massive dip in the productivity of wheat in Vidisha because of the unexpected heatwaves in March.
But the wheat export ban won’t impact farmers much as exporters and middlemen have already bought their stock by paying Rs50-100 more than the MSP (minimum support price of the government is `2,015 per quintal),” says Sharma. While Indian farm exporters have factored in weather and war, the two known variables of the season, the wheat export ban is an added obstacle. On top of it, high ocean freight rates have hit them hard.
“More than the weather or anything else, we are hit hard by ocean freight rates. For about 15 years or so, till 2020, a 40-feet containerised cargo from Mumbai to Rotterdam (in the Netherlands) used to cost us around $2,000. In 2021, it jumped to $4,000, and now it is $8,000,” says grape exporter Agrawal. At this juncture, a normal monsoon is indispensable for Indian farm exporters to walk into the sunshine.