Indian Agri-Exports Have a Quality Problem
India ranks among the top producers of over 80 per cent of agricultural produce items, including many cash crops such as coffee and cotton. However, it has not been able to capitalise on this production base to develop an export-led high-value agricultural economy.[1] In December 2018, the Ministry of Commerce and Industry introduced a comprehensive Agriculture Export Policy with the objective of diversifying India’s export basket and destinations and boosting high-value and value-added exports. The policy aimed to double India’s agricultural exports, from $30 billion in 2018 to $60 billion in 2022, and $100 billion in a few years thereafter.[2] A major hurdle to reaching this goal, identified within the policy, is market access, especially with respect to sanitary and phytosanitary issues.
Exports and Sanitary Issues
Sanitary issues revolve around the safety and quality of food products and the potential risks they pose to human health. They involve measures to prevent the introduction, transmission, and spread of diseases and contaminants through food. These measures can include the introduction of maximum residue levels (MRLs) or requiring specific food safety certifications. The 2018 policy identified pesticide and chemical residues as a “chief cause of concern” for Indian agricultural exports.
In recent times, several Indian shipments of agricultural produce have been rejected due to the presence of chemical residues at levels higher than the MRLs of importing states. For example, in 2022, 675 shipments of agricultural produce from India were stopped at EU borders for containing excessive pesticide residue, increasing from 212 interceptions in 2021. Nearly 79% of the shipments intercepted in 2022 were found to pose a ‘serious’ risk, compared to 69% in 2021.[3]
These interceptions affect some crops more than others. Cumin exports declined by 13 per cent in 2021, after China, the largest buyer, mandated shipments are residue-free of nine pesticides. Mangoes, table grapes, okra, peanuts, curry leaves, chillies, and tamarind are other agricultural products that have encountered rejections and even bans in markets including the US, EU, Saudi Arabia and Japan. This has twofold consequences for both farmers and exporters: immediate financial losses in the short run and the potential loss of market share to exports from other countries in the long run. Indian exporters are at risk of losing their market share to exports from countries such as Kenya, Uganda and Brazil and Chile, who are able to meet the stringent standards.
The Role of Government
A 2019 report from Indian Council for Research on International Economic Relations (ICRIER) pointed out that “(t)here has been an increase in the use of risk analysis techniques and a number of developing countries are taking measures to implement more stringent food safety standards for both exports and domestic consumption.”[4] Countries such as Cambodia have used international funding and joint capacity-building projects to upgrade domestic standards and implement sustainable agriculture practices for products such as rice. The Cambodian government even banned tricyclazole in March 2017, following the EU’s new MRL on the fungicide [4], something which the Indian government has still not done.
The Indian government has recognised that agricultural exports play an important role in doubling farmers’ income. To ensure that Indian agricultural exports are not shut out of key markets, the government must take proactive steps in the following areas.
Regulation of Highly Hazardous Pesticides (HHPs)
In July 2013, the Department of Agriculture and Farmers Welfare, Ministry of Agriculture and Farmers Welfare constituted an Expert Committee under the chairmanship of Dr Anupam Verma to review the use of 66 pesticides that were banned, restricted, or withdrawn in one or more countries but continued to be registered for domestic use in India. Based on its recommendation, the government passed two draft orders to ban some HHPs but neither of them was notified.
The continued use of HHPs in India not only damages the environment and the health of both farmers and consumers, it also hurts exports. Effective regulation of HHPs is thus essential to boost agricultural exports.
Information Dissemination
The Agricultural Extension system plays a key role in disseminating accurate information on pesticide use and promoting Good Agricultural Practices (GAP). In India, the system has limited reach and information dissemination is hindered by delays, outdated content, and a gap between research findings and their practical application.
An ongoing Toxics Link study on the use of Highly Hazardous Pesticides (HHPs) revealed that most farmers rely on sources other than the government for information about pesticides. When Basmati exports faced rejection in the EU, exporters had to bear the burden of educating the farmers on what pesticides are banned. By strengthening the agricultural extension system, the government can ensure that information on sanitary measures of importing countries is shared proactively so that farmers and exporters do not face losses.
Expanding Laboratory Testing
Currently, there are limited laboratory testing facilities approved by the Agricultural and Processed Food Products Export Development Authority (APEDA); and they are also not uniformly spread across different states. For example, there are 122 APEDA-approved labs across India but only one of them is in Punjab. Often the testing procedures in India and importing countries are different and can yield different results. As a result, India does not have any mutual recognition agreement (MRA) with countries like the EU. In its absence, these countries reserve the right to not acknowledge the inspection and the testing procedures.
The expansion of India’s testing infrastructure is limited by regulatory and cost hurdles. It takes about 3–5 months on average to obtain a licence for testing facilities. Further, while the cost of obtaining the licence is around Rs 50,000, often the facilities have to be re-constructed to suit the requirements of importing countries. Thus, the total cost of setting up testing infrastructure can come up to Rs 5–10 crores.[5]
Traceability system
A traceability system for exports is a mechanism that allows for the tracking and documentation of the entire supply chain process of goods being exported from one country to another. Such a system can reduce the number of border interceptions by enhancing transparency and providing quality assurance. It will also allow the government to identify and address potential contamination risks along the supply chain before products reach the export market.
The Agricultural and Processed Food Products Export Development Authority (APEDA) already has a traceability system for GI-protected goods called TraceNet. This can be scaled up to include crops that face a high risk of interception by significant export destinations.
Some of the interventions will require a large state capacity to implement. Since 85% of agricultural holdings in India are small and mid-sized, raw materials for export products are sourced from numerous small farms and agricultural mandis. This poses difficulties in ensuring comprehensive product traceability. End-use regulation of pesticides, i.e., releasing an ‘approved’ list of pesticides and dosages, has been unsuccessful as monitoring of pesticide use across millions of farms is near impossible. The extension system in India is hobbled by poor funding and human resource, as well as organisational fragmentation.
Given these challenges, the government must introduce innovative and convergent schemes in the three areas, in order to reach its target of $100 billion from agri-exports and fulfil its promise of doubling farmers’ income.
[1] Production versus Exports: a Status Check, Volume IV “Post-production interventions: Agricultural Marketing”, Report of the Committee on Doubling Farmers’ Income, https://agricoop.nic.in/Documents/DFI%20Volume%204.pdf
[2] https://commerce.gov.in/wp-content/uploads/2020/02/NTESCL636802085403925699_AGRI_EXPORT_POLICY.pdf
[3] Data extracted on 24.07.2023 from RASFF window, European Commission, https://webgate.ec.europa.eu/rasff-window/screen/search
[4] ICRIER Report https://icrier.org/pdf/SPS_Barriers_to_India_Agriculture_Export.pdf
[5] op. cit. ICRIER Report
