Govt's latest food export show targets value-added products, big brands

Move hopes to attract more global buyers, but will shrink space for smaller sellers

In a major change of format, Indus Food - the government’s flagship international food and agriculture export show - will now focus on bigger brands having processed products rather than smaller exporters and those selling general commodities.

In a surprise move, the second edition of the show has undergone a major shift in format and will do away with small- and medium-sized enterprises and general commodity exporters, in favour of major brands selling products with a higher recall value.

Set to begin from January 14 onwards, the fair is expected to shape order books of exporters in 2019, as more than 700 global buyers reach India and more than 500-plus Indian sellers jostle for attention. The inaugural edition of the show had generated significant interest among global players, with 450 global buyers and over 75 global retail chains participating from more than 43 countries. A total $650 million worth of business was generated in the form of spot orders, along with a cascading effect of $2 billion. However, show organiser Trade Promotion Council of India (TPCI) believes most transactions were one-time deals and is inviting major players with custom-made products to the show in 2019.

“Value-added product suppliers reported much better sales figures with repeat orders. Also, despite direct access to buyers, the probability of a buyer returning to commodity exporters remained low due to pricing and competitiveness issues, at a time when profit margins remain lower for general exporters,” said TPCI Chairman Mohit Singla.

Earlier this month, the government unveiled an ambitious agriculture export policy that seeks to double agri exports to $60 billion by 2022 and does away with arbitrary curbs on exports. Aiming to push India into the list of top 10 agri export nations, the policy has been backed by the Prime Minister’s Office. However, the policy found little support from experts who termed the target ‘highly ambitious’, given how outbound trade had fallen from nearly $40 billion five years back to $30 billion in 2017-18.

Smaller manufacturers and commodity exporters make up the overwhelming majority of this figure and senior officials at the Agricultural & Processed Food Products Export Development Authority said the focus should remain with them.

Slow climbing the value chain

But the TPCI argues that global buyers will show up once value addition becomes the norm and Indian exports are aligned with global demand. “Our only focus is on bringing customers. Processed produce is less than 30 per cent of our total exports, which in itself is considered to have huge potential since India’s total food and agri exports represent only 2.33 per cent of the global total,” said Singla.

Only 4 per cent of high-value exports such as cashewnuts and less than 7 per cent of India’s largest fruit export - mangoes - are currently in value-added forms, said official estimates.

As a result, Indian manufacturers often realise lower profits on the same commodity imported and re-exported by their foreign counterparts. Much of the $4.6-billion shrimp exports from India suffer this as packs of shrimp exported to largest market Vietnam at $7.4 per kilogram is then reprocessed and sent to the Association of Southeast Asian Nations market as packs of 100 gram for a higher cost, said official estimates.

The erosion of large export bases to newer variants from competing nations also remains a headache. Case in point, India commanded nearly 73 per cent of tea imports by Iraq in 2002, which has then been taken over by cheaper variants from Sri Lanka that now controls 93 per cent of the market.

Global majors to reach

Major retailers such as Lulu Hypermarket from Qatar, the Netherlands-based Jumbo Supermarket, and Korean conglomerate Lotte are set to participate in the upcoming show, said Singla. He added that dominant players from newer and more promising markets such as the Shwapno group from Bangladesh, Iranian chain store operator Ofogh Kourosh, and Velamart from the Philippines are being eyed as key buyers set to return annually.

The list of buyers has been fixed after mapping demand for specific products. Senior officials revealed that the commerce and external affairs ministries got in touch with buyers through India’s diplomatic missions across the world. This allowed them to bring on board buyers from Lebanon, Syria, and Iraq, which represent a premium tea market.

The Indian Federation of Culinary Associations, the nodal body of culinary professionals in the country, has also been brought in to study global tastes and innovate classic Indian dishes. Pairing Indian dishes with widely known local ingredients available in foreign markets is hoped to allow exporters break into tougher markets and cultivate Indian tastes. Some suggestions for customisation for specific markets include blue cheddar cheese naan, ricotta spinach samosa, and saffron basil chicken tikka, according to the TPCI.

All forms of processed foods such as jams, jellies, waffles, biscuits will receive special focus at next year’s fair. The TPCI is also aiming to capture the attention of the diaspora market across the US, the European Union, and Australia.