'We can double our share in the global commodities market'

Q&A/ S Sivakumar

Started in 1990, ITC's International Business Division (ITC-IBD) today holds a prominent position among the exporting community in India.

It contributes over 60 per cent of ITC group's total foreign exchange earnings. The division is engaged in the trading of a wide range of agricultural commodities and aqua foods. ITC-IBD attributes its leverage in the industry to a focused approach on strengthening its core competencies in select commodities.

Chief executive of ITC's Agri Business S Sivakumar says that the division is now focusing on horticulture products.

In an interview to Business Standard, he said that India could certainly double its market share in the global commodities market in medium term. Excerpts:

ITC-IBD's mission is to become the first choice supply chain partner for select international customers of agriculture and aqua products. What is the road map in this regard?

Identifying the unique needs of our customers and building our capabilities to meet those needs has been the core strategy. Delivering identity preserved products through supply chains that trace them back to farms is one of our value proposition to our customers.

There seems to be poor participation by corporates in commodity exchanges at present. What are the reasons?

Corporates use commodity exchanges primarily for the purpose of hedging their physical market price risks.

Our exchanges are still evolving, and several rules still need to be fine-tuned to suit the needs of hedgers as opposed to speculators. Quantity limits, delivery/settlement rules, liquid forward months, etc are a few examples.

What are your comments on volatility in global marine trade? How is your aqua business in the current year?

At a fundamental level, volatility in marine products prices is not very different from any other agricultural commodity impacted by global supply "� demand factors. We are focusing a lot more on European market this year because of the anti dumping duty problem in the USA market.

India is slowly emerging as a non-basmati rice exporter. How competitive is the Indian non-basmati rice abroad?

The Indian non-basmati rice exports are quite competitive into specific markets in Africa.

In fact, we would have been happily exporting to Indonesia, Philippines and such markets also but for the quality problems it faced some years ago due to the unscrupulous actions of a few exporters.

What new products do you plan to include in ITC-IBD export basket?

Horticulture is one of the new focus areas for us. We are stepping up exports of our processed fruits & vegetables. Pulps, concentrates, frozen, freeze dried products are in this portfolio. Another focus area is organically produced fruits and vegetables.

ITC-IBD has emerged as one of the top export houses of agricultural commodities in a span of just 15 years. How did you achieve this?

We followed a two-pronged strategy. Customer focus, as mentioned already, was one of them.

The other key strategy was to build the eChoupal supply chain that preserves identity of products and offers traceability advantage. eChoupal was our innovation to suit the unique character of Indian agriculture that has small farmers and heterogeneous resources.

Which are the Indian agriculture commodities that have good export potential in future?

Horticulture products, particularly organic and/or processed have the best potential. Poultry products is another area we have a competitive advantage, because we grow most of the feed crops. Currently, we export grain and oilmeals without any value addition.

Can India corner a major share in the global commodities business?

We may not be able to corner a 'major' share of the global market because we have a large and growing domestic consumption also, but I believe we can certainly double our market share in medium term.