Stronger rupee hits agriculture exports

While the stronger rupee has affected almost all major exports, the agriculture exports sector has been the hardest hit, resulting in falling exports.

The other sectors compensated the losses in terms of higher imports with the currency advantage favouring the importers. But the agriculture sector, which has virtually no imported inputs, has not been able to offset the currency losses.

This may prove to be a major hindrance for agriculture exports, which have been growing rapidly. India's agriculture exports grew from Rs 14,184.16 crore in 2003-04 to Rs 17,918.07 crore in 2005-06.

"The agriculture sector has suffered the most severe blow from the rupee appreciating against the dollar. This sector has been the worst affected because there are no inputs to be imported when compared to the amount of exports. The second hardest hit sector is handloom as that too does not have imported inputs," said G K Gupta, president, Federation of Indian Export Organisation (FIEO).

The other sectors hit by the rupee appreciation include handloom, textiles, leather, gems and jewellery and chemicals.

"The total loss to the Indian export sector is roughly around Rs 35,000 crore because of the stronger currency, with agriculture topping the list of losses," he said.

India's agriculture exports haVe been rising over the past three years. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), India's total agriculture exports during 2003-04 were worth Rs 14,184.16 crore, which rose to Rs 16,828.17 crore in 2004-05. In 2005-06 the agri exports reached to Rs 17, 918.07 crore.

"We have observed different impacts of rupee appreciation on the three major commodities from Gujarat. Castor, cotton and isabgol," said Biren Vakil, an Ahmedabad-based commodity consultant.

The castor oil exports, which were around 1.6 lakh mt in the first nine months of the last year, stood at 1.4 lakh mt this year for the same period. Cotton is likely to be affected this year because of the overall good production.

However, the imports of long staples might compensate the losses. On the other hand, commodities such as guar and isabgol were not much affected as the demand-supply gap is quite wide. Cumin seed exports from Gujarat and Rajasthan have also suffered in terms exports this year.

According to the figures of the Spices Board, released recently, jeera exports in April-June came down to 4,000 mt compared with 8,000 mt during the first three months of the last financial year.

Compared with the total exports of 26,000 mt last year, the board has set a lower target of 25,000 mt this year.

According to market experts, Re appreciation is one of the reasons for dropping exports.

The major agricultural commodities exported globally from India include Basmati rice (exported volume 7,71,475 mt in 2003-04 to 11,66,562 mt in 2005-06), non Basmati rice(26,40,568 mt in 2003-04 to 29,21,601 mt in '05-06), poultry products( 4,15,228 mt in 2003-04 to 1,45,889 mt in 2005-06) and onions (8,59,938 mt in 2003-04 to 9,605,07 mt in 2005-06).