There are not many lists of the feel-good variety where India ranks first, so this may come as a surprise. India’s agricultural product export growth was the highest in the world in a decade till 2013, according to a US Department of Agriculture (USDA) report. India’s agricultural exports grew by 21.3%, ahead of countries such as Indonesia, Brazil and China. In absolute terms, exports have risen from $5 billion in 2003 to $39 billion in 2013 ($1 billion equals 6,050 crore at current exchange rates).

According to the USDA report, government subsidies are driving exports, especially for wheat and rice. It estimates that government support for agriculture rose from $68 billion in 2009-10 to $85 billion in 2013-14.

The report also believes that generous increases in the minimum support prices have led to higher production and accumulation of stocks. When this stock is released in the open market, it depresses prices and makes Indian agricultural exports more competitive. The report also mentions how the government itself has been exporting wheat at prices that are below its procurement and transportation costs.

Commodity-wise data shows that India’s influence is increasing across commodities. India was the second-largest exporter of cotton in 2013-14, after the US, with China buying up about 60% of its exports. India’s export of beef (buffalo meat) makes it the second-largest in the world after Brazil in 2013 and 2014, considerably larger than US beef exports. It plays an important role in exports of commodities such as rice, cotton, sugar and beef, according to the report. Other products where it holds sway are soybean meal, guar gum, corn and wheat.

Now, the US remains India’s largest market. However, it is the developing world that has become a major target market for Indian agricultural products. In 2013, 79% of India’s exports went to developing countries, compared with 56% in 1999. After the US, countries importing at least $1billion of products from India were China, Vietnam, Iran, Bangladesh, Saudi Arabia, United Arab Emirates, Indonesia, Malaysia and Pakistan. Exports have been particularly strong to least developed countries.

India has the potential to lead the global export tables in agriculture, given its vast land resources and low productivity that leaves headroom to improve. This is indeed good for the country’s agriculture sector and for trade. It may also explain why India’s domestic farm policy (indirectly being blamed for its growing export basket) is attracting so much critical attention in global trade forums.

But there is an aside as well. One of the problems cited in the fight against food inflation has been structural issues that are restricting supply. But could the increase in exports also be one explanation for the tightness in domestic markets, despite improving output? Gross domestic product (GDP) in constant prices in the agricultural sector is estimated to have risen by 4.7% in 2013-14, compared with 1.4% in the previous year.

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