World Bank report: India’s share in global horticulture
Despite India producing 11% of the world’s vegetables and 15% of all fruits, but its share in global exports amount to a meagre 1.7% in vegetables and 0.5% in fruits, reports Srinand Jha.business Updated: Apr 17, 2007 21:00 IST
As pronounced a paradox as any: India produces about 11% of the world’s vegetables and 15% of all fruits, but its share in global exports amount to a meagre 1.7% in vegetables and 0.5% in fruits.
Reason: International transportation costs are outrageously high (20-30 times higher than those faced by other countries) and storage/distribution services are inefficient. A new World Bank report says that because of infrastructural and other constraints, a domestic exporter is mostly unable to service destinations beyond 14,000 Kms from the country’s borders.
Consider this: It costs $790 to transport 1 metric tonne of grapes from India to Netherlands - about three times higher than what it takes to transport the same from Chile - which is twice as far from the Netherlands as compared to India.
Creating an integrated and competitive supply chains for agriculture and improving storage, distribution and transportation network ought to be taken as the two broad priorities of reform, said Aaditya Mattoo, the report’s co-author at a roundtable on Tuesday.
Titled, “From competition at home to competing abroad: A case study of India’s horticulture", the report points out that poor backward linkages in the distribution chain and inadequate access to cold storage facilities lead to seasonal gluts and extreme price variation. It further states that - because of the fragmented marketing chains in India - average wastage levels in the horticulture sector are quite high: As much as 12% of the total production.
There also exist, the report says, a huge gap between the stringent health, safety and quality standards required by foreign governments and buyers and the weak standards and assessment mechanisms in India.
Trade protections of the kind that discriminate against efficient delivery are also a disincentive for exporters, said Deepak Mishra -another of the co-authors. A willingness to reform its own trade regime will enable India to take a more forceful position in the WTO negotiations as it can demand a lower level of foreign protection and also greater transparency and predictability in foreign trade regimes, added Ashish Narain - also a co-author.
China is currently the world’s largest fruit and vegetable producer (production share 34%) and among the top four developing country exporters of fresh vegetables. China, Thailand, Chile and Turkey together account for 58% of developing country exports of processed foods and vegetables. Developing countries share in exports of processed products, however, remains low (36% in 2001).