A more focussed approach to leverage from the diversification towards the horticulture sector and making the exportable produce globally competitive can enhance farm income significantly.
The Indian economy is gradually moving from a supply-driven value chain to a demand-led market-oriented supply chain. The shift in cropped area towards highly demanded horticulture crops is evidence of agro diversification. The Horticulture sector encompasses a wide range of crops like: fruits, vegetables, spices, plantation crops, etc. Horticulture production in 2024-25 at 362 million tonnes continues to surpass food grain production. India is the largest producer of ginger and okra amongst vegetables and ranks second in production of potatoes, onions, cauliflowers, brinjal, cabbages, etc. Amongst fruits, the country ranks first in production of Bananas, Papayas, and Mangoes (including mangosteens and guavas). The vast production base offers India tremendous opportunities for export.
The trend in export of fruits and vegetables has also been encouraging. In the last 10 years, i.e. 2013-14 to 2023-24, export value of fresh fruits and vegetables increased at 3% per year, while export value of processed fruits and vegetables increased at 7% per year. During 2023-24, India exported fruits and vegetables worth USD 3 crore, which consisted of fresh fruits and vegetables worth USD 204 crore and processed fruits and vegetables worth USD 162 crore.
Expanding the agriculture market by way of exporting has been recognized by various researchers and policymakers as a key step to doubling farmers’ income. Evidently, the gross returns of horticulture crops exported are ~2X those of domestic sales. In certain crops, like: mangoes, grapes, papayas, pomegranate, and potatoes, it is even higher than 2X. However, despite the high returns of horticulture crops in the global market as compared to the domestic market, the profitability in the global market is not always assured. Broadly, there are two types of problems which make export of fruits and vegetables uncompetitive. These are:
- Supply chain issues which are inherent to the domestic supply chain of food products.
- Market access issues which are driven by the requirements of target countries.
The supply chain issues raise the cost of exporting, leading to higher prices in the global market. The cost of marketing agro commodities is also much higher abroad as compared to the domestic market. High prices further result in loss of market. Further, most exports from India lack scale – for example, the export of fresh fruits records an annual sale of about USD 115 crore and vegetables USD 89 crore in 2023-24. The low volume translates into lack of economies in operation and makes export of fruits and vegetables uncompetitive. The issues of market access, supply chain, and government policies are found to be connected in both space and time coordinates. In order to have a comprehensive solution, it is imperative to identify the focused crops that have a competitive advantage in the global market and develop a comprehensive solution by identifying its advantages and constraints.
