Abstract
Indian agribusiness is being seen as an important arena for creation of employment and income for large sections of India’s rural and agrarian population in the coming years and decades by public agencies, nationally and globally. This is happening in the context of strong agribusiness sectors in the neighbouring countries of China and those in the South-East and East Asia. This article examines the global context of agribusiness competitiveness from an Indian perspective, including the global trade regime and focusses on a few key sectors like dairying, cereals, fruits and vegetables and identifies major factors in their export performance from a value chain perspective. It also examines key global trade policies at the World Trade Organization (WTO) level and Indian agribusiness policy domain to explore ways forward to focus on promising sectors with an appropriate policy and practice steps.
Introduction
Indian agribusiness, defined as a set of activities ranging from farm inputs and services to final retailing of food and fibre products including farm production, processing and distribution, besides banking and insurance and various logistical services such as storage, warehousing and transport and even regulation, is not discussed often as the focus is on agricultural sector due to the large number of workers and population being dependent on the primary production sector. However, if an agribusiness perspective of the Indian economy is taken, then the entire discussion on the role of agricultural development changes as agribusiness sector contribution (not just farm and allied production which accounts for 13.5 per cent of gross domestic product (GDP) but also agro processing, distribution and retail and services related to food and fibre) to the GDP is of the order of 25 per cent. I have been arguing for this prospective for bringing policy focus on agriculture and rural livelihoods (Singh, 2007). But, since agribusiness connotes different things to different stakeholders, generally, an agribusiness perspective to agricultural development is not taken. A recent estimate of the contribution of agribusiness sector to India’s GDP pegs it at about 10 per cent of GDP and if the organized segment of the food services, that is, hotels, restaurant and food trade is taken into account, its contribution would be even higher (The World Bank, 2017).
Since agribusiness sub-sector is usually distributed across sectors of agri-culture, manufacturing and services, its dynamics during the process of structural transformation of the economy are obscured and, therefore, not very well understood. However, countries like Brazil identify agribusiness in their national accounts and give statistics on the share of agribusiness in GDP and also its contribution to various sub-sectors. In 2015, in Brazil, agribusiness sector contributed 22 per cent of its GDP of which 6.4 per cent was from agriculture, 5.9 per cent from industry and 6.6 per cent from services. Furthermore, in many middle-income countries, the share of primary agriculture may decline to less than 6 per cent of GDP but share of agribusiness would grow to more than 30 per cent. In some of the middle-income countries, such as Korea, Mexico and South Africa, agribusiness is more than 2.5 times of the size of the primary agriculture. Even in other middle-income countries such as Brazil, China, Thailand and the Philippines, the contribution of agribusiness to GDP is estimated to be 1.5 times of that of primary agriculture. Even in Brazil, where primary agriculture contributes only 5 per cent, the agribusiness is four times larger than agriculture (The World Bank, 2017).
In India, less than 14 per cent of the agricultural produce is processed in the organized sector (The World Bank, 2017). It is estimated that if there is proper policy support for agribusiness sector, it can become a major source of employment and absorb 17–40 per cent more people, provided India could bridge productivity and investment gaps to the level of middle-income countries. There is evidence from Europe that traditional services like retail can be integrated with modern retailing or protected from its ill-effects with the provision of various types of assistance like grants, training, re-training and even the retirement pensions. It is important to focus on agribusiness because the share of medium and highly processed foods in the consumption pattern is growing over the decades (The World Bank, 2017). The focus on agribusiness in terms of crops and post-harvest management can attend to many of the problems of agricultural sector like farm incomes and resource use.
The share of agricultural commodities in India’s total trade basket was 6.06 per cent in 2015–2016 (Mukherjee, Goyal, Miglani, & Kapoor, 2019). Indian agricultural exports during 2006–2011 were largely made up of fresh produce and nuts (22%), cereals and cereal products (19%) and meat (18%) (The World Bank, 2017). India’s high-value exports include meat and offals, fish and marine products (5% each), vegetables (mainly onions—39% of all and leguminous vegetables—22%), nuts (cashew—56% of all fruit and nut), fruits (2–3%; grapes and mango—11% and 14% of all fruits and nuts), cotton (17%); and spices mainly chillies and pepper (35% and 11%) and cumin and turmeric (13% and 8%). India had, in 2014, a major share in world exports in meat of bovine animals—20 per cent, sheep-goat meat (5%), natural honey (2%), milk and cream (2%), and cucumbers and gherkins (9%). Cereals (44%), animal products (25%), and fruit and vegetable (F&V) fresh and processed products (11%) account for 80 per cent of India’s agro and food exports as of 2015. In fact, these sectors of F&V products, animal feeds, fish and fish products and meat products are also the high employment sectors in India (Grant Thornton, 2015).
India’s share in global exports of agricultural products has remained low at around 1–2 per cent in the last 10-year period. Furthermore, India’s position among the top 10 exporters declined from seventh in 2014 to ninth in 2015. In addition, Indian agricultural exports have been facing rejection in important markets such as the United States (US), the European Union (EU), Australia and Japan because they do not meet food safety requirements, also known as sanitary and phytosanitary (SPS) standards imposed to protect the health and safety of consumers of importing countries and region (Mukherjee et al., 2019).
The EU is India’s largest trading partner for trade in agricultural commodities. India has a positive balance with the EU for agricultural commodities (fresh and processed). Within the EU, the UK is the largest market, followed by the Netherlands, which is largely the port of entry for mainland Europe. Some of the key items of agricultural export from India to the EU are frozen shrimps and prawns, cashew nuts, fresh grapes and husked rice. The share of the top 10 products in total agricultural exports and imports indicates that India has a fairly diverse trade basket in agricultural commodities trade with the EU. The export of processed products such as oil, coffee and tea is high. Among the top 10 export commodities, processed commodities (including dry fruits and seeds) account for 97 per cent. In 2015–2016, 10–70 per cent of India’s mango and mango products exports, 67 per cent of fresh grape exports, 43 per cent of peas exports, 43 per cent of mushroom exports and 8 per cent of basmati rice exports went to the EU. The number of countries to which basmati rice is exported from India increased from 93 in 2003–2004 to 143 in 2014–2015 (Mukherjee et al., 2019).
In general, food value chains in developing countries suffer from inefficiency, market volatility, lack of capital and lack of innovation at the farmer level, and issues of innovation, globalization and food safety, besides energy efficiency and waste management at the processor level. Furthermore, retailers and distributors face issues of delivering high quality, managing multiple complex channels, engaging in e-commerce and focus on packaging. At the same time, consumers face issues of food security and affordable food prices, obesity and other health and wellness issues, and food safety. Globally, there are concerns about trade relations, food safety, and land grabs so far as food value chains are concerned (Deloitte, 2013).
Changing agricultural markets globally and food and fibre standards means that there is increasing concentration within value chains and higher costs of compliance to these standards as increasingly tougher public like SPS Measures (SPSM) and Technical Barriers to Trade (TBT) standards, private standards, that is, company specific like Nike or Tesco standards, and collective standards like Global-Good Agricultural Practices (Global-GAPs), and voluntary sustainability standards like Better Cotton (Singh, 2019; Sneyd, 2014), all of which are about product, process and social standards are coming, which do lead to larger gains like environmental protection, improvement in working conditions and efficiency, but they do not percolate down soon and always. The issues of food safety have implications for developing country exporters like India where the compliance to SPS standards led to increase in cost to the extent of 10–20 per cent for a majority of the grape farmers. The reasons for which grapes were being rejected in 2008–2009 were in the nature of pesticides residues, too high prices, unacceptable size, market glut, intense competition and even lack of documents (Shankar, 2012).
The extent of food safety issues and their trade impact on India is an important issue as most of the exported products from India have suffered SPS restrictions. Some examples of these in the last few years include:
UAE ban on Indian meat imports (for 10 companies) due to health and hygiene reasons. EU ban on Indian fish imports due to lack of SPS standards especially in canning (only 90 out of 404 plants approved for fishery exports to the EU). Fruit fly problem in fresh fruits and vegetables needs to be treated (vapour heat treatment [VHT]) as the pests may be carried to the importing country (mango (stone weevil) in case of Australia, mango, citrus fruits and flowers in case of Japan, and grapes in case of China). Hand picked seeds (HPS) groundnut and spices (EU, Italy, and Germany) and chillies (Spain) due to aflatoxin and chemical residues (Mukherjee et al., 2019). India delisted from the list of approved countries in EU for import of egg powders, 2 years ago, for non-submission of residue monitoring plan (RMP). ‘Karnal bunt’ in wheat, and also Iran’s rejection of Indian wheat sent by two private exporters due to quality problem (centad.org).
Between 8 March 2004 and 30 April 2016, there were 172 notifications that were raised for peanuts and peanut products. Around 91 per cent notifications were for the presence of aflatoxin beyond permissible limits. Among the EU member states, the UK raised the maximum number of notifications, followed by the Netherlands. This is despite the fact that there is a mandatory health certificate requirement for exports. The other key reason for notifications was the absence of a health certificate from the Export Inspection Council (EIC). It was made mandatory for EU-bound export consignments to have this certificate after 2013; yet, the consignments were sent from India without the health certificates. Out of 172 notifications, 115 notifications were classified as ‘border rejection’, which means that the product was refused entry into the EU for reason of a risk to human health and to animal health or to the environment if it concerns feed (Mukherjee et al., 2019).
On the trade negotiations front, India’s grains support programmes like Minimum Support Price (MSP) for wheat and paddy are also under the World Trade Organization (WTO) scanner as the US, Canada, and other countries have taken it to the disputes settlement body (DSB) claiming that though India procures a small percentage of the total production in these two crops and pulses, the distortion created due to price and market intervention is much larger and, therefore, should not be continued. The US has already won a case against China on its price support for grains. India uses the same methodology to calculate price support as China. The WTO agreement permits trade distorting subsidies up to 8.5 per cent of the value of the production in case of China and 10 per cent in case of India. China’s argument that only the grains procured by government should be counted as subsidized was not accepted at the WTO. On India’s pulses price support and procurement programme, there are objections from the US, Canada and Australia, who have been joined by EU, New Zealand and a few other countries. India claims that the price supports only about 1.5 per cent of the total value of production, but Canada and the US contend that it is as high as 31–85 per cent. India has earlier suffered notifications on sugar and cotton besides wheat, paddy and pulses. India’s argument that only actually purchased volume should be considered as eligible production for the purpose of determining support levels was not found logical as it (price support) is supposed to have led to raising the price levels in the market for the entire production (Sen, 2019).
This article examines the global context of agribusiness competitiveness from an Indian perspective, including the global trade regime and focusses on a few key sectors, that is, dairying and livestock/meat, cereals and fruits and vegetables, and identifies major factors in their export performance from a competitiveness angle. These sectors are chosen for analysis as these are the largest sectors for production in terms of their share in agricultural GDP and also export contribution besides two of them being also high value. They are also important from a policy angle as they are being targeted for doubling of farmer income in the next few years besides being important to tap emerging demand for high-value products globally and are a focus of new agro export policy (2018). It also examines key global trade policies at the WTO level and Indian agribusiness policy domain to explore ways forward to focus on promising sectors with appropriate policy and practice steps. Section II examines the larger concerns that affect trade and the nature of trade itself followed by Section III, which examines the competitiveness of India’s dairy and meat, cereals and fruit and vegetable sectors from a global trade perspective. Section IV concludes the with some suggestive policy and practice steps.
Analyzing Competitiveness: A Framework
Competitiveness can be defined both at micro firm level and also the sectoral (macro) level but the latter is much more clearly defined by World Economic Forum (WEF) as a set of institutions, policies and factors that determine level of productivity of a country. It is also called competitive advantage of a country, which can be either absolute or relative. The determinants can be underlying factors such as natural resources, judicial system; intermediate factors like factor markets, human resources; and the immediate factors like innovation intensity, information flow and the level and nature of competition (Babu & Shishodia, 2017). Furthermore, there could be a departure between agricultural competi-tiveness and agribusiness competitiveness if the two are about two sub-sectors (primary production and value added production and marketing, respectively) of the larger agribusiness sector. Competitiveness is determined by both internal and external factors and from both demand side and supply side as value chains identify, create and capture value. A classic case of agricultural competitiveness is that of the Netherlands, which is the top most agricultural exporter after the US and has 53 per cent of its total land under agriculture that is next only to India and China but its absolute agriculture land sizes 225 times less than the US. However, it has the highest yields of wheat, tomato, potato and onion. Its poultry and livestock producers have reduced the use of antibiotics by 60 per cent and water use for major crops has been brought down by 90 per cent. It is the largest exporter of potato; grows lab meat (from animal cells) for sustainability; has undertaken potato seed development for the first time (25 g vs 2500 kg seed potatoes); and uses no pesticides in greenhouse cultivation; it uses no genetically modified organisms (GMO) but relies on ancient practices of regeneration for more sustainable agriculture (TNN, 2019).
Furthermore, from a value chain perspective where supply chain is a part of value chain, competitiveness can come from both supply chain efficiency like more timely and lower cost and better quality procurement and delivery or from a marketing angle where better market integration, backed by efficient supply chain, achieves better market presence and reputation. The supply chain aspect boils down to lower transaction costs and, therefore, more competitive prices and deliveries. So, it is both a cost advantage or cost leadership and product differentiation or differentiation focus, which make for competitiveness of firms. Furthermore, competition has to be viewed as a strategic aspect where buyers, suppliers and substitutes besides existing and new competitions also need to be considered as a part of the strategy (Porter, 1985). In simple terms, cost and quality both matter for competitiveness in modern agribusiness markets.
That the quality issues keep plaguing the sector is evident in the recent high-value export cases, some indication of which comes from the following: 800 cases of rejection in 5 years mostly from EU-763 since 2008 under Rapid Alert System for Food and Feed (RASFF). Risk communication is done through RASFF in the EU, which was put in place to provide food and feed control authorities with an effective tool to exchange information on measures taken to eliminate serious risks detected in relation to food or feed (Mukherjee et al., 2019). The US rejections were mainly for incorrect labelling, maximum residue limits (MRL; chemical residues) and contamination/lack of hygiene. In June 2015, 97 red alerts were received for processed food products mostly on adulteration (77%), mislabelling (10%) and unapproved product (12%) and 170 warnings and in 2011, Food and Drug Administration (FDA) issued 97 warnings to India, which was three times that to Mexico (30) (ILFS Cluster Development Initiative Ltd, 2015).
But, more importantly, it is about innovation in business models, processes, products, and markets, which create and sustain competitive advantage. There are many types of innovations like technological, social, or product, process, marketing, organizational, and institutional innovations (IICA, 2014).
Competitiveness of Indian Agribusiness
As expected, the competitiveness of India exports differs across commodity and product groups due to their internal context of production and external context of markets. There is low competitiveness of domestic cereal and livestock production of South Asia, in general (CENTAD.org). This section analyzes three of them, that is, dairy and meat products, cereals and cereal products and perishable produce (fruit and vegetable) and their processed products.
Dairy and Meat Sector Competitiveness
Major producers of milk and milk products globally include India, the US, EU, and Oceania with 80 per cent of cow milk being produced in the EU, the US, India, China, Russia and Brazil. Furthermore, milk accounts for 28 per cent and cheese another 27 per cent of value of dairy products. The US is more efficient producer than the EU due to scale of its dairy farms and dairy plants. New Zealand has off-season supplies and locational advantage of being close to Asian market. There is also some latent demand gap in Asia, Latin America, North Africa and Middle East. Fat accounts for 26 per cent of calorie intake and is growing in share which means eggs, milk and dairy product to benefit. However, livestock also accounts for 18 per cent of Green House Gas (GHG) emissions in CO2 terms. The elimination of EU milk quotas in 2015 led to concentration of milk production in a smaller number of countries but provided market for individual dairy farmers throughout the EU. There was movement towards organic and GMO-free products and demand for local produce. Therefore, besides price, taste and convenience, which were traditional value drivers, there is a trend towards health and wellness, safety, social impact and experience as the new value drivers in the dairy sector (Deloitte, 2017).
Over the years, the base of global dairy production has moved to Asia and Oceania with one-third of the milk production being in the region by 2013, and India and China being major producers of milk. Similarly, the top four or five importers of the dairy products also are in the developing world including China, Mexico and Indonesia, beside Japan (Salois, 2016).
On the trade front, world dairy trade is relatively small, accounting for about 6 per cent of global milk production. But, it is a high stake business for a few countries. For example, four major commodities—Cheese (37%), milk powders (36%), butter (12%), and condensed milk (9%) dominate the world dairy trade. In 2015, these shares were as follows: cheese 24 per cent, milk powder 11 per cent, butter 7 per cent and wheat 7 per cent. Furthermore, four major players—the EU, New Zealand, Australia and the US (20% milk solids production exported) dominate the world dairy trade (79% in 2014 from 74% in 2010). The EU and the US account for 50 per cent (now 43%) while Australia and New Zealand another 45 per cent (now 34%) (CENTAD.org). Further export concentration is expected due to low domestic demand growth. However, major importers of milk powder traditionally were Mexico, Algeria and Japan; major importers of butter were Russia, EU, and Egypt; and major importers of Cheese were Japan, the US, Russia and EU. Since 2010, it is China, Russia, the US, Mexico and Japan. The important insights regarding consumption of dairy products include: persistence of dairy alternatives, criticality of clean label expectations and crucial role of innovations in driving business success.
Asia is the largest consumer of dairy products but has the lowest per capita consumption by value. However, dairy trade globally is not very competitive in terms of number of players, with only four countries or blocks, that is, New Zealand, the EU-28, Australia and the US accounting for more than 75 per cent of the exports for the last few years. Whereas in New Zealand, cooperatives handled majority of the exports and availed of the price pooling power and flexibility, the US has the system of subjecting milk to price pooling under federal and state milk marketing orders, which essentially means a minimum pricing for the procured milk based on products sold at domestic prices. Both the EU and New Zealand have used policies to keep export flowing during periods of surplus production. But, in EU, milk is not subjected to minimum prices and market pooling, which gives dairy operators greater flexibility for internal prices to deal with competition. The US has a voluntary Cooperatives Working Together (CWT) programme, which provides assistance to export of cheese, milk fat and milk powder since 2003. Since most of the milk produced in New Zealand is exported and at world market level prices, the price received by dairy farmers is much lower than those received by the US or the EU farmers. The New Zealand cooperative (Fonterra) pays its members under an annual pooling arrangement (Vitaliano, 2016).
At present, there is no export of milk products such as Skimmed Milk Powder (SMP)/Whole Milk Powder (WMP) to the EU. This is despite the fact that India is the largest producer of milk and India has implemented a fairly robust export inspection regime. The Indian companies are interested in exporting milk-based products such as ethnic sweets and ready-to-eat food products, but are facing a number of SPS issues. There was one notification of border rejection for butter in Greece in 2008 for not providing a health certificate during 2000–2016. Furthermore, there were three notifications in 2007 for matar paneer dish (peas and cottage cheese) and curried spinach and cheese from India due to the presence of bacteria and undeclared substances (soya) in the shipment. Despite the continuing effort to tighten export quality controls, India has experienced a decline in milk exports to not only developed country markets but also to some of its key developing country markets such as Bangladesh. For example, as per the data published by Director General of Foreign Trade (DGFT), in 2015–2016, India’s export of SMP and other milk and cream powders registered a decline of 66 per cent and 83 per cent, respectively, compared to 2014–2015 (Mukherjee et al., 2019).
However, livestock and livestock products (LLPs) trade accounts for one-sixth of total agricultural trade, with meat alone being 50 per cent of LLPs but only 8–13 per cent production (much higher than that of milk production) is traded across products. Major players in beef and pork include Australia, the US, Canada and the EU and in poultry, the major players are: Brazil, the EU, China and Thailand. Interestingly, the developing world is a net importer of LLP—dairy and poultry mainly and there is growing vertical coordination in this sector.
Cereals Sector Competitiveness
Wheat accounts for 20 per cent of the global calorie consumption, is the most planted and most traded grain and provides 20 per cent of the protein for the poorest half of the world. Though it has more area but the highest production globally is that of corn. Major producers of wheat during 2011–2015 included China, India, the US and Russia, and major exporters were the US, Canada, France, Australia and Russia in that order. In fact, Russia changed from a net importer in the 1990s to a major net exporter in the second decade of 2000s. This has impacted the direction of US wheat exports, which has changed from Asia and Africa to Asia and Latin America. More importantly, the trade distortion now comes more from domestic price support rather than export subsidies, and most trade distorting grain markets are China, Turkey, Brazil and India. The prices of wheat in these countries are much above WTO limits ranging from 25 per cent in case of Brazil to as high as 40 per cent in case of China, 60 per cent in case of India and 90 per cent in case of Turkey, whereas the WTO maximum limit is 10 per cent in general and 8.5 per cent in case of China. It is estimated that if price and input subsidies are eliminated in these countries, the US farmers can hope to have US$1 billion more revenue from wheat. It is estimated that the annual impact of China’s farms support policies hit all major exporters by US$100 million each at the farm gate (Tracy, 2016).
In 2018, cereal consumption was to exceed production globally for the first time after 2010, which was due to production decline in EU, Russia and Australia largely, but, this was not the case in wheat. Overall, 77 per cent of wheat consumption is in the developing world and 20 per cent of wheat output is traded. The cereal grains market growth is led by maize (largest production), wheat and rice. The durum wheat is mostly exported by Canada (40%), EU, Mexico and the US and more of wheat is going into feed increasingly. Globally, wheat markets have price buyers and quality buyers where low-protein soft white wheat earns higher premiums (EU, 2019).
However, maize production is higher than demand since 2017 with decline only in Brazil. The EU, Mexico and Vietnam are major importers. Major demand growth for feed comes from developing world and for human consumption from Africa. Brazil’s warmer climate gives its farmers a longer growing season than their US counterparts (Agnewsfeed.com). Most Brazilian growers can seed corn immediately after harvesting soybeans, planting two corn crops per year. However, the US farmers must wait through winter. The US corn export share is 34 per cent (24% to Mexico) and Brazil has 23 per cent market share (EU, 2019).
Unlike wheat, barley production and consumption are both declining globally since 2016 but consumption has been higher than production with major declines in Russia, Ukraine and Australia, and only Canada doing well, though its use in feed is declining. Major cereals markets are China, the US, India and Brazil (48% of total), and the US, Russia, Argentina and France are major exporters of cereals (47%) and Japan and China are major importers (12% of total). The cereal use categories are food—32 per cent, feed—45 per cent and industrial—17 per cent. Chinese stocks of corn were 51 per cent and of wheat 31 per cent of the world stocks in 2012–2013, which has been disposed of later (EU, 2019).
Market potential of rice can be assessed from the fact that an experiment in Korea and Japan on local, the US and China rice with and without information and with Country of Origin (COO) information and information on production region and variety revealed the following: In Korea, slightly higher price for US rice and slightly lower for Chinese rice without information. In total, 21 per cent higher for local, 3 per cent higher for the US and 10 per cent higher for Chinese with COO label. In Japan, 8 per cent higher for US rice and 26 per cent lower for Chinese rice without info but 12 per cent lower for local, 30 per cent lower for the US and 45 per cent lower for Chinese with info on area and variety. This shows that segment targeting and quality matter in this market. But, Japan has 778 per cent tariff on imported rice (Walton & Grishin, 2018a). If all tariffs/quotas are abolished, 90 per cent of Japanese rice would be replaced by imported rice (estimate in 2010) (Hayashi, 2016). Major factors in cereal demand and supply include:
Climate change especially for wheat, soyabean and maize leading to price fluctuations, oil prices, wheat aid, and changing demand; Agricultural policies, especially production and price subsidies, not export subsidies anymore. India’s MSP for wheat, rice, sugar, cotton and pulses is on radar at WTO, along with China, Brazil and Turkey in wheat. There are two issues in this regards: first, procured output value versus all output price is affected due to MSP; and second, overall aggregate measure of support (AMS) versus product-specific AMS. The WTO already ruled against China on wheat, Indica rice and Japonica rice saying it paid too much to its farmers in 2012–2015 (AMS limit being 8.5%). China had the same argument as India! Bilateral and regional trade agreements like Trans-Pacific Partnership (TPP, with 12 countries and 26 per cent of global trade and 12 per cent of global pop) and role of WTO (Hayashi, 2016); G20 with 60 per cent of farm land and 80 per cent of world agricultural trade; Major wheat trade distorters: China, India, Turkey and Brazil (US$384–231 per MT price support level); Rise of Russia as the wheat exporter from an importer; competes with the US in the Asian, Middle East and African markets (41% of all grain crop output in Russia exported).
Historically, India’s wheat and rice have accounted for only 1 per cent and 9 per cent of total agricultural exports of India and, more recently, this percentage share has been higher for rice at 14 per cent (2010–2012) and it is the largest item in agricultural exports from India accounting for 21 per cent of global rice trade (Kumar, 2019). Furthermore, relative export competitiveness (REC) of India’s wheat and rice over the last 3 decades has increased over time but these are not as competitive as those of the top exporters of these commodities such as the US, Russia in wheat and Thailand in rice, and the relative export competitiveness deteriorated over time due to export restrictions, although WTO had a positive effect on India’s relative export competitiveness in rice and South Asian Free Trade Agreement (SAFTA) adversely affected it in both rice and wheat. Interestingly, farm size had no effect on REC in both wheat and rice (Narayan & Bhattacharya, 2019).
Basmati rice accounts for 59 per cent of the total rice exports in quantity (2016–2017) and even higher in value as the price of basmati rice is almost double that of non-basmati rice, which had even higher share during the 1990s when basmati was the only focus of export policy (Kumar, 2019). But, as mentioned earlier, even basmati rice export has suffered from poor quality, especially use of chemical pesticides at the farmer level, which has led to states like Punjab undertaking special efforts to advise farmers to not use certain chemicals.
In the RASFF portal, there were 12 notifications between 2000 and 2016 of rice from India being contaminated by aflatoxin B1 (the excess in aflatoxin B1 ranged from 5.5 mg/kg to 9.5 mg/kg). Between 1 January 2000 and 30 April 2016, there were 42 notifications on basmati rice exported from India in the RASFF portal for not meeting the EU standards. Out of these 42 notifications, in 39 cases, the risk decision was reported as ‘undecided’, that is, it was not decided whether the risk was serious or not serious. Yet, 25 out of the 42 notifications faced ‘border rejection’, which means that the consignment was refused entry into the EU for reason of a risk to human and animal health or to the environment. The maximum notifications were raised in the year 2014 (16 notifications). Among the EU member states, Italy raised the maximum number of notifications (34), followed by France (5). Out of the 42 notifications recorded for basmati rice, the most common cause for rejection was the presence of pesticides, beyond the permissible limit. Overall, 36 notifications were for pesticide residues, five were for the presence of insects in the shipment (such as weevils and beetles) and one notification was for the presence of foreign body (screws) in the shipment. Out of all the notifications, aflatoxins had the maximum notifications (11). On 16 November 2016, the WTO Committee on SPSMs passed a notification on reduction of the MRL of tricyclazole in certain products (including basmati rice) from 1 mg/kg to 0.01 mg/kg in the EU. The proposed date of adoption and publication of the notification was June 2017. Following this, the EU enforce this on basmati rice in India. Certain countries exporting rice (other than basmati rice) to the EU such as Cambodia have already decided to ban tricyclazole. This issue is not specific to the EU as an important destination. In 2013, Indian rice exports faced SPS issues in the US (and a subsequent fall in export quantity) due to the presence of residues of tricyclazole. In the case of India specifically, it is a common practice to use tricyclazole in basmati rice and exporters highlighted that up to 60 per cent of the rice exported from India can face this issue (Mukherjee et al., 2019). Furthermore, incidences of contamination varied across regions within India: North India: 10–32 per cent, West: 3–20 per cent, Sout: 6–40 per cent, and central: 31–38 per cent, East with NE: 4–45 per cent (ILFS Cluster Development Initiative Ltd, 2015).
Sometimes, faulty policies can do more damage than good. In the case of Thailand, the Thai paddy pledging policy during 2011–2014 led to 52 per cent of total paddy production being purchased from the farmers by the government. It was the largest government intervention in the rice market accounting for 41 per cent of the annual fiscal budget. The same rice was later on attempted to be exported by the government by withholding large supplies from the market unsuccessfully. In fact, the rice export dropped sharply because the export price of Thai rice was much higher than those of India and Vietnam, which replaced Thailand from the world’s largest exporter position. The policy benefitted directly one-third of the rice farmers who sold to the government besides benefitting other farmers due to higher domestic price but most of the benefits went to the medium-and large-scale farmers. There was large-scale corruption in rice sales as government sold to a few connected traders at below market prices. Of the total benefits of the policy, 39 per cent went to rich and 42 per cent to middle farmers though poor (44% of all) farmers received only 18.4 per cent of the benefits. The three major reasons for the failure of the scheme were setting the pledging price above the world rice price, attempt to corner the export market by withholding large enough amount of rice from the market to increase the export price and execution failure of not mandating the operating agencies to prepare financial accounts of the transactions (Poapongsakorn & Pantakua, 2014).
Perishable Produce Competitiveness
Fruits and vegetables contribute 43.40 per cent and 53.62 per cent in total fresh fruit/vegetable/seed export, respectively. India’s fruit and vegetable exports are largely (60–85 per cent) happening within Asia as against only 45 per cent of total agricultural exports going to Asia (Singh, 2013b; Tripathi & Singh, n.d.). In India, there have been very successful export players like Field Fresh in Maharashtra dealing in baby corn, which works with really small farm holders and is Global-GAP recognized by primary marketing organization (PMO), which works with small farm holders. Similarly, Mahindra Shubhlabh Services Limited (MSSL), dealing in grapes, follows a unique export model where it does not buy from farmers but helps them export for a fee (commission). This model is unique in that it leaves all the surplus to the producers but it is also a bit risky as any rejections or low prices are the burden of the growers (Singh, 2013a).
However, Mahagrapes-a company of the grape growers co-operatives which is also a Globalgap PMO has been a well-documented and successful case of how a co-operative export business can be turned around when faced with export problems like chemical residues in grapes which was tackled by the private limited company set up by the co-operative for export marketing of the grower co-operative member produce in the mid-1990s. It was the creation of Mahagrapes by the Maharashtra State Agricultural Marketing Board (MSAMB), Department of Co-Operation, Government of Maharashtra, National Horticulture Board (NHB), National Co-Operation Development Corporation (NCDC), Agricultural Products Export Development Authority (APEDA), and the grape growers as a public private partnership company for the benefit of grape growers which made all the difference. Mahagrapes was set up in 1991 as a marketing arm of the grape growers’ co-operatives in Maharashtra for promoting marketing of grapes globally and to attend to the problems of quality and rejection in global market faced by the growers’ produce. It has features of both a co-operative and a company in terms of its organizational structure and functioning. It is a unique organization in India which was born as a result of the special provision of the (amended) co-operative law at the provincial level in 1984 wherein the co-operatives were allowed to associate with other agencies, including marketing partners. Thus, Mahagrapes was registered as a partner to the producer co-operatives under the clause following the amendment to the Co-Operative Act. The two executive partners head the organization which has an executive council comprising seven elected co-operative heads, followed by a board of directors composed of the heads of 16-member grape growers’ co-operatives. Mahagrapes is a for-profit organization and its primary source of funding is membership equity. Mahagrapes has now assumed a much bigger role of managing and facilitating the entire value chain of grapes including extension and market information besides negotiating prices, for growers, with national and global buyers. It only charges a facilitation fee from growers for its services and does not retain profits it earns. It is totally owned and governed by farmers and their co-operatives. It has been able to deliver better net returns to its member growers than those earned by non-member grape growers. Noteworthy in this effort is the role of the state agencies in helping the apex organization of growers to come up and stabilize. The MSAMB paid the salaries of the first governing officers of Mahagrapes for 3 years who were on deputation from other state government departments. NCDC provided loans to grape co-operatives for creating local value addition and value preservation (Roy & Thorat, 2008).
There are other exporters like Patiala Horticulture in snow peas/sugar snaps, which undertakes its own farming for export on leased land, and Namdhari Fresh in vegetables/fruits, which combines corporate and contract farming and works as PMO of growers for successful export of fruits and vegetables. However, onions and potatoes from Maharashtra are exported mostly within Asia. All of this has also been made possible by local facilitators and aggregators and production organisers for processors and exporters, for example, Siddhi Vinayak, Fresh Agro consultants and the like.
In fruits and vegetables, for example, onions, in general, only ‘A’-grade onions, are exported. Grading is done manually on the basis of bulb size. Occasionally, ‘B’-grade onions are also exported but the market for such onion is only Dubai. The standards or quality differ in the Asian markets from the European market in term of size of the onion, where bigger size is preferred in Asia, and the pungency and colour, where EU prefers less pungent and yellowish or brown colour onions. After grading, packaging is done in bags of different sizes (5, 10, 18, 28, 36, 50 kg) based on the demand. It takes 2–4 days to procure, pack and load the onion for further trade. Overall, 2 per cent of the onions is lost due to moisture loss. The payment for export is received within 2–3 weeks and rejections, which are rare due to supervised grading and packing, are re-negotiated for price. About one-third of the traders in Maharashtra cater to export orders. The labour is paid on piece rate basis, which encourages involvement of children because what matters is volume of work done by the group of labour, not who does it. There were many children working in grading and packing of onions, both boys and girls. The labour lives in the pack sheds, beside the onion heaps and bags, in temporary huts made of plastic, bamboo and tin sheets. This was quite different from onion and potato pack shed conditions in Mumbai where it was mostly adult male and female labour that came for work from elsewhere and went back by the evening. The onion pack sheds in growing areas in Maharashtra are ad hoc structures for grading and packing where seasonal migrant labour from tribal areas are stationed for work. The exporters mostly purchase from Agricultural Produce Marketing Committee (APMC, wholesale) markets through commission agents or directly, from traders directly and, only rarely in some cases, from farmers through contract farming directly or through a facilitator or just ‘contact’ farming with growers. The procurement price payment to the farmer is based on local market price minus transport cost in case of direct procurement from growers and all of them pay market fee for purchase of onions from APMC markets. The Indian exports to South Asian Association for Regional Co-operation (SAARC) countries also carry SAARC certification. India’s potential competitors in onion are Thailand, Netherlands, China, Pakistan and Indonesia. But, India has an edge in scale, season and variety which needs to be harnessed with better marketing and promotion (Singh, 2013b).
There was hardly any vertical co-ordination in the onion value chain (Singh, 2013b). Competitive edge comes from research and development, business systems and marketing. For that, more vertical co-ordination is needed, which could be through contract farming or franchising mechanisms. In China, which accounts for 30 per cent of world onion production and 10 per cent of global onion exports, green onion packers with more than 90 per cent sales from exports, worked with contract farmers to procure 30–50 per cent of their total produce, which led to not only better quality but also higher price realization and net income for contract growers than those received by independent growers despite contract production cost being higher. They provided seeds and pesticides on credit and offered pre-agreed fixed price or market price plus premium (Miyata, Monit, & Hu, 2009).
Challenges and Opportunities
Major challenges in India agribusiness in general and in perishable produce production and markets include lack of innovation, lack of skills especially worker training and capacity building, marketing and branding, access to credit, infrastructure like warehouses, pack houses and cold storage and testing labs besides lack of understanding of international laws and quality and safety standards (Grant Thornton, 2015).
As of now, India, despite being top producer of millets and second largest producer of milk, rice, cotton, sugar and potatoes and the third largest producer of coconut oil and wheat globally, is topper only in rice exports, second largest exporter of cotton and third in sugar globally as of 2011. It is argued that if structured carefully, Regional Comprehensive Economic Partnership (RCEP) offers an opportunity for India as this trading block accounts for 49 per cent of global population and 30 per cent of global GDP. India joining RCEP would throw open the entire agricultural sector for immediate competition, and can provide a gradual mechanism for introducing change and if seized carefully, it could provide the platform for a more efficient sector with rising opportunities for farmers, while simultaneously reducing the cost of food for consumers (Elms & Tran, 2014). But, it is important to note that a country’s participation in the Global Value chains (GVCs) can be assessed by examining the use of its goods and services as imported inputs in its exports of other countries (forward integration) and the use of imported inputs in its own exports (backward integration) (Palit, 2014). Higher participation in GVCs may not ensure higher gains. A break-up of forward linkages and backward linkages in GVCs can provide a useful insight into the gains that go to a country from its participation in GVCs. If gains are measured in terms of ‘net value-added’ by participation in GVCs, then higher the forward linkages as compared to the backward linkages, higher are the gains. This means that by participating in GVCs, a country is creating and exporting more domestic value added than the foreign value added which is imported (Banga, 2013). Furthermore, backward participation is a bigger driver for small economies while forward participation is a bigger driver for relatively large and more industrialised countries (Palit, 2014).
India’s forward as well as backward participation in GVCs is low (20% forward and 22% backward in 2009), and lower than regional average of 22 per cent and 28 per cent, respectively. Thus, import intensity of India’s exports is increasing and contribution to other country exports is stagnant. India mostly specializes in primary agricultural exports rather than processed items unlike Malaysia, Vietnam and Singapore, and India has no comparative advantage in export of food and wood paper products among Association of South East Asian (ASEAN) countries. India’s foreign value added in agribusiness sector from Regional Comprehensive Economic Partnership (RCEP) countries is only 0.7 per cent in agriculture and 3.9 per cent in food products compared with 2.3 per cent and 9.6 per cent, respectively, from non-RCEP countries and it is the lowest across all sectors of business with the exception of wood and manufacturing. Therefore, there is not much scope in the food sector except if it meets standards of RCEP in some specific segments, and unless the global buyers source locally from India (Palit, 2014).
So far as the nature of global agricultural trade is concerned, it is important to realise that WTO is neither about free trade nor fair trade though its mandate is to promote free and fair trade among nations. This is evident in so many WTO negotiations and disputes over the last few years. In this context, it is a ‘buyer’s’ market in the presence of market concentration in food processing industries and retailing, for example, 80 per cent of meat and soyabean processing by only four firms each in the US. Furthermore, a large part of agricultural trade is between similar countries (70% of developed country trade) within the developed world, but intra-developing country trade has also grown. The trade in processed and high-value food products is expanding rapidly (80% of total) and that is intra-industry trade to a large extent and increasingly oligopolistic. Furthermore, the importance of trade in processed agricultural products increases at the expense of trade in basic products which is concentrated among a few countries (30 developed countries account for 84 per cent of processed food imports). Here, it is also important to take into account China’s presence in global agribusiness wherein JD.com (Beijing) says: it would soon be able to deliver fruit from anywhere in the world to the doorsteps of Chinese consumers within 48 h due to Border Road Initiative (BRI), or One Border – One Road (OBOR) and China reorganising its agriculture/agribusiness within and outside (GRAIN.org). In Africa, Pakistan, and Kazakhstan, China has agribusiness presence in terms of beef import by train from Kazakhstan since 2017 and 3.3 million ha of farm land in 31 countries, due to the fact that 20 per cent of Chinese food imports are from the US with which a trade war is raging at present. In fact, the US has the largest share in global processed food consumption (31% of global food sales; Grant Thornton, 2015).
Furthermore, 49 per cent of dry ports in Kazakhstan are owned by the Chinese companies. Sri Lanka agreed to allow China to build a new port which was ultimately taken over by China due to the non-repayment of loan by the Sri Lankan government. Of course, there are serious health, labour and environmental impact concerns of BRI projects which include diversion of water, from communities to crops, pollution of water or forced labour being used in some Chinese plantations in countries like Laos and Myanmar (GRAIN, 2019).
China has green production policies like subsidies and high prices that encourage farmers to increase the area under food grains and technology for innovations, which lead to improvement in the yield besides its grain reserve policies that are operated at the national, local and city levels. There is MSP-based purchase system for wheat and paddy, a temporary purchase and storage system for corn and target price policy for soybean and cotton. Overall, 40 per cent of corn and 50 per cent of paddy are handled by non-state trade agencies in China. The production of Japonica rice has been increasing for the past 10 years and due to quality and safety reasons, its demand is growing and accounted for 30 per cent of total production in 2014. It also had the highest minimum purchase price during 2004–2016 (Xigui, 2016).
However, opportunities are aplenty in various food market segments especially those like organic, fair trade, and responsible and ethical production and consumption markets which can be leveraged with cluster-based promotion, for example, root crop production in Salem, Tamil Nadu (tapioca for liquor making); fish processing in Kochi, Kerala; and fresh fruit and nut processing in Sindhudurg, Maharashtra; and poultry in Namakkal, Tamil Nadu (30% of India’s production). Also, there is a need to focus on brownfield projects rather than greenfield projects for agglomeration (Grant Thornton, 2015). But, here too, competitiveness is determined more by supply side factors as compliance to standards like no child labour or environmental norms is lacking due to lack of knowledge and capacity building among various stakeholders and poor reputation. This requires multiple stakeholders working together in a partnership mode to achieve the levels of compliance and, therefore, competitiveness (Nesadurai, 2019).
That public-private partnership (PPP) and focus on high-value products with Unique Selling Propositions (USPs) can also play a role in achieving competitive agribusiness exports is revealed by the experience of Kohinoor Food Ltd (KFL), formerly known as Satnam Overseas Limited, one of India’s leading companies in the organized marketing of rice, including basmati rice, who attempted a PPP in organic basmati rice in Uttarakhand. It holds a leading position in the branded basmati rice business in India with about 38 per cent market share. To increase its supplies, KFL tried to identify farmers for the organic programme and, thus, the company approached various state agencies such as the State Agriculture University, the Rice Research Station and the Rice Seed Development Corporation. They also approached some farmers’ groups and, in 2004, after some false starts, KFL made contact with a basmati farmers’ federation in Dehradun district. This federation was organized by the Uttarakhand Organic Commodity Board (UOCB), a state government agency, which had been set up in 2003 to promote organic farming and allied sectors throughout the state. UOCB took responsibility for the internal control system and organic certification which enabled KFL to avoid the pre-operational work of motivating the farmers to adopt organic cultivation. Since the majority of the farmers in Uttarakhand have small holdings, one federation was not sufficient for KFL’s requirement. KFL and the first farmer federation, therefore, identified seven other UOCB promoted farmer federations, and a total of eight federations, four each in Dehradun and Udham Singh Nagar districts, were organized to participate in the programmes. Formal contracts between each federation and KFL were signed with UOCB as organic certification service provider and mediator. The technical support to farmers was provided by KFL. The farmer federations procure paddy from farmers as they have a mandi license, pay mandi charges and receive payments and service charges (2.5%) from KFL and pay to individual farmers (Singh, 2009).
Compared to the mandi system, the farmers gained approximately ₹235 per metric tonne (US$1 in 2009 was equal to ₹50). The organic yield was higher, cost of production was lower and price was higher than conventional basmati. KFL also gained ₹245 per metric tonne from this and a quarter of this was spent on extension support to farmers. A subsidy of ₹250 per farmer or about ₹10 per kg was provided by UOCB as a part of its support for organic certification. The farmers were also able to make some more money by weighing and bagging their produce themselves, and they were paid for the work. Previously, they had to do this for nothing in the mandi during the peak times. Moreover, 1.5 per cent commission to federation not only covers its operation costs but also serves as a cash reserve, which can be used to make emergency cash loans to the members. Starting with only 190 farmers and 119 acres under the organic project in 2005, the project covered 864 farmers and 748 acres in 2007. Because Organic Basmati Export Program of the UOCB was a government-supported project, they have placed great emphasis on the inclusion of small and marginal farmers. This meant that a large number of farmers had to be covered to produce sufficient quantities of paddy. It was very difficult to ensure that all these small farmers adhere to organic practices. Every year, UOCB had to expel about 5 per cent of the farmers from the programmes because they deviate from organic practices. KFL is training the farmers in paddy grading and it was hoped that within a year or two, it will be possible to start grade-based pricing. With time, the confidence of the farmers in KFL and in organic farming in general has increased (Singh, 2009).
Conclusions: Policy and Practice
As the above analysis shows that the RCEP may not bring much export opportunity for India in general in food and agribusiness sector. In the dairy sector, globally, the scenario is composed of better production and commercial technologies, ending of EU milk quotas (introduced in 1984 to manage excess supply in the market which meant cap on amount of milk a farmer could sell each year and levy on those who exceeded) on the trade front, ‘Skill before sale’ requirement at farm level, environmental issues, that is, green image and resource use in terms of carbon footprint, energy and water use, and biodiversity, and health and wellness issues in the form of organic, local produce, non-factory farming, GM free, food safety, transparency, fair trade, ethical trade, healthy ageing, clinical nutrition, and sports nutrition besides innovation thrust in products, processes, organising of business, and marketing. There is also a multiplicity and an overlap of various standards in the sustainability domain even in each crop or commodity chain like cotton (Singh, 2019), which makes it further difficult and, at the same time, crucial to attend to merging market demands from a triple bottom line perspective.
In a scenario of poor quality of food and fibre exports, a strategy for competitiveness would mean: innovation in technology—product, process, transport; in business models—customised solutions, micro-delivery, seamless delivery, inclusive models, sustainable models; in institutions—flexibility to adapt, innovate, multi-stakeholder arrangements, and a move from input-intensive to knowledge-intensive agribusiness. This, from a policy angle, requires combining: value chains promotion with a livelihood perspective to enable the poor to enter into and stay into commercial markets; choosing right market and market development strategy as a must to scale up and avoid ‘race to the bottom’, partnerships with private sector as they can provide technology, and help upgrade business (quality) and social standards, and pro-poor policies for poor relevant sectors and facilitating supportive policies and social and ecological standards (GTZ, 2007).
Meeting SPS standards (whether public or private or collective) would require making enterprises more informed about SPS standards, working with government for help in monitoring SPS regulations in export markets, active government participation in international standards bodies and the WTO, incentives/penalties for better/poor quality export (e.g., National Dairy Development Board (NDDB) incentives for clean milk at producer/society level under Clean Milk Production Programme launched in Punjab, Karnataka, Andhra Pradesh (AP), M. P. and West Bengal included ₹0.5/lt extra in Punjab and ₹0.20/lt in A.P. and Karnataka), adoption of Hazard Analysis and Critical Control Points (HACCP) and better quality monitoring and Global-GAP as a must at production level in agribusiness sector. India still does not have India-GAP, while there are national standards in other countries, which are based on Global-GAP like Chile-Gap and Mexico-GAP or Thai-GAP. Some of these can be achieved through better vertical co-ordination mechanisms like contract farming (Diza & Karaan, 2006), co-operative-corporate alignment and use of New Generation Co-Operatives (NGCs)/Farmer Producer Companies at the local level (Singh & Singh, 2014).
Strategy for competitiveness thus calls for arrangements like one district-one product (cluster approach), focus on organic, fair and responsible production and processing, promotion of agri-start-ups, focus on research & development (R&D), professional capacity building and marketing support rather than production and promotion of Global-GAP as a minimum standard.
There is also a need to take note of the agritech innovation trends, which are in the form of Farming as a Service (FAAS), Big data and its analysis, market linkage building, role of Fintech and robust supply chain models (Mathur, 2017). Also, what is important is not just material technology but knowledge technology, which involves skills of farmers in managing and converting various inputs into outputs (Walton & Grishin, 2018b). The Indian brands, if any, need to go beyond importers and should target direct supply to supermarkets with better marketing efforts.
It is important to realize that in the world of value chains, agribusiness competitiveness is all about creating and capturing value, which can be at different stages across the chain. In the case of the US, only 16 per cent of the final food value was created at input and production stages while 84 per cent came from post-farm gate stages. Therefore, the perception that farmers create more value than they are able to capture may be misplaced. In fact, producers are capturing relatively less value because they are creating relatively less value. The lack of coordination and commercialization of undifferentiated products, and producers being primarily price takers makes the production stage create the lowest level of value. However, food manufacturers create a high level of value due to strong product differentiation, coordination with retailers, and access to low cost inputs from the production stage. Similarly, retail firms create relatively high value due to their consumer orientation, innovations and strategic locations within the chain. In fact, firms with higher level of intangible assets and goodwill create more value as do firm with higher levels of R&D expenditures. The degree of product differentiation or market focus and firm size also help create and capture value (Cucagna & Goldsmith, 2017; Dimpsey et al., 2002).
That collectives can also help achieve competitiveness is shown by a producer company (PC) from Maharashtra. The Sahyadri farm producer company set up in 2011 is the largest exporter of grapes from India today with 8000 farmer members and turnover of ₹3,000 million. There are thousands of such PCs in India which can play a role in connecting small farmers with export markets lowering transaction costs for both growers and exporters (Bhosale, 2018).
But, cooperatives which are generally seen as important platform for small farmers can also destroy value if they are not efficiently managed (Dempsey et al., 2012). In the case of China, it was found that cooperatives gained competitive advantage through technology innovation which happened in the context of knowledge spillovers and technology acquisition, grass root and social innovations, and a hybrid structure of cooperative companies. In the case of shellfish, it was processing technology, in silk, it was introduction of new silk worm varieties, in mushrooms, it was new planting process for new raw materials, and in quail, it was developing new technology of distinguishing quail gender. The knowledge spillover was high in silkworm and mushroom where there was no patent protection and innovation investment was low while it was low spillover in shellfish processing and quail gender distinguishing, where technology was embodied and initial investment was low in one case, and presence of patent protection was there in another case. The impact of performance across four different product cooperatives was that income increased, the brand was established in economic terms, while on the social side, in each case, thousands of farmers were supported, products were green or organic, and there was a reduction in environmental pollution and better resource utilization across all products. There were four types of innovation—grassroots social in mushroom with high spillover and internal technology, grass root commercial in quail with low spillover and internal technology, socially acquired in silkworm with high spillover and external technology and commercial acquired in case of shellfish with low spillover and external technology acquisition. The policy measures emerging from this kind of innovation performance included public procurement in case of mushrooms and silkworm, credit support in case of quail and also shellfish on the demand side. On the supply side, it was material awards, financial support for technical training, and networking which led to innovative performance of these cooperatives (Luo et al., 2017).
From a marketing angle, there is need to break market potential into crop and commodity product specific like ‘What Asia wants’ not good enough for Australia and fruit and vegetable not enough as category (Growcom, 2014). More detailed analysis of markets and constraints is needed.
Finally, there is no doubt that trade can be crucial for poverty reduction and decent work. For that to happen, product, process, organisational and institutional innovations are needed. This can help smallholder/worker upgradation/organization if backed by relevant and adequate incentives for inclusion and upgrading. But, that does not reduce the significance of regulation of global and national value chains for better delivery of benefits of trade, though this needs to be more effective, not just more regulation.
Footnotes
Acknowledgements
An earlier version of this paper was delivered as Professor Surjit Singh memorial lecture at the International Conference on Asia’s development experience in the twenty-first century at Punjabi University Patiala, Punjab, June 12, 2019.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The author received no financial support for the research, authorship and/or publication of this article.
