International

India-South America Trade Ties An Insight on Marketing Agricultural Produce and Preventing Crop Loss

By Ramesh Kumar Sharma

The smarter ways to market agricultural produce, namely value addition, internet & website marketing, cold room facilities, direct marketing (no mediation), organic production and adoption of quality specific crop, are perhaps well known worldwide. But the question arises; how all these can contribute to the prevention of crop loss in a country like India where droughts and floods are common phenomena, leading to more possibilities of foods import than export.

For example, recently addressing the group of South American leaders in Brasilia on July 17, 2014, Indian Prime Minister Narendra Modi spoke on various issues related to Latin America-India economic ties. He accepted that trade and investment between India and Latin America is below the potential despite the enormous range of opportunities – hydrocarbons, food, pharmaceuticals, textiles, engineering goods, automobiles etc. India and Brazil inked three bilateral agreements in the field of environment and mobility along with setting up of a Brazilian earth station receiving data from Indian satellites. The agreement made a special mention of South America’s contribution to India’s energy and food security.

India has been annually importing more than $1 billion worth of soybean and sunflower oil from Brazil and Argentina. As per statement from Minas Gerais (Brazilian state) based India-Brazil Chamber of Commerce (IBCC), metals, crude oil and sugar make up the vast majority of Brazilian exports to India. According to Thomson Reuters, India exports refined diesel, medicines, textiles and plastics to Brazil. At the same time Leonardo Ananda Gomes, the executive director of BICC, points out, “One particular interesting possibility for Brazil is the exportation of processed foods to India.” Brazil is the well known exporter of packaged non-vegetarian foods, mainly beef and pork, also supplied to Russia as per BRICS mutual cooperation policies. But India’s religious sentiments would never allow such food products in the country. Then the question arises as to whether Brazil is planning to export HPP (High Pressure Processed) vegetables including tomatoes, onions and potatoes to India. If ‘yes’ it would enable India, which frequently faces scarcity of vegetables due to getting rotten or being hoarded, to stabilise prices of food articles provided those are economically procured from South American countries.

Agricultural Trends: Population Shift, Smarter Way of Development

Both Brazil and India follow shifting cultivation, called ‘roca’ in former and ‘bewar’ or ‘poda’ in latter. Indian agriculture is well known for production of rice, wheat and other cereals, but severely faces the hazards of landslides in northern regions and floods in eastern regions if heavy rainfall takes place. In southern, middle and western India heat waves are the major hazards to agriculture where drought situations frequently occur.

Indian mountain ranges are highly deforested and it is perhaps the major reason of hazardous climatic conditions leading to serious crop loss. On the other hand, Brazilian agriculture is well known for production of millet, sorghum, barley and potatoes. Brazil is famous for good quality dairy products and brilliant stock raising capabilities. Brazilian highlands enjoy 25 to 200 centimetres and somewhere even more annual rainfall with almost no hazards of landslides, floods and heat waves to agriculture. But Brazilian agriculture is affected by frequent forest fires. The whole South America continent, except Brazil, frequently faces the natural hazards like earthquakes and volcanoes. It is perhaps due to existence of dense alpine forests that Brazil does not face intense earthquakes despite divergent plate boundaries in Atlantic Ocean in its close vicinity. Brazilian agriculture, in this way, runs smoothly while Indian agriculture frequently undergoes crop losses.

Brazilian mountains are densely forested (of course not much densely perhaps due to low human population density 21 persons per sq km) varying from stock raising Pampas to dense Amazon basin woods; while Indian mountains are not densely forested, with severe threat to biodiversity, perhaps partly due to high population density (around 320 person per sq km slightly above optimum) and mainly due to land mismanagement or non-implementation of forest policy.

Naturally, Indian agriculture business is likely to suffer from crop losses and quality deterioration along with unemployment of farm workers, even the skilled hands. On the other hand, Brazilian agriculture business has enormous development possibilities if its population density rises up to optimum. Therefore, a shift of agricultural human resources from high population density countries like India to low population density countries like Brazil might be a smarter way for agricultural development – production as well as marketing.

Importation: Smarter Way for Deforested Countries to Stabilise Food Prices

Brazil can effectively offer sugar, maize, potatoes and coffee, for which it is well known in the world, to India. However, sugarcane might be a more preferred imported commodity for India, instead of sugar, to run the existing sugar industry and to safeguard respective employment. The processed maize products and HPP (high pressure processed) potatoes, onions, tomatoes and other vegetables might economically be imported from Brazil and other South American countries. Dairy facts tell that India is a better performer in milk and milk products than Brazil. But fodder might be India’s major requirement as an imported commodity, if droughts and floods destroy it. And Brazil might be a good choice to supply it, if it possesses surplus fodder after feeding its own livestock. India would also most probably continue to import soybean and safflower oil from Brazil.

India’s demands, in context of food security, do not end at that much only. If monsoon disturbance continues, looming large year-by-year due to ever increasing deforestation, the country might lose its position of rice producer, which has been second in the world next to China. Similarly, it might lose wheat production, which has been fourth next to China, EU and USA.

‘Price stability’ is the promise Prime Minister Narendra Modi made to the people of India. But the Modi government, perhaps, knows that the way of cost effective organic agricultural production in deforested India is almost blocked; therefore the smarter way to stabilise food prices is importation.

Organic Food Importation and Value Added Exportation Quite Possible

The supply chain, maintained via importation, can effectively contribute to price stability, if currency is not devaluated as a consequence of trade imbalance by means of increased exports. As such, Modi Government’s priority would be to strengthen exportation. India has been usually exporting refined diesel, medicines, textiles, engineering goods, and plastics. As Prime Minister Narendra Modi states that India has developed a cost effective technique of satellite launching and is going to set up a Brazilian earth station that will receive data from Indian satellites. He said, “India will set up centres of excellence in Information Technology in South American countries and extend cooperation in the areas such as tele-medicine, tele-education, e-governance, weather forecasting, resource mapping and disaster management.” It is worth mentioning that western coastal South American countries frequently face volcano and earthquake disasters and India can effectively contribute to disaster management.

As far as the organic food sector is concerned, 100 percent importing and exporting organisations do exist in this field in India. Value addition is the only key for exporting a product made of imported raw material.

Reactions

Narendra Modi is perhaps the first Indian Prime Minister to interact with several South American leaders at one place. The meeting held at Brasilia was arranged by Brazilian Prime Minister Dilma Rouseff in which leaders of Argentina, Venezuela, Ecuador, Colombia, Peru, Uruguay and Paraguay participated. India and Brazil inked three bilateral agreements. It is a common opinion of Brazilian people that India is a comfortable business partner in comparison to China and USA. According to Insper’s Professor Dumas Damas, production cost is rising in China as the country shifts to a consumption-led model of economic growth, and it still makes sense for many Brazilian companies to outsource their production to avoid extremely high costs at home. He avers, “The time to discover China has long gone.” According to the Director of BICC, “There are untapped opportunities for Brazilian companies in India. One particularly interesting possibility for Brazil is the exportation of processed foods to India. Now supermarkets exist in India. While Brazilian companies have generally been slow to explore foreign markets, there are notable exceptions.”

Crop Loss Prevention Techniques Lead to Smarter Marketing Ways

Although dense forestation is a must for soil conservation and good climatic conditions, still crop loss prevention techniques, in India, will lead to smarter marketing ways even in situation of food products importations due to floods, droughts and landslides. These techniques include aseptic packaging, drying, spray drying, cold storing etc. It is often said in India that mediation based marketing is one of the major factors that affect quality and increased prices of food articles. So clustering of farmers or direct marketing to consumers is also considered to be smarter way.


Based On Analysis of India - South America Trade Ties.

Ramesh Kumar Sharma is a Freelance Writer.