Understanding The Agriculture Commodities Trading In India

Understanding the Agriculture Commodity Trading in India

Farmers and mandi suppliers auction their agriculture commodities trading in mandis. This process is regulated by each state’s Agricultural Produce Marketing Committee (APMC) act. The trading processes in the agricultural mandis are mainly regulated by the commission agents (CA) who work as a mediator between farmers and mandi traders. Today we will learn in detail about all the activities that happen during the trade of agricultural products on a large scale.

Importance of Agricultural Commodity and Related Activities

The contribution of Indian agricultural commodities to the food industry keeps increasing. Especially in the food processing industry. The Indian food and grocery market are the sixth largest in the world. In this retail sales is responsible for 70% share. Indian food processing industry is accountable for 32% of the total food market of India. This is one of the largest industries in India and the fifth largest in production, consumption, export, and growth.

In India agriculture is the prime source of livelihood for around 58% of the population while in other western countries like the U.K, the U.S.A, and France it’s only 2%, 3%, and 6%. Agricultural commodities are the main food supply source for our population. Many important industries of India such as cotton and jute, textiles, sugar, edible oil, plantation industries (tea, coffee, rubber), and many agro-based cottage industries heavily rely on the agriculture sector. These agro-based industries generate about 50 percent of the income in the manufacturing sector. Agricultural commodities are one of the majorly exported items of India. Our main exported agricultural items there are mango, tea, coffee, sugar, tobacco, spices, cashew, etc. These are accountable for around 50% of the total export of India. This makes the agricultural trade sector important for the country’s international trade and commerce activities.

Types of Commodities Traded in India

India’s Position in Global Agricultural Trade

India is one of the 15 major exporters of agricultural commodities in the world. India is emerging as an important exporter of many agricultural commodities such as ice, meat, spices, raw cotton, and sugar. Also, India has developed itself as an export competitor for commodities such as Basmati Rice, Guar Gum, and Castor Oil.

Agricultural Trade Policy

Currently, agricultural commodities such as rice, sugar, cotton, fruits, and vegetables are being exported without any export restrictions. Export of pulses (except chickpea) and edible vegetable oil in bulk (except coconut oil and rice bran oil) is ‘restricted’ to meet the domestic demand of India.

Foreign Direct Investment Policy in Agriculture Sector

As per the current FDI policy, 100% FDI of agriculture is allowed in the following activities.

  • Floriculture, horticulture, beekeeping and cultivation of vegetables and mushrooms under controlled conditions.
  • Growth and production of seeds and planting material.
  • Animal husbandry (including dog breeding), and fish farming, under controlled conditions.
  • Services related to agriculture and allied sectors.
  • 100% FDI is also permitted in the plantation sector through the automatic route mainly for tea plantations, coffee plantations, rubber plantations, cardamom plantations, palm oil plantations, and olive oil tree plantations.

India’s Agricultural Trade Grew Significantly During 2020-21

If we talk about the data, despite the pandemic the world the export of Indian agricultural commodities increased by 18.49% between April 2020 to February 2021. Also, during the year 2020-21 the Indian wheat export grew by 727% and rice (non-basmati) by 132%

Top 10 Agriculture Commodities Traded in India

Even during the time of pandemic India took care of the global food supply chain by continuing exports. Agriculture and allied sector exported commodities worth Rs. 2.74 lakh crore from April 2020 to February 2021. Agriculture Commodities that have shown significant growth in export are wheat, other cereals, and rice (besides basmati, soy meal, spices, sugar, cotton, fresh vegetables, processed vegetables, and alcoholic beverages).

Wheat and other cereals witnessed great growth during the previous year. Wheat export increased from Rs.425 crore to Rs.3283 crore and other cereals export increased from Rs.1318 crore to Rs.4542 crore. India registered a tremendous growth of 727% in terms of wheat exports.

Structure of Agriculture Market in India

The country also registered a significant growth of 132% in terms of the export of rice (non-basmati). The export of non-basmati rice has increased from Rs. 13,030 crores in 2019-20 to Rs. 30,277 crores in 2020-21. This growth in export happened because of many factors. The main factor was India’s capture of markets of Timor-Leste, Papua New Guinea, Brazil, Chile, and Puerto Rico. Apart from these India exported rice to countries like Togo, Senegal, Malaysia, Madagascar, Iraq, Bangladesh, Mozambique, Vietnam, and the Republic of Tanzania.

India also increased the export of soya meals to 132%. The export of soya meals increased to Rs 7224 crore in 2020-21 as against Rs 3087 crore in 2019-20.

If you also do mandi business, then it is quite important for you to be aware of the ups and downs of agricultural trades in the global market and also about the agricultural business. If you want to keep yourself updated with the latest mandi business news, then download the Bijak app. Here you can connect with mandi traders from across India and make deals with them.

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