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Home > Business > Business Headline > Commodities

Bad logistics hurting India's horticulture exports

Abhijit Roy, Commodity Online | April 19, 2007 10:46 IST

High delivery costs, caused primarily by a fragmented supply chain, bad logistics, together with poor standards are hurting India's horticulture exports much more than trade barriers, according to a World Bank report.

Despite producing 11 per cent of the world's vegetables and 15 per cent of fruits at very competitive costs of about 53 per cent and 63 per cent of average global prices, India's share in global fruits and vegetables trade has remained at only 1.7 per cent and 0.5 per cent, respectively, the report points out.

It also had suggested for the creation of an integrated and competitive supply chain for agriculture along with radical reform in transport, storage and distribution services before India opens up to foreign competition.

The World Bank study is based on primary value chain surveys of 10 horticultural items, 1,400 farmers, 200 commission agents and 65 exporters across 17 Indian states.

Horticulture and fisheries now account for half the growth in India's total agricultural production, currently estimated at 2.6 per cent.

However, in the case of table grapes, while the retail price in the US is Rs120.30, the farmer gets only Rs13.50, while the intermediaries claim Rs 5.40, the exporter Rs 24.20, and international freight and insurance claim about Rs 53.50.

The importer contributes the remaining Rs 23.50 to the total cost.

Compared to 30-40 per cent in the US or Thailand, the Indian farmer gets to keep only 15-20 per cent of the final price.

The post-WTO situation is favourable for export of high-value food products from India. Over 2001-2004, horticulture exports went up to $464 million (Rs1,327 crore) compared with $316 million in the previous three-year period, report said.

Even international transport costs are 20-30 per cent higher than in other countries. For instance, it costs $790 to transport one tonne of grapes from India to the Netherlands, which is two and a half times higher than what the Chileans are paying, although it is twice as far from the Netherlands as India.

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