Export performance and supply chain analysis of major vegetables of Kerala

Abstract

The study entitled „Export performance and supply chain analysis of major vegetables of Kerala‟ was conducted at the Department of Agricultural Economics, College of Agriculture, Vellayani, at Thiruvananthapuram during the period from 2014 to 2019. The major objectives of the study were to evaluate the export performance and supply chain of major vegetables for export from Kerala and to suggest policy measures to enhance export oriented production and marketing of vegetables. The study was based on both primary and secondary data and the respondents included 10 exporters, 30 agents and 150 vegetable farmers who were participants of the export supply chain of vegetables and 50 vegetable farmers who are not participating in the export supply chain. Samples were selected for primary data collection using purposive sampling technique. Percentage analysis, Coppock‟s Instability Index, Gini concentration index, Hirschman Index and Markov chain analysis were used for the analysis of secondary data. SWOC analysis was also used to focus on the strengths, weaknesses, opportunities and challenges related to the export scenario of vegetables from Kerala. The area under vegetables in India increased from 6.16 million ha in 2001-02 to 10.26 million ha in 2017-18. The share of major vegetables in the total area under vegetables in the country in TE 2017-18 showed that potato accounted for the highest share of 21 per cent, followed by onion (13%), tomato (8%) and brinjal (7%). Major categories of vegetables exported form the country include „other fresh vegetables‟, fresh onions, „cucumber and gherkins‟ and processed vegetables‟. Data on the vegetables exported from India from 1988 to 2016 showed that „onions and shallots‟ accounted for the highest share in terms of quantity exported, among all other vegetables during the Triennium (TE) ending1990, 2000, 2010 and 2016. It also accounted for the highest share in terms of value (Thousand US$) in all the trienniums, except for the TE 2000 (17.19%). The Coppock‟s instability indices estimated for quantity exported during the period from1988 to 2016 indicated that the most stable exports were „onions and shallots‟ and „dried onions‟ while the least stable exports were garlic (323.7%), „dried lentils‟ (292.7%) and tomatoes (164.3%). Instability indices for value of exports for the same period showed that „onions and shallots‟ were the most stable exports (31.3%), followed by „dried leguminous vegetables‟ (71.1%) and dried onions (71.2%). Commodity concentration in the exports of vegetables from India estimated for the period from 1988 to 2016 using the Gini Concentration Index (GCI) showed an overall mean value of 45.75. The mixed trends in the GCI values exhibited during period II may be attributed to the implementation of various trade related agreements in agriculture. The overall value of Hirschman Index (HI) used to measure the geographic concentration in the value of exports of vegetables from India for the period from 1988 to 2016, indicated increased diversification in terms of geographic coverage in the case of „dried onions‟ with the lowest index of 35.38. Tomatoes exhibited highest mean values among all other vegetables exported from India during the overall period (75.31) and sub periods and indicated high geographic concentration. The Markov chain analysis used for identifying the stable export markets for major vegetables showed the probability that Nepal, Singapore and Kuwait would retain their export shares of „onions and shallots‟ from India from one year to next year were 79 per cent, 64 per cent, and 64 per cent respectively. For dried onions and tomatoes, the most stable export markets were Belgium and Pakistan respectively. Pakistan, Philippines and Thailand were the other consistent markets for Indian garlic.Kerala occupies 12th position in the area under vegetables in India. The State Department of Agriculture is the main agency for promotion of vegetable cultivation in the state. The average quantity of vegetables exported under the category, „other fresh vegetables‟ (OFVs) from different ports in Kerala, increased from 38,277 tonnes in the TE 2010-11 to 46,404.79 tonnes in TE 2018-19, while that of „processed vegetables‟ (PRVs) decreased from 11,197.7 tonnes to 8,380.51 tonnes during the same period. The „OFVs showed prominence over „PRVs‟, both in terms of quantity (in tonnes) as well as value (in million US$) of export during all the trienniums. The share of different vegetables in the total vegetables (OFVs) exported was highest both in terms of value (83.03%) and quantity (80.44%) for „vegetables‟-fresh/chilled‟ during TE 2009-10. The analysis of the decadal changes in the export of „OFVs‟ during 2018-19 over 2009-10 showed that the percentage increase in the export value was highest for tomatoes (67,436%), followed by shallots (11,866%). The share of different „processed vegetables‟ in the total quantity of export of PRVs showed an increase in TE 2018-19 over TE 2009-10 in case of „garlic (dried)‟ (6,710%), „onions-dried (whole/cut/sliced)‟(1290%) and „other vegetable-frozen‟ (505%). The decadal change in the share out of total export of PRVs during TE 2018-19 over TE 2009- 10 was the highest for „garlic-dried‟, both in terms of quantity and value. Coppock‟s Instability Index was used to study the instability in exports. Tomatoes (fresh/chilled) showed highest instability index among OFVs, both in terms of export quantity (1,573 per cent) and export value (1,191per cent), indicating that it was the least stable exported commodity. Lowest instability indices under OFVs were exhibited by „vegetables-fresh/chilled‟ and cassava both in terms of export quantity and value which indicated highly stable exports. The most stable export among processed vegetables in terms of quantity were „green pepper in brine’ and „other edible plant parts‟ with instability indices of 13.5 and 14.5 per cent respectively. The category of „OFVs‟ exhibited higher values for the Gini Concentration Index than the „PRVs‟ during the period from 2007-08 to 2018-19 as indicated by the overall mean GCI values of 84.83 and 5.09 respectively. Thus, „other fresh vegetables‟ showed more commodity concentration than the processed vegetables. Among the OFVs, tomatoes exhibited average Hirschman Index (HI) value of 79.37 for the period from 2007-08 to 2018-19. The average values of HI worked out for PRVs for the same period indicated that „garlic-dried‟, „onionsdried- whole/cut‟ and „other vegetables-frozen‟ were having the highest geographic concentration in exports. „Green pepper in brine‟, „other edible parts of plants‟ and „other roasted and fried vegetable products‟ were the commodities with least geographic concentration in exports among the PRVs. The quantity of total vegetables exported from Kerala during 2006-07 was 2,669.78 tonnes, worth 2,599.34 thousand US$, which increased to 45,691.93 tonnes worth 49,274.29 thousand US$ during 2018-19. The average quantity and value of „other fresh vegetables‟ exported during the entire period (2007-08 to 2018-19) was more than four times the average quantity of „processed vegetables‟ exported during the same period. The number of import destinations for OFVs increased from five countries to 35 countries and that of PRVs increased from 23 to 50 countries during the period from 2006-07 to 2018-19. The United Arab Emirates was the top importer of both OFVs and PRVs from Kerala. The value of export of vegetables (both OFVs and PRVs) through the five major ports of Kerala for the period from 2006-07 to 2018-19 showed that the export value of OFVs increased in TE 2018-19 when compared to TE 2008-09 for Trivandrum airport, Cochin airport and Cochin seaport and the increase in the quantity exported in TE 2018-19 was substantial for Cochin airport and Cochin seaport. The profile characteristics of the respondent farmers included in the export supply chain showed that all belonged to the category of marginal farmers, with an average holding size of 0.18 ha. Agriculture was the main occupation for the majority (84%) of the farmers. Vegetables accounted for 81.5 per cent of the total gross cropped area cultivated by all the respondent farmers. The per hectare cost of cultivation (Cost A1) worked out for the entire crop mix was ₹1,04,956 per hectare for the respondents. High labour cost, high input cost and marketing related issues were the major constraints faced by the famers. Agents acted as the major link between the exporters and farmers.Majority of the agents (57%) procured vegetables from contact/representative farmers at the local level and another 23 per cent directly from individual farmers. Agents often resorted to procurement of vegetables from other states and most important constraints faced by the agents were poor post harvest operations and multiple source points of supply for each vegetable. Out of the total number of exporters registered under the Agriculture and Processed Products Export Development Authority (APEDA) from Kerala, only a few are active and regular. Eight out of the ten exporters were depending on neighbouring states for procurement of vegetables for export purpose. Delay in getting payment from importers, stiff international competition and fluctuation in the exchange rate of foreign currencies were the major problems faced by the exporters. The farmers outside the export supply chain were also marginal, with an average holding size of 0.21 hectare. All farmers were literate and agriculture was the main occupation for 76 per cent of the farmers. High labour cost, low prices for the produce and high input costs were the major constraints faced by the farmers outside the export supply chain. The SWOC analysis for the production and post-harvest operations of vegetables revealed that diverse Agro Ecological Zones (AEZs) with climatic suitability and genetic diversity of vegetables, increased interest among farmers towards vegetables farming, public policies and public sector investments were the major strengths. Major weaknesses include loss of agro-biodiversity, vulnerability of small holders to environmental risk including climate change, high input and labour costs and lack of integration and coordination among stakeholder institutions. The opportunities available include sustainable agricultural production based on AEZs, increased domestic and global demand for vegetables and opportunities for more employment and income. Major challenges identified were self sufficiency in production, coping with climate change, organization of small holders and establishment of regulated marketing systems with modern infrastructure. The SWOC analysis of the marketing and export scenario of vegetables in Kerala revealed that better road-connectivity, international airports with facilities for handling perishable cargo and large diaspora related population worldwide were the major strengths. Weaknesses identified include unscientific handling of produce at ports, unorganized production and absence of marketing regulations and lack of credit availability to exporters. Important opportunities available include facilities for handling perishable cargo at airports, increasing domestic and global demands, better income and employment opportunities for small holders, support from national organizations and opportunities of FPOs. Major challenges identified include lack of export oriented infrastructure viz., pack houses, cold chains and logistic net works, improving market access to farmers and their inclusion in to the export supply chain, export oriented production and marketing and provision of policies for support and, incentives to exporters and other stakeholders. Recommendations and policy suggestions related to export oriented production and marketing include development of vegetable farming in different Agro Ecological Zones (AEZs) and Specialized Agricultural Zones (SAZs), improving on farm productivity and availability of vegetables, integration of stakeholders involved in the export supply chain, improving the market access and infrastructure, quality and food safety standards and application of Information and Communication Technologies (ICTs) for effective supply chain management. Other major suggestions include the export oriented production and export of vegetables included in the category of „other fresh vegetables‟ (OFVs) and inclusion of more number of commodities in its export basket based on the demand from importing countries. The export oriented production of cassava, „vegetables- fresh/chilled‟ and „mixed vegetables‟ may also be promoted since it was found as the most diversified items of export among „OFVs‟, The export market of „processed vegetables‟ has a price advantage over „other fresh vegetables‟ and very low commodity concentration compared to „other fresh vegetables‟. Hence, export oriented strategies may be developed for widening the export basket of processed vegetables in response to the global demand and to identify more promising export destinations. „Green pepper in brine‟, „other edible parts of plants‟ and „other roasted and fried vegetable products‟ are the promising items under „processed vegetables‟ owing to lesser geographic concentration.