Navigating New Horizons: South Asia's Agri-Trade in a Transforming Global Landscape

With South Asia expected to experience continued growth, how do you perceive this economic shift will influence the agricultural commodity market in the region? What strategies should stakeholders in countries like India, Bangladesh, and Pakistan employ to leverage opportunities in this evolving landscape?

The economic growth in South Asia will pose challenges as well as bring in opportunities in the agricultural commodity markets.

Governments in countries like India and Bangladesh are spending a lot on basic infrastructure. This will help logistics, ease market access for farmers, and cut post-harvest losses. At the farm level, adoption of improved varieties, scientific methods, climate-smart practices could improve farm productivity. Thus the overall market efficiency will leave more money in the hands of primary producers and such enhanced incomes will lead to change in diets. Demand for exotic vegetables fruits, protein rich dairy variants like cheese meat will increase, affecting their price and supply chains. Growing regional and global trade could open up new markets for South Asian agricultural products. However, as evident from current year, domestic political considerations like food security could come into play.

Strategies for stakeholders: The value chain participants need to adapt their strategies to meet the demands from the above.

Primary producers (farmers) would need to diversify their crops and add livestock, focusing on high-value products where processing and value addition through initiatives like derivatives trading thru farmer collectives can ensure reduction in volatility risk and enhance income.

The processors, stockists, and retailers need to invest in eliminating inefficiencies by improving infrastructure, logistics, and market information systems.

Governments can facilitate trade through regional cooperation, harmonizing regulations, and creating an enabling environment for foreign investment in agriculture. They can also make investments in research on climate-resilient crops, improved seeds, and sustainable farming. Further in countries like India, and Pakistan equitable land distribution and securing land rights for smallholder farmers and tenant farmers is crucial for inclusive development. On the social side, empowering women economically is feasible when they are socially also empowered and can add substantially to the GDP.

Considerations for 3 major countries:

• Bangladesh: Agriculture contributes 13% of Bangladesh GDP and 50% population is dependent on it. The country needs to cash on the blue economy by utilising coastal resources for aquaculture, and for food security concentrate on high yielding rice varieties

• India: About half the population depends on agriculture but the GDP contribution of Agriculture is less than 20%. Clearly there is need to promote high value Agricultural products. To become a major player in high value agriculture, produce markets, the country needs to eliminate the near 20% storage losses, remove physical and bureaucratic bottlenecks, and promote farmer collectives to aggregate produce.

• Pakistan: 43% population involved in agribusiness, contribute 19% of GDP. Clearly value addition is the need. Investments in water management, climate-resilient crops, would help Pakistan overcome water scarcity and unlock its agricultural potential. farmers' income can be enhanced by promoting cultivation of as vegetables, fruits, pluses, oilseeds, and fodder, due to the higher income per hectare in Pakistan.

With India being a key player in South Asia's agricultural sector, how do you foresee its agricultural policies and market strategies impacting the regional dynamics, especially in commodities like cereals, oilseeds, and sugar? Given India's substantial role in these sectors, what steps do you recommend India take to bolster its position as a central figure in shaping the South Asian agricultural commodity market?

Given that it is a large economy, large producer in certain commodities and large consumer in others, Indian policies, and market strategies impact not only the regional dynamics of South Asian agricultural commodities, but also in ASEAN and other regions. For example, India's large-scale sugar production and export subsidies can disrupt regional sugar markets, affecting producers and consumers in countries like Pakistan and Bangladesh or the demand for imported vegetable oils, can put pressure on regional markets and impact the livelihoods of oilseed farmers in Malaysia and Indonesia as also neighbouring countries. The MSP led cereals like wheat and rice can upset export plans of Pakistan, Nepal, and Bangladesh.

India can initiate with South Asian neighbours’ easier movement of agricultural goods and creating win-win situations for all. Promoting e-commerce platforms for farm produce, and data-driven market information systems can improve market efficiency and transparency aided by establishing common agricultural markets and common standards. Indian research in climate-resilient crops, pest and disease control, and sustainable farming practices can benefit the entire region by contributing to higher productivity and increasing production of oilseeds and pulses through improved seeds, technologies, and infrastructure. This can reduce dependence on imports and stabilize regional prices and address price volatility. Further, Indian policy mandarins can relook at Geopolitical factors and trade agreements to significantly influence regional dynamics.

With global trade in agricultural commodities expected to expand, yet at a slower pace than in the past decade, how do you assess the future demand and supply dynamics for key commodities? Considering that South and Southeast Asia's net imports of agricultural commodities are projected to increase, what implications does this have for regional trade and food security, especially in light of the growing population and changing consumption patterns?

As per UNCTAD Global Trade is set to contract by 5% in 2023. Geopolitical trends, including declining interdependence between China and the United States, have an impact on global trade. The rapid expansion of global agricultural trade observed in the past decade is predicted to slow down due to factors like Russia Ukraine war, rising trade barriers and protectionist policies, as seen in recent times in India, worries about climate change and sustainability. Such slowdown affects commodities unevenly - rice and wheat see continued steady demand, higher-value products like fruits, vegetables, and animal proteins face steeper price fluctuations due to their more complex supply chains. South Asian imports will rise because of economic and population growth. The national governments will have Food Security Concerns, especially for vulnerable population.

Increased demand within the region presents opportunities for intra-regional trade in agricultural products. South and Southeast Asian countries can strengthen cooperation and develop regional value chains to reduce dependence on external markets. As evident from Indian policy for palm oil or Bangladesh for wheat, to ensure long-term food security, South Asian nations would need to continue investment in sustainable domestic production, improve storage infrastructure, and address post-harvest losses. Given vagaries of nature, environmental sustainability will take centre stage in agri-production in near term.

In conclusion, the slowing of global agricultural trade offers challenges and opportunities for South Asian and ASEAN. By adopting regional cooperation, investing in domestic production, and embracing sustainable practices, South Asia and ASEAN can ensure food security and navigate the currents of agricultural trade for building a shared and prosperous future.