Agri Export for abundant income... Successful Strategies - Part 2
There are primarily four important factors to be considered before venturing on exports, viz, a) buyer; b) exportable product; c) the country to which export to be made and d) investment. Importantly, the buyer must be assessed in terms of his business interest and credibility which can be verified with the Government machinery, Export Credit Guarantee Corporation of India (ECGC). This agency does proper verification with the help of our Indian embassy and banks and hence the enlisted buyers would be genuine for having trade relations. ECGC has its office at Chennai also.
The second aspect is the product. There are four categories. One is ‘prohibited products’ like red sandal trees, sandalwood trees etc. which are barred from exporting. The second one is that certain products can be exported under a special licence issued by the Government. This includes cattle and livestock. The third one is that certain goods can be exported only with the sanction of No Objection Certificate. However, the agricultural seeds are prohibited for exports under this category. Many countries have this restriction in common. When we want to export groundnut seeds we must get NOC under the clause that it will be used for the purpose of making oil. The last category is ‘Licensed Products’ which means that certain products are listed by the Government itself regarding their exportability. For instance, APEDA is the agency which gives guidelines for agricultural products. Likewise, there are different departments for different goods.
The third aspect is the country. We must be aware of the countries to which only we can export our commodity. We should not export our products to countries that are banned. Additionally, each country will have a trade agreement with our country in regard to export and import and we are required to adhere to these stipulations without fail. The fourth one is an investment. In this regard, we can invest ourselves or get advance payment from the buyer for doing the export. These are the four fundamental aspects in connection with exports.
Further, we must understand which particular product and branch of production we have the requisite expertise. For instance, we must know whether our expertise lies in vegetable cultivation or green cultivation or fruit cultivation etc. because of the fact that the aspects of packing, pricing and exporting will be different from each other. Similarly, we must know how many days it will approximately take for cultivation from the time we sow the seeds, yield expectations, constraints in the cultivation and also in the area of value addition for each product.
There are still some more prerequisites we need to possess for exporting. One is dress sense. When it comes to actual cultivation, we can be in any attire to suit our convenience but when it comes to meeting the buyers or agents from other countries or signing trade agreements, we must observe more etiquettes including dressing sense, our body language etc. Next one is the financial strength. For any business, capital is fundamental and for exporting it is one of the important requirements. We must honour our commitments in regard to the prompt delivery of the products. Last but not the least is that we must be basically aware of proper communication including the use of certain technical features like ‘what’s app’, ‘e-mail’ and related technical knowledge. Even if we do not know, we must have reliable personnel to do the same.
We must further gather knowledge relating to the products and in which condition they are used in foreign countries. For example, the coconut shell that we use here as a fuel is being used as a raw material for making various other products in Canada and other South American countries.
There are certain restrictions in other countries for importing rice from India. It is essential that we should have this information in advance. Otherwise, they may be rejected outright. Kamaludin himself has encountered such a problem. Once he sent rice to Dubai on getting an order from that country. Unfortunately, it was detained at the Dubai port itself for want of health certificate which should have been produced before exporting as part of the documentation. The rice was lying there for three months intact. Later he came to know that such a certificate was not a pre-condition in Singapore to which country he then redirected the rice.
These points are not confined to exports only. For any kind of trade that we wish to do, we need to equip ourselves with these relevant points. Additionally, we must put in our best efforts with suitable training. Then only we will be able to see success and growth including happiness in the end.
We would have seen only local markets so far. But we must know whether we are going to export products like rice, milk, coconut, edible oil, salt, tamarind, chillies, turmeric etc as it is or add value and sell under brand names.
Further, we must know several other aspects like where to produce, where to export, how many days the export commodity will stay in good condition, whether it is a seasonal product and the pricing factor. There are some Government organizations that will be helpful to know.
Karthikeyan is an expert who is engaged in exporting organic products through his company ‘Asian Organics’, Coimbatore. He shares his experiences here. He has been exporting for the past 10 years. Initially, he was sending coir pick and rope through Coir Board, Kochi. Then he had shifted to the export of corn. Now for the last 4 years, he has been exporting value-added drumstick product to Malaysia and other European countries. Drumstick leaves, powder, oil and cake totalling around 10 products are being exported by Karthikeyan. He says that drumstick cake is being used to refine the water in countries like Malaysia and Japan.
Whether we export through air or sea, we must ensure that the items of export are properly despatched and the buyers also take immediate delivery upon reaching the destination.
Normally, our Indian embassy in every country will have an authentic list of importers in that country registered with them. It is easy to export to them. But sometimes, we may be required to export through agents in which case we must verify with the embassy as to the registration of that company and the importer with our embassy so that there will be no problem at a later stage.
It would be wise to export after getting full payment because most of the time, we may have to outsource certain commodities for which we may have to pay upfront. While doing so also, we must deal with the traders directly instead of having the transaction through the bank. Then only we will be able to confirm the quality and promptness of delivery. Similarly, some countries may offer concession while importing and our Government may give some special incentives while exporting which we must avail of promptly. If we have the Government certificate for the organic products, we will be in a position to sell at a competitive rate which the buyers will be willing to offer without any doubt or hesitation.
Value addition to rice export is rather simple. Rice is exported in large quantity to countries like Singapore, Malaysia, Brunei, Sri Lanka, America and Middle East countries. Basmathi rice and non-basmathi rice are of two kinds and the latter kind would only be available in Tamilnadu. Our competitors are Thailand and Vietnam. During 2017-18 we had exported 86.4 L metric tonnes of rice for a value of Rs.22,967/- crores. However, Thailand is the one which exports more rice than any other country in the world.
As regards Singapore, it is a stipulation that the buyer should have stock bile for storage. There is a rule in Singapore that the buyer who imports rice should deposit 1/3rd of the imported quantity with the Government of Singapore. If the buyer does not possess stock bile, the exported rice will be returned to us.
Likewise, if we want to export to Malaysia, it will be possible only through Bernas control which has since been suspended from last June.
In regard to the export of rice to Sri Lanka, they will import rice from us only if their Government issues the relevant sanction order; or else, they will not import at all. There are no restrictions whatsoever with regard to the export of rice to Middle East countries. The only condition is that the details of the product, date of manufacture, date of expiry, address etc. must be mentioned in both Arabic and in English. The quantity must be indicated in both kilogram and LBS. Above all, the content must accompany with the relevant health certificate.
In the case of exports to America, we must register with Plant Quarantine (PQ) body which is available in the Central Agricultural Ministerial Department. Similarly, we must obtain a nutritional expert’s certificate for the carbohydrate and moisture content. We must also note that the orders that we may receive from Thailand and Vietnam may be fake orders because the rice stock is already abundant in these countries. Thus there are different norms in different countries for the export of rice. We must always be alert.
(This article was written in Tamil by K S Kamaludeen for Pasumai Vikatan magazine dated 10/10/18 has been transcreated in English by P.S.Ramamurthy)