MARKETING OPPORTUNITIES FOR INDIAN FRESH FRUITS AND

VEGETABLES IN GULF COOPERATIVE COUNCIL (GCC) COUNTRIES

SUMMERY

Indian is one among top producers of agricultural commodities in the world. The number of
commodities and varieties produced has increased during the past 25 years. The existing capacity
is self reliant and capable of exporting surplus produce to South Asian and Middle East
countries. Due to initiatives taken by government of India to meet the food needs of growing
population, it is expected that the production will increase manifolds and consumption would be
lower than the production in next two decades. India will be having advantage of excess agro-
production and that is nullified by spoilage and poor harvest and processing system. Hence
Indian farmers need an orientation on pesticides use, Post-harvest management, packaging
systems and latest logistics technology for meeting the quality as per the standards of USDA and
HACCP.

The total market potential of agriculture imports of GCC countries is USD 28,975 millions, in
which India’s share is about 8 percent amounting to USD 2700 million(WTO,2009). India’s
exports to gulf dominated by fruits and vegetables in raw form as well as processed. European
Union, USA, and Gulf China are the major sourcing countries for agricultural and non-
agricultural products for countries. These 3 countries alone contribute more than 40 percent of
their imports. There is an enormous opportunity to export Indian fresh produce to Middle East
countries provided there is a compulsion for integration of suppliers to synchronize the logistic
movement with market demand. This paper will analyze the Indian production capacity, export
opportunities in gulf countries and also offer solutions to various problems in agricultural supply
chain management.

Authors:

1. Mr. Sudhakar Madhavedi, Research Scholar, School of Management Studies, University

of Hyderabad, Gachobowli, Hyderabad. He can be reached at: reachfirst@gmail.com

2. Dr. Acharyulu GVRK, Seniour Lecturer, School of Management Studies, University of

Hyderabad, Gachobowli, Hyderabad. He can be reached at: acharyulu_gvrk@yahoo.com
1.0 INTRODUCTION
Agriculture is an important sector in India. It is indispensible for the sustenance and growth of the Indian
economy. On an average, about 70% of the households and 10% of the urban population is dependent on
agriculture as their source of livelihood. Agriculture and allied activities constitute the single largest
contributor to the Gross Domestic Product (GDP) i.e. about 33% percent. Due to various initiatives taken
by the government of India, there is an increase in agriculture production. The initiatives include bringing
additional area under cultivation, extension of irrigation facilities, the use of improved high yield varieties
of seeds, adoption of new farming techniques and modern control system. There is an improvement in
India’s agriculture productivity in terms of self sufficiency and export of variety of food grains. In spite
of the several efforts, it comprises only one to two per cent of the world agriculture exports.

India was the world’s second largest producer of fresh produce in the year 2006. It produced 43 million
tons of fruits and 88 million tons of vegetables. The National Horticulture Mission forecasts annual
production growth is at 8.8 percent for fruits and 10.9 percent for vegetables by the year 2015. The total
consumption of 90 million tons of fresh produce is supplied through 7300 wholesale assembly markets
and 27294 rural weekly markets. The consumption of fresh produce is expected to reach 140 million tons
by 2015. It indicates there is an enormous growth opportunities to fresh produce sector. India can become
a world market leader in horticultural produce through the vertical and horizontal integration of different
components of the supply chain.

2.0 FRUITS AND VEGETABLES SUPPLY PATTERN

The Indian economy is moving from supply-driven economy to a demand-driven economy thus there is a
change in consumption pattern of the population. Total domestic demand for fruits is expected to increase
to 17.43 million tons by 2010 and 25.47 million tons by 2020. For vegetables, the demand is expected to
be 103.16 million tons by 2010 and 137.25 million tons by 2020. Demand for both fruits and vegetables
are expected to rise at the rate of 4-5 per cent per annum in the next 15 years. The per capita demand is
also expected to rise at the same rate.

Total Demand (Million tons) Per Capita Demand (Kg)

Year
Fruits Vegetables Fruits Vegetables

Base Year 2000 12.37 79.15 12.04 77.07

2010 17.43 103.16 14.78 87.51

2015 21.06 119.12 16.67 94.28

2020 25.47 137.25 18.93 102.00

Table 1: Projected domestic demand of fruits and vegetables in India

Note: Scenario of economy growing at 8 percent annum Source: Kumar & Kumar (2007)
The increase in the demand of fruits and vegetables for domestic consumption is a challenge to the
country. It is difficult to allocate large areas of land for horticulture. Diversifying land away from cereals
to horticulture remains a constraint in spite of it being more profitable for farmers to produce horticulture
products than cereals. The National Horticulture Mission (NHM) aims to double the production of fruits
and vegetables by 2010. Tables 2 and 3 project the future production and supply of fruits and vegetables
in India for 2015-16. It is estimated that the production of fruits and vegetables would increase to 66.9
million tons and 131 million tons respectively by 2010 and doubled by 2015. By reducing Post-harvest
losses, the surplus margin of 20-25 percent of fruits and vegetables are moved from domestic market to
export markets. Thus it is required that efforts should be diverted to minimize and remove the supply
constrains and make the supply chain efficient in order to improve the horticultural growth rates.

Production (Million
Year Area (Million ha) Yield (tonnes/ha) tonnes)
Vegetables
1999-00 5.82 14.4 83.8
2010-11 6.49 20.2 131.1
2015-16 6.49 23.5 152.5
Fruits
1999-00 3.74 11.8 44.3
2010-11 4.43 15.1 66.9
2015-16 4.43 16.9 74.9
Table 2: Production forecast of vegetables and fruits

Source: Kumar and Kumar (2003)

In spite of India’s wide range of soil and climatic conditions the horticulture sector is facing several
constraints. These constraints result in a cultivable waste of about 19-40 percent. Another issue in the
supply chain is the inefficient post-harvest management. The proper integration of post-harvest
technology into marketing supply-chain is crucial. The extent of losses of fruits and vegetables in India is
estimated at about USD. 238 million to USD 266million per annum (Surabhi Mittal), and the loss of
quantity ranges between 10 per cent and 80 per cent in the most perishable fruits and vegetables. The
other challenges before the fresh produce industry are rapid progress in production technology, changing
consumer preferences, entry of multi-national companies and finally, the survival of interest of illiterate
farmer who is unaware of consumer safety and quality standards. There is no coordinated effort made to
bring uniform food safety and quality regulations by the different ministries of government of India
 Production Post-harvest losses Supply
Year (Million tons) (Percent of Production (Million tons)

Vegetables
1999-00 83.8 19 67.9
2010-11 131.1 19 106.2
2015-16 152.1 19 123.5
Fruits
1999-00 44.3 25 33.2
2010-11 66.9 25 50.2
2015-16 74.9 25 56.2

Table 3: Supply of vegetables and fruits in India

Source: Kumar and Kumar (2003)

3.0 INDIAN EXPORTS SCENERIO

The total agri-export from India to the world is largely dominated by the cereals like Basmathi and Non-
Basmathi rice, wheat, Milled products and other cereals. These products are accounted for USD 3535
million and having a share of 46 percent of total agricultural exports. The next position in Indian agri-
exports is occupied by processed foods like Groundnut, Cocoa, cereal preparations, Alcoholic and
beverage preparations and confectionery with worth of USD 1553 million and 20 percent share. It is
remarkable to note that the contribution of processed fruits and vegetables export to the world wide is
USD 583millions confined at 8 percent and it is similar in case of raw fruit and vegetable exports.
Majority of Fresh products are exported to GCC countries. The floricultural exports are very negligible
and accounted for USD 114 millions

Item 2007-08

Value (Million % of total value

Value in Million USD Qty. USD) (Rounded off)
Total for Floriculture & Seeds 46398 114.82 2
Total for Fruits and Vegetables 1724573 580.26 8
Total for Processed Fruits & Vegetables 774849 583.67 8
Total for Animal Products 1932856 1221.25 16
Total for Other Processed Foods 3220200 1553.13 20
Total for Cereals 9752245 3535.08 46
GRAND TOTAL 17451123 7588.23

Table4: Agricultural products export statistics

Source: APEDA, 2007-08
The total imports of GCC countries are at USD 293351millions in which Agricultural products share is
around 10 percent. The largest importers of agri-products in GCC region are UAE and Saudi Arabia
having a worth of total trade of USD 23048 millions. The total exports to UAE and Saudi Arabia alone
contributing 80 percent of the total Agricultural products trade. The total Indian exports to GCC
countries are valued at USD 2700 million and which is 9.5% of the total Agri-imports. It is observed that
the total exports from Indian to GCC countries Bahrain, Oman and Qatar is very negligible and the
exports are 4.98, 3.27 and 5.27 percent of their total Agri-imports respectively.

Crops/ Groups Potential Competitors

Fruits
Apple China, South Africa
Banana Oman, Singapore, Philippines
Lemon South Africa, Jordan, Iran
Spain, France, South Africa, Thailand,
Other Citrus Fruits/Mosambi
Netherlands
Oranges Bhutan
Grapes Australia, USA, South Africa, Syria, Chile
Mango and Guava Mexico, Brazil, Peru, Pakistan
Papaya Malaysia
Thailand, South Africa, Philippines, Malaysia,
Pineapple
Kenya
Vegetables

Brinjal Netherlands, Spain, France, Kenya

Cabbages Spain, Netherlands
Cauliflower Mexico, Australia, China, Singapore, UAE
Onion Thailand, Netherlands, China, Pakistan, Indonesia
Peas Syria, Egypt, Greece, Kenya
Tomato China
Potato Pakistan
Sweet Potato Thailand, Indonesia, Vietnam
Beans Jordan, Kenya, Oman, Zambia, Iran, Egypt
Table 5: Major competitors for fresh fruits and vegetable
Source: Surabhi Mittal, 2007

4.0 INDIAN TRADE WITH GCC COUNTRIES:

India and gulf continue to enjoy traditional friendly relations. Geographical proximity, historical trade
links, cultural affinities and presence of a large number of Indian expatriates in gulf have all continued to
sustain and nurture the longstanding relationship over the years. India was a natural trading partner and a
destination for higher learning. The presence of a huge Indian workforce in gulf has ensured close cultural
interaction and bond between the Gulf Co-operation Council (GCC) countries and India. This friendship
found a new impetus with the discovery of oil in gulf with this gulf is exporting oil and other
petrochemical products to India while numerous commodities are imported from India to gulf.

India’s trade with GCC countries is highly cooperative and existing from many centuries. Trading with
gulf is dominated by the crude oil and agri-products. India is regular importer of crude oil and exporting
varieties of agri-commodities like fresh fruits, vegetables, Animal Products and cereals. The balance of
trade recorded a negative balance in India’s account. The total trade balance is showing a negative
balance of USD 102,079 millions. Indian trade account with Oman is having a very negative balance of
USD 79026 millions. Hence there is need to nullify the negative trade with Oman and rest of the GCC
member countries. The GCC countries need more agricultural products as their countries Agricultural
production is very poor compare to the rest of the countries in the world.

Saudi Arab Qatar Oman Kuwait Bahrain UAE TOTAL

Export 3,708 538 377,358 682 252 15,635 398,173.24

Import 19,411 2,457 456,384 7,694 830 13,477 500,252.97

Total Trade 23,119 2,996 833,743 8,376 1,082 29,112 898,426.19

Trade Balance -15,702 -1,919 -79,026 -7,012 -578 2,157 -102,079.73

Values in Millions US$ ,
Table 7: Balance of trade between India and GCC countries
Note: Crude oil is excluded from the list of import items since 2000-01
Source: Ministry of commerce, published in 2009 and data relating to year 2007-2008.

As per trade statistics (2007-2008) published by the Ministry of commerce, Government of India, the
country has achieved a total trade of USD 13857 millions of exports in agricultural products across the
world. The total exports to GCC region is at USD 2700 million contributing 19 percent of total agri-
exports from India.
Indian
Agri-Products Worth of Exports
GCC country Total Imports Imports Percentage Agriculture imports worth Percent of total
UAE 132494 8.6 10599 1285 12.12
Bahrain 11488 5.6 643 32 4.98
Kuwait 21122 12.0 2534 293 11.56
Oman 16025 10.3 1650 54 3.27
Qatar 22005 5.5 1100 58 5.27
Saudi 90217 13.8 12449 978 7.86
TOTAL 293351 28975 2700 9.32
Table 6: Statistics showing the Agricultural products imported to GCC countries in 2007-08
Source: World Trade Organization (WTO) in April, 2009

5.0 CONSTRAINTS TO EXPORT OF FRUITS AND VEGETABLES:

India has relatively well developed markets and well established marketing systems for fruits and
vegetables. Even the export marketing systems are generally well developed and free from government
restrictions and regulations. To increase the income of producers and to augment the exports of fresh and
processed fruits and vegetables, India must attempt to reduce post-harvest losses through efficient
processing and packaging, develop infrastructure facilities for quick handling and treatment of export
consignments, and undertake research and development to produce large quantities of high quality
products.

Processed fruits and vegetables:

Despite being the second largest producer of fruits and vegetables in the world, India has not, in general,
done well in the export as well as in domestic marketing of processed fruits and vegetables. One
important reason for this is that commercial processing of these commodities is highly limited and costly.
This leads to considerable wastage of these commodities. The absence of exportable varieties of many of
the potential products is another reason. Most of the processing units are concentrated in the home,
cottage and small scale sectors. Very few processing units fall under the category of large scale units. The
location of processing units at long distances from the producing centres is an important factor
contributing to the high cost of the finished products. Even in terms of export markets, the country has
concentrated on a few neighboring countries and the Middle East at the expense of European and other
western markets which can yield better unit values.

Institutional Problems:
Poor infrastructure (in terms of storage, transport, cargo space, facilities at air/sea ports, vapour heat
treatment, etc.), insufficient institutional support (credit arrangement, promotion of Indian fruits &
vegetables overseas) and low research and development efforts (in terms of quality and productivity
comparable to those in other producing and exporting countries) are the major constraints to the export of
fresh fruits and vegetables. The institutional arrangements for (i) widening the production base for
exports, (ii) efficient post-harvest processing/handling and product promotion technology, (iii) supply of
raw materials at reasonable costs, (iv) provision of adequate and timely credit, (v) creation of strong
infrastructure, including uninterrupted power and water supplies, and efficient transportation system, and
the provision of technical support and conducive labour legislation are prerequisites for high export
performance and marketing.

Sanitary and Phytosanitary measures:

Increasingly stringent food safety and agricultural health standards in industrialized countries cause major
challenges for continued developing country success in international markets for high-value food
products, such as fruit, vegetables, fish, meat, nuts, and spices. The literature casts sanitary and
Phytosanitary (SPS) standards as a barrier to trade because some appear to be thinly disguised
protectionist measures or discriminate against certain suppliers, or because of the high cost of
compliance. Yet, in many cases, such standards have played a positive role, providing the catalyst and
incentives for the modernization of export supply and regulatory systems and the adoption of safer and
more sustainable production practices. Much of the policy discussion pertaining to SPS standards and
developing country trade centers on finding ways to increase the participation of developing countries in
international standard-setting bodies, or otherwise influencing the level and nature of the standards
themselves.

6.0 POLICY IMPLICATIONS

There is an urgent need for planned development of horticulture in the country. Land use and credit
policies should be oriented to encourage the growth of fruit and vegetable commodities by inducing large
scale cultivation and processing operations as well.
1. To augment the supply of vegetables, there is a need to promote the cultivation of offseason
vegetables. Suitable areas need to be identified and both research and extension efforts should be
intensified for this purpose.
2. Co-operatives should strive hard to enhance the bargaining power of producers and they can be a
viable and potential alternative to private trade in both the domestic and export sectors. Co-
operatives must encourage producers to become members through flexible policies which should
allow procuring of produce without prior indent. Cooperatives need to locate more purchasing
centres at the main wholesale markets and give wide publicity to their programmes.
3. The cost of transportation of raw materials (fruits and vegetables) to the processing units has been
found to be high. There are also considerable losses during transit. Location of processing centres
in the producing areas will help to reduce transportation costs and transit losses, consequently
making the processed products cheaper and more competitive in domestic and export markets.
4. The product characteristics demanded for the export markets are quite different from those
demanded for the domestic markets. Also the export markets demand high quality products.
Hence there is a need to undertake research and development not only to increase productivity
levels but also to develop varieties with product characteristics which are suitable for export
marketing and processing.
5. Packaging is one area which requires considerable attention. Proper packaging will reduce transit
losses and help to maintain the quality of the product that reaches the consumer. This will also
help to cut down costs.
 6. Buying habits in the markets of the developed countries are different from those in India.
Branded products are preferred as brand names are associated with particular quality
characteristics. Thus, proper branding of products, including fresh fruits and vegetables,
especially for the export markets, needs to be encouraged.
7. Post harvest losses in fruits and vegetables are very high because of the perishable nature and
short shelf life of these products. However, with the help of certain pre and post-harvest
operations, which can be easily undertaken at the farm, the magnitude of these losses can be
minimized.
8. Grading and sorting should be done at the production site. Quite often, proper packing and sorting
of the produce is not done at the production site, which necessitates regarding and repacking
during transit or at the terminal market. This results in repeated handling and in the process it
causes damage to the commodity. These operations ultimately imply higher prices for the
consumer and delay both in transit and dispatch.

7.0 CONCLUSION
Geographically, India’s export markets are rather limited. Major importers of Indian fresh fruits and
vegetables are the Middle East countries, with only small quantities of these commodities being imported
by the UK, Bangladesh and the former USSR. Similarly, the market for processed fruits is largely
confined to the former USSR and to some extent to Gulf countries. Barring a few exceptions, most of the
European and ASEAN markets do not figure in the list of importing markets of India’s horticultural
products. A larger number of export markets could provide sustained growth for India’s exports besides
yielding higher unit values. Hence efforts must be made to tap a large number of international markets in
the bid to expand and diversify India’s export markets. Since there is currently limited scope for
increasing the area under cultivation, it is essential to promote improved cultural and management
practices to increase productivity levels. Many existing orchards are in a state of neglect and need to be
rejuvenated through scientific methods and management.

India has a narrow product mix for the export market as the bulk of Indian exports consist of mango,
onions and mango pulp. Concerted efforts must be made to promote export of other commodities and
products and to expand the export product mix. Exporting a large number of diversified products rather
than relying on a few commodities will enhance export potential and hold on to the world market
throughout the year. Direct contact between producers and processing factories should be encouraged.
Such direct contacts between producers and processors can ensure better prices for producers.
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