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TREND: Grape exports may fall 15% as virus resurgence sours demand

Informist, Tuesday, Mar 30, 2021

 

By Rahul Dhuri and Roshni Devi

 

MUMBAI – India's grape exporters are bracing for another bitter season after the COVID-19 pandemic battered demand last year. Industry experts say grape exports for Dec-Apr are likely to fall 15% on year due to the resurgence of coronavirus infections, withdrawal of government support, steep freight costs, and delayed harvest.

 

Around 20% of grapes produced in India are exported, 60-65% sold at domestic markets, and the rest used for wine production, say traders. Grapes are harvested during Dec-May in major producers like Maharashtra, with Feb-Mar being the peak season.

 

Since December, the country has exported 83,927 tn grapes, compared with 92,342 tn in the year-ago period, data from The Agricultural and Processed Food Products Export Development Authority shows.

 

The Netherlands was the largest buyer, purchasing 54,850 tn grapes, followed by the UK with 14,230 tn and Germany with 8,123 tn. 

 

In 2019-20 (Apr-Mar), India's exports had fallen to 193,691 tn from a record 246,134 tn in 2018-19.

 

The rapid spread of coronavirus and delays in vaccine rollouts in Europe, a major export market, dashed traders' hopes that unlike last year, demand would recover sharply.

 

But the resurgence of COVID-19 cases and the spread of a more contagious variant led to extended lockdowns in the region. Germany has extended its lockdown until Apr 18 citing an alarming infection rate. Austria, another key market, too tightened lockdown restrictions. France has imposed an early national curfew, and Spain and Italy have announced similar curbs.

 

Exporters say they are struggling to survive amid the pandemic crisis, leave alone turn profits.

 

"The industry is facing a huge financial crisis," said Prakash Patil, executive partner at Pune-based Mahagrapes. "As of now, survival is the biggest issue and thinking of harvest is impossible."

 

Mahagrapes is one of India's largest exporters of fresh grapes.

 

 

SOUR HARVEST

Ample supply, coupled with weak demand across markets and the withdrawal of government support, is threatening exports, said an official at Maharashtra Rajya Draksha Bagaitdar Sangh, a grape research association based in Pune.

 

Grape harvest in Nashik, a major growing region in Maharashtra, was delayed by 20-25 days due to labour shortage, financial crunch and sluggish demand, Patil added.

 

The state accounts for over 81% of India's grape exports.

 

Losses from last year and a supply glut in domestic markets have added to the industry's woes.

 

"Due to the financial crunch, we can't afford the packaging and exports of grapes, so we are selling the fruit in the local markets," said Nilesh Dawange, the owner of the Nashik-based Savona Agro Exports.

 

European Union countries impose 8% duty on grape imports from India. The government's decision to withdraw Merchandise Exports from India Scheme from January further hit grape traders. The scheme provided traders of fresh fruits and vegetables an assistance of 5-7% on the free-on-board value.

 

It helped make the prices of Indian grapes competitive against produce from other key exporters like Peru, Chile and South Africa.

 

The absence of the subsidy has further pushed up costs for exporters.

 

Though the government has announced a remission scheme in lieu of the withdrawn scheme, it failed to announce any assistance for exporters.

 

Exporters say logistics costs have more than doubled as the pandemic has disrupted the transport of goods and led to shortage of containers.

 

Prices of crude oil have topped $61 a barrel, driving up freight costs.

 

This has put additional burden on exporters, who say it is already difficult to book storage space on shipping vessels amid the pandemic.  End

 

US$1 = 73.38 rupees

 

Edited by Charumathi Sankaran

 

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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