Happenings from M.S.Y Traders, India

Happenings

Mango Exports Turn Sour

Exports of mango, the king of fruits, from India to the US were touted as a major coup by the United Progressive Alliance government. Special shows were held in the US to celebrate the end of the 18-year ban on export of mangoes from India that showcased Alphonso and other exotic varieties.

That was 2007. Two years have gone by and the Alphonso mango could generate only Rs 2 crore revenue from exports, despite the huge demand for the exotic fruit, reflected in the mails sent to exporters. “We have done well in times of recession in the US, since our mango offers best value for money over others, and there is a huge demand,” says a senior director in the horticulture division of the ministry of agriculture.

But mango exporters do not share the bullishness of the government. Instead, they fear losing the demand from the US due to high cost of Indian mangoes. A 3.5 kg packet of mango from India is sold for $22 (about Rs 1,110) in the US, while the same quantity, less sweet mangoes from Mexico and Costa Rica costs less than $10 (about Rs 505).

Mango exporters say the cost of transport and irradiation is going up, resulting in escalation of the price of mango in the US. “We can bring the cost down to about $15, if we ship through sea to the US in 21-25 days. The necessary trials are being worked out,” says Asit Tripathy, chairman of Agricultural and Processed Food Products Export Development Authority (APEDA).

“It is not easy to export to the US. The demand is increasing from customers but irradiation costs make Indian mangoes costly,” says Murtaza Bharmal, director of MSY Traders, a Pune-based mango exporter.

The first shipment of mangoes was sent from India to the US on 27 April 2007 after irradiation treatment in the Bhabha Atomic Research Centre (BARC) at Trombay facility. So far around 180 tonnes of mangoes have been exported to the US, according to APEDA. Irradiation is a process that involves exposing the mangoes to high energy electron beams generated by high voltage electricity (not radioactive material) to control microbial, pathogens, parasites and pests in food, preserving food or inhibiting physiological processes such as sprouting or ripening. The cost of irradiation is Rs 4 per kg, while setting up an irradiation facility is about Rs 12 crore.

But this facility has been rejected by the United States Department of Agriculture (USDA). Hence, a new facility is being built in association with the Maharashtra government.

Another major issue in export of mangoes to the US has been the cost of certification. According to the requirements, the entire cost of travel and stay of the USDA inspector in India at the irradiation facility as well as the officials of USDA located at different places and involved in the process is borne by Indian exporters.

As the demand for Indian mangoes increase, the centres for irradiation will also go up and so will the number of USDA inspectors required to be positioned in India. The cost of mango is bound to escalate. That would directly impact the commercial viability of mango exports to the US.

“This is turning out to be a major non-tariff barrier issue,” says a senior official in the commerce ministry. Recognition of India’s conformity assessment procedure can be a good solution. “India does not recover inspection costs from the US for meeting similar requirements,” says a commerce ministry official.

The story of India’s mango exports to the US is getting sour, while officials project it as a sweet victory.

(Businessworld Issue Dated 31 March-06 April 2009)