A Case Study of India's Horticulture

A 2007 World Bank report From Competition At Home to Competing Abroad: A Case Study of India’s horticulture examines the paradox that while India is a large, low cost agricultural producer, its share in global agriculture exports is minuscule. India produces nearly 11 per cent of all the world’s vegetables and 15 per cent of all fruits, yet its share in global exports of vegetables is only 1.7 per cent and in fruits a meager 0.5 per cent.

The report says that Indian exporters perceive high international transportation costs as the number one external barrier to trade:

In comparison to India, China is currently the world's largest fruit and vegetable producer with a production share of 34%. Despite strong domestic demand, China is among the four top developing country exporters of fresh vegetables. China,  Thailand, Chile and Turkey also account for 58% of developing countries exports of processed fruits and vegetables, though developing countries share as a whole in the exports of processed products is low (36% in 2001).

The report says that Indian exporters perceive high international transportation costs as the number one external barrier to trade:

• India’s international transportation costs are 20–30 per cent higher than those faced by other countries.
• India’s share of exports to any destination declines by ten percentage points for every 1000 kilometers increase in the distance, and any market that is beyond 14,000 kilometers from Indian borders is unlikely to be served by Indian exporters.
• It costs $790 to transport 1 metric tone (MT) of grapes from India to Netherlands—2 to 3 times higher than it takes to transport the same from Chile, although Chile is twice as far from the Netherlands as India.

Link to full report: The World Bank - Case Study