Overview
This year’s surge in pulse prices, attributed to compromised production due to an erratic monsoon, is just the tip of the iceberg. The latest research report by agricultural economists implies that India’s challenges in meeting the demand for crucial protein sources, edible oils, and fruits are not a temporary hiccup but are expected to persist or worsen over the next seven years.
The report, titled ‘Prospects of India’s Demand and Supply for Agricultural Commodities Towards 2030,’ and jointly published by the National Bank for Agriculture and Rural Development (NABARD) and the Indian Council for Research on International Economic Relations (ICRIER), highlights that constant food deficits will lead to increased dependence on imports.
What is the report about?
The importance of accurate demand and supply forecasts cannot be overstated, especially for policymakers aiming to shape the outlook of essential commodities in the long term. Oscillations in production can create deficits, jeopardising food security, destabilising prices, and heightening dependence on imports.
In response to these obstacles, the report attempts to comprehensively interpret India’s demand and supply dynamics for essential commodities until 2030, presenting recommendations to ensure food security in the coming years.
India’s journey from a food-insecure nation to a self-sufficient country in foodgrain production is emphasised, accentuating its current status as a global leader in producing various agricultural products. The transformative progress, particularly during the Green Revolution, underscores the impact of focused policy interventions, technological innovations, and strategic planning in achieving self-sufficiency.
The report stresses the need for reliable demand and supply predictions, considering factors such as population growth, per capita income, and evolving consumer preferences, to establish an accurate food balance outlook for the medium to long term.
By providing estimates of demand, supply, and potential deficits in domestic production till 2030, the report aims to guide future policies and programs to protect the country’s food and nutritional security in the coming decade.
Prolonged Supply-Demand Gap for Pulses, Oil Seeds, and Fruits
What commodities are expected to face a deficit?
The report scrutinises the anticipated demand and supply of agricultural commodities for the years 2020-21, 2025-26, and 2030-31, revealing a projected deficit in the food balance sheet for crucial items such as oilseeds, pulses, and fruits in the upcoming years.
Consumption Patterns in India
Since 2011-12, India’s consumption patterns have diversified, and a significant shift in tastes and preferences has been witnessed. Alternative growth scenarios, supported by elasticities from various studies, suggest a movement towards nutritious commodities like fruits, vegetables, and dairy products, away from traditional staples like cereals. Due to continuous population growth, the demand for grains and food grains is projected to rise, albeit at a diminishing rate.
Analysing the changing consumption landscape is crucial for accurate forecasting. NSSO’s consumption expenditure data reveals a decline in per capita cereal consumption from 12.68 kg per capita/per month in 1993-94 to 10.62 kg per capita/per month in 2011-12, attributed to factors like a diversified food basket, changing lifestyles, and increased income levels.
Conversely, a notable increase in per capita consumption of high-valued commodities, such as eggs and milk, indicates a shift towards preferences for horticulture and livestock products driven by higher economic growth and a growing population.
3-Year Low
The initial independent estimates for this Kharif season suggest a potential three-year low in the output of pulses, some coarse cereals, and groundnut oil seeds. Retail inflation has surged, reaching 18.8% for pulses and 9.34% for fruits.
Edible oils, on the other hand, glimpsed deflation for most of the year after a sharp price increase in the wake of the Ukraine conflict last year. Predictions indicate that oilseeds production may reach 35 to 40 million tonnes by 2030-31, but the gap between demand and supply is expected to widen to 3 million tonnes by 2025-26 and 6 million tonnes by 2030-31, even with a modest 5.1% rise in per capita incomes.
The report highlights the deficit of oilseeds in the food balance sheet by 2030, especially considering the significant edible oil imports of 13.4 million tonnes during 2020-21.
To address this, the report suggests that a technological breakthrough in oilseeds to enhance productivity or an expansion in cultivation areas could be viable long-term solutions.
The report also echoes a 2012 Commission for Agricultural Costs and Prices (CACP) recommendation to increase import duties whenever the crude palm oil import price falls below $800 per tonne to safeguard Indian producers. However, it cautiously notes that pursuing self-reliance in water-intensive and long-gestation crops like oil palm may not be a sustainable goal.
Is Climate Change Affecting Food Security?
Climate change substantially threatens the four pillars of food security—availability, access, utilisation, and stability—placing farmers’ livelihoods in jeopardy.
A recent study reveals that global warming has contributed to a 5.2 per cent decline in wheat yield from 1981 to 2009. As climate change intensifies, meeting the rising demand for agricultural commodities becomes increasingly challenging for the government.
Addressing this challenge necessitates joint efforts through public-private partnerships in agricultural research and development and climate change mitigation research.
Policy adjustments and regional cooperation are crucial for promoting sustainable farming practices. The Government of India has launched a program for climate-resilient villages to address these issues, serving as a pilot learning platform. This initiative aims to develop, implement, evaluate, and disseminate climate-smart agricultural innovations with active community participation.
Recommendations of the Report
Addressing this imbalance, the report advocates for a substantial increase in the production and productivity of these commodities, given their anticipated higher demand relative to supply. Oilseeds require technological advancements to enhance productivity, mitigating the long-term dependence on edible oil imports.
To bolster oilseed production, the National Mission on Edible Oils-Oil Palm, a centrally sponsored scheme with a significant investment of Rs.11,040 crores, aims to promote oil palm cultivation.
The goal is to elevate production to 1.12 million tonnes by 2025-26 and 2.8 million tonnes by 2029-30, reducing reliance on edible oil imports. However, sustainability concerns arise due to the water-intensive nature and prolonged oil palm cultivation gestation period.
Substantial investments in market infrastructure, processing, and storage facilities are deemed essential to meet growing demand and manage surpluses of high-value commodities. This includes the development of warehouses, cold storage, and cold chains to establish an efficient and reliable value chain connecting farms to markets.
Encouraging private players and fostering public-private partnerships, akin to the successful AMUL model for dairy products, could play a pivotal role in minimising post-harvest wastage and achieving a harmonious balance between domestic production and demand.
Conclusion
To sum it up, the report emphasises the pressing need for strategies to tackle India’s shifting agricultural landscape. From balancing supply and demand to adapting to changing consumer habits and climate impact, it’s clear that teamwork, innovation, and sustainable practices are vital to securing our food future and building a robust agricultural foundation for the times ahead.
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