Focus on India

by Chris Lyddon
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India has become an important grain producer and exporter, particularly when it comes to wheat. Climate change and disease problems, however, pose a combined threat to the nation’s industry.

The International Grains Council (IGC) puts India’s total grain production in 2012-13 at 134.8 million tonnes, up from 128.6 million tonnes the year before. Wheat production in 2012-13 is put at 94.9 million tonnes, up from 86.9 million the year before. Indian maize production in 2012-13 is put at 20.6 million tonnes, up from 21.3 million the year before.

The IGC put India’s barley production in 2012-13 at 1.6 million tonnes, down from 1.7 million. It put India’s sorghum production for 2012-13 at 6 million tonnes, down from 6.1 million.

India’s total grain exports in 2012-13 are forecast at 10.4 million tonnes, up from 5.5 million tonnes in 2011-12. That figure includes a jump in wheat exports to 7.5 million tonnes, from 1.3 million the year before. It also includes 2.7 million tonnes of maize, a fall from the previous year’s figure of 4.1 million.

In an annual report, the U.S. Department of Agriculture (USDA) attaché in India forecast marketing year 2013-14 (April/March) wheat exports at 8 million tonnes, including 5 million tonnes of government wheat.

“Assuming normal weather conditions through harvest (April), the attaché forecasts marketing year 2012-13 wheat production at 92 million tonnes from 29.8 million hectares compared to last year’s record 94.9 million tonnes from 29.9 million hectares,” the report said. “The government’s preliminary estimate pegs 2013 production at 92.3 million tonnes, which is likely to be revised later.

“Despite the delayed announcement of the minimum support price of wheat by the government of India, the expectation of continued increase over last year’s high support price provided sufficient incentive to farmers to plant wheat.”

Indian wheat is largely a soft/medium hard, medium protein, white bread wheat, somewhat similar to U.S. hard white wheat, it explained. “Wheat grown in central and western India is typically harder, with higher protein and gluten content compared to wheat grown in northern India.

“India also produces around 1 million tonnes of durum wheat, mostly in the states of Madhya Pradesh and Rajasthan. Indian durum wheat is typically purchased by the private trade at a price premium, mainly for processing of higher value/branded products,” it said. “Farmers are increasingly shifting from durum wheat to higher yielding non-durum varieties as the durum yield is significantly lower than regular wheat varieties and the government’s continued increase of MSP has reduced the price premium.”

The attaché identified two major future threats to Indian wheat production: global warming/climate change and the wheat rust Ug99. “Unscientific irrigation practices and over-exploitation of ground water are increasingly causing water table depletion and soil salinity in the wheat growing areas in northern India,” the report said. “Depletion of irrigation water resources is likely to press wheat cultivation in north India in the next few years, forcing farmers to explore less water intensive crops like corn, pulses and oilseeds.”

One problem is that most of the commonly sown wheat varieties were released more than a decade ago and are showing signs of obsolescence. “The Indian Council of Agricultural Research (ICAR) institutes and various state agricultural universities (SAUs) continue to develop new wheat varieties with higher yield potential and better grain qualities, largely through traditional breeding methods,” the attaché said. “Given that seed production and marketing are largely done by public sector institutions, the new wheat varieties have failed to make sufficient inroads due to limited seed multiplication, distribution and extension facilities.”

“Current biotechnology applications in wheat are limited to experimental marker-assisted breeding for resistance to biotic and abiotic stresses and for quality traits,” it said.

It also highlighted growing concern among policy makers and researchers “about the vulnerability of the wheat crop to global warming and changing climatic conditions, particularly the rise in temperatures during March/April at the grain filling stage.”

“Of the 29 million hectares under wheat cultivation, researchers estimate that about 9 to 10 million hectares are prone to terminal heat stress,” it said. “According to some local research, a one-degree Celsius rise in temperature during the growing season can result in a 3% to 7% decrease in grain yield.”

More than three-quarters of the wheat varieties planted in India are highly susceptible to the wheat rust Ug99. “Although Indian agricultural researchers assert that the agro-climatic conditions in the major wheat belt of northern India are not conducive to the spread of Ug99, the highly mutative nature of the Ug99 strain could make Indian wheat varieties vulnerable to this rust,” the report said.

The Indian Council of Agricultural Research (ICAR) institutes and various state agricultural universities (SAUs) monitor the wheat crop for rust, including Ug99. “ICAR is also screening newly developed wheat varieties in the country against the Ug99 stem rust,” the attaché said. “The government has been encouraging replacing the susceptible varieties with Ug99-tolerant varieties in the major wheat growing area.”

The USDA attaché forecast wheat consumption in 2013-14 at 83 million tonnes, noting that production was expected to be sufficient and that there would be continued higher supplies of government wheat stocks at subsidized prices to the consumers through the Public Distribution System and local millers through the Open Market Sales program. “The government is likely to launch the proposed National Food Security Act in MY 2013-14 before the upcoming national elections in 2014, which could significantly increase the supplies of food grains, including wheat, through the PDS,” the report said. The National Food Security Bill proposes a legal entitlement to subsidized food grains for 62.5% of India’s population, including 75% of rural and 50% of urban dwellers. “The recommendations, if accepted, will create legal entitlement for 820 million people to receive 5 kg of food grain every month at a highly subsidized price,” the attaché said.

“Wheat for feed consumption is forecast to increase to 4 million tonnes on expected strong demand from the dairy/poultry sector and supplies of damaged/inferior wheat from the large government-held wheat stocks,” the attaché said.

“Wheat is the staple food for most Indians, consumed in the form of homemade chapattis or rotis (unleavened flat bread), using custom milled atta (whole wheat flour),” the attaché said. “Some wheat is also used for various wheat-based processed products like raised breads, biscuits and other bakery items and their share is gradually rising.”

“With the growth in the economy and an expanding middle class, Indian households are diversifying their consumption patterns with an increasing share of high-value and high-protein items, like fruits, dairy products, meat, and processed foods,” the report said. “Recent National Sample Survey Organization surveys indicate that per-capita consumption of wheat at household levels has been relatively flat over the last decade.”

Typically, whole wheat is distributed through the public distribution system to be subsequently custom milled by the household for home use, it said. “The balance of production not marketed by farmers, after retention of some quantities for seed use for the next season, is also custom milled, mostly in the chakkies (small flour mills). However, branded and packaged wheat atta marketed by large food companies is gaining market share in urban areas due to convenience.”

Small Milling Sector

According to the attaché, “the organized milling sector is relatively small with about 1,000 medium to large flour mills in India, with a milling capacity of 22 to 24 million tonnes, which mill mostly maida (flour) and semolina to cater to institutional demand, and produce bran flakes for the mixed feed industry.

“However, the average capacity utilization by these mills is only around 45% to 50%, processing about 10 to 12 million tonnes wheat every year,” it said.” Some quantity of government-held wheat (mostly spoiled or of inferior quality) is also used for animal feed. Market sources report increased usage of wheat in the last two years due to relatively low wheat prices and leakage from the government PDS system.”

Oilseeds production to rise

India is set, according to the IGC, to produce 13 million tonnes of soybeans in 2012-13, up from 12.3 million in 2011-12. Its rapeseed production is put at 6.7 million tonnes in 2012-13, up from 6.5 million tonnes.

An analysis by Dr. Palakonda Subramanyachary, associate professor, Department of MBA, Siddharth Institute of Engineering and Technology, published in Global Research Analysis in January, said: “Although India is a major producer of oilseeds, per capita oil consumption in India is only 10.6 kg/annum which is low compared to 12.5 kg/annum in China, 20.8 kg/annum in Japan, 21.3 kg/annum in Brazil and 48 kg/annum in the U.S.”

Subramanyachary explained that oilseeds production is divided into Kharif Crop’ and Rabi Crop. “The Kharif Crop that is dependent on the Monsoon is harvested around October-November each year,” he said. “On the other hand, the Rabi Crop is harvested around March-April each year.

“The edible oil industry of the country is comprised of 50,000 expellers, 600 solvent extraction plants, 300 vegetable oil refineries, and 175 hydrogenation plants.”

This year, according to the attaché, a late monsoon delayed rabi (winter) planting, but optimal sub-soil moisture conditions facilitated planting.

“Favorable weather during the critical planting period (October-November), coupled with strong market prices, encouraged farmers to plant an additional 300,000 hectares for rapeseed-mustard, sunflower, and peanut crops, bringing the total oilseed planted area to 8.1 million hectares,” the report said. “A prolonged cold wave/frost in northern and north western India during first two weeks of January 2013 caused some damage to the standing crop of vegetables, oilseeds (rapeseed-mustard) and pulses (gram and pea). The extent of the damage is not yet known.”

It predicted rapeseed production for 2012-13 of 6.8 million tonnes, up 600,000 tonnes from the previous year, following a rise in the government’s Minimum Support Price. It forecast sunflower production at 700,000 tonnes and peanut production of 4.7 million tonnes.

Large rice crop

The IGC reported that the latest official estimate of 2011-12 rice production in India was 105.3 million tonnes with 10% year-on-year expansion underpinned by a bumper main crop. “Although the IGC forecast for the current year (2012-13) is lifted slightly, following an official assessment, production is still expected to decline by 5% year on year, to 100 million tonnes, as delayed monsoon rains resulted in a smaller kharif outturn. Nevertheless, this would still be the second largest total on record.

“(In 2012-13) consumption in India is expected to increase to 94.3 million tonnes, as ample reserves more than compensate for a smaller outturn,” it said.

Against the backdrop of ample food-grain stocks, the government of India removed a near four-year ban on non-basmati rice exports in September 2011, it said. “Shipments of competitively-priced supplies surged thereafter and, as trade data show, cumulative January-November exports totaled an unprecedented high of 9.4 million tonnes, up by about 160%, or more than 5.7 million year on year.”

“While India’s basmati rice exports grew solidly in 2012, the dramatic expansion of the country’s rice shipments was underpinned by increased non-basmati trade, especially of parboiled rice,” it said. “Exports to Africa, mostly comprising white and parboiled varieties, increased more than five-fold year on year, to an all-time peak of about 4.7 million tonnes, including heavy sales to Benin, Côte d’Ivoire, Nigeria, Senegal and South Africa.”

Key Facts
Capital: New Delhi

Population: 3,316,328 (July 2012 est.)

Religions: Hindu 80.5%, Muslim 13.4%, Christian 2.3%, Sikh 1.9%, other 1.8%, unspecified 0.1% (2001 census).

Location: Southern Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan.

Government: Federal republic. Chief of state: President Pranab Mukherjee (since July 22, 2012); head of government: Prime Minister Mamohan Singh (since May 22, 2004).

Economy: India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country’s growth, which has averaged more than 7% per year since 1997. India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the workforce is in agriculture, but services are the major source of economic growth, accounting for nearly two-thirds of India’s output, with less than one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis — in large part because of strong domestic demand — and growth exceeded 8% year-on-year in real terms. However, India’s economic growth began slowing in 2011 because of a tight monetary policy, intended to address persistent inflation, and a decline in investment, caused by investor pessimism about domestic economic reforms and about the global situation. High international crude prices have exacerbated the government’s fuel subsidy expenditures, contributing to a higher fiscal deficit and a worsening current account deficit. In late 2012, the Indian government announced reforms and deficit reduction measures to reverse India’s slowdown. The outlook for India’s medium-term growth is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.

GDP per capita: $3,900 (2012 est.); inflation: 9.2% (2012 est.); unemployment: 9.9% (2012 est.).

Currency: Indian rupees (INR): 54.364 Indian rupees equal 1 U.S. dollar (March 2012 est.).

Exports: $309.1 billion (2012 est.): petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel.

Imports: $500.3 billion (2012 est.): crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals.

Major crops/agricultural products: Rice, wheat, oilseeds, cotton, jute, tea, sugarcane, lentils, onions, potatoes; dairy products, sheep, goats, poultry, fish.

Agriculture: 17% of GDP and 53% of the labor force.

Internet: Code: .in; 6.746 million (2012) hosts and 61.338 million (2009) users.

Source: CIA World Factbook

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