NEW DELHI, INDIA — With the second largest population, India is also one of the world’s largest consumers and producers of a range of crop and livestock commodities.
It has produced a record wheat crop the last six years and is expecting another large crop, although not as large as initially anticipated, in the 2022-23 market year. It is a leading importer of edible oils, meeting 61% of its consumption needs through imports, and is second to only China in rice production.
India was described as one of the “bright spots” on the world stage during the World Economic Forum in Davos in January. The Centre for Economics and Business Research believes India could become the world’s third-largest economy, reaching $10 trillion by 2035.
This rapid economic growth is expanding and diversifying the demand for food. Per capita consumption of grains has been relatively stable, but there is increasing demand for higher valued foods such as fruits, vegetables, edible oils, dairy products and meat.
The Centre for Economics and Business Research believes India could become the world’s third-largest economy, reaching $10 trillion by 2035.
At the same time, the Indian government estimates that about 22% of its population, about 260 million people, remain in poverty. India has the largest share of the global population that is food insecure, according to the US Department of Agriculture (USDA).
Wheat production in 2022-23 is estimated at 100 million tonnes, down 6 million tonnes from the prior estimate and down 9 million tonnes from the 2021-22 harvest. Still, wheat plantings are expected to exceed a record-setting 32 million hectares, according to the Foreign Agricultural Service (FAS) of the USDA. Farmers are encouraged by higher prices and the government’s minimum support price procurement.
Exports are estimated at 6 million tonnes but the government is unlikely to allow further exports as it seeks to ensure national food security.
Prices are expected to increase further in coming months unless the government releases additional wheat into the open market, the FAS said. Sources report the government has an additional 4 million to 4.5 million tonnes of wheat in stocks after meeting existing commitments under food security programs and its normal buffer stocks.
“Rising food inflation concerns and reports of robust planting of wheat for the upcoming season may allow the government to release additional wheat in the market through sales to private millers, which will keep domestic prices under control,” the FAS said.
Despite large consecutive harvests in the last several seasons, there is growing concern about the long-term sustainability of this level of production, the agency said. Researchers at India’s leading research centers are concerned about the crop’s vulnerability to the effects of climate change. This includes earlier-than-normal onset of summer and the increase of unseasonal heavy rains.
India’s organized milling sector includes 1,300 medium-to-large flour mills with a capacity of about 25 million to 28 million tonnes per year, according to the FAS. Most mills operate at 55% to 60% of their capacity, processing 15 million to 16 million tonnes of wheat per year. Most wheat is milled in small neighborhood flour mills, the FAS said.
Wheat is a main staple cereal in central and northwest India, which are the traditional wheat growing regions, according to the FAS. Wheat consumption competes with rice in southern and eastern India.
Households and local restaurants account for 80% of the wheat consumed as atta (whole wheat flour) and maida (white flour). About 12% to 15% of wheat is used in the production of raised bread, biscuits and other bakery items. There is also a small market for high-quality wheat for western-style pasta and baking/confectionery foods, the FAS said.
Wheat unfit for human consumption and wheat bran from the flour milling industry are used as animal feed for dairy cattle and domestic water buffalo.
Edible oil demand grows
Oilseed production in 2022-23 is expected to increase 1% in 2022-23 to 42.1 million tonnes. This includes soybeans, rapeseed-mustard, peanut, sunflower seed, cottonseed, and coconut. Oilseed crush is expected to increase 2% to 34.7 million tonnes on rising demand for derivatives such as food, animal feed and seed.
Increasing animal feed demand and the anticipated growth in oilseed supply will further increase oil meal production by 2% to 20.7 million tonnes, the FAS said. The feed industry primarily uses soybean meal and occasionally peanut, sunflower seed and rapeseed meals. Oil meals also are used in processed food and health care products, including high-protein supplements. Soybean meal also is used as texturized protein to fortify other food products or for protein isolate extraction.
While domestic oil production is expected to increase 2%, demand also is rising, causing imports to increase 6% to 14.5 million tonnes.
While domestic oil production is expected to increase 2%, demand also is rising, causing imports to increase 6% to 14.5 million tonnes. Consumption is estimated to increase 5% to 23 million tonnes.
“After two years of subdued economic activity due to the COVID-19 pandemic, both institutional and home consumption of edible oils will flourish, despite recent economic uncertainties,” the FAS said.
The Russian invasion of Ukraine last February has led to disruptions in sunflower oil shipments to India. Prior to the war, about 30% of Ukraine’s sunflower oil exports went to India.
Importance of rice
Rice is the most important crop cultivated in India and contributes more than 40% of total food grain production. Rice production is trending upwards and has reached record levels in the last five years due to rising yields on favorable monsoon rains and improved varieties, the FAS said. Rice is the main food grain in food security programs with the government procuring 38% to 45% of the production in recent years, the FAS said.
Production in 2022-23 is estimated at 125 million tonnes, down from 130 million tonnes in the previous market year. Yield prospects have improved this market year due to late rains in September-October in the previously moisture-stressed Gangetic Plains region, the FAS said.
Government procurement under the minimum support price program has been steady and ahead of last year’s volume. Procurement is estimated at 22.1 million tonnes through Dec. 1, 2022, compared to 19.5 million tonnes at the same time last year. Domestic prices have remained firm due to the higher government procurement.
Exports are estimated at 19.5 million tonnes, down from a record-high of 22 million tonnes in 2021-22. Despite a government-imposed export duty of 20%, Indian rice continues to remain very competitive, the FAS said.
More than 4,000 rice varieties are grown, with locally preferred rice types picked up by the private trade and marketed in bulk, the FAS said. Ninety percent of farmers are smallholders who keep 45% to 50% of their harvest for home consumption and seed use.
Long grain basmati rice and specialty/fragrant types of rice are purchased by millers for export and domestic sales in bulk or branded packages.Small amounts of broken rice and de-oiled rice bran is used as fillers in commercial feed. Additionally, a small amount is used for alcohol production, mostly by the potable liquor industry, with the distillers dried grains with solubles by-product sold to the feed industry.