workshop on medium term outlook for india’s food sector overview of the issues by shashanka bhide

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Workshop on Medium Term Outlook for India’s Food Sector Overview of the Issues by Shashanka Bhide NCAER Project Supported by Food and Agriculture Organisation June 26, 2014

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Workshop on Medium Term Outlook for India’s Food Sector Overview of the Issues by Shashanka Bhide NCAER Project Supported by Food and Agriculture Organisation June 26, 2014. Outline of the presentation. The context for our workshop An outline of emerging scenario Summary. - PowerPoint PPT Presentation

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Page 1: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Workshop onMedium Term Outlook for India’s Food

Sector

Overview of the Issuesby

Shashanka BhideNCAER

Project Supported by Food and Agriculture Organisation

June 26, 2014

Page 2: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Outline of the presentation• The context for our workshop• An outline of emerging scenario• Summary

Page 3: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The context• Medium term outlook assessments are important for strategising policy

priorities, for investments both within the sector and in the other sectors with backward and forward linkages

• In the food sector, the margin for error, especially when it is failure to meet the requirements is quite small.

• The general framework for the metrics for assessing the medium term outlook is the supply- demand balance. This approach does take into account input sectors, markets- both domestic and international- overall economic conditions and government policies affecting investment and consumption demand.

• However, additional factors such as environment are important, especially as the assessment horizon is longer

Page 4: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The context: demand side factors• While the demand evolves as affected by demography, income levels and structure of the economy, government policies also influence demand. The extent of government policy interventions would be determined by the fiscal sustainability of the interventions.• The factors that need to be taken into account in arriving at an assessment of a medium term outlook:

– Population growth– How the income levels are changing– How the structure of the economy is changing – How policies are changing

Page 5: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The context: supply side factors• The supply side of the outlook includes domestic production and the access to international markets. The export demand affects resources available for production for domestic use. • Given the land constraint on agricultural production, the key issue on the supply side is productivity of land in the medium term. While increased productivity is critical, it is also necessary that productivity growth shifts supply curve to the right.• Policies relating to input prices, output prices, infrastructure, and research will be major determinants of growth of supply of food and the price of food.

Page 6: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The context: the markets• The need for efficient markets has become increasingly critical for balancing supply and demand pressures to meet the food requirements.• The urgency of fair and efficient markets to ensure supplies of quality, timely and affordable food commodities has increased.• An efficient distribution system linking producers and consumers globally is necessary for the food sector from a medium term perspective.

Page 7: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The context: summary• This workshop is organised as a part of the activities that supplemented the main grant from NFSM, Ministry of Agriculture to bring out periodic reports on Agricultural Outlook.• Today’s workshop will address these issues. • There are presentations on the outlook for specific sectors, for some of the inputs, for markets and marketing channels.• We hope that this forum for interaction will continue so that insights from an assessment of the changing dynamics of the food sector will be useful inputs to strategising • Before closing, we look at some specific trends that are likely to have implications for the medium term outlook for the food sector.

Page 8: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

THE MEDIUM TERM OUTLOOK: EMERGING SCENARIO

Page 9: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The Setting for the Medium Term• Perspectives from the 12th FYP Working Group Report: what led to better output growth in the XI FYP?

– Improvement in terms of trade– Public and private investments– Quality seed, hybrids, technology– Institutional efforts

• Trends in the sector with implications to outlook: – Share of agriculture in GDP– Size of holdings– Cropping pattern trends– Subsidies/ input prices– Consumption demand

Page 10: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The 12th Five Year Plan: projections for 2016-17Crops Demand (Million Tonnes)

Supply (Production)(Million Tonnes)Cereals 235 240 to 251Pulses 22 18 to 21Total food grains 257 258 to 272Oilseeds 59 33 to 41Edible oils 26.5 NASugarcane 279 365 to 411Sugar 26.5 NASource: Working Group on Agriculture for 12th Plan, Planning Commission

Page 11: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Indicators of emerging scenario in the medium termItem Income

elasticity of demand

Annual growth in demand due to increase in national income by 6.5% per year; population @1.2%

Annual growth in production during 2005-06 to 2011-12

Cereals 0 1.2 3.7Pulses 0.5 3.7 4.2Edible oils 0.8 5.2 5.7

(Nine Oilseeds)Sugar 0.8 5.2 5.0Milk 1.0 6.2 3.8Fruits &Vegetables

0.8 5.2 4.8 (4 years upto 2010-11)

Eggs, Fish and Meat

1.0 6.2 4.6 4 years upto 2010-11)

Page 12: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Per capita consumption expenditure: Index of Rs, 2004-05 prices (1950-51=100)

1950-51

1952-53

1954-55

1956-57

1958-59

1960-61

1962-63

1964-65

1966-67

1968-69

1970-71

1972-73

1974-75

1976-77

1978-79

1980-81

1982-83

1984-85

1986-87

1988-89

1990-91

1992-93

1994-95

1996-97

1998-99

2000-01

2002-03

2004-05

2006-07

2008-09

2010-11 50

100150200250300

Cereals and bread Fruits & vegetablesMilk & products Meat, fish and egg

Page 13: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Changing Pattern of Food Consumption: Urban India (per capita)

Rice

Whe

at

Coarse ce

reals

Pulses

Edible o

ils

Fruits

&ve

gMilk

Eggs Fish

Mutton

Chicke

n0

10

20

30

40

50

60

70

Urban

1993-942004-052009-10

Source: National Sample Surveys; all units are kg/year except milk (litres) and eggs (number)

Page 14: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Changing Pattern of Food Consumption: Rural India (per capita)

Source: National Sample Surveys; all units are kg/year except milk (litres) and eggs (number)

Rice

Whe

at

Coarse

cerea

ls

Pulses

Edible

oils

Fruits

&veg

MilkEgg

sFish

Mutton

Chicke

n0

102030405060708090

Rural

1993-942004-052009-10

Page 15: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Index of value of output: 2004-05 prices (2004-05=100)

Page 16: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Average Retail Prices in Delhi: Rs/kg

Rice Wheat Wheat Atta0.005.00

10.0015.0020.0025.0030.00

2010201120122013Gram

Tur (Arhar)

Groundnut Oil

Soya Oil

Mustard Oil0.0020.0040.0060.0080.00100.00120.00140.00160.00180.00

2010201120122013

Potato Onion0.005.00

10.0015.0020.0025.0030.0035.0040.00

2010201120122013

Page 17: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

FAO Food Price Index1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0.0

50.0

100.0

150.0

200.0

250.0

Page 18: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Is there a new global context?

Page 19: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Projected world prices: $/ tonne [FAO]

Page 20: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Projected growth of production of selected food commodities in India: % per year [FAO]Commodity 2014-2021Wheat 2.69Rice 1.67Maize 2.68Soybean 2.04Sugar 2.68

Page 21: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Summary• Assessment of medium term supply-demand conditions point to the need to push production of commodities such as fruits, vegetables, livestock products, sugar where growth in demand will be higher than in the staples such as rice cereals. • The trends also point to the need for achieving higher production under more competitive price environment.• Greater efficiency in the use of inputs would be necessary to keep production costs low.• Improvements in infrastructure is needed to improve efficiency of the supply chain.• Productivity improvement is needed to achieve higher production given the binding land constraint. •

Page 22: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Thank You &Visitwww.agrioutlookindia.ncaer.org

Page 23: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

The context: demand side factors•Increase in population, is a steady factor increasing demand for food. Changes in the demographic composition of population has some impact on the level of consumption demand.•The most important driver of change on the demand side has been the increase in income levels of the population. Life style changes resulting from urbanisation, nature of occupational distribution of population have also influenced changes in consumption pattern.•The changing composition of food demand has also implications to overall demand for food commodities: increasing demand for livestock products implies increasing demand for grain as feed.•However, there is also the policy impact which aims to raise level of consumption of food commodities, especially for the poor. Policies also influence use of food commodities for other uses: food commodities as bio fuels

Page 24: Workshop on Medium Term Outlook for India’s Food Sector Overview  of the Issues by Shashanka Bhide

Medium Term Projections and comparisonsCommodity Estimates for

2012-132016-17 Scenario 1

2016-17 Scenario 2

2016-17 Working Group Projections

Projections by FAO for 2017

Rice 99.0 119.6 121.6 98-106 112.31Wheat 93.5 93.3 100.6 93-104 85.6Coarse cereals 37.0 50.2 46.5 42-49Cereals 228.5 263.1 268.7 240-251Pulses 17.0 18.8 18-21Foodgrain 245.5 277.8 284.3 258-272Oilseeds 31.0 42.2 43.7 33-41Potato 43.5-44.5 57.0Onion 16.7 20.3Banana 31.9 38.8Sugarcane 333.5 375.4Milk 131.8-132.1 152.7