Transcript Presentation - NCAER : Agriculture Outlook India

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
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
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
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.
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.
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.
THE MEDIUM TERM OUTLOOK:
EMERGING SCENARIO
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
The 12th Five Year Plan:
projections for 2016-17
Crops
Demand
(Million Tonnes)
Cereals
Pulses
Total food grains
Oilseeds
Edible oils
Sugarcane
Sugar
235
22
257
59
26.5
279
26.5
Supply
(Production)
(Million Tonnes)
240 to 251
18 to 21
258 to 272
33 to 41
NA
365 to 411
NA
Source: Working Group on Agriculture for 12th Plan, Planning Commission
Indicators of emerging scenario in
the medium term
Item
Cereals
Pulses
Edible oils
Sugar
Milk
Fruits &
Vegetables
Eggs, Fish and
Meat
Income
Annual growth in demand
elasticity due to increase in national
of demand income by 6.5% per year;
population @1.2%
0
1.2
0.5
3.7
0.8
5.2
0.8
1.0
0.8
5.2
6.2
5.2
1.0
6.2
Annual growth in
production during
2005-06 to 201112
3.7
4.2
5.7
(Nine Oilseeds)
5.0
3.8
4.8 (4 years upto
2010-11)
4.6 4 years upto
2010-11)
Cereals and bread
Fruits & vegetables
Milk & products
Meat, fish and egg
2010-11
2008-09
2006-07
2004-05
2002-03
2000-01
1998-99
1996-97
1994-95
1992-93
1990-91
1988-89
1986-87
1984-85
1982-83
1980-81
1978-79
1976-77
1974-75
1972-73
1970-71
1968-69
1966-67
1964-65
1962-63
1960-61
1958-59
1956-57
1954-55
1952-53
1950-51
Per capita consumption expenditure: Index of
Rs, 2004-05 prices (1950-51=100)
300
250
200
150
100
50
Changing Pattern of Food Consumption:
Urban India (per capita)
Urban
70
60
50
40
30
1993-94
2004-05
20
2009-10
10
0
Source: National Sample Surveys; all units are kg/year except milk (litres) and eggs (number)
Changing Pattern of Food
Consumption: Rural India (per capita)
Rural
90
80
70
60
50
40
30
20
10
0
1993-94
2004-05
2009-10
Source: National Sample Surveys; all units are kg/year except milk (litres) and eggs (number)
Index of value of output:
2004-05 prices (2004-05=100)
Average Retail Prices in Delhi: Rs/kg
30.00
180.00
160.00
25.00
140.00
120.00
20.00
2010
2011
15.00
2012
10.00
2013
2010
100.00
2011
80.00
2012
60.00
2013
40.00
20.00
5.00
0.00
0.00
Gram
Rice
Wheat
Wheat Atta
Tur (Arhar) Groundnut
Oil
Soya Oil Mustard Oil
40.00
35.00
30.00
25.00
2010
20.00
2011
15.00
2012
2013
10.00
5.00
0.00
Potato
Onion
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
FAO Food Price Index
250.0
200.0
150.0
100.0
50.0
0.0
Is there a new global context?
Projected world prices: $/ tonne [FAO]
Projected growth of production of selected
food commodities in India: % per year [FAO]
Commodity
2014-2021
Wheat
2.69
Rice
1.67
Maize
2.68
Soybean
2.04
Sugar
2.68
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.
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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
Medium Term Projections and
comparisons
Commodity
Rice
Wheat
Coarse cereals
Cereals
Pulses
Foodgrain
Oilseeds
Potato
Onion
Banana
Sugarcane
Milk
Estimates for
2012-13
99.0
93.5
37.0
228.5
17.0
245.5
31.0
43.5-44.5
16.7
31.9
333.5
131.8-132.1
2016-17
Scenario 1
119.6
93.3
50.2
263.1
18.8
277.8
42.2
57.0
20.3
38.8
375.4
152.7
2016-17
Scenario 2
121.6
100.6
46.5
268.7
284.3
43.7
2016-17
Projections
Working
by FAO for
Group
2017
Projections
98-106
112.31
93-104
85.6
42-49
240-251
18-21
258-272
33-41