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Economic Growth Drives Agricultural Change in India

by 5m Editor
5 November 2010, at 8:20a.m.

INDIA - With a broiler sector growing 10 to 12 per cent per year and an egg sector growing six to seven per cent, India’s agriculture and food systems are responding in significant ways to the country’s economic growth – and over time that may offer opportunities to trade partners.

“In the last decade, India’s per capita GDP doubled and it will double again in less than a decade. This economic revolution is driving change and providing extraordinary opportunities for the people of India and those who can enhance their economic growth,” said Thomas C. Dorr, president and CEO of the US Grains Council.

Dorr, who just returned from a weeklong set of meetings in India, said the country will be a strong market for US food and agriculture products in years to come.

“This opportunity is not too far down the road,” he said.

“If its economy continues to grow as it has in last decade, it will need soybean oil, distillers grains and perhaps corn in three to five years.”

Mr Dorr was joined in India by the Council’s Chris Corry, senior director of international operations; Rebecca Bratter, director of trade development; and Joe O’Brien, regional director for the Middle East and Subcontinent.

While some perceive India as a vegetarian country, that is not the case.

“Roughly 40 per cent of the people are vegetarian, and while others do consume animal proteins, that consumption is limited but growing,” Ms Bratter said.

“It is growing the most among younger people who have more income than their parents and families and are aware of protein deficiencies among children. The decision is generally economic and incomes are rising.”

While the poultry and egg sectors are seeing tremendous growth, the country’s dairy processing industry is only operating at 50 per cent capacity. The main issue is adequate nutrition to increase the productivity of the country’s dairy and buffalo cow herds. Another strong area is the industrial/starch corn processing industry that provides a number of important products for India’s manufacturing sector.

“With demand growing for food, agriculture and industrial products, India has plans to double corn production by 2020,” Mr Dorr said.

“Doubling corn production would mean going from only 800 million bushels to 1.6 billion – and that’s in a country of 1.3 billion people.”

Even with increases in corn production and other agricultural products, Mr Dorr said it is clear India will be challenged to provide enough crops to meet its needs, especially as the standard of living increases. This will make trade important – and from the Council’s perspective, trade and food security go hand in hand.

“Food security is an important subject,” he added.

“Yet food security does not have to be built on food self-sufficiency. As long as there is transparency in markets, pricing, trade policy and food safety, then you can develop a trading routine that is reliable and provides an opportunity to be food secure.”

While Mr Dorr said he went to India with an impression that biotechnology may be an impediment to trade, he left feeling leaders of all industries, including agriculture, are aware of the benefits of biotechnology and a broader acceptance of biotechnology is coming. Instead, infrastructure and financing are probably the greatest impediments to trade and the development of improved food production systems, he said.