Agricultural Outlook and Situation Analysis Report
Source: Flickr, Bread for the World

A recently released report by the National Council of Applied Economic Research (NCAER) provides an overview of India’s agricultural outlook. This report is part of a series of reports that monitors and provides analysis of food scenarios in India in the short (one to two quarters) and medium term (up to 10 years).  The agricultural outlook and situation analysis undertaken in this study analyses and compares medium-term projections for major Indian crops made by four international institutions (OECD/FAO, USDA, FAPRI and IGC) on the supply and demand conditions for the world and India. The goal of this comparison is to highlight trends across the projections. The report also provides an overview of India’s livestock sector as well as some policy recommendations for India’s agricultural sector as a whole.

The report provides an overview of the projections, from the OECD/FAO, ERS/USDA, FAPRI and IGC, for major Indian crops over the next ten years. The various estimates project that wheat production will grow between 1.3 and 2 percent annually, that the per capita consumption of wheat will increase by around 1.1 percent annually and that the price of wheat will increase by 4.2 percent annually over the next ten years. Similarly, regarding rice projections the report estimates that production will increase between around 1.1 and 1.7 percent annually, per capita consumption by 1.1 percent and price by 5.1 percent in the coming ten years. These projections, despite some minor variations, are similar for coarse grains and oilseeds. Significantly, these projections illustrate that despite production increases, the price of these major agricultural commodities in India is expected to increase significantly in coming years. This is in contrast to global projections were these major crops are expected to increase by just over 1 percent annually, apart from wheat which is projected to increase up to 0.3 percent annually. These large price increases in India are mainly driven by significant population increase and changing diets.

The report also compares projected growth rates in yield and yield gap between India and the rest of the world. The projections estimate that the yield gap between India and other major countries (such as China, the US, and Brazil) for wheat, coarse grains and oilseeds will decrease in the coming ten years. However, the yield gap and projected changes vary significantly depending on the crop. Regarding wheat, the average yield per hectare in India is currently 3.6 percent below the world average, this is expected to increase to 1.4 percent above the world average in 2024. By contrast, India’s average yield per hectare for coarse grains and oilseeds is less than half that of global levels and this is only expected to be reduced marginally by 2024, highlighting the need for improving productivity for these crops in particular.

The report also contains a chapter on India’s livestock sector, which highlights that the sector has emerged as one of the major engines of agricultural growth in recent years. In particular, the extent of mixed crop-livestock agricultural systems has increased; this is especially important as it supplements farm incomes and makes nutrient-rich food available to consumers. The report emphasizes that livestock provides a secondary source of income to around 70 million rural households, in particular the number of crossbreed cattle has nearly doubled since 1997 and milk production tripled since 1990. The report also predicts that cattle and poultry will continue to grow significantly in coming years.

In conclusion, the report highlights that rising productivity per unit of land and per drop of water will need to be the main engine of agricultural growth as nearly all cultivable land is already farmed. Water resources are especially limited and water for irrigation must contend with increasing industrial and population needs. Regarding policy recommendations, the report highlights that Indian agriculture is at a very early stage of technology adoption, as compared to other countries, and concerted policy efforts to deploy technology in agriculture and the food distribution sector can transform almost every part of the value chain. The report highlights that there are already multiple government initiatives focused on improving agricultural productivity, these include the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) focused on irrigation development, the soil health card scheme, the Paramparagat Krishi Vikas Yojana (PKVY) which promotes organic farming, the Pradhan Mantri Fasal Bima Yojana (PMFBY) for extending wider and cheaper coverage of crop insurance, the setting up of a National Agriculture Market (NAM) for electronic trading of agricultural products. The report emphasizes that the effective implementation of these programs should be central to Government policies as they can support significant improvements in agricultural productivity.

A blog on a previous ‘Agricultural Outlook and Situation Analysis’ report can be accessed here.

By Bas Paris

Photo credit:Flickr, Bread for the World