Filling a Thriving India's Emerging Food Gap

April 28, 2000

THE BridgeNews FORUM

CHURCHVILLE, Va.-Indian consumers will demand another 200 million tons of grain a year by 2020, if India's economy keeps growing at its recent rate of 5 percent to 6 percent annually.

In other words, rapid economic growth will more than double India's current grain consumption, an increase that will equal the whole world's current annual grain trade.

That's a conservative estimate by the International Food Policy Research Institute in Washington. Even such a huge increase in grain consumption will only bring India's per capita meat and milk consumption up to one-third of the U.S. level, and slightly below China's current consumption.

Much of India's additional grain will probably have to be imported, along with substantial amounts of protein meal and even dairy products, thus brightening prospects for export farmers in the United States, Europe and South America.

India has been increasing its grain production by about 2.7 percent a year since 1970. But few people believe that this trend increase will continue over the next 20 years without huge Indian investment in irrigation, fertilizer, seeds and biotechnology.

India is arid, and heavy use of irrigation wells has already begun to draw down the water table. The country's good land is already farmed, most of it with high-quality seeds, fertilizer and pesticides.

New rice varieties promise a one-time yield increase of 30 percent. Some good rain-fed land, such as Bihar State, is still managed in traditional low-yield systems by nearly-illiterate farmers.

But India's future farm production potential is severely constrained. India's economic potential, by contrast, is almost unlimited. For over 50 years the country has tied itself in economic knots with socialist monopolies and a dedication to national self-sufficiency in everything.

For example, the only car manufactured in India is a copy of Britain's 1957 Morris Minor that my Indian friends derisively claim is engineered to break down after each 30 minutes of driving.

Until recently, IFPRI didn't dare to project increases in India's current low per capita levels of milk and meat consumption. The whole country seemed to have taken an oath of poverty in memory of Mahatma Gandhi, who led the independence movement in the 1940s.

The country's rate of economic growth averaged only 1.4 percent per capita in the 1960s and 1970s. That's why India had about one-fourth of the world's poverty in 1991, and the highest concentration of poor in the world. Both religion and poverty seemed to dictate vegetarian diets for India. But in 1991, everything began to change.

Faced with severe budget deficits, a balance of payments crisis and double-digit inflation, India finally turned its back on socialism and began to liberalize its economy.

The economy responded with strong growth (7 percent annually between 1994 and 1996) while population growth continued its decline. As a result, per capita income growth soared from 1.4 percent in the 1970s to 4.8 percent in the 1990s.

Milk demand began to rise by more than 1 million tons a year, ice cream became the new food fad in the capital of New Delhi and poultry consumption soared.

The World Bank is forecasting 6 percent economic growth for 2000. Indian officials are talking of another round of economic reforms. India has become one of the leading hot spots for computer design and services.

For 50 years, the country has had one of the top mathematics education programs in the world, turning out large numbers of doctorates for the world's universities and high-tech companies. Over 100,000 students take the annual exam competing for 300 scholarships to the Indian Technical Institute.

India also has lots of low-cost labor for textiles and other labor- intensive industries. It can get low-cost electricity from its large coal deposits and/or a couple of tall dams in the towering Himalayas of neighboring Nepal.

Factoring in not only grain but protein meal, ice cream powder and other high-quality diet items, India's total farm imports may total 200 million tons after 2020.