India's Agricultural Output Shortfalls Expected to Persist

• 27 Nov 2023

Price spikes in pulses this year are linked to uneven monsoon, but a new research report suggests that India's output shortfalls in key protein sources, edible oils, and fruits may continue or widen over the next seven years.

Key Points

• Research Source: The research report, titled 'Prospects of India’s Demand and Supply for Agricultural Commodities towards 2030,' is jointly published by the National Bank for Agriculture and Rural Development (NABARD) and the Indian Council for Research on International Economic Relations (ICRIER).
• Import Reliance Warning: Food deficits leading to reliance on imports can elevate the food import bill, urging caution for the long-term impact.
• Supply-Demand Gap: Commodities like oilseed, pulses, and fruits are expected to face a supply and demand gap in the coming years, emphasizing the need to boost production and productivity.
• Changing Consumption Patterns: As per capita incomes rise, there is a shift in consumption patterns towards nutritious and high-valued commodities, leading to increased demand for fruits, vegetables, and dairy products.
• Inflation Challenges: Recurrent high food inflation, as seen this year, limits the scope for monetary and fiscal policies to promote economic growth.
• Output Challenges: Preliminary estimates indicate a potential three-year low in the output of pulses, some coarse cereals, and groundnut oil seeds during the current Kharif season.
• Demand Growth: Demand growth for non-cereals and high-valued commodities is expected to outpace population growth and cereal commodities' growth in the coming years.
• Oilseeds Deficit Concern: The report raises concerns about a potential deficit in oilseeds in 2030, highlighting the importance of technological breakthroughs or area expansion for sustainable solutions.
• Import Duty Recommendation: The report echoes a 2012 recommendation to raise import duty when crude palm oil prices fall below $800 per tonne to protect Indian producers.
• Scenario Projections: The report projects demand for farm products up to 2030-31 based on alternative growth scenarios, considering per capita income growth ranging from 4.1% to 6.1%.
• Policy Recommendations: Policy attention is urged to balance domestic production and absorption of commodities, emphasizing the need for investments in market infrastructure, processing, and storage facilities to build an efficient value chain and reduce food wastages.