Monitoring Agricultural Outlook for India
26
Monitoring Agricultural Outlook for India: The Supply Side Challenges of Food Security Presentation By Shashanka Bhide, NCAER, New Delhi At UN ESCAP South Asia Policy Dialogue on Regional Cooperation for Strengthening National Food Security Strategies August 13-14, 2013 New Delhi
Transcript of Monitoring Agricultural Outlook for India
Monitoring Agricultural Outlook for India:
The Supply Side Challenges of Food Security
Presentation
By
Shashanka Bhide, NCAER, New Delhi
At
UN ESCAP South Asia Policy Dialogue on
Regional Cooperation for Strengthening
National Food Security Strategies
August 13-14, 2013
New Delhi
Acknowledgements
• National Food Security Mission
• Project Team at NCAER
• Most data are from Official Statistics
Outline of the Presentation
(1)Backdrop
(2)Drivers of Agricultural Outlook in the Medium Term
(3)An assessment of the medium term prospects
Backdrop
• Ministry of Agriculture, Government of India, commissioned a
project to NCAER to bring out short term and medium term
Agricultural Outlook Reports focusing on food commodities.
• This 3- year project began towards the end of 2011 with the
objective of integrating wide range of information available on
the food sector and provide insights into the future scenarios.
• Starting from June 2012, five Quarterly Reports and one semi-
annual Medium Term Outlook Reports have been brought out
so far.
• FAO is supporting supplementary activity in terms of collection
of additional data and modelling alternative policy scenarios
A Framework for Assessing
Agricultural Outlook
• Global prospects for supply and demand conditions: availability
and prices of imports and demand and competitiveness of
exports
• Policy support for agriculture: incentives for investment and
productivity growth
• Emerging supply- demand balances for food commodities
emerging from economy, policies, monsoon and inputs
• Regional variations within the country: need for spatial shifts;
need for integrated markets
Sources of Information on Global
Perspectives
• WB, IMF, UN: Overall economic growth, inflation, international
prices, currencies, trade, population trends
• FAO, FAO-OECD reports, databases
– Agricultural Outlook 2013-2022
– Food price indices
• USDA, ABARES, IGC, FAPRI
• Pulses?
The national food economy
• Production prospects:
• Monsoon, market environment for producers, investment, input
supplies, technology
• The market:
• Income growth, market infrastructure, policies
• Adjustment to imbalances:
• Prices, stocks, consumption
• Assessing sustainability of strategies:
• Supply-demand imbalances, water scenarios, fiscal pressures, lack of
incentives to producers and supply chain, high food inflation
Monsoon Matters: Agricultural Production
Index and Monsoon Rainfall as % of Normal
40
50
60
70
80
90
100
110
120
130
PROD INDEX RAIN RAIN PROD INDEX (Estimated)
Drivers Of Outlook
In The Medium Term
What Will Drive Production?
Declining Share of Agriculture in the
Economy
0
10
20
30
40
50
60
195
0-5
1
195
5-5
6
196
0-6
1
196
5-6
6
197
0-7
1
197
5-7
6
198
0-8
1
198
5-8
6
199
0-9
1
199
5-9
6
200
0-0
1
200
5-0
6
201
0-1
1
% o
f G
DP
(co
nsta
nt
pri
ces)
Agriculture & alliedactivities
Agriculture
Challenge of Small Farms
0.0
0.5
1.0
1.5
2.0
2.5
0
20
40
60
80
100
120
No. of farm holdings with <= 1 ha (million)
Avg holding size (ha) (Right)
Productivity Growth Driving Production: All
Crops Indices, Average % Change Per Year
Item 1980-81 to 1989-90
1990-91 to 1999-00
2000-01 to 2011-12
Area 0.10 0.27 0.97
Yield 2.56 1.33 3.27
Production 3.19 2.29 2.76
Productivity Growth Drives Production
Growth: Rice Indices % Change YOY
80
90
100
110
120
130
140
15019
90-9
1
19
91-9
2
19
92-9
3
19
93-9
4
19
94-9
5
19
95-9
6
19
96-9
7
19
97-9
8
19
98-9
9
19
99-0
0
20
00-0
1
20
01-0
2
20
02-0
3
20
03-0
4
20
04-0
5
20
05-0
6
20
06-0
7
20
07-0
8
20
08-0
9
20
09-1
0
20
10-1
1
20
11-1
2
20
12-1
3
RCE_A RCE_Q RCE_Y
What Drives Productivity?
Productivity drivers
• Investments (Irrigation, infrastructure, technology)
• Input use (Fertilisers, machinery, new seeds)
• Higher value addition
• Spatial shifts in production
• Better terms of trade
Producer Prices Keep Up with Input
Costs: Price Indices
98
148
198
248
298
348
398
448
Index of Prices Received Index of prices paid
98
99
100
101
102
103
104
98
148
198
248
298
348
398
448
Index of Prices Received
Index of prices paid
Index of Terms of Trade (Right)
Trends in the Ratio of Output Price to
Input prices (%)
Commodity Input 2005-06 2006-
07
2007-08 2008-09 2009-
10
2010-11 2011-
12
Food grain Diesel 89.5 94.0 104.2 107.0 125.1 115.0 109.8
Electricity 98.2 106.2 113.3 124.4 145.3 138.5 136.5
Fertiliser 104.9 117.3 123.1 136.0 153.8 149.3 136.3
Note: Ratios are based on wholesale price indices.
But Food Prices Rise: WPI, % Change
YOY
0.0
1.8
3.6
6.1
4.5
5.4
2.2 1.9
8.5
11.1
9.0 9.5
10.1
4.7
5.7
9.8
0
2
4
6
8
10
12
Cereals Pulses Vegetables Fruits Milk Edible oils Sugar Allcommodities
2000-05 2005-12
Accommodating Global Prices:
FAO Price Indices
0.0
50.0
100.0
150.0
200.0
250.0
300.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Cereals Price Index Food Price Index
What is supply responding to?
• Rising income levels
• Urbanisation
• The Food Security Bill
Net Availability of Food Items: Grams/
day
Item 1990 2000 2011 (P)
Rice 212 204 189
Wheat 133 160 165
Cereals 432 423 424
Pulses 41 32 39
Edible oil 18 26 41
Sugar 13 16 18
Milk 174 214 285
Net Availability= Production- (Seed, Feed, Wastage) + Imports –
Exports + (Beginning Stocks – Closing stocks)
P = Provisional
THE MEDIUM TERM OUTLOOK
Medium Term Projections and
comparisons
Commodity Estimates for
2012-13
2016-17
Working
Group
Projections
2016-17
Alternative
scenarios
Rice 104.2 98-106 119.6-121.6
Wheat 93.6 93-104 93.3-100.6
Coarse cereals 39.5 42-49 46.5-50.2
Cereals 237.3 240-251 263.1-268.7
Pulses 18.0 18-21 18.8
Foodgrain 255.3 258-272 277.8-284.3
Oilseeds 30.7 33-41 42.2-43.7
Potato 42.5 57.0
Onion 16.8 20.3
Banana 30.3 38.8
Sugarcane 336.2 375.4
Milk 132.1 152.7
The Supply Slide
• Goal:
• Sustaining food production capacity
• Concerns:
• Consumer subsidies and fiscal pressures
• Fiscal pressures and input subsidies
• Transition to more efficient markets
