Download 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 semiannual 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
130
120
110
100
90
80
70
60
50
40
PROD INDEX
RAIN
RAIN
PROD INDEX (Estimated)
Drivers Of Outlook
In The Medium Term
What Will Drive Production?
1950-51
1955-56
1960-61
1965-66
1970-71
1975-76
1980-81
1985-86
1990-91
1995-96
2000-01
2005-06
2010-11
% of GDP (constant prices)
Declining Share of Agriculture in the
Economy
60
50
40
30
20
Agriculture & allied
activities
Agriculture
10
0
Challenge of Small Farms
120
2.5
100
2.0
80
1.5
60
1.0
40
20
0.5
0
0.0
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
RCE_A
RCE_Q
RCE_Y
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92
1990-91
Productivity Growth Drives Production
Growth: Rice Indices % Change YOY
150
140
130
120
110
100
90
80
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
448
398
348
298
248
198
148
98
Index of Prices Received
Index of prices paid
448
398
348
298
248
198
148
98
104
103
102
101
100
99
98
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
Food grain
Diesel
Electricity
Fertiliser
2005-06
2006- 2007-08 2008-09 2009- 2010-11
201107
10
12
89.5
94.0
104.2
107.0
125.1
115.0
109.8
98.2
106.2
113.3
124.4
145.3
138.5
136.5
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
12
11.1
10.1
10
9.0
8.5
9.8
9.5
8
6.1
6
5.7
5.4
4.5
4.7
3.6
4
2.2
1.8
2
1.9
0.0
0
Cereals
Pulses
Vegetables
Fruits
2000-05
Milk
2005-12
Edible oils
Sugar
All
commodities
Accommodating Global Prices:
FAO Price Indices
300.0
250.0
200.0
150.0
100.0
50.0
0.0
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
Rice
Wheat
Coarse cereals
Cereals
Pulses
Foodgrain
Oilseeds
Potato
Onion
Banana
Sugarcane
Milk
Estimates for 2016-17
2016-17
2012-13
Working
Alternative
Group
scenarios
Projections
104.2
98-106
119.6-121.6
93.6
93-104
93.3-100.6
39.5
42-49
46.5-50.2
237.3
240-251
263.1-268.7
18.0
18-21
18.8
255.3
258-272
277.8-284.3
30.7
33-41
42.2-43.7
42.5
57.0
16.8
20.3
30.3
38.8
336.2
375.4
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
Thank You
www.agrioutlookindia.ncaer.org