Context: National Bank for Agriculture and Rural Development (NABARD) and the Indian Council for Research on International Economic Relations (ICRIER) has released a report ‘Prospects of India’s Demand and Supply for Agricultural Commodities towards 2030’.
As per the report,
- The per capita consumption of food grains particularly cereals has declined considerably while the demand for high valued commodities like fruits and vegetables, livestock products as well as processed food have increased over time.
- The NSSO’s consumption expenditure highlights the changing consumption pattern of Indian households. There has been a decline in the per capita consumption of cereals from 12.68 kg per capita/per month in 1993-94 to 10.62 kg per capita/per month in 2011-12.
Demand-supply gap of Agriculture commodities (in million tonnes)
Factors that determine the demand for crops/cropping patterns:
Changes due to consumption patterns:
Changes in consumption patterns due to evolving dietary patterns for various reasons resulted in crop pattern changes in the following way:
- The area under millet cultivation has been significantly reduced over the decades as their consumption substituted by cereals such as rice and wheat due to rise in income, their availability through PDS, penetration of their diversified value-added products, ease of preparation, and short cooking time.
- Dietary transition towards more protein and mineral rich foods resulted in increased cultivation of Pulses and Horticultural crops.
- Shift in demand for organic products, especially fruit and vegetables in the cities due to increased awareness about organic food in consumers led to increased area of cultivation of organic crops in India. E.g., The share of net area under organic farming in India increased from 0.9% in 2016 to 3.9% in 2022.
Changes due to market conditions:
- Government intervention in marketing:
- MSP support and Procurement policies changed the cropping pattern in favour of cereal crops like Rice and Wheat.
- Government subsidy support to sugar mills for procuring cane from the farmers at FRP resulted in excessive sugar production in India. The area under cultivation and production of sugarcane in India almost doubled from 1990-91 to 2020-21.
- Export demand: Commercial crops cultivation increased in India due to favourable export potential after LPG reforms. Area under food grains in gross cropped area (GCA) declined by 11% and replaced by crops like oilseeds, fruits & vegetables, and non-food crops in the last three decades.
- Contract farming: new marketing arrangements like contract farming between corporates/traders and farmers resulted in crop diversification and introduction of new crops in many regions of India. E.g., Chicory farming in Punjab; Gherkins in Andhra Pradesh; Potato in Gujarat.
As per the report, the country will continue importing large quantities of Pulses and Oilseeds by 2030-31 because of a substantial gap between demand and supply of these commodities.
Edible Oil:
The diverse Agro-climatic conditions of India are favourable for growing wide variety of edible oil seeds, which include groundnut, Mustard, sunflower, soyabean and Niger. Despite having this climatic advantage India has now become one of the largest importers of edible oil in the world.
India’s edible oil imports have increased from 11.6 mt (valued at Rs 60,750 crore) in 2013-14 to 16.5 mt (Rs 138,424 crore) in 2022-23.
Reasons:
- Green revolution: success of green revolution encouraged cereal crops like rice and wheat in traditionally oil producing regions.
- Ex: Rice-wheat cycle replaced Rice-mustard and mixed-cropped farms on which oilseeds were cultivated in Punjab region
- Rainfed farming: 72% of oil crops confined to rainfed confined to Rainfed areas.
- Low seed replacement and Marginal landholdings decreased the productivity of oil crops.
- Govt policy and Business interests favoured cheaper palm oil imports at the cost of domestic production of traditional oil crops.
- Change in consumption pattern increased the demand for edible oil which couldn’t be met by domestic production.
Need for self-sufficiency:
- To reduce import bill and unfavourable trade balance.
- Palm oil accounted for the lion’s share of the total imports (62%) of edible oil but consumption of palm oil is unhealthy. Replacing it with indigenous oil is necessary to save healthcare expenditure.
- Domestic production of edible oil gives by products like oil cake, which is the raw material for dairy and poultry industry. Importing of edible oil deprive the supply of these raw materials.
Way forward:
- Increasing production through adoption of high yielding varieties of seeds; soil and moisture conservation techniques in rainfed areas; balanced Utilisation of fertilisers; Intercropping of Oilseeds with other crops; Contract farming etc.
- Encourage Cooperatives and FPOs and link them to oil processing Industries.
- Reduce per capita consumption of edible oil and minimize import. Campaign for healthy oil consumption.
- Promotion of Secondary Sources (rice bran, coconut, cotton seed, oil palm and TBOs).
- Enhancing capacity utilization of domestic processing industries.
- Promoting consumption of coconut as edible oil.
Challenges in Indian Pulses Industry:
- High Yield Gap: pulses yield gap (yield Achieved in Experimental Lab Conditions to the actual Farmer’s field in India) in Pigeon Pea is 50%, Green Gram 45%
- Inputs related challenges: non-availability of recommended HYVs quality certified seeds at all levelsin-flow of spurious and sub-standard seedsLack of demonstration of implements like light seed drills, zero-till machine.Inability of farmers to access institutional credit discourage them to purchase quality inputs and adopt improved technology.
- Production Related challenges: Prone to numerous biotic & abiotic stresses (like mid-season cold waves and terminal heat during Rabi, micronutrient deficiency etc), soil alkalinity, salinity, waterlogging etc. Crop failure occur due to reasons like erratic monsoon behaviour and moisture stress.
- Cultivation on marginalised lands: Green revolution pushed pulses cultivation in marginal and sub-marginal lands - declining productivity.
- 84% area under pulses is rain-fed with soils relatively of low fertility.
- Drought and heat stress influence 50% reduction in seed yields particularly in arid and semi-arid regions.
- Ineffectiveness of MSP: Though MSPs are announced for 23 commodities, substantial benefits accrue to wheat & rice growers in selected States leaving pulse-growers often receiving prices much below MSP. Lack of assured market make pulse production less attractive for farmers compared to other crops.
- Price Volatility: inflation in pulses follows a cyclical pattern, with prices shooting up every 2-3 years. Pulses follow cobweb phenomenon wherein production responds to prices with a lag, causing a recurring cycle of rise and fall in output and prices. This phenomenon can be attributed to a number of factors, including pricing policies, import policies, production decisions, and the weather.
Road Ahead:
- Enhancing production: Between 1991 and 2010 average increase in yield of two major pulse crops viz. chickpea and pigeon pea were as high as 81% to 100% in AP recording a substantially higher increase in yield than the national average yield increase. This has been attributed to:
- On-time availability of HY, short-duration and wilt resistant varieties
- Adoption of improved varieties and easy access to production technologies
- Commercial cultivation by mechanising field ops and efficient management
- Availability of grain storage facilities to farmers at the local level at an affordable cost
- Maintaining Buffer stocks: Building a need-based buffer stock with accountability for proper management incurring no wastage
- Accessibility to pulses: Better system of easy availability of pulses in the open market throughout the year through distribution through PDS if necessary.
- Provisions of imports: Keeping a close watch on the crop growth in 30 pulse-exporting countries through services of the FAO and our embassies that can help negotiate favourable terms for timely import as and when imminent.