Eye on India - The Subcontinent is on the Move
- Published on Friday, 03 August 2012 18:29
India is a market to watch. The message came through loud and clear from Alan Mustard, Agricultural Minister Counselor in the U.S. Embassy in New Delhi, as he addressed attendees at the 2012 U.S. Grains Council Board of Delegates meeting in Vancouver, Washington. While India is still committed to food self-sufficiency and is still a corn exporter, fast-growing demand coupled with severe supply constraints are likely to force changes in coming years.
Speaking to delegates from New Delhi via Skype, Mustard surveyed the dramatic changes that are transforming the subcontinent. India is incredibly diverse -- possibly the world's most diverse nation -- in language and religion. Within the next 20 years, it will also be the world's most populous country. Entrenched preconceptions die hard, but Mustard emphasized that India is neither the country it was 20 years ago, nor the country that the reformers of a generation ago anticipated would emerge. It is today a land of dynamic economic growth, rapid change in consumption, and new opportunities on the horizon.
Food supply is among the sectors in which the old assumptions are crumbling. While India is majority Hindu, the country nonetheless contains 250 million people who do eat meat, as well as more than one billion dairy consumers. The middle class now numbers over 100 million and is growing rapidly. While the nation remains committed to food self-sufficiency, chronic structural food inflation -- now running at 9-10% annually -- is a constant reminder of the heavy costs imposed on consumers by this choice. In addition, India is already water stressed and by 2020 will be severely water stressed, limiting the potential for agricultural expansion, particularly in the nation's grain belt.
For food exporters, Mustard suggested, the challenge in India is to look a decade ahead. Rising incomes, rising expectations, and rising food demand are on a collision course with supply constraints and food inflation. Food security through trade is an attractive solution, and necessity is a powerful persuader. There are no guarantees -- but India is a nation on the move, and is clearly a market to watch.