Street crowded with people, cycle rickshaws and porters with handcarts, which carry a wide assortment of goods.
Is food India’s best kept secret?
India might be the world’s third-largest food producer, but the combined sales of its ten largest food companies is only $2 billion; a paltry sum. In a country of one billion people, is the potential of the food market overstated or a sleeping giant?
The rate India’s economy is projected to grow in 2013/14. India’s population is expected to surpass China’s in the next 15 years.
The truth is somewhere in between. Development of markets for the products that food companies typically concentrate on—higher value items such as breakfast cereals and sauces—are aimed at an elite. Growth for food in India will come from mass market products—wheat flour, poultry, milk—as the country’s lower class moves to middle class and its overall population grows. Within 15 years, India’s population is expected to surpass China’s, which will peak at 1.4 billion, estimates the U.S. Census Bureau.
"I don’t see any ‘burgeoning’ demand; however, the population of India is enormous," says Ashley Gulke Leavitt, an analyst with the Gulke Group in Chicago.
What if India becomes more secular and starts eating more beef? Of the 1,241,491,960 people that comprise India’s population, just .05% is 620,745 people. Average consumption per capita in the U.S. is 65 lb. If 0.05% of Indians eat 20 lb. per year, that’s 12,414,919.6 lb. of beef. That’s a lot of protein that needs to be produced.
"This is just an example of how big India is, and how little, tiny changes can bring about big numbers," Gulke Leavitt adds.
The Indian economy will grow at a higher rate of 6.7% in 2013/14 compared to the estimated growth of 5.5% for the current financial year (2012/13), due to a revival in consumption based on lower interest rates, notes Roopa Kudva, Managing director and CEO of Crisil, an Indian ratings agency.
"The economy of India is the tenth-largest in the world."
India’s recent performance in agriculture shows growth during the past five years of 3.3% per year. Investment is up and there have been bumper harvests. A normal monsoon (timely and needed rains) will boost agricultural GDP to an above-trend rate of 3.5% in 2013/14, albeit on a lower base from 2012/13, according to Kudva.
Rising incomes, which will enable poor people to begin to emulate the diet of the rich, and greater
eating experimentation resulting from increased choice are two factors driving the change in food consumption patterns. Although most people will remain faithful to cultural notions, diets are evolving as a new generation grows up with a higher income.
But supply growth of key commodities (particularly in the high-value segment) lags behind demand growth. Many value chains do not work well and large numbers of farmers are needlessly poor. In many instances production patterns are not sustainable from an environmental standpoint.
Efficiency in India is almost universally low, notes Marco Ferroni, executive director of the Syngenta Foundation for Sustainable Agriculture.
Yields per unit of land and labor are poor, and water and nutrient use efficiency are low. This must change. "Efficiency is a key part of sustainability," Ferroni explains.
Boosting agricultural production in India must stem from increasing yields on existing acres, as farmers deal with encroaching cities and highways.
Better Farming? Government programs drive new technological and sustainable advances in agricultural production with the hopes of attaining a 4% annual growth rate in agriculture. The Indian government intends to double horticultural crop production throughout the next five years.
Still, demand for many farm commodities will quickly outpace supply, says Surabhi Mittal, a senior fellow at the Indian Council for Research on International Economic Relations.
In 10 years’ time, India’s edible oils deficit will be 17.7 million tons, or double its 2009 imports, and its sugar shortfall will be nearly 40 million, or five times the deficit that triggered last year’s global rally, Mittal estimates.
- March 2013