‘Rising incomes, changing food preferences to fuel India’s demand for grains, proteins’

After the success of the green revolution in India, India has moved from the status of food deficient country to one of the leading nations in agriculture. As per the current government estimates, we have a surplus crop of wheat by about 1.5 million tonnes(mt). The production in the country is 112 mt against 110.6 mt last year. The country is entering into La Nina year which is considered good for most of the crops under an enhanced rainfall scenario. As of May 1, the current government stock of wheat is 25.95 mt. Keeping that in context, in the years to come and as the Indian economy will continue to grow, it will have an immediate impact on the dietary preferences of the large population of the country as they begin to exercise their choice of food. If we look at the global wheat market, it is forecast to reach $62.86 billion by 2029. India’s significant contribution will be driven by the rising food consumption in India particularly in processed foods like the bakery segment, pastry and noodles. So, rising incomes and changing dietary preferences are going to increase the demand for both the food grain and proteins indirectly thereby boosting the grain production for animal feed as well. I think the bigger question for the country will be how we are going to meet our food grain demand over the next 10-15 years. I think the Indian grain policies on grain procurement and especially the EXIM policies, are critical in managing the right balance between ensuring that there is sufficient domestic supply and also at the same time we leverage the EXIM capabilities. I think that’s where we stand today as far as wheat is concerned.

As of May 1, wheat stocks with the government were 25.95 mt. This is the lowest level since 2008 with almost like a 10.3 per cent year-on-year drop. The opening stocks, as of April 1 this year, was about 7.5 mt as against 8.34 mt last year. The crop has been good as it is evident by the numbers, we are y-o-y about 1.5 mt surpluses from last year. As of May 1, the Government had purchased 19.6 mt, surpassing its annual requirement of 18.6 mt which is required for all the welfare schemes including the National Food Security Act. Currently, the procurement already reached 26.2 mt.

The opening stocks on April 1 were less than last year. So, it is very difficult to say whether immediate import will happen or not. I think Indian participation in the global wheat market will be contingent on overcoming certain challenges. For example, there will be limited substitution between rice and wheat in the country. Also, there is a growing domestic demand for hard wheat which is fuelled by the burgeoning robust bakery sector. So like I mentioned, the policies of the Indian government will be dependent upon how the grain procurement eventually happens as we go on, which we will all see when the procurement campaign is over.

At the same time how they can balance the domestic supplies within the market, keeping in mind the global scenarios. And also we are seeing that the frost event has already happened in Russia, and the Black Sea and Australia being a critical origins for India. So, all these pieces of puzzle will be put together, you know, before we can get to answer that question.

There are two things that have happened. One is that we have spoken about the government wheat procurement. Simultaneously, India had urged this year to all global and domestic traders to refrain from purchasing any new season wheat from the local farmers in an attempt to rebuild its depleted reserves. Against that, we just spoke about the burgeoning demand in the country.

What we cannot defy is the robust demand that is happening. India is on its way to a robust demand scenario and government will have to augment supplies into the local market for the sheer fact that in the domestic market, the global and the domestic traders have not really, keeping in mind the government directions, have refrained from entering into the private market to a big extent. So still keeping in mind the demand segment, I think eventually the supply and demand dynamics will have to play out.

In the last couple of months, we have seen lower US winter crop ratings, we have seen frost damage in Russia, and that has taken up the markets. As a general trend there has been a 7 -8 per cent increase in the global market over the last few weeks. The markets have been firm on the back of global supply moves within the limit losses.

As India has set ambitious ethanol blending targets of 15 and 20 per cent, maize has become a crucial raw material for ethanol production. The rabi corn crop in 2024 has decreased to about 10 mt from 12 mt in the previous year under the impact of erratic rainfall caused by the El Nino. We have seen that maize has continued to be a very promising crop for the country, especially with increase in distillery capacities and capabilities. The big question for the country to answer will be how the ethanol industry will play out given these ambitious blending targets. There are two things that has to happen. I think corn has to really stand up to the challenge of acting as a sustainable supplier to the ethanol industry apart from other promising sectors like starch and poultry. The increase in exports of DDGS (distillers dried grains with solubles) from the country, is causing a disruption with 2024 witnessing one of the highest export of DDGS from the country to Southeast Asia. So as far as import is concerned, the least developed countries (LDC) supply of corn into India is already mitigating some of the deficits that is there in the corn in certain regional parts of the country. Considering the rising demand for maize from ethanol, and the tight domestic supply, India will really at some point in time, need to augment or look at maize import to support the ethanol industry, which is playing a pivotal role in India’s energy strategy.

I think the key driver for corn again is how much corn will go into ethanol or how much corn the ethanol producers will use. We already are exporting less and surplus is available for the domestic market. If the ethanol industry continues to pull corn in comparison to other raw materials that they use and the trend continues, what is happening today, then there may be a demand and a supply that could change the dynamics for the country as we see today. I think it is pretty much balanced in the country because we are seeing a rabi corn harvest. We are seeing a very good Bihar crop coming. And then we will also have the UP corn crop coming in June 1st week. So we still have another half of the year to go. So it will really depend on how the rising demand plays out for maize from the ethanol producers, which is the new demand — I would put it this way for the country, the tight domestic supply is there because of the reduced production. And if demand surpasses, then I think the government policies will, on its own play out.

LDC is aligned with India’s vision for a sustainable, transparent and fair agriculture sector, we are proud to be part of this journey. LDC is implementing Project Samridhi in Rajasthan’s Banswara region, wherein maize is the main food crop for tribal communities. The average yields are only 1,200 kg per hectare in that region as compared to the national average of 2,400 kg. So, there is a significant opportunity to increase productivity in these tribal regions, which is where LDC plays a key role. So we cover about 1,400 farmers in about 30 villages. We cover about 465 acres of corn and 500 acres of wheat. We started this in this particular project apart from various other projects in September 2023. And some of the practices like seed replacement, along with seed treatment, with the right advisory on the kind of practices that are to be followed, are some of the key interventions that were taken place for yield enhancement. The outcome of Project Samridhi was that we saw an increase in the yield of corn by about 50 per cent, leading to a 50 per cent increase in the family income. So LDC played a key role, I think, by helping the farmers increase productivity both in wheat and corn, leading to higher incomes and better livelihoods. We will continue to run these projects to increase the scale of these projects so that we play a key role in building resilient farming economies. 

We all know that millet is a superfood, and they are nutritionally very rich and drought-tolerant varieties. With these benefits of millets, I think India has to sustain and grow more millets. We need to focus on the improvisation of the yields of millets because we know that there is limited landmass available for agriculture in India. I think there is a huge technological intervention required there, along with a push on high yielding varieties that can help sustain the potential growth in millets. So, as a country, we need a renewed focus on creating our brand name in millets. We hear about California almonds and various other brands worldwide. So, today, is Indian Millet a brand or do we need to create one? – I think that’s the question we need to answer.