Friday, May 9, 2008

Unpalatable facts, at home and outside

Unpalatable facts, at home and outside
- Analyst says grain output hasn’t kept pace with income

New Delhi, May 4: Indian politicians may be chewing up George W. Bush on his comments on food habits but analysts have warned that the country needs to raise the productivity of its farms.
India’s population has risen from about a billion in 1999-2000 to about 1.130 billion in 2007-08, or by around 13 per cent.
However, foodgrain output has remained more or less stagnant, fluctuating between 200 and 220 million tonnes a year.
On the other hand, India’s per capita income has risen from Rs 11,535 in 1990-91 to Rs 16,172 in 2000-01 to 22,553 in 2006-07, a steady growth that the government feels has led to higher consumption of grain, cereals and meat.
“Even if consumption patterns had remained the same with the poor not demanding more food, we should have increased production by at least 13 per cent or roughly 27 million tonnes. We should have been adding about 7-8 million tonnes of grain every year since the mid-1990s,” said Devinder Sharma, an agricultural analyst.
If indeed India had a hand in pushing up global prices of grain, it was not because of imports. Last year, the country imported only 1.8 million tonnes of wheat.
But on the export front, India did play a role. Plagued by wheat crop failures in the past two years, the country banned export of rice as a precautionary measure. Several other rice exporting countries like Vietnam and Cambodia, too, banned exports.
This did directly impact global rice prices as countries like Bangladesh and several African nations were dependent on imports.
Wheat prices have been rising on the back of drought in Australia, which many blame on climate change. A poor winter wheat crop in southwest US as well as shifting the focus from food to bio-fuel crops also had an impact on the wheat output.
“The US too has contributed to the current global food crisis... it has allowed significant acres to be shifted from food to fuel,” said Sharma. Global production of ethanol, a bio-fuel, is about 40 billion litres and the US accounts for 46 per cent.
After the US, Australia is the second largest exporter of wheat. In a good year, it harvests up to 25 million tonnes of the grain. However, Australia has been in the grip of a prolonged drought. Despite early rains in 2007, crop forecasts were slashed by 22 per cent.
Global wheat stocks are at their lowest levels since 1982 and are expected to be around 110.4 million tonnes by May 31, according to the US Department of Agriculture.
Analysts at the Food and Agriculture Organisation estimate world wheat production in 2007-08 to be 602 million tonnes, significantly below expectations and just 1 per cent more than the year before.
In 2008-09, wheat farmers are expected to increase acreage to take advantage of the higher prices, raising hopes of a larger crop of 617 million tonnes.