India is losing self-sufficiency in food produces'

Written by Banking Bureau | Mumbai, Jul 4 | Updated: Jul 6 2008, 04:05am hrs
India is slowly losing out on self-sufficiency in food produces, says a report titled Asian Food and Rural Income released by Credit Suisse. This factor makes the domestic procurement prices to become more responsive to the global food situation.

The report states that Indian demand not only plays a huge role in global grain prices, but global grain prices, in turn, are causing varying political, fiscal and consumer price pressures in Indiasomething that was not happening in the past few decades. The situation is highly positive for Indian farmers as free-market forces are causing the state-determined minimum procurement prices of key crops to rise by over an unprecedented 30% year-on-year basis. Even if the cycle reverses globally, Indian farm-gate prices may not because of politics as food grain procurement prices have never come down in the past.

Credit Suisse expects food demand to grow at 3-3.5% per annum in India where population is expected to grow at 1.5% per annum in the next ten years. Thus, countrys domestic food supply is growing at a far slower rate, threatening Indias self sufficiency in a critical economic segment. Historically, India is a cereal dependent nation but meat consumption too is rising rapidly. The consumption of meat in the country has more than doubled from less than 0.8 kilograms per person at the turn of the century to 2 kilogram currently. Consumption of other high value item such as fruits and vegetables, milk and dairy products and sweeteners like sugar are

on the rise.

Factors like rising income levels of people, strong economic growth etc are swiftly changing the food consumption landscape of India.