June 27, 2007

India: Wheat slump threatens food security; corn surges on growing poultry

The languishing wheat production in India may not be able to keep pace with the increasing demand as wheat production projections are reduced to 74 million tonnes this year from 76 million tonnes it pegged in 1999-2000, according to the US Department of Agriculture (USDA). 

The reduced production has prompted the Indian government to resort to imports this year.

The Indian Agricultural Research Institute has pointed several factors such as stagnating wheat production, changes in agriculture input policy and globalization could endanger India's high wheat production targets.  Shifts in cropping patterns from grains to other profitable cash crop options and increased industrialization in the traditional wheat bowls of India are cited as other reasons contributing to decreased yield potential.  Wheat acreage has also declined from 28 million hectares in 1998-99 to 26 million hectares last year. 

On the other hand, farmers are seen to increase its acreage for corn this year due to better price and the growing demand from poultry. The USDA says corn demand from the poultry sector -- which growth is perceived from 10 to 12 percent this year -- is projected to jump to 6 million tonnes this year from 5.5 million tonnes a year ago.  In the last two years, the average price has also been higher by around US$31 per tonne.  The government is supposed to have supported increased corn area by raising the minimum support price for corn by around US$19 per tonne.