November 12, 1999

India's Changing Diet Could Impact Cereal and Livestock Production

NEW DELHI—As Indians consume more and more livestock products like milk, meat, and eggs, the country's demand for cereal could soon outpace supply. This increase could significantly impact the world's cereal markets, as well as India's own trade deficit. But cereal shortages and trade imbalances can be avoided if India adopts appropriate agricultural policies, according to a report released today in New Delhi by the Washington, D.C.-based International Food Policy Research Institute, at a meeting held at the Indian Council of Agricultural Research.

In Prospects for India's Cereal Supply and Demand to 2020, authors G. S. Bhalla, Peter Hazell, and John Kerr present projections of cereal demand and supply balances from 1993 to 2020 under alternative scenarios for income growth, consumption behavior, and agricultural production strategies. Although India is currently self-sufficient in cereals, "all that could change as the country's population of 1 billion burgeons to 1.3 billion over the next two decades and consumers' eating habits change," said IFPRI's Peter Hazell.

In the report, the authors assume that India will realize an average annual growth rate of 3.7 percent per capita over the next two decades. As the economy grows, the country's currently low consumption of livestock products will increase significantly, causing demand for meat and eggs to rise to approximately 20 million tons by 2020. This is a projected fourfold increase over 1993's consumption level of 5 million tons. Demand for milk and milk products are projected to increase more than five times, from 52 million tons in 1993 to 289 million tons in 2020.

As demand for livestock products grows, Bhalla, Hazell, and Kerr predict that livestock producers will increase their use of cereal feeds to 50 million tons by 2020, more than 12 times the use in 1993. During the same period, total cereal demand is expected to reach 296 million tons–50 million tons for feed and 246 million tons for direct human consumption–while cereal production is projected to increase to only about 260 million tons. Under the most plausible production scenario, the authors predict that the cereal gap–the difference between supply and demand–will fall somewhere between 36 and 64 million tons.

The report portrays the likelihood of this supply-demand imbalance over the next two decades as an opportunity for India's decision-makers. It urges the Indian Government to complete the policy reforms begun in the early 1990s by further liberalizing domestic markets, foreign trade, and agro-industry. The authors say that these reforms and more investments in research and development and infrastructure–especially in rainfed areas–will improve trade for many farmers and encourage greater cereal and livestock production.

"With the right policies and investments, the government could reduce the cereal gaps to manageable proportions," said Hazell, "creating additional rural income and employment and reducing poverty."

Prospects For India's Cereal supply and Demand to 2020 can be ordered from IFPRI, 2033 K Street NW, Washington, DC, 20006-1002, USA, Tel: 1-202-862-5600; Fax: 1-202-467-4439; E-mail: ifpri@cgiar.org; Web: www.ifpri.org.