Abstract
India has been one of the world's fastest growing economies over the past twenty years. That growth mainly reflects government reforms to support economic activity and increase the openness of the economy to global markets. It has brought with it rising household incomes and a gradual increase in the proportion of the population living in urban centres, trends that are projected to continue to 2050. As a result, consumption of agrifood products has been rising, andis projected to more than double between 2009 and 2050.
Indian consumers are not only demanding more food but a wider variety of foods. To meet increased demand the Indian agrifood sector needs to contend with the challenges of increasing its production and productivity growth. Some of the existing production challenges are being addressed by significant and ongoing investment in the sector, investment which nearly doubled productivity in the 2000s compared with the previous decade. The Indian Government's
continued commitment to agricultural investment will be required to further mitigate or overcome the persistent challenges of a deteriorating resource base, and rising costs of intermediate inputs and transport. On the consumer side, the significant projected increase in agrifood demand also poses challenges for India where, despite rising incomes, poverty continues to be widespread and access to food for many is dependent on existing agricultural policies. India's agricultural and food policies have three broad objectives: food security, food self-sufficiency and income support for farmers (USITC 2009). Among the many policies employed to meet these objectives are the subsidised prices of staple grains paid by consumers and the guaranteed minimum support prices (MSP) received by farmers for their grain. These policies insulate consumers and producers from market price movements. However, their financial cost to the Indian Government is significant and increasing.
With the population of India expected to increase from 1.2 billion in 2010 to about 1.6 billion in 2050, the nature of food demand will depend on a number of factors, including income growth, urbanisation and the policy direction taken by the Indian Government. Using an updated version of the ABARES agrifood model (Linehan et al. 2012a), this study analyses potential changes in agrifood consumption, production and trade to 2050 stemming from three hypothetical changes to existing agrifood policies. These hypothetical policy environments progressively move the existing policy settings for rice and wheat to ones that are more market oriented, reduce government expenditure and improve the sector's potential for growth. While these policy changes are not currently on the agenda of the Indian Government, they are not inconsistent with the overall approach to reform.
The agrifood model is an economic simulation model of global agricultural production, consumption and trade. In this report, agrifood products include primary agricultural products and lightly transformed agricultural products, such as flour and meat. Highly processed food items, such as beverages and packaged food, are not included.
Indian consumers are not only demanding more food but a wider variety of foods. To meet increased demand the Indian agrifood sector needs to contend with the challenges of increasing its production and productivity growth. Some of the existing production challenges are being addressed by significant and ongoing investment in the sector, investment which nearly doubled productivity in the 2000s compared with the previous decade. The Indian Government's
continued commitment to agricultural investment will be required to further mitigate or overcome the persistent challenges of a deteriorating resource base, and rising costs of intermediate inputs and transport. On the consumer side, the significant projected increase in agrifood demand also poses challenges for India where, despite rising incomes, poverty continues to be widespread and access to food for many is dependent on existing agricultural policies. India's agricultural and food policies have three broad objectives: food security, food self-sufficiency and income support for farmers (USITC 2009). Among the many policies employed to meet these objectives are the subsidised prices of staple grains paid by consumers and the guaranteed minimum support prices (MSP) received by farmers for their grain. These policies insulate consumers and producers from market price movements. However, their financial cost to the Indian Government is significant and increasing.
With the population of India expected to increase from 1.2 billion in 2010 to about 1.6 billion in 2050, the nature of food demand will depend on a number of factors, including income growth, urbanisation and the policy direction taken by the Indian Government. Using an updated version of the ABARES agrifood model (Linehan et al. 2012a), this study analyses potential changes in agrifood consumption, production and trade to 2050 stemming from three hypothetical changes to existing agrifood policies. These hypothetical policy environments progressively move the existing policy settings for rice and wheat to ones that are more market oriented, reduce government expenditure and improve the sector's potential for growth. While these policy changes are not currently on the agenda of the Indian Government, they are not inconsistent with the overall approach to reform.
The agrifood model is an economic simulation model of global agricultural production, consumption and trade. In this report, agrifood products include primary agricultural products and lightly transformed agricultural products, such as flour and meat. Highly processed food items, such as beverages and packaged food, are not included.
Original language | English |
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Type | Research by the Australian Bureau of Agricultural and Resource Economics and Sciences |
Number of pages | 59 |
Publication status | Published - Nov 2014 |
Externally published | Yes |
Publication series
Name | ABARES Research Technical Report |
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