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Corn+Soybean Digest

Will India follow China’s path?

Think different Cheap Indian corn currently competes with U.S. exports, especially in Southeast Asia, where India also has a transportation advantage. Only one out of four Indians is vegetarian. With economic growth, Indian consumers are demanding more poultry and dairy products. India’s poultry industry is growing by 12-15% annually, and the dairy sector is expected to expand 13-15% per year through 2020. As in China, domestic demand is expected to outpace corn production and make India a net corn exporter by 2018-20.

A consistent corn supplier in recent years, India has captured some 45% of the Southeast Asian corn export market. Like Chinese exports a decade ago, India offers the cheapest corn in the region (reflecting quality issues) and is well located to provide short-term delivery to countries like Malaysia and Indonesia.

India’s ability to supply those exports reflects a long-term increase in harvested acreage, yield gains from increased hybrid seed use, and expanded production that, so far, has kept up with growing domestic demand.

That export status may be due for a change, however, according to Adel Yusupov, regional director for the U.S. Grains Council (USGC).

“More money to spend and a growing taste for meat are transforming India’s appetite for feed grains,” says Yusupov. “Comparisons to China are not accidental. I believe that India will follow in the footsteps of China and become a net importer of feed grains.”

With a population poised to overtake China and the youngest median age in Asia, India is becoming the biggest consumer market in the world.

“At least 74% of the Indian population is non-vegetarian,” says Amit Sachdev, the USGC’s representative in India. “More people are eating meat [primarily chicken] and eggs. The growth of the poultry industry will be the trigger for imports.”

The poultry sector has been growing by 12% to 15% annually, according to a USDA Foreign Agricultural Service report.  Demand for dairy products is also huge and on a growth curve expected to average 13% to 15% annually until 2020.

Other sectors of corn use -- notably starch, food uses, packaging, and textiles -- could also grow much faster, according to Yusupov: “The effect on global food markets will be profound.”

How soon Yusupov’s predictions come true will depend in part on whether India continues to expand corn production.

As yet, only 60% of India’s acres benefit from hybrid seed. Better genetics would improve yields, and adoption of genetically modified hybrids could mean even more gains.  While not permitted yet for food production, biotech seed is used on 96% of India’s cotton acres, and Sachdev believes Indian farmers see the technology as beneficial.

Other challenges that face India include high input costs, low technology investment due to small farms, and labor challenges.

While 65% of Indians are engaged in agriculture, a government guarantee of work in rural areas has reduced mass migration and made it harder to find farm workers while increasing the cost of labor. 

India’s government has plans to diversify from rice to corn production as part of a self-sufficiency effort, but a new food security law commits the government to guarantee cheap grain to 67% of the population. That will create more pressure to cultivate wheat and rice, rather than corn, according to Sachdev.

“India could be a net corn importer by 2018-20,” he concludes. 

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