However, we believe that the effects of abundant supply in 2010/11 for many key crops such as sugar and rice should eventually weigh down on prices and hence inflation. In the longer term, although the government has laid down plans to improve efficiencies in the agricultural sector, we are not confident that these efforts will translate into significant gains in production across the board given the unconsolidated nature of the industry and also poor infrastructure. For example, we see the country becoming a net importer of poultry by 2014/15.
Key Trends
Rice production growth to 2014/15: 52.0% to 132.9mn tonnes. This increase will come from increased domestic demand as India's population continues to swell, as well as better access to pesticides and fertilisers, which will improve crop yields.
Sugar production growth to 2014/15: 105.9% to 36.7mn tonne. This increase will be boosted by an increase in consumption of soft drinks and confectionery items which will be dependent on the expansion of incomes and wages.
Poultry consumption growth to 2014/15: 30.0% to 34.4mn tonnes. With a growing middle class and rising incomes, we expect demand growth for poultry meat to outperform over our forecast period. Given the rapid expansion in demand for the meat, India will become a net importer of the poultry by 2014/15.
Corn consumption growth to 2015: 30% to 22.4mn tonnes. Consumption growth will be driven by increasing demand for feed from the livestock sector as rising incomes allow Indian consumers to eat more meat, especially poultry but also buffalo meat, for which consumption is also increasing.
2011 Real GDP Growth: 8.1% (down from 8.4% in 2010; predicted to average 8.1% from 2011 until 2015).
Consumer Price Inflation: 10.0% average in 2011 (down from 12.4% y-o-y average in 2010). Industry Developments
After being delayed numerous times, the government finally lifted its ban on sugar exports in mid- November 2010. That said, the officially allowed figure of 500,000 tonnes have so far underwhelmed expectations of as much as 3.5mn tonnes of sugar exports in 2011, given the bumper sugar crop. BMI is confident, however, that the government will raise the current 500,000-tonne export quota in the near future. Our view is boosted by certain measures recently imposed on the industry such as the restart of sugar futures trading on Indian domestic commodity exchanges after a 19-month freeze, as well as the reinstatement of a 60% import tax on sugar.
India's dairy market size in value terms, including the organised and unorganised sector, is estimated at US$47.6bn and has been growing at nearly 7.5% annually. Presently, the country is still able to largely meet its domestic demand and is only marginally dependent on dairy imports. However, given the strong rate of consumption growth, which has been led in part by rising incomes, demand will soon outstrip supply, very likely causing India to become more dependent on imports. Already, we forecast the butter production balance to run into deficit in 2011/12.
India's premium basmati rice exports have been facing mounting difficulties in traditionally strong export markets in the Middle East. Iran's Trade Promotion Organisation recently withdrew licences for rice imports, with the intention of improving domestic rice quality and taming rising consumer prices. Saudi Arabia has also removed rice import subsidies in the hopes of reducing reliance on rice imports from India, which currently supplies more than 70% of the country's market. Given that 60% of Indian basmati rice is shipped to these two countries, we are concerned that unless these measures are temporary -India might lose its significant market share in these major rice export partners in the long run.
Contents
Executive Summary
SWOT Analysis
India Agricultural SWOT
India Political SWOT
India Economic SWOT
India Business Environment SWOT
Industry Forecast Scenario
India Soybean Outlook
Table: India – Soybean Production, Consumption & Trade
Table: India – Soybean Production, Consumption & Trade
India Grains Outlook
Table: India – Wheat Production, Consumption & Trade
Table: India – Corn Production, Consumption & Trade
Table: India – Sorghum Production, Consumption & Trade
Table: India – Wheat Production, Consumption & Trade
Table: India – Corn Production, Consumption & Trade
Table: India – Sorghum Production, Consumption & Trade
India Dairy Outlook
Table: India – Milk Production, Consumption & Trade
Table: India – Butter Production, Consumption & Trade
Table: India – Milk Production & Consumption
Table: India – Butter Production, Consumption & Trade
India Sugar Outlook
Table: India – Sugar Production, Consumption & Trade
Table: India – Sugar Production, Consumption & Trade
India Livestock Outlook
Table: India – Beef & Veal Production, Consumption & Trade
Table: India – Poultry Production, Consumption & Trade
Table: India – Beef & Veal Production, Consumption & Trade
Table: India – Poultry Production, Consumption & Trade
India Rice Outlook
Table: India – Rice Production, Consumption & Trade
Table: India – Rice Production, Consumption & Trade
India Coffee Outlook
Table: India – Coffee Production & Consumption
Table: India – Coffee Production & Consumption
Competitive Landscape
Table: Agricultural Commodity Producers & Traders
Table: Agribusiness Suppliers
Table: Integrated Agricultural Producers
Commodity Price Analysis
Monthly Softs Update
Cocoa
Table: Cocoa
Coffee
Table: Coffee
Milk
Table: Milk
Sugar
Table: Sugar
Grains Update
Corn
Table: Corn
Rice
Table: Rice
Soybean
Table: Soybean
Wheat
Table: Wheat
Downstream Supply Chain Analysis
Industry Forecast Scenario
Consumer Outlook
Food
Food Consumption
Table: Food Consumption Indicators - Historical Data & Forecasts
Confectionery
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts
Processed Food
Table: Processed Food Industry Indicators - Historical Data & Forecasts
Trade
Table: India Food & Drink Trade Indicators - Historical Data & Forecasts
Mass Grocery Retail
Table: India MGR Sales by Format - Historical Data & Forecasts
Table: Grocery Retail Sales by Format -- Historical Data & Forecasts
Macroeconomic Forecast
Industry Trend Analysis
Fodder-Deficiency Poses Downside Risks To Livestock Production
Table: India – Poultry Production, Consumption & Trade
Table: India – Beef & Veal Production, Consumption & Trade
Strong Cotton Arrivals To Weigh on Prices In Medium Term
Vegetable Oil Imports Rise Despite Increased Oilseed Output for 2009/10
BMI Forecast Modelling
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