After years, India will import food
India is struggling in the agriculture sector and may soon end up being a net importer in many agricultural commodities. Climatic upheavals such as consistent droughts and untimely rains coupled with a lack of investment and surging demand are adversely affecting the agriculture sector. The weak growth in this sector is creating a slowdown in rural demand, affecting the whole economy.
Agriculture in India contributes to 13% of the GDP, and is a way of life in rural India which has more than two-thirds of India's population. Additionally, agriculture employs almost half of India's workforce.
India's state-run agriculture trading company PEC Ltd, awarded corn import tenders to South Korea's Daewoo. Accordingly, Daewoo will supply 2,50,000 tonnes of non-genetically modified corn at $192-194 per tonne. Notably, India had been a net exporter of corn to South East Asia, and this is the first time in 16 years that India has to import corn due to droughts and rising demand.
The growth rate of the agriculture sector has fallen to 2% in the first half of financial year 2015-16, as against 2.4% in the same period previous year.
The gap between demand and supply of pulses has been widening as the acreage has remained stagnant. India produced around 17 million tonnes against a demand of 23 million tonnes. Over the last decade, inflation in pulses was close to 9.4% against an overall inflation of 6.3%. Experts attribute this to low irrigated area(15%) and uncompetitive pulse-prices, leading to farmers prefering to grow cereals.
India's move to import corn has already pushed up prices, at a time when global commodity prices are low. Although it may benefit food exporting nations such as Brazil, US and Canada, India may end up becoming a major food importer similar to the situation in the 1960s. Though food imports may help keep prices low, it may hurt domestic farming adversely.
According to experts, urgent measures are required to boost irrigation and improve crop yield so as to revive the agriculture growth rate in the country. Experts assess that the newly launched Pradhan Mantri Fasal Bima Yojana (PMFBY) can help by significantly easing financial stresses on Indian farmers. Absence of urgent actions on the agricultural front may ultimately affect India's food security.
