GPC Coverage/
Usa Agricultural Outlook Forum (Aof) 2017

The annual USDA Agricultural Outlook Forum (AOF) was held this year during February 23-24, 2017 at Arlington, VA (USA).

In terms of agri-market outlook, here’s the broad picture that emerged:
• For three years in a row, world agricultural crop production rebounded from the disastrous 2012-13 season
• Global 2016-17 production and consumption of major crops – wheat, corn and soybean – are at record levels
• Large global ending stocks help moderate price volatility
• Production could be marginally lower in 2017-18 as compared with 2016-17
• In the US, corn (-4.3%), wheat (-8.3%) and feed grains (-7.1%) expected to lose acreage while soybean set to gain (5.5%)
• Prices are set to edge up in 2017-18

China’s imports are set to rise, boosted by soybean; continued growth in China’s soybean import expected.

Middleclass to grow strongly in the coming years in China, India USDA AOF 2017 had a session on India with the theme:

INDIA: Challenges and Opportunities - The outlook for India's agricultural policy and markets as well as the experiences of U.S. investors and exporters.

G. Chandrashekhar was invited to speak on India's Agricultural Transition: Is Demand Outpacing Policy? and discuss recent policy developments and the growing pressures on policymakers to reform agriculture and trade policies.
Thrust of Mr. Chandrashekhar’s presentation:

• Although India is one of world’s fastest growing significant economies and world’s third largest producer of food, yet it ranks low on Human Development Index and high on Global Hunger Index

• Share of agriculture in GDP is ~15%, but the pie is shared by >50% of workforce depending on farm for livelihood; Continued low farm growth rates mean ‘growth without equity’

• Newer challenges – land constraints, looming water shortage and climate change – will make the country’s food and nutrition security more vulnerable

• On the other hand, food demand is burgeoning with the combination of rising purchasing power + demographic pressure + current low per capita availability.

• Food demand growth is rapidly outpacing food supply growth and the trend is likely to continue over next 10-15 years, widening the supply-demand gap and raising the country’s import dependence

• There have been numerous policy initiatives of the government in last two years including identification, banking and mobile phone technologies for direct benefit transfer

• Doubling farmers’ income in 5 years; Soil Health Card; Crop Insurance Scheme; Agri Credit; Organic farming; Dairy initiatives; Irrigation program; National Agricultural Market; Contract farming law; and many more initiatives are designed to improve the terms of trade in favour of agriculture

• Yet, structural issues remain unaddressed – weak input delivery system; inadequate irrigation; lack of technology infusion; poor rural agri-infrastructure;

• So, demand will continue to outstrip policy response unless the structural issues are addressed with policy support, investment support and research support

• India’s agri-exports are set to gradually taper-off and agriimports are set to expand; containing food inflation is a priority for policymakers

• India needs ‘sustainable farm resurgence’ to ensure growth with equity, meet growing food demand, advance nutrition security and reduce rural distress; and realize the objective of inclusive growth

• The author has proposed a six point action plan or six mantras

• As agri sector is politically sensitive, there will be political and constitutional challenges in ensuring sustainable farm resurgence and implementing the author’s action plan

• Indian government (Centre) must take the State governments along; create a national consensus; invest heavily in addressing structural problems; and stay focused on outcomes.

The presentation was followed by a panel discussion on India’s agri policies, agri-trade and market access in which the author participated.