Agriculture in India
- October 10, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Agriculture in India
Subject : Agriculture
- India’s agricultural production statistics sometimes present dissonances with consumption data.
- The household consumer expenditure data are more than a decade old, and an update is urgently needed.
- According to the National Statistical Office’s (NSO) household consumer expenditure (HCE) survey for 2011-12, the monthly per capita consumption of milk was 4.33 litres in rural India and 5.42 litres in urban India.
- Taking an average of 5 litres (5.15 kg; 1 litre of milk = 1.03 kg), this translates into an annual consumption of nearly 75 million tonnes (mt) for a population of 1,210.85 million as per the 2011 Census.
- If this milk is assumed to be 25% over and above that consumed by households, it adds up to about 94 mt — or a daily per capita availability of 212 gm.
What production data show-
- Going by Department of Animal Husbandry & Dairying (DAHD) statistics, India’s milk production in 2011-12 was127.9 mt with a daily per capita availability of 289 gm. These were 210mt and 427gm respectively in 2020-21.
- Unfortunately, there is no published HCE survey data after 2011-12.
- In all likelihood, the gap between the NSO’sconsumption based estimates and the DAHD’s production numbers would only have widened.
- Between 2013-14 and 2020-21, India’s milk production grew at an average 6.2% a year.
- But this isn’t reflected in the marketing of liquid milk by dairy cooperatives, which grew by just over 3% annually in volume terms during this period.
- In the private sector, growth in the average sales of 12 major dairy companies averaged 4.93% in nominal terms between 2014- 15 and 2020-21.
- After adjusting for an average wholesale price inflation of 3% for “dairy products” over this period, their real sales growth was slightly more than 1.9%.
Discrepancies are glaring-
- Clearly, the 6.2% growth in milk production based on official DAHD statistics does not seem to square up with the sales growth of organised dairies, averaging only 2-3% per year.
- Equally interesting is the per capita daily milk availability of 427 gm for 2020-21, which, by definition, is the average for India’s population — across regions, rich and poor, babies, the young, and the aged.
Demand is the key-
- The monthly per capita household consumption of all cereals in the 2011-12survey was assessed at 11.22 kg for rural India, and 9.28 kg for urban India.
- At an average of 10 kg, the annual household cereal consumption requirement for 1,400 million people today would be around 168 mt.
- Assuming 25% additional consumption in processed form (bread, biscuits, cakes, noodles,vermicelli, flakes, etc.), and another 25 mt of grain (mainly maize) for feedor starch, the totaly early demand would be around 235mt.
- As against this, cereal production from 2016-17 to 2020-21 has averaged 267 mt.
- If the Agriculture Ministry’s output estimates are accurate, the country is producing 30 mt-plus of surplus grain every year— partly borneout by overflowing rice and wheat stocks in government warehouses, atleast till quite recently.
- Discrepancies in production may be less for a commodity like sugar, where most of the cane is crushed by organised mills.
- Direct household consumption, at almost 1kg per capita per month, would work out to 16.8 mt for a population of 1,400 million.
- Indirect consumption may be another 50%, as sugar has more bulk users — including soft drink, confectionery makers— than milk or wheat.
- That takes the total domestic demand to 25-26mt, compared to an average production of 32 mt in the last five years.
- Sugar has been prone to overproduction, with rare exceptional years.
Need for a new HCS survey-
- Knowing what and how much Indians are consuming— which only a comprehensive nationwide HCE survey can reveal— is useful for analysis of demand and supply in other farm produce too.
- It helps in framing policies better, whether on fixation of minimum support prices and tariffs or on crop diversification.
- There is a more immediate reason why a new HCE survey is needed.
- The current consumer price index— used to calculate inflation and also for RBI’s interest rate actions— is based on the consumption basket from the 2011-12 HCE survey.
- That basket is perhaps outdated and not truly representative of the items, both food and non-food, being consumed by Indian households today. And it may, to that extent, not be useful for either agriculture or monetary policy.