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BW Businessworld

Rising Population, Supply Chain Disruptions: Can India Solve Global Food Scarcity?

India has been in the past an agrarian economy, but over the years, with rapid urbanisation and focus on services, the area under cultivation has been decreasing and even the yields have been falling

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In the middle of a major war in Europe, border disputes and internal conflicts in Asia, the global population on 15 November 2022 reached 8 billion amid falling growth rates around the globe. 

India is projected to surpass China as the world’s most populous country in 2023, according to World Population Prospects 2022 by the United Nations. 

In recent times, India with a population of over 1.4 billion has seen it all— from a crumbling economy due to the Covid-19 pandemic to the migrant crisis and farmers' protests on three controversial farm laws. 

The Russian war in Ukraine has hit almost every part of the world in the form of supply chain disruptions that lead to high inflation which resulted in monetary tightening. As if these developments were not enough economists are predicting a recession in the United States and Europe. 

In India, amid the monetary tightening by the Reserve Bank of India (RBI), consumer price index inflation for November decreased to an 11-month low of 5.88 per cent from 6.77 per cent in October, according to the data released by the Ministry of Statistics and Programme Implementation (MoSPI).

In this article, BW Businessworld decodes how India can be a trailblazer in adopting modern, sustainable farming practices thereby solving the global food shortage problem with increased quality and quantity of food production.

Currently, the global economy is at a key inflexion point given the spillover of war across the entire world leading to supply chain disruptions. Hence, the rise in the population poses a risk to food security, which is further exacerbated by climate change and food inflation. 

"India holds a key vantage point in this scenario, where our startup and innovation engine, coupled with our manufacturing prowess, are increasingly looked upon as bacon of stable leadership. A progressive production strategy can galvanise the agri-sector at this critical juncture, unlocking its long-known potential in its purest form," said Sourabh Bagla, Director, Upaj, Absolute. 

Interestingly, the rising population has been a big driver of consumer demand in India. Major international firms are venturing into India. Experts noted that setting up their base here validates the fact that India is going to be a big market for different products. 

"India is at the cusp of an inflexion point. Where its GDP per capita has reached closer to USD 2,300 levels. Countries that have reached there have seen tremendous growth in the subsequent decade. And hence the mantra, the next 10 years are going to be India’s. There are impending issues associated with that explosive growth- issues of strain on infrastructure and food security," said Arun Malhotra, Founding Partner and Portfolio Manager, CapGrow Capital Advisors. 

Coming back to agriculture, India has been in the past an agrarian economy, but over the years, with rapid urbanisation and focus on services, the area under cultivation has been decreasing and even the yields have been falling.

Hence, at present, India needs transformative new-age solutions that focus on transitioning towards sustainable agriculture practices addressing multiple issues such as climate change, crop losses, food security and sustainability. 

"It would require strengthening policy frameworks in key areas such as encouraging public-private partnerships, boosting exports to control the trade deficit, incentivizing farmers to implement cutting-edge farming practices, and so on," added Absolute's Bagla. 

In the global food economy, the food bill is rising by 10 per cent over the record levels of 2021, mainly on account of the higher world food prices. This does pose a risk to food security in low and low-middle-income countries that rely on imports. 

"India, which is dependent on labour for agri-produce, has very low yield and we have an opportunity to bridge the gap between the actual and potential yield through technology transfer so as to ensure food for all," said Akshay D'Souza, Chief of Growth and Insights, Bizom, a retail intelligence platform. 

Apart from that higher fertiliser and energy costs will lead to reduced use leading to reduced agricultural productivity and food availability and adding to the risk to food security. 

Domestic food price inflation remains high around the world. Information between July to October 2022 showed high inflation in almost all low-income and middle-income countries; 84.2 per cent of low-income countries and 93 per cent of lower-middle-income countries have seen inflation levels above 5 per cent, with many experiencing double-digit inflation. 

Although, India's Wholesale Price Index (WPI) inflation declined to a 21-month low of 5.85 per cent in November, as per the data released by the central government. 

In a major development, India in May restricted the export of wheat to stock up for domestic availability along with a ban on the export of broken rice. The Modi government, however, announced some relaxation and said that whatever wheat consignments have been handed over to customs for examination and registered into their systems on or before May 13 would be allowed for export.

"Indian rice and wheat export restrictions are ensuring greater availability of food in the local markets, especially to serve the economically weaker sections of society and this is definitely playing its part to improve food security in view of the global challenge of rising food inflation across the world. To that extent it is to be seen in the perspective of domestic food security rather than a price-altering measure," said D'Souza.  

D'Souza added that for India, increased food production, augmentation of grain reserves, maintenance of a public distribution system (PDS) and generation of employment have helped provide Food security. Over time, with a population of our size, more than physical access, we have to work on greater economic access to food as a key solution to our population and poverty.  

Meanwhile, experts told BW Businessworld that India has always been at the forefront of agriculture commodities, especially wheat and rice, and with a contribution close to 15 per cent of the GDP while deploying more than 40 per cent of the population, this ratio will inch upwards, as India bring in more technology to reduce manpower deployment and at the same time increasing production and contribution to India’s GDP. 

There is tremendous potential that remains to be captured in agriculture in the coming years, experts noted.