I was invited to speak at the CII Partnership Summit held in Chennai at the session on New Trade Routes. I spoke on how Latin/South America is well-positioned as the world’s agriculture outsourcing hub, and can meet India’s needs for food security. See video below:
The recent price rise in food items which has caused heartache and wallet-ache for many Indian households is a phenemenon that will worsen in the years ahead. The near quadrupling in the price of toor dal (split pigeon pea) over the last 3 years is only a trailer in the coming horror movie of spiraling food inflation. With Indian incomes forecast to rise over the next decades, food consumption will skyrocket. On the edible oil front, the annual additional deficit of 350,000 to 450,000 tons projected by the Solvent Extractors Association of India is the equivalent of every Indian eating an additional samosa or bhajji every year; this is an exponential increase in demand. The same is the case with pulses and other commodities.
Forgetting the recent blame game for rapid food price in India – accusing politicians, traders, speculators, hoarders for this recent food increase, the main reason has been prolonged underinvestment on the supply side of food production, because Indian farming has been a sector with terrible incentives. Not surprisingly, 45% of Indian farmers want to quit farming. Add to that rapidly falling water tables in North India – India’s bread basket, and erratic monsoons from climate change you have the recipe for domestic food output falling short of demand, repeatedly in the future.
Latin America can meet India’s food needs, a place where agriculture commands the status of IT in India, with the best brains and fortunes in that sector. Indian companies should join US, European companies who have realized this, and participate in the agri value chain there – investing in contract farming to agroinputs to food processing to logistics.