Focus - Oilseeds & Pulses. Sanjeev Asthana

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1 India Growth & Demand, Agriculture Focus - Oilseeds & Pulses Sanjeev Asthana

2 Presentation Flow India Demand Side Equation Economy and Growth Momentum India Food & Agriculture Production Challenges Oilseeds Pulses Opportunity Scan

3 Diversity 29 States + 6 Union Territories Within each state, diversity in customs and traditions 22 official languages and 1600 minor languages and dialects 70% population lives in 600,000 + villages ( < 20,000 population) However, accounts for more than half of sale of many FMCG and Consumer Durable products

4 India is growing Source: Economist India will be the third largest economy by 2040 (Source: The Economist, IMF and Goldman Sachs) India s GDP at current prices is estimated to be US$ 1721 billion by 2015 (Source: Goldman Sachs)

5 Household Incomes Increasing Household incomes in India to cross Rs 150,000 by 2010

6 Incomes-Changing Profile Emerging niche tier 3 cities are richer than most tier 1 and 2 cities

7 Young Population (Source: UN) India has a demographic advantage with a large young population More than 85% population estimated aged less than 65 in 2050

8 Most Attractive Retail Market Source: AT Kearney Global Retail Development Index (GRDI) India s retail market has grown by 10% on average for past 5 years steadily rising to top position in GRDI

9 Consumer Market Growing India will be 5 th largest consumer market by 2025

10 Consumption Growing India s aggregate consumption will quadruple by 2025

11 Consumption Shifting Consumption is shifting from necessities to discretionary spending

12 Food is the Largest Category Food, Beverages and Tobacco will remain the largest category Estimated at Rs 17.3 trillion by 2025

13 Consumer Preferences Evolving From traditional to modernized traditional From globalize to Indianise From functional to lifestyle

14 Part 2 Indian Agriculture

15 Indian Agriculture Snapshot We are a large producer and consumer of food All 15 major climates of the World are present in India 52% of total land is cultivable as against world average of 11% India is a multi crop country unlike major ag economies Milk Largest Producer 91 Mn T Fisheries Marine: 2.7 Mn T Inland : 3.1 Mn T Cattle / buffaloes Largest in the world 283 million F & V #2 in the world 129 Mn T Fruits and Vegetables 41% of mango 23% of Banana 24 % of cashew nut 10% of onion Food Grains Tea 30% of cauliflower #2 in the world 36% of Green Peas. (218 Mn T) (0.85 Mn T) Largest Producer Meat and Poultry 53% of world s buffalo 17% of goat Fifth in world egg production Cereals Largest Producer of Pulses Second largest producer of Food grains Second largest producer of Sugarcane Sugarcane # 2 in the world (245 Mn T) Goat & Sheep 182 million Source: FAO / NHB / Department of Animal Husbandry

16 Supply-Demand Gap - Selected Foods Unit Million Metric Tonnes Source: ICRIER, Surabhi Mittal, Working Paper No-209 Emerging Food deficit, it especially pulses & oilseeds is a matter of grave concern Huge dependency in veg oils & Pulses on imports

17 Diversifying Agriculture High value agriculture taking root over traditional crops Further increase in big imports as a consequence

18 India Oilseeds Outlook India to import > 50 % of oil consumption 8 Myn Tons (est 09-10) Output 28 myn tons (3% Growth) major species Soy, Mustard, Peanut Demand for oilseeds to rise around 8 % Ever increasing SND Gap set to increase Deficit expected to widen 73% by 2020

19 Global Vs India in Oilseeds Scenario World Oilseeds Production million tonnes in India Share in World (in %) Oilseeds Output : 7.4 Oilmeal Production : 6.1 Vegoil Production : 5.8 Vegoil import : 10 Per Capita Consumption (Kgs) World : USA : India : (Source:- IVPA) Yield of Groundnut and Mustard India World Yield of Soybean and Sunflower India World : 1000 kg/ha : 1490 kg/ha and 1630 kg/ha : 1103 and 604 kg per hectare : 2277 kg/ha and 1225 kg/ha

20 Vegetable Oil Consumption 15 Million Tons +3.8% (0.5 mt) / / / / / / / / / /09 Oh Other Rapeseed Palm Soybean India vegetable oil consumption maintained despite high prices through reduced import duties Source: Keith Menzie, World Agricultural Outlook Board, October 15, 2008

21 Veg Oil Import in India Veg oil imports grew 79 % to 5.82 Myn Tons (08-09) Significantly higher imports est 8 Myn Tons (09-10) Palm products has nearly 4/5 th of import share Zero duty on imports are a major driver for imports

22 India Pulses Situation Largest Producer, Consumer & Importer of Pulses Stagnant Supply No Substantial Increase in Last 20 Years Highly Unorganized & Fragmented Industry Per Capital Availability declined from 27.3 kg/yr in to 12.7 kg/yr in current year.nutrition deficiency Major imports from Canada (40%), Myanmar (27%), Australia (9%) Demand set to rise from 18.3 MMT in to around 19.9 MMT

23 Global versus Indian Production - Pulses World Production of Pulses (2007) MMT Indian Production ( ) MMT Indian Production ( ) MMT India s Share in World Area 33 % India s share in world Production 24 % Total Consumption MMT Imports (2007) 226MMT 2.26

24 Production of Major Pulses in India Pigeon Pea Bengal Gram Black Gram Green Gram Lentil Source: Agriwatch

25 Big Concerns Today Stagnant production and higher demand of pulses and oilseeds Nutritional Security.Declining per capita consumption Food Inflation.and it s wide ramification Supply side equation in production Technology and methods out of step.low yields Low investments in agriculture..virtual collapse of infrastructure The sub par quality and reach of credit flow

26 Opportunity (1/2) Food Imports & Distribution Infrastructure Development Warehousing, Logistics Processing Investments..Rapid Consolidation in Veg Oils & Highly Fragmented Pulses Product Innovation & Packaging Agriculture Distribution, Infrastructure and Services

27 Opportunity (2/2) Liberal FDI Regime Huge Resource Allocation and Investments in Rural Development, Agriculture and Services at Farm level Momentum with Players putting Foot in the Door.. Eg Cargill, Bunge, Dreyfuss Australian companies have a strategic fit and necessary capital Intellectual t ll t l and financial i to play a major role

28 Thank You!