India's Food Security at a Crossroads: Comfortable Public Stocks, Rising Farm Input Costs, and Soaring International Prices

Strategic Insights -

India's public stocks of rice and wheat, currently at comfortable levels, may provide some insulation against the recent surge in international food prices. However, the country's agricultural sector faces significant challenges due to the rising cost of farm inputs, such as diesel, fertilizers, and pesticides, which have increased alongside Brent crude and other international commodity prices.

Key Takeaways:

  • The UN Food and Agriculture Organization's (FAO) food price index averaged 159.3 points in March, up from 141.4 points in February, breaking a record set in February 2011.
  • The FAO index has exhibited huge volatility in the last two years, crashing to a four-year low of 91.1 points in May 2020 due to pandemic-induced lockdowns, and now surging due to supply chain disruptions caused by the Russia-Ukraine war.
  • The FAO's cereal and vegetable oil price indices hit record highs of 170.1 points and 248.6 points, respectively, in March, driven by Russia and Ukraine's share of 28.3%, 19.5%, 30.8%, and 78.3% in global exports of wheat, corn, barley, and sunflower oil, respectively.
  • India's comfortable public wheat and rice stocks may provide some insulation against soaring international food prices, but the rising cost of farm inputs poses significant challenges to the country's agricultural sector.
  • India's agricultural exports have grown by 19.9% and reached a historic high of $50.21 billion in 2021-22, but farmers are paying more for diesel, fertilizers, and crop protection chemicals, which may impact the upcoming kharif planting season.

Statistics:

  • UN Food and Agriculture Organization's (FAO) food price index - 159.3 points in March, up 17.5% from January.
  • FAO's cereal price index - 170.1 points in March, a record high.
  • FAO's vegetable oil price index - 248.6 points in March, a record high.
  • India's public wheat stock - way above the required minimum buffer norms.
  • India's agricultural exports - grew by 19.9% and reached a historic high of $50.21 billion in 2021-22.

Sources:

  • UN Food and Agriculture Organization (FAO)
  • Indian Express Online Media Services Pvt. Ltd.
  • Contify.com