Why India Is Next

U.S. corn may be shipping there within the next five years, predicts analyst

In the next 15 years India will surpass China as the world's most populous nation. And in less time than that, it could become a major buyer of U.S. corn, predicts Chris Corry, senior director of international operations at U.S. Grains Council.

While China steals the headlines, India will become a major customer for U.S. farmers as its middle class is set to boom and ratchet up their diets with more meat protein. It already has a population of 1.1 billion with annual corn production of just 20 million tons.

"Over a billion people can't survive on 20 million tons of corn," says Corry (pictured left at a recent stop in India). "We produce over 335 million tons of corn with a population a quarter the size of India.

"It's just a huge opportunity," he adds. "You have a country with 1.1 billion people right now, living in a land mass the size of what we have east of the Mississippi, and they don't have any more land they can bring into ag production."

There are three barriers to overcome before India becomes a U.S. grains customer, says Corry.

Right now, India won't grow or import genetically modified grain, even as its middle class is set to boom. On a national level, political leaders believe it's time to accept GM grain. While India is the world's oldest democracy, its constitution sends the primary authority for agriculture to the states. On a state level GM is not popular.

India is still a poor country, with a large segment of population that makes less than $2 a day. However, India is investing heavily in its infrastructure – building roads, dams and bridges, and doing so by implementing a work program guaranteeing employment for 180 days a year for adults who are the head of their household.

"This government work program is putting more money into the household," says Corry. "Couple that with India becoming a technology hub, which generates more income, and as more income comes in, the first thing people are going to spend that on is buying chicken or other meat to put with their rice dish.

Another barrier is religion. Then again, maybe not. Four-fifths of Indians are Hindu, which is a vegetarian religion, for lack of a better way to describe it.But that's a misconception, says Corrie.

"The fact is, several studies, even by the Indian government, say 70%-85% of the population is not religious," he says.

That in itself bodes well for increased meat, milk and egg demand.

India's yields lag other developing countries (see graph). India's ag policies do not promote better production. Because the states have all the power there is a hodge podge of 26 different ag policies. Laws are set up to help society, but not necessarily to improve agricultural production.

"The pressures of the population and the demands for food are going to force India to make changes in its policy," Corry predicts. "If left alone and no one pushing the policy button, you probably won't see India becoming a net importer of corn for at least seven years. But the Grains Council is going in there to influence policy decisions, to partner with local industry, and to address issues like biotech, to get the government to accept imports of biotech crops. By doing so India could move to an import position much quicker.

"It's a market that's going to open - the question is when, not if," concludes Corry.


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