By 2050, India could have more people than China — 1.6 billion, in fact. During the same time, India could become the third largest economy behind the United States and China.
That means all of those people with increasing buying power will want to eat more protein. That’s potentially good news for Illinois soybean producers.
At a time when many of us are faced with prevented plantings, late plantings and trade war market pressure, the importance of growing and exploring new markets is more important to our profitability than ever before.
India is one of those vital markets where ISA sees potential. During a recent market study trip to India, Illinois Soybean Association leaders started building relationships with key soybean industry stakeholders there.
We had the opportunity to see and learn about India’s market promise. Our impression is that India is where China was a decade ago — buildings are under construction, optimism exists about economic growth and there is opportunity for more business.
It became clear the Indian market should be a target for Illinois soybean producers. This was validated again last month when a delegation from the Securities and Exchange Board of India, including the regulator of the commodities derivatives market in India, reached out to ISA to learn more about U.S. markets and storage.
ISA hosted the delegation’s visit to Illinois to continue fostering relationships and to work toward opening India’s markets to our soybeans.
Consider these statistics about Indian market potential:
- India’s economy accounts for about 7% of world gross domestic product. By 2050, that could double to 15%.
- About 46% of the population is below age 25. Their incomes are rising, and their demand for export products continues to increase.
- Based on per capita GDP growth, India’s per capita food expenditures are expected to increase from $311 to $715 between 2017 and 2035, putting them close to levels in China today. Key proteins, such as meat, eggs, fish and seafood, as well as a greater portion of the Indian population’s food expenditures, will go to food eaten away from home.
While India has the second largest arable land total and is the second largest producer of wheat and rice, agriculture is dominated by millions of small, marginal farmers. Crop production is at risk from weather, soil degradation, pest attacks and processing and food storage losses.
India appears to be largely self-sufficient for meat and protein meal production short-term, but the rate of projected growth will produce shortages long-term.
Deloitte Touché Tohmatsu India LLP reports that from 2014 to 2017, global production of soybeans grew at a compound annual growth rate of 5%, whereas India’s production declined at a CAGR of 1%. Global soybean meal exports increased at a CAGR of 0.9%, while Indian exports increased 7%.
India is the third largest global edible oils consumer, and that could increase between 16.6 and 32.8 million metric tons between 2017 and 2035. Soybean oil demand alone could increase to 12.3 million metric tons, or 280% of 2017 U.S. consumption.
Clearly, as India is unable to supply all of the food they need domestically into the future, analysts anticipate India will respond with increased meat imports, increased soybean meal imports and more soybean crush.
The Indian government has made agriculture a key focus with this in mind, increasing its budget allocations for agriculture by 24% from 2016 to 2017.
We recognize the challenges producers face, and exploring a vast market like India with an expanding and hungry population is one way ISA can help. We will continue to nurture relationships with key stakeholders in India to expand sales opportunities for Illinois soybean producers.
For more information about India and other key worldwide markets, read the July issue of Soy Perspectives online at www.ilsoy.org/magazine/soy-perspectives-july-2019.