Kunal Bose 

The UN Food & Agriculture Organization (FAO), which month on month tracks the global cereal supply and demand situation, says in its March report that global trade in all cereals in 2017/18 will be close to 405mt (million tonnes). This, while it stands slightly better than the earlier forecast, is nearly 1mt or 0.2% below the 2016/17 level. It attributes the revision mostly to an increase in global maize trade, which more than offsets lower wheat shipments to India, Japan and Vietnam. As for wheat, the US Department of Agriculture (USDA) says, global wheat exports in 2017/18 are to advance to 184.41mt from 182.24mt in 2016/17. This is mainly on account of Russia whose exports are now seen to be up 35% at 37.5mt from last year’s record 27.81mt.

Surge in Russian exports more than makes good the shortfall in global wheat supply from Australia and the European Union amounting to 4.561mt and 1mt, respectively. While shipments from Argentina and Canada are up, the US wheat exports are set to fall to 24.50mt from 29.49mt in 2016/17 on “reduced price competitiveness in some international markets,” says USDA. As a result of export contraction, the US end season stock of wheat will be up by an identical amount.

For the second year in a row, world wheat production at 744mt in 2018 will experience a fall, according to FAO’s first forecast for the cereal. Whatever happens, the global output is still expected to remain above average. The projected decline in world production will be mostly on account of the EU and the Russian Federation both standing to suffer fall in yields from 2017 highs. FAO further says an anticipated recovery in Australian wheat production will be check on a larger output decline at the global level. Chinese wheat output is estimated 1% higher at 129.774mt against 128.845mt in the previous year. India is likely to see a minor fall in wheat production at 97.11mt from last year’s 98.51mt due to diversion of land to pulses.

In the meantime, the world is closing on a fractionally higher 2017/18 rice production at 486.3mt, thanks largely to India benefiting from a normal monsoon and improved availability of inputs such as seeds and fertilizers stepping up output to 111.01mt from the previous year’s record 110.15mt. According to the Indian govern- ment’s second advance estimate of farm production the summer-monsoon rice crop in 2017/18 agricultural year (July to June) is taken at 96.48mt and the winter crop at 14.53mt. China is seeing a 1% growth in rice output to 208.560mt. The upsurge in fair weather-driven Indian production will more than offset the setback in Sri Lankan output where worryingly the rice crop has remained below average for the second consecutive year.

The global trade in the commodity will be 47.3mt higher than earlier forecast of 46mt aided by bigger exports from India with its great surplus to go by. Expectations remain that smaller purchases by Bangladesh, Senegal and Sri Lanka would more than offset larger deliveries to Indonesia, Nigeria and the Philippines. Expect world-ending rice stocks to become the second highest on record at 143.1mt with majority of that held in China. International trade in all cereals in 2017/18 is forecast to approach 405mt, marginally up on the earlier estimate but still almost below the earlier year’s level. The revision upward is mostly due to an increase in global maize trade, more than offsetting lower wheat shipments to India, Japan and Vietnam.

China’s likely total cereal imports in 2017/18 at 24.1mt will mark a third decline since the record achieved in 2014/15. Even then, imports will remain close to five-year average. Chinese wheat imports are forecast to fall by close to 20% from last year’s high level to 3.5mt. This happened 

because the country was sitting on high stocks built from successive bumper harvests. Imports of feed cereals are expected to return to average, after the exceptional high levels in 2014/15 and 2015/16, due to expectations of the much larger use of domestic maize for feed and industrial processing, says FAO. This is being occasioned by Beijing’s decision to pare domestic inventories. Rice imports by China are expected to remain close to the five-year average of 5.8mt, given persistently more profitable prices in other major origins in Asia compared with local quotations.

According to USDA, the global coarse grain production forecast for 2017/18 remains virtually unchanged at 1.322bn tonnes. It further says coarse grain outlook relates to “nearly unchanged production, increased use, lower trade and greater stocks relative to last month.” Production outlook for coarse grain in the southern hemisphere points to a likely decrease mostly due to contraction in plantings and unfavourable weather in South America and southern Africa. Brazilian corn production is down. For Argentina it is a double whammy — its late planted corn stands to suffer yield loss due to heat and dryness during February and March while the early planted corn yield was lower than expected.

The US corn is positioned for larger exports and increased crushing to make ethanol, a non-fossil energy source. The country’s corn exports are raised 175m bushels to 2.225bn bushels. This shows global price competitiveness of US corn and reduced exports by Argentina. China, which suffered a 2% fall in maize production in 2017 at 216mt from 219.554mt in 2016 will see its imports climb, including from the US with which it is now engaged in trade skirmishes. Maize production fell two years in a row and the 2017 output sank below the 2012/16 average of 217mt. Reuters reported quoting an analyst that China could end up importing 20mt of corn a year, more than six times the current level to meet a switch to greater use of ethanol as energy source. USDA estimates China will end up importing 3mt of corn during 2017/18 crop year, up from 2.4mt in 2016/17.

The Indian Agriculture Ministry says the country’s production of coarse cereals, including maize, jowar (sorghum), bajra (pearl millet) and barley will be a record 45.42mt against last year’s 43.77mt. Maize output is an all-time high at 27.14mt. In order to have a greater degree of self- reliance in pulses, a major source of protein for the common Indian, New Delhi is using all the tools at its disposal, particularly attractive minimum support prices and improved supply of high quality seeds to incentivize farming of the crop on an increasingly bigger scale. The results are already there. The country is harvesting a record 23.95mt of pulses in 2017/18, up from 23.13mt in the previous year.

However, the country’s concern point remains oilseeds where production is forecast to fall to 29.88mt from 31.28mt. India’s big worry this sugar season (October to September) is now to protect the interest of farmers and save industry sickness in the face of record production of around 30mt against 20.3mt in 2016/17. As major falls in sugar prices, which for the last couple of months and a half do not even cover the cost of sugarcane, are inflicting big losses on crushing factories instances of their failing to pay for the cane bills are growing fast. Farmers are seething in anger. But factories just don’t have the money to clear cane bills.

India needs 25mt of sugar for domestic use. That leaves it with seasonal surplus of 5mt plus the current season opened with stocks of a nearly similar amount. Export India must despite the low world prices. Success in selling sugar in the world market will, however, depend on what kind of financial help New Delhi will be ready to provide to enable factories to participate in exports. Sugar industry official and farm expert Om Prakash Dhanuka says “crisis of the present kind will continue to recur at regular interval till the government ordains linkage of sugarcane and sugar prices. What I’m saying has been recommended by the Rangaraj committee.”

Talking about outlook for the farm sector in general Dhanuka says: “We have to wait till the fourth and final estimate is out in August to know precisely the year’s production of each major crop. The fact remains whether it is rice, wheat or oilseeds, India has much catch up to do to raise productivity by way of reforming farm practices, expanding irrigation command area, creating condition for extensive use of tractors and harvesters through consoli- dation of land holdings and introducing a robust farm extension programme.” UN and FAO statistics show that against the cereal yield of over 7,000kg a hectare in the US and 5,800kg a hectare in China, Indian productivity is around 3,000kg a hectare. Incidentally, Bangladesh, which at the time of declaration of its Independence in March 1971 was seen as a basket case, has a cereal productivity of over 4,100kg a hectare.

Giving a few examples to illustrate the point of the country being a laggard in making better use of land resource, Dhanuka says referring to the US Geological Survey 2017 that India has 179.8m hectares of cropland area, which is 9.6% of the global total. “With such a big share of global cropland, India has tremendous potential to make farming a profitable and sustainable economic activity. Unfortunately, even after 71 years of Independence, the percentage of irrigated land to total cropland is still 34.5. The country remaining heavily dependent on rains for growing crops, it is no surprise that annual farm growth rate in recent times fluctuated between 5.6% in 2013-14 and minus 0.2% in the following year. The irrigation command area needs expansion at a rapid rate,” says Dhanuka.

Citing a United Nations report, Dhanuka says the planet could have as many as 9.7bn mouths to feed by 2050. “You factor in changing diets in the two most populous countries on earth with the per capita income rising and that will require of us to lift global food output by 70 per cent from 2009 levels. This is what FAO observes,” according to Dhanuka. Besides raising farm efficiency by deploying technology on a much bigger scale, countries such as China and India will have to see that instead of further land loss because of degradation by way of pollution, serious attempts are made to restore heath to land.

Whether it is India or China, the farm sector remains vulnerable to production disturbances due to climate change in the form of increased variability in temperature and occurrences of extreme weather events such as heavy rains, floods and drought all leading to crop damages. Disturbances to agro-ecosystems resulting from climate change have led scientists and agronomists to turn ambitious in developing climate smart agriculture (CSA). Still evolving, CSA has three defined objectives: First, sustainably increase agricultural productivity and incomes. Second, make crop resilient to climate change. Third, tighten greenhouse gas emissions. Dhanuka sees in CSA a right way forward.