Less cereals in India's food bowl

Plotted on a graph, the inflation worms looked like trails left behind by a missile, as food prices spiked soon after India's 2009 drought. Rates of some commonly consumed items were defying usual trends by not falling back to previous levels even with normal rains. Zia Haq reports. Food facts: per capita food expenditure

Plotted on a graph, the inflation worms looked like trails left behind by a missile, as food prices spiked soon after India's 2009 drought. Rates of some commonly consumed items were defying usual trends by not falling back to previous levels even with normal rains. The price spiral hung over Subir Gokarn's head like a riddle.

HT Image

When Gokarn, the former Reserve Bank's deputy governor, broke down the food inflation data, something stood out. While prices of most other articles were somewhat reversing or at least stabilising, inflation remained entrenched in a clutch of protein-rich items, such as pulses, milk, eggs, fish and meat.

One of the reasons why Indians are paying the highest prices in a decade for some items has to do with their changed diets. Consumption patterns are changing at a faster clip than previously thought, suggesting a shift towards so-called high-value foods, a new report by consulting firm McKinsey & Company and the Confederation of Indian Industry states.

As incomes rise, demand tends to shift more towards protein-rich items. In the middle-class food basket, spending on fruits and vegetable consumption would rise to 25% by 2030 from about 21% in 2010, the study states. Expenditure on cereals is expected to slide to 16% from 28%.

Farmers have surprisingly responded to this shift, prompting a corresponding change in production patterns. "Take for instance, a 5% increase in high-value crops in terms of total rupee value," McKinsey's Barnik Chitran Maitra said.

However, average yields aren't rising fast enough to match demand due to poor technology adoption and weak industry-farmer partnerships, according to the CII's farm head Rakesh Bharati Mittal.