From China to America, monumental forces are driving global demand for food, feed and renewable fuel. Faced with a worldwide credit crunch, demand will probably take a breather, but the long-term trends are still strong.

Golden Opportunity Or Empty Promises?
The world's second most populous country must modify its trade policy and embrace other changes if U.S. farmers hope to cash in on this huge potential market.
By Barb Baylor Anderson

At first glance the economic profile of India appears to be a market bonanza for America's farmers. India's 1.1 billion people live in the world's largest democracy and the second most populous nation after China.

India has the world's second fastest growing economy, thanks to its service and manufacturing sectors, and Asia's third largest Gross Domestic Product (GDP). But unlike China, India remains a moving target for agricultural export opportunities for U.S. farmers.

"Optimism in the food sector stems from a vibrant economy, increasing purchasing power and more urban consumers demanding an international shopping experience. Organized retail development can provide an impetus for U.S. agricultural products, processed and fresh foods," says Holly Higgins, minister-counselor of the U.S. Embassy Office of Agricultural Affairs in New Delhi.

"But marketing chains are highly fragmented, often with six to eight intermediaries, and dominated by small-scale enterprises," she explains. "Transportation infrastructure and the cold-chain (distribution) system are poor."

Large but limited ag. India's arable land mass is second only to the U.S., and its irrigated crop area is the world's largest. India is a major producer of wheat, rice, pulses, cotton, peanuts, fruits and vegetables. It also leads the world in number of cattle, is the top producer of milk and has one of the world's biggest and fastest growing poultry sectors.

"A market for feed grains definitely exists in India," says Chris Corry, senior director of international operations for the U.S. Grains Council (USGC).

Yet India does not, and perhaps cannot, produce enough food to meet its needs.

Crop yields are far below those in other countries because farmers don't use high-yielding varieties or modern crop inputs.

Only 20 to 30% of farmers use hybrid seed corn. Average crop yields from 2004 to 2007, as a percent of U.S. average yields, were about 37% for soybeans and 21% for corn. Milk yields are abysmal at just 12% of U.S. output.

"Increasing urbanization and other non-agriculture activities and limited land availability will likely limit soybean production at about 12 million metric tons," says Virgil Miedema, who served as program director for the American Soybean Association-International Marketing (ASA-IM) activities in India for 10 years.