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

"If India can improve soybean productivity by 25%, it may go beyond 15 million," he adds. "But small landholdings, poor agronomic practices and limited means to improve make it unlikely." Corn production faces similar constraints.

Mixed bag of market policy. India appears willing to import commodities to fill domestic production gaps, yet its import policies are unpredictable. India frequently uses tariff and non-tariff barriers to curb imports.

"India imports more food and feed to satisfy growing demand, which causes the government to lower tariffs and relax some unreasonable import requirements," says Higgins. 

"With the high rate of inflation caused by supply-side food shortages, the government has liberalized imports by lowering or eliminating the applied duty on various essential food items such as wheat, corn, pulses and edible oils."

But USGC's Corry adds India can change its policies quickly and has done so in the past. This makes future sales unpredictable. "They don't necessarily play by the rules," he says, adding that USGC has worked since 1993 to encourage more imports. "We don't know what will happen next," says Corry.

On the oilseed front, India has focused to expand domestic production by maintaining high import tariffs that keep domestic prices high. The U.S. has yet to capture a significant share of India's soybean oil imports due to lower Argentine and Brazilian prices and seasonal availability.

Soy for human consumption also offers a potential market for the U.S. India's government and private sector feed more than 120 million people a day under various food programs. The value of soy products used in those programs has increased from $60,000 in 1998 to almost $6 million in 2007. ASA's Miedema predicts sales could rise to $10 million by the end of 2010, as demand grows for more high-quality soy products.

Unknown opportunity. Whether the U.S. can consistently gain more of the market is anyone's guess. USDA's Economic Research Service reports that over the past four years, U.S. exports have risen roughly 20% per year in volume and value.

"Given that current U.S. and world wheat, corn and soybean prices are much higher than India's domestic prices, there is little grain and soybean trade," says Higgins. "India is a small corn exporter and net soy oil importer, mainly from Latin America. India exports soymeal, around 4 million tons, mostly to Asian countries and the Middle East."

While domestic meal is widely available for India's livestock and poultry sectors, little is used. Much of India's population does not eat meat for religious reasons, or is too poor to afford it, says Miedema.

"India's livestock sector is undergoing rapid change, however, as consumers look for better products and farmers improve efficiencies in poultry, aquaculture and milk," he says.

"This will trigger consolidation within the sector and increase demand for quality feed."

Corry says change is needed in India to grow the sale of U.S. farm products longer term. "We see promise, but not without cultural change," he adds.