India to face wheat shortage soon

India may become a wheat importing country with a lower than expected output forecast for this year at a time when domestic consumption has already outpaced production, a commodity expert said on Tuesday.

"India is likely to become a wheat importing nation by the end of this year," Cargill India president Hardeep Singh said at Confederation of Indian Industry annual session in New Delhi.

Wheat output has declined substantially this year from 72 million tonnes last year, he said, adding this was contrary to available output projections by various agencies which pegged output to be around 73-74 million tonnes for 2004-05.

The current high wheat prices along with low procurement by state-owned agencies, including Food Corporation of India, point to lower production during this year as compared to last year.

Terming India as a food deficit country along with China, Singh said the total deficit amounts to 44 million tonnes, which is equivalent to the total deficit in edible oils, pulses and sugar in the country.

Total shortfall included a five million tonnes deficit in edible oil, equivalent to 34 million tonnes of foodgrains, and two million tonnes in pulses, equivalent to seven million tonnes of foodgrain.

The country also has a three million tonne foodgrain equivalent shortfall in cotton and sugar, he said.

Attributing the main reason behind these shortfalls, Singh said, "Supply is not catching up with the demand fuelled by higher population growth rate".

Singh said India is still deficient in oilseeds despite the best efforts of government to diversify farm production from traditional crops like rice and wheat.

Production of rice has become a problem as it led to depletion of groundwater level in the major producing region -- North India, he added.

Singh said the time has come when investment in the farm sector should aim at higher productivity and abandoning subsidy regime.

Foodgrain subsidy went up to Rs 25,800 crore (Rs 258 billion) in 2004-05 from Rs 2,450 crore (Rs 24.5 billion) in 1990-91.

Investment has to be initiated for productivity, and not just for subsidy, he said adding, "we have to find out domestic farm sector's competitive advantages".

Singh said time has come when private sector should be allowed to manage supply of foodgrains.