Global turbulence is testing the resilience of global food systems. By 2032, South Asia and Southeast Asia in particular, with India as the pacesetter, will be challenged by social change – because there are no blueprints given the eating habits there.
Since COVID-19 and the associated collapse of global supply chains, the war between Ukraine and Russia, two of the largest exporters of agricultural commodities, food prices have risen to unprecedented heights worldwide. In addition to uncertainties and fluctuations in energy, seeds and machinery and corona-related restrictions on labour mobility, these are mainly due to the increase in the price of fertilizers, explains the Food and Agriculture Organization (FAO) of the United Nations.
In its medium-term outlook up to 2032, the FAO nevertheless anticipates a rapid recovery in price pressure on the food markets. Provided there are no further disruptions, agricultural production is expected to increase by 1.1% annually. Growth will be concentrated primarily in low- and middle- income countries. This growth will be based on more effective use of existing agricultural land rather than an expansion of farmland. However, this requires investments that are not yet sufficient. The current environment with high interest rates makes it even more difficult to find this. Overall, global calorie intake is expected to increase by 1.3 percent annually over the next ten years – a slight slowdown compared to the past decade.
The poorest and middle-income countries are massively expanding their livestock populations, mainly in poultry. In contrast, livestock numbers are declining in the wealthy countries and China. At 1.3 percent annually, this sector will grow even more worldwide than agriculture. This is mainly due to better husbandry management and more nutritious feed.
A global problem is the loss of up to 400 billion US dollars worth of food – around 14% of food – along the value chain from harvest to retail. A further 17 percent is lost in the trade itself and among consumers. Reducing these losses would be a huge lever for stabilizing regional and international food systems.
South Asia and Southeast Asia’s demand for food will increase enormously
A third of the world’s population lives in the South and Southeast Asia region, of which more than half – 1.4 billion people – live in India. A huge surge in economic growth is expected here over the next few years, which will surpass all other regions of the world. Per capita incomes are currently still below the global average, but incomes are expected to rise rapidly and with them spending on higher quality food. Currently, the South and Southeast Asia region is still home to the largest number of undernourished people – ahead of sub-Saharan Africa.
Fresh fruit, vegetables and dairy products are too expensive for many households, although a recommended diet in Pakistan consists of 30 percent dairy products. The cost of such a sample menu has increased by 15 percent in just a few years. Transportation and storage in particular have made food prices more expensive. The governments in Delhi and Islamabad are systematically promoting horticulture in order to give people, especially in rural households, continued access to a healthy diet.
Prosperity and urbanization are changing eating habits
As urbanization progresses and incomes increase, people’s eating habits are also changing. People have to spend proportionally less money on food. On a global average, expenditure on food will probably fall to 17% of household income in 2032. This is mainly due to the developing region of South and Southeast Asia.
Calorie intake will remain relatively constant for many inhabitants of South and Southeast Asia. India’s calorie consumption will increase slightly to 2900 kilocalories per day by 2032, almost reaching the global average. Cereals in the form of wheat and rice still make up a large part of the Asian diet. Here, Asia’s consumption patterns will split in the course of development. While countries such as Indonesia and Vietnam continue to expand their rice consumption, Indians will also rely on wheat in addition to the dominant millets, lentils, beans and other pulses. Despite rising incomes, India’s sugar consumption per capita is not expected to increase significantly.
Milk determines the menu in India and Pakistan in 2032
Experience has shown that eating habits change with greater affluence in favor of animal and processed products. This is not the case in India and its neighboring states with their globally exceptional cuisine. A significant proportion of the region’s inhabitants live a vegetarian lifestyle – in stark contrast to their East Asian neighbors, who have rapidly gained in prosperity since the turn of the millennium and have relied heavily on meat.
This makes it difficult to predict their future eating habits. Individuals around the world currently consume an average of 12 kilograms of meat per year; Vietnam’s inhabitants currently eat an average of just seven kilograms, which could rise to around 52 kilograms by 2032 – mainly pork. In India, it is currently only 3.3 kilograms, mainly poultry. Forecasts of how this will affect overall demand must therefore be more than optimistic for the vegetarian giant.
Overall, the protein intake of Indians is far below the global average. Like neighboring Pakistan, they will probably compensate for this deficit as their income grows by consuming more milk than average. While the nation of billions plays practically no role in the consumption of meat and fish, the country dominates the growth in demand for milk – overwhelmingly from cows, and to a lesser extent from buffalo and camels. Even if imports of milk increase slightly as a result, both countries manage to maintain a high level of self-sufficiency. Together, India and Pakistan account for around half of the rapid growth in milk production. Overall, the region will increase its milk production by a third with around 23% more cows and 8% more yield per cow.
Agricultural production in India and South Asia
Despite the major expansion of milk production in Pakistan and India, the increase in feed consumption in the form of maize or protein feed is limited thanks to the low meat consumption. This is expected to increase by around a quarter by 2032.
With its independence in the 1960s and the experience of recurring famines, India saw the need to modernize the agricultural sector. This so-called Green Revolution began in the province of Punjab. There, reforms were introduced to facilitate access to higher quality, more durable seeds, financing and access to credit, wheat, more effective fertilizers and an irrigation infrastructure.
In South and Southeast Asia, only 0.2 hectares per person are currently cultivated compared to the global average of 0.6 hectares. With a growing population, the pressure on resources will continue to increase, making higher yields per hectare even more important for the region. However, the current crop rotation of wheat and rice is now leading to stagnating productivity. Once again, the country needs to reform itself. FAO forecasts seem optimistic that India can succeed in this.
South and Southeast Asia is now the largest producer of wheat, rice, vegetable oils, pulses and sugar. India alone produces 70 percent of the region’s wheat and 40 percent of its rice. This is due to more intensive land use, higher crop yields and more efficient crop rotation as well as more suitable varieties. The FAO expects high growth rates for wheat, maize and rice, with overall agricultural output set to increase by 20 percent. Only in Africa is a greater increase in productivity expected.
This agricultural production is also increasingly being processed into biofuels, which have become the dominant industrial development of agricultural products in recent years. In addition to traditional countries such as Brazil, Argentina and Colombia, India in particular is focusing on bioethanol. This is primarily obtained from sugar cane, maize, wheat and rice. Biodiesel from used cooking oils is particularly popular in Indonesia. Both countries are pushing this consumption through mandatory blending quotas of between 20 and 30 percent.
Other industrial uses include the materials industry for plastics, clothing, paint and the pharmaceutical industry, which is very important in India. The Southeast and South Asia region currently accounts for around a fifth of global biodiesel use – by 2032, this is expected to be a quarter.
44% of vegetable oils are produced in Malaysia and Indonesia. Despite the recent severe turmoil due to poor weather conditions, COVID-related restrictions on labor mobility and Indonesian export restrictions on palm oil, much of the growth in agricultural production is expected here. Ultimately, this will also reduce the need for fossil fuel imports from abroad and free up funds for other purposes. In Indonesia, too, the largest production gains are due to mechanization and the reactivation of old plantations, while the development of new plantations has been restricted for reasons of sustainability.
Important role of trade in agriculture, especially fertilizer
Trade plays a very special role within resilient food systems. Countries with agricultural surpluses sell them to those with deficits and thus supply the entire world population with sufficient food. They also offer farmers, agricultural workers and traders higher incomes and enable the exchange of agricultural means of production, as well as switching to other suppliers in the event of crop failures
India alone is one of the top five rice exporters in the world. Together with the other countries in the region, there is currently still a small plus in the export of agricultural commodities, but this will turn into a slight deficit by 2032. It will remain particularly dependent on imports of wheat, corn, soybeans and protein feed, where dependencies will deepen over the next decade. In contrast, India supplies the world primarily with rice (86% of the global market) and sugar (28%). Indonesia and Malaysia are among the largest traders of vegetable oils, as well as tubers, root vegetables, meat and around a quarter of all fish exports.
COVID-19, Russia’s war in Ukraine and, most recently, the Palestinian Hamas attack on Israel led to major disruptions to trade routes. Although global trade in the food sector proved to be more resilient than feared, there were still massive price increases. 20 countries additionally fueled these by imposing export restrictions on agricultural goods, thus driving up price uncertainties even further. This had a negative impact on food security in many countries. Even the recent strong economic upturn was unable to halt this trend reversal in the number of undernourished people.
Last but not least, energy and fertilizer prices were decisive factors in the recent price increases. Fertilizers provide valuable nutrients to maximize crop yields and increase their quality. The most important are based on phosphorus, potassium and nitrogen – Russia is a major exporter of the latter in particular and India is one of the largest importers: Russia, Belarus and Ukraine are all among India’s ten largest fertilizer suppliers. The FAO has calculated that every dollar increase in the price of fertilizer results in a 20 US cent increase in the price of agricultural products. As a result, in some regions of India almost 50 percent less rice and oilseeds, 40 percent less grain and 35 percent less pulses were sown than in the previous year.
However, thanks to lower prices, India’s fertilizer imports from Russia rose by over 500% within a year, replacing China as the most important fertilizer supplier. These have since been suspended again and new turbulence is looming due to the war between Israel and the Palestinian Hamas.
Israel’s port of Ashdod is a major transshipment center for potash fertilizer, but it is currently operating under severe restrictions – the stock markets have already reacted.
Global crises fuel local hunger
Numerous global crises, from pandemics to wars, have put pressure on local food systems and driven up food prices. Fertilizers, which are only exported by a few countries worldwide, are a particular element of this. Millions of people are once again affected by malnutrition.
Despite all the adversity, the FAO is forecasting a recovery in the medium term. India and the South Asian region in particular will fuel this recovery with their population growth, higher incomes and urban growth. However, due to the vegetarian lifestyle, the diet will be somewhat different than in previous regions with a sudden increase in prosperity. As in Pakistan, protein intake from milk is likely to replace meat and both countries will massively expand these sectors. Other growth drivers are the industrial use of agricultural raw materials for fuel and travel exports.
However, the countries still have massive reforms ahead of them to turn these optimistic forecasts into reality. The political climate also needs to calm down, but food markets have so far proved to be much more resilient than feared. However, global agriculture still faces one major challenge: coping with the consequences of climate change, which are becoming increasingly apparent.