The Market Potential for Hemp Grain’s Approval in India
By Eric Singular, Director, Hemp Business Journal
The Food Safety and Security Authority of India (FSSAI) last month approved hemp seeds, hemp seed oil, and seed-based flour for human consumption. As the issued notification stated, “…hemp seed, hemp seed oil and hemp seed flour shall be sold as food or used as an ingredient in a food for sale subject to conforming standards.”
While the move signals progress from regulators and governmental approval, domestic production of industrial hemp for grain and market development in India will likely be a slow process. Nevertheless, it will open opportunities for hemp grain as a plant-based protein ingredient to a market of 1.4 billion consumers.
While classified as a lower middle-income country, India is home to the world’s second-largest population, and one of the world’s fastest-growing major economies. It has the world’s third-largest economy after the U.S. and China, valued at $ 2.1 trillion. The World Economic Forum expects India to become the third-largest consumer market by 2030. The country’s rapid economic growth is expanding, and diversifying food demand, and is putting pressure on farmers and agricultural producers to boost currently low levels of productivity.
Today, India is among the world’s largest producers and consumers of a range of crop and livestock commodities. According to the Food and Agriculture Organization of the United Nations (FAO), the country leads global production of milk, pulses, and jute, and ranks as the second-largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruit, and cotton. It is also one of the leading producers of spices, fish, poultry, livestock, and plantation crops.
When considering the potential of the hemp grain market in India, it is necessary to focus on two categories: human consumption and animal feed. In terms of the market for human consumption, it is important to consider that India’s most widely practiced religions traditionally observe dietary laws, and the country has an above-average population of vegetarian consumers.
According to a Pew Research Center survey, 81% of Indian adults follow some meat restrictions in their diets, whether refraining from eating certain meats, not eating any on certain days, or both. A reported 39% of Indian adults describe themselves as vegetarian. The Indian vegan market is expected to grow at a compound annual growth rate (CAGR) of 9% in the forecast period of 2021-2026, to reach a value of approximately $26.1 billion by 2026.
Nevertheless, a recent report published by the U.S. Department of Agriculture (USDA) titled “India Emerges as a Burgeoning Market for Plant-Based Meat Substitutes” posited that India’s large vegetarian population and a greater demand for nutritious foods are fueling rapid expansion of plant-based meat substitutes in the country. While plant-based meat products are relatively new to Indian consumers, a growing number of domestic manufacturers and foreign suppliers are penetrating the market to deliver a high-value product for which consumers are willing to pay a premium. A 2019 survey found that among Indian consumers, 63% (i.e., 882 million) were willing to replace meat with plant-based options.
Victory Hemp Foods is one among a handful of U.S. hemp grain processors that are advancing research and development of formulating plant-based meat products with hemp protein. As leading plant-based food brands like Beyond Meat and Impossible Foods begin using hemp grain as ingredients in imitation meat products, the groundwork laid by Victory Hemp Foods may prove vitally important. In April, the Beyond Meat burger made its commercial debut in India.
Aside from being a valuable ingredient for plant-based food manufacturers, hemp grain as a cost-effective, protein-rich, and nutrient-dense ingredient may also prove useful in addressing malnutrition in India. According to 2020 estimates from the FAO, India had 189.2 million undernourished people, or 14% of its population. The Global Hunger Index 2019 ranked India 101st among 116 countries.
Once farming of hemp grain and formation of a domestic supply chain takes hold in India, government subsidies and incentives could help spur agricultural production for the purposes of utilizing hemp protein to address hunger and food insecurity.
While market opportunities for human consumption of hemp grain abound, use in animal feed likewise offers immense growth potential. Of course, hemp grain will first need to be approved for use as an animal feed by agriculture policymakers in India, a regulatory step which has proven arduous in North America.
The Indian animal feed market is expected to grow at a CAGR of 6.09%, climbing from $11.7 billion in 2019 to $16.7 billion by 2025 as powered by increasing government support, domestic consumption of animal-based products, and a rising livestock population. India has the world’s largest cattle population (followed by Brazil, China, and the United States), with an inventory of over 305 million head in 2021. Dairy farming has become a booming industry in India as milk consumption has risen consistently for the last half-century.
Today, India is the world’s largest producer and consumer of milk. In 1970, India annually produced 20 million metric tons (MMT) of milk production. By 2018, that number had risen to 180 MMT. Milk production reached about 198 MMT in fiscal year 2020, up from the previous year’s 187 MMT. By 2025, the country is expected to produce about 240 MMT of milk. Despite such rapidly growing demand, India’s lack of quality feed could jeopardize the country’s dairy industry.
India dairy farmers tend to rely on nonprocessed feed, i.e., raw crop residues including cotton cake or husks for feed (both of which are low in protein and nutrients). By comparison, U.S. dairy cows subsist on up to 100 pounds of daily rations made from a balanced combination of forage, grain, mineral supplements, and protein-rich feeds such as soybean meal.
Research is underway in the U.S. to analyze hemp grain as a feedstock for cattle. While anecdotal reports are positive, if research corroborates the value of hemp grain as cattle feed, a massive market awaits. If hemp grain is approved for animal feed in the U.S., Cargill (which has an Indian division and currently produces compound feed for dairy cattle under its Purina® brand) is poised to become an early entrant to the Indian animal feed market with hemp grain feed products.
Still, obstacles remain before hemp grain can find any footing in India. One is genetics: Nearly all commercially available hemp grain varieties have been bred in far northern latitudes. As seen in university trials of hemp varieties in the southern U.S., yields fall dramatically when planted at southern latitudes (as particularly demonstrated in Texas), where varieties have struggled to acclimate and are prone to premature flowering. Given that West Bengal (the largest food-grain-producing state in India) sits at a latitude of 22.9868° N (essentially that of Central Mexico), it is entirely possible that plant breeding and genetic advancement will be necessary to establish a hemp grain variety that will perform well enough to bring to market and acclimate for high-yielding production in India.
Fortunately, advanced work by U.S. hemp genetics companies can offer competitive varieties for the southern tier of the country. Still, as seen in the U.S. since passage of the 2018 Farm Bill, development of reliable infrastructure and a supply-chain takes years. While India’s market potential for hemp grain is promising, and hopefully sufficient to compel investors to provide the necessary capital to spur development of the country’s hemp industry, patience and consumer education should be the aims to sustain stakeholders for the long road ahead.