Agriculture to economy’s aid: Robust rabi, F&V estimates signal farm sector recovery

Updated: January 28, 2020 6:16:06 AM

Excess production of wheat and paddy in rabi 2019-20 will build on existing surplus and stimulate additional market distortions as well as add to procurement and subsidy load, he said.

The ongoing winter crop — the harvesting of which will begin in late March — is going to be robust one helped by higher water levels in reservoirs (72% of capacity now against 46% a year ago).

By Prabhudatta Mishra  

After two years of relatively subdued growth, India’s agriculture sector may approach a higher growth trajectory in the next financial year, helping the economy’s revival in a significant way. Early indications of the standing rabi crop as well as the horticulture sector augurs well for agriculture gross value added (GVA) for 2020-21. Of course, the GVA is also driven by the prices of these items about which it is too early to draw conclusions on.

The ongoing winter crop — the harvesting of which will begin in late March — is going to be robust one helped by higher water levels in reservoirs (72% of capacity now against 46% a year ago). While an official estimate of the winter food grains output hasn’t been made yet, NCML, a private warehousing company, has put it at close to 153 million tonne (MT), up 7% over last rabi production.

Also, the agriculture ministry on Monday estimated that horticulture production (comprising mostly fruits, vegetables and spices) in 2019-20 crop year (July-June) will be 313.4 MT, compared with 310.7 MT in the previous year.

Of the agriculture output, fruits and vegetables have a share of about 27%, close to the share of ‘crops’ (food grains and oilseeds). Livestock segment has an equal weight too.

India’s agriculture and allied sectors’ GVA is expected to grow just 2.8% in FY20, according to the first advance estimate released by the National Statistical Office (NSO) recently. In Q2FY20, the sector grew by 2.1% and in FY19, the growth was 2.9%. The said GVA in the second half of the current fiscal will draw strength from a favourable base.

“The agriculture GVA (FY21) may go up by 1-1.5 percentage points as a huge jump in rabi production will definitely bring positive change in the sector. However, the government should be prepared to ensure that prices don’t crash and are stabilised at least at the current levels,” said PK Joshi, former director (south Asia) of International Food Policy Research Institute (IFPRI). The official procurement has to be robust to support the mandi prices, he added.

According to NCML’s estimate, wheat production in rabi 2019-20 would be a record 109 MT, compared with 102.2 MT in the last winter season.

Rabi season contributes nearly half of the total food grain production.  A 10% above-normal rainfall during the June-September monsoon season of 2019 and 42%-above-normal October rainfall had generated favourable conditions for rabi sowing by providing adequate levels of soil moisture. Besides, the winter season so far has been very conducive for the crops with no reports of pest attacks from any state.

“Bountiful rains received during the monsoon have boosted the prospects of crop production in the ensuing rabi season. This crop year (2019-20) is likely to see a record food grain production led by the wheat crop along with corn and jowar. Oilseeds and pulses may, however, end up lower than the previous year,” said Siraj Chaudhry, CEO of NCML.

Excess production of wheat and paddy in rabi 2019-20 will build on existing surplus and stimulate additional market distortions as well as add to procurement and subsidy load, he said. There is an imperative need to align the production basket to consumption needs so that demand generating from growing population and changing lifestyles can be met domestically, he added.

According to the first advance estimates of horticulture crops released on Monday by the government, the concerns over onion prices will be eased as the government expects the vegetable’s output to jump by 7% to 24.45 MT in the current year due to higher acreage. This may bring relief to consumers from high prices seen since mid-August.

Onion crop has been planted in 12.93 lakh hectare in the 2019-20, compared with 12.20 lakh hectare during the previous year.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Piyush Goyal asks traders to promote swadeshi by selling, consuming local goods
2Hydropower can help Nepal reduce trade deficit with India
3Power ministry asks states to request regulators to reduce power tariff for prepaid consumers