Analyst Corner: Acreage activity of key crops to have bearing on CRIN

Key crops grown in the regions mentioned above include paddy, pulses, cotton, soyabean and maize. Thus, the acreage movement in the above crops would have a bearing on CRIN’s performance.

Prices of paddy (down 9% y-o-y) and soyabean (flat y-o-y) have remained firm (relatively); thus, the sowing of these crops is likely to continue at similar levels in the upcoming kharif season, particularly in the southern region.

However, cotton prices (20% down y-o-y) have plummeted due to the current crisis; hence, farmers may shift to alternate crops such as groundnuts (up 7% y-o-y) and soyabean.

The key reason for the shift from cotton to this crop could also be attributable to lower yield in the previous season due to a pink bollworm infestation and excess rainfall. Price of maize plunged 20% to Rs 1,577/quintal. We believe farmers in the southwestern region may shift from maize to soyabean and groundnut. We do not foresee any major labour issue in paddy sowing in CRIN’s addressable market. The migrant labour situation may pose an issue in Punjab and Haryana, where paddy is a key kharif crop.

As paddy sowing is labour-intensive, states such as Punjab and Haryana may use the direct seeded rice (DSR) method of plantation for rice sowing in some areas in their fields, against the conventional method of transplanting.

DSR is gaining popularity owing to certain advantages: it saves labour, it requires less water, and crops reach maturity faster. We believe better pre-season rainfall and water storage as well as a favourable crop pattern in CRIN’s addressable market would drive overall demand for fertiliser for the company.