New Delhi: A study by global analytics company Crisil says that farm profit from field crops in India is expected to increase by 10 to 12 per cent in kharif season 2019 due to expected higher prices and despite lower output.
After three years of healthy growth, kharif output this time could decline by three to five per cent because of lower sowing acreage and yields being impacted by uneven distribution of rains, said the Crisil Research’s Agriculture Report 2019.
Delayed onset of monsoon has already led to a sharp 6.4 per cent decline in paddy sowing as on August 22, 2019. Paddy accounts for over 30 per cent of kharif season acreage. However, area under cotton and maize cultivation will be higher than in the previous season as higher prices have encouraged farmers to sow them, the report added.
Floods in Maharashtra, Odisha and Andhra Pradesh, and weak rains in West Bengal and the Marathwada region of Maharashtra are expected to affect productivity. Additionally, high-intensity rainfall in August is likely to increase pest attacks on maize and paddy further impacting productivity.
“The quick catch-up in southwest monsoon has meant excess rains in August in a few sub-regions. This has affected kharif crops, particularly paddy. But abundant rains have also improved chances of healthy rabi production because of recharging of groundwater resources and higher reservoir levels,” said Crisil’s Chief Economist Dharmakirti Joshi.
Lower kharif output is expected to push up mandi prices, and boost profitability of most crops, providing respite to farmers. Some crops such as sugarcane will be an exception, with profit hit by lower acreage and productivity.
Within the kharif basket, the study foresees an upward shift in paddy prices due to lower estimated production, higher cotton exports to China to support prices, price support from steady demand growth in soy meal exports and higher domestic soybean crushing as palm oil import duties rise, healthy rise in prices of maize on account of higher demand from industries such as poultry feed, and growth in jute demand and prices because of plastic ban in many states.
“At a regional level, northern states are expected to continue to reap the highest profits owing to a more favourable crop mix, limited dependence on rainfall, and higher farm mechanisation,” said Crisil Research’s Director Hetal Gandhi.
“Further, Gujarat, Madhya Pradesh and Rajasthan are expected to register healthy on-year growth in profits, driven by bajra, cotton and soybean crops,” he said.
The southern peninsula, which had been severely impacted by lower rainfall and drought-like situation over the past three years, is expected to show improvement in profits.
Maharashtra though is expected to continue to reap lower profits as increase in profitability from cotton is expected to be offset by shrinking profits in sugarcane and crop damage in Madhya Maharashtra.
Effective implementation of central and state government schemes should further support incomes, said the study.