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Kharif output to decline, but farm profits set to rise 10-12%: CRISIL Researchqrcode

Sep. 3, 2019

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Sep. 3, 2019
A farmer spraying pesticide on a paddy field at Gannavaram in Krishna district of Andhra Pradesh
 
Lower production of paddy could be instrumental in a 3-5% decline in kharif crop output, says a new report by CRISIL Research. However, the report adds that farm profits could still rise 10-12% this season on the back of an expected rise in prices of agricultural commodities.
 
Paddy accounts for 30% of the kharif crop acreage. The research agency observed that the monsoon's delayed arrival this time around contributed to a 6.4% decline in paddy sowing as on August 22. However, other factors will provide price support to the kharif crop, such as higher cotton and soy exports, and increased domestic demand for soybean, maize and jute, the agency said.
 
The 3-5% fall in kharif output is likely to push up prices, and thus profitability of most crops. Owing to this, farm profits are set to rise 10-12%, CRISIL added.
 
Kharif crop output has been increasingly steadily over the past three (marketing) years. From 165.2 million tonnes in 2016, to 168.1 million tonnes in 2017 and a record 170.7 million tonnes in 2018. This year, though, the delayed rainfall and subsequent floods have impacted crops.
 
Floods in states like Maharashtra, Odisha and Andhra Pradesh later in the season has affected paddy output, said Dharmakirti Joshi, Chief Economist, CRISIL. In a press release on CRISIL's website, Joshi said, “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.”
 
As on September 29, India has received 696.9 mm average rainfall this season, which is equal to the long-term average. Northwest India has seen the highest deficiency in rainfall, with Haryana experiencing a shortfall of 34%, Delhi 31% and Uttarakhand 26%. Uttar Pradesh has received 18% deficient rainfall.
 
Added Hetal Gandhi, Director, CRISIL Research, “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. Further, Gujarat, Madhya Pradesh and Rajasthan are expected to register healthy on-year growth in profits, driven by bajra, cotton and soybean crops.”
 
Maharashtra may see a drop in farm profitability due to shrinking profits in sugarcane and crop damage in Madhya Maharashtra, the release added.

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