Hebei Lansheng Biotech Co., Ltd.
Beijing Multigrass Formulation Co., Ltd.

The illusion of a revival in Indian agricultural sectorqrcode

−− Big hopes are being pinned on farming but its performance is not as impressive as made out to be

Aug. 17, 2020

Favorites Print
Forward
Aug. 17, 2020

The illusion of a revival in Indian agricultural sector

Most recent economic indicators suggest a modest recovery compared to the first two months of India’s lockdown. But when compared to the data of last year, it also becomes clear that an economic comeback is likely to be a long-drawn affair. There is also a consensus that a recovery will be contingent on a revival in consumption demand, which had declined considerably even before the lockdown. 


The only hope during these grim times seems to arise from the agricultural sector, which is expected to not only show positive growth, but also boost consumer demand. Such hopes are bolstered by a normal monsoon and increased sowing this year, on top of last year’s record production of some crops. But how realistic are these hopes pinned on agriculture to revive demand and the economy?


Agriculture has stood out, with high growth in the last two years, when most other sectors and the broader economy were slowing down. The sector grew 4% last year, and at an impressive 3.2% per annum during the last six years. For the first five years of the National Democratic Alliance (NDA) government, the annual agricultural growth rate was 3.08%. At an aggregate level, these figures appear impressive, but they have failed to contribute to a resurgence of India’s economy, which has been slowing down for at least two years.


Part of the reason is that while the agriculture sector as a whole grew at more than 3%, there was wide variance in the performance of its sub-sectors. Agriculture comprises the crop subsector and allied sectors such as livestock, forestry and fishing. But it is the crop sector that most Indian farmers are employed in and derive their income from. The crop sub-sector doesn’t just form the largest chunk of agricultural value added, accounting for two-thirds of the total value added in the overall sector in 2013-14, it is also the key determinant of farmer incomes. 


However, its performance under the first five years of the NDA government was far less impressive than that of the broader sector, with its net value added declining at constant prices. Between 2013-14 and 2018-19, the crop sub-sector’s net value added fell 0.3% per annum, implying a decline in farmer incomes. 


Even though the value of output at constant prices for the crop sub-sector increased by 1.1% per annum, input costs increased by an annual 2.7%, resulting in a decline in the overall value added by the sub-sector. The increase in input costs was largely driven by higher electricity and diesel costs. These rose at 7% and 6.8% per annum, respectively, during the period, despite a significant fall in international energy prices.


However, the broader agricultural sector continues to show growth of more than 3% per annum. A big contributor to this is growth in the livestock and fishing sub-sectors, which posted 8% and 11% annual increases between 2013-14 and 2018-19, respectively. These high growth rates are surprising, given the past trends, and also attract suspicion since the crop sub-sector contracted during this period. 


In general, the livestock sub-sector tends to show a similar trend as crops. Moreover, there is reason to doubt these numbers, given that unlike the crop sub-sector, in which a large part of the data is derived from crop-cutting experiments and is therefore more reliable, estimates of the better-performing sub-sectors are based on less reliable methods. But even if the data is assumed to be accurate, a decline in the value added by crops means that overall agricultural growth might not be the best indicator of farmer incomes. The decline also partly explains the past two years’ broader slowdown in the rural economy despite good aggregate growth in agriculture.


Some of the trends that contributed to the fall in the crop sub-sector’s net value added remain relevant even after the pandemic. While output prices have fallen across the board for most crops in the last four months, the government has refused to pass on the decline in energy prices to farmers. In fact, in many states, the price of diesel has increased. 


However, unlike the past five years, farmers are now also reeling from falling poultry and milk prices, two commodities that saw among the highest growth rates within the livestock sub-sector. If these trends continue, it is likely that the value added in agriculture will be not only turn out to be lower than expected, it may actually deepen distress in the rural economy. If the government is serious about reviving rural demand, it must urgently subsidize input costs and raise the value added in the crop sub-sector through price support measures.


[ Survey ]

Join AgroPages TOP 20 India Agrochemical Companies ranking list in FY2019-20

The ranking list of top 20 India agrochemical companies has been published by AgroPages for 7 years since FY2012-13. To understand Indian agrochemical market better and faster, we will make persistent efforts to keep on.

Top 20 Indian Agrochemical Companies in FY 2018-19: Backwards Integration, Forwards “OpenAg”

Join us in this year's list!

 

Note:

1. The list of rankings focuses only on Indian native enterprises, excluding the branches of multinational companies in India.

2. The list of rankings focuses only on the sales of pesticide products(TC & Formulation), excluding the sales of fertilizers and intermediates.
3. If you join this survey, we'll freely publish a PR news online for your company. Please contact: zorro@agropages.com
We'll offer you the Company Directory in the upcoming 2020 India Pesticide Suppliers Guide magazine once the information adopted.

  1. 1. What are the sales of pesticide products(TCs & Formulations) in FY2019-20?
  2. 2. What do you think of the increase/decrease in sales this year compared with last year? Please describe briefly.
  3. 3. What are your company's actions to keep your business running during this tough time?
  4. 4. Please leave your information to submit the survey.
    Your Name:
    Email:
    Company:
    Tel:
    Mobile:
Source: livemint.com

Picture 0/1200

More from AgroNews

Magazine

2020 India Pesticide Suppliers Guide 2020 Market Insight
Chinese issue of 2020 Market Insight 2020 CRO & CRAO Manual
Chinese issue of 2020 Biologicals Special 2020 Biologicals Special
Subscribe Comment

Subscribe 

Subscribe Email: *
Name:
Mobile Number:  

Comment  

Picture 0/1200

Subscribe to daily email alerts of AgroNews.