Table of Contents
This report profiles India's agriculture industry, discussing market trends and outlook into 2015 and beyond. The report also highlights leading players in the sector including Tata Coffee Ltd, Ruchi Soya Industries Ltd and McLeod Russel India Ltd.
Agriculture is the third largest sector of India's economy after services and industry. Though the country's dependence on agriculture has fallen considerably, its importance cannot be forsaken. Still, more than half of the Indian population depends on this sector for their livelihood. India has emerged as a global power in the agriculture sector by becoming a leading producer of food grains, oilseeds, commercial crops, fruits and vegetables. Yet, the country needs to increase the yield of crops to feed its ever-growing population. India continued to lead the world in the production of rice, wheat, cotton, sugarcane, tobacco, fruits and vegetables. But, the major challenge for the country is the insufficient production of pulses and oilseeds.
FYE Mar-15 was a tough year for the Indian agriculture sector due to deficient rainfall. Scanty rainfall was recorded in the monsoon season, which led to the decline in agricultural harvest with lower production in all the major crops. The declining trend continued in the FY16 monsoon season as India saw deficit in rainfall yet again, which led to drought like conditions in many parts of the country. This will likely result in lower agricultural output in FY16.
The long-term outlook for Indian agriculture is firm because of growing production and improving yields. Reforms, such as the opening of retail sector to foreign companies and adoption of model APMC Act by states, will increase direct sourcing from farmers and in turn benefit the farmer and the sector as a whole. The only concern for India is to match the agricultural growth with population growth. The country needs to restrain its reliance on agricultural imports which may put the currency under pressure and cause an imbalance in the current account.
o According to MOSPI, the agriculture and allied sectors contributed around 16% to the country's GDP at factor prices as of FY15.
o The country's food grain production grew at a CAGR of 3% during 2005-14. Scanty monsoon rainfall received by the country in FY15 led to a decline of 4% y/y in food grain production.
o Agriculture sector saw strong growth in FY14 backed by good monsoon rainfall. The sector registered a GVA growth of 3.6% in FY14 against 1.2% in FY13. However, the growth dipped to 0.6% y/y in FY15, due to draught like conditions as a result of deficient monsoon rainfall. In 1HFY16, growth was at 2.0%, lower than the 2.4% growth recorded in 1HFY15, due to less than adequate rainfall in some parts of the country.
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