Agriculture World

Farm Profits Per Hectare to Grow 7-9 Percent in Crop Year 2019-20: Crisil Research

Abha Toppo
Abha Toppo
farmers

According to Crisil Research analysis, irregular distribution of the south-west monsoon in 2019 has impacted the 3Ps of agriculture i.e. productivity, prices & profitability - erratically.

In spite of this, the overall farm profits per hectare will grow 7 to 9 percent on-year in crop year 2019-20 (April 2019 - March 2020), a CRISIL Research study of 15 main MSP-linked crops on parameters like crop productivity, international & domestic demand-supply situation, share of government procurement & exports, farm gate rates and evolving cost dynamics shows.

In 2018-19 crop year, farm profits jumped 26 percent on-year over a low base of the previous year, which had seen per-hectare profits decline because of low mandi rates following a bumper crop. The outlook for this year is muted in contrast, though an increase in mandi prices for kharif & higher productivity for rabi crop will give support to overall profitability per hectare.

The analysis further mentioned that unprecedented heavy rainfall in the month of September and October will bring down kharif crop output by 4 to 6 percent on-year. On the other hand, a 10 percent above-normal monsoon has filled reservoirs to the edge, which in turn, promises to lift up rabi crop production and lead to 7-8 percent higher output. While the lower market supply of kharif food-grains would push up mandi rates by more than 10 percent, high MSP & government support for wheat is likely to aid price growth for rabi, which will lead to an expansion in the overall per-hectare farm profitability in 2019-20 crop year.

crop

The southwest monsoon was 28 percent below normal on 30 June and 9 percent below normal on 30 July, leading to delayed commencement of kharif crop sowing this year. But, a quick catch-up in August & September resulted in 10 percent above-normal monsoon from 1 June to 30 September.

Although sowing gained speed in response to the monsoon’s progress, several parts of India, including Haryana, Punjab, Uttar Pradesh & West Bengal continued to be arid. On the other hand, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Odisha, Andhra Pradesh and Rajasthan suffered from crop damage because of excess rainfall and floods.

Overall, the kharif crop output is likely to be 4-6 percent lower on-year in crop year 2019-20. But, shortage in market supplies could keep mandi prices firm – in fact, mandi rates have already shown an upward trend in the past few quarters, leading to higher kharif profits per hectare

Prices of pulses & oilseeds have shown an increase of 23 percent and 8 percent, respectively, from the 3rd quarter of 2018 to 4th quarter of 2019. However, prices for cash crops have reduced by 5 percent, led by a decline in cotton prices due to an expected increase in output. Prices of cereals % coarse cereals inched up 13 percent on average, because of an 11 percent increase in paddy prices supported by high MSP & over 25 percent increase in weighted average prices of coarse grains owing to high domestic demand.

The good news is that all the 120 reservoirs in India have high water levels compared with the long period average as on 31st October  2019. This would lead to high rabi crop sowing on-year. After 2 years of irregular south west monsoon, Gujarat & southern states are likely to witness a healthy rabi output in crop year 2019-20.

More than 75 percent of kharif sown area & over 90 percent of rabi sown area are likely to earn high profit / hectare in 2019-20 crop year. Even though northern states will pocket the largest share, growth in profitability is likely to be robust in Gujarat & southern states. Eastern states are also expected to turn gainful at C2 cost.

Like this article?

Hey! I am Abha Toppo. Did you liked this article and have suggestions to improve this article? Mail me your suggestions and feedback.

Share your comments

Subscribe to our Newsletter. You choose the topics of your interest and we'll send you handpicked news and latest updates based on your choice.

Subscribe Newsletters