Agri Business

Amid Covid gloom, farm sector blooms for the most part

Rajalakshmi Nirmal BL Research Bureau | Updated on June 17, 2020 Published on June 17, 2020

Over the past two months, the demand for seeds and pesticides has also been strong   -  PTI

Spending on agri inputs rises as demand for seeds, fertilisers and tractors sees spurt

The Covid-19 lockdown and supply chain disruptions over the past few months have hit many industries. But the farm sector appears to have escaped these with the minimum impact.

While horticulture and dairy farmers did face the brunt of the lockdown, for the farm sector as a whole, it has not been bad at all. Sample these numbers:

Procurement under the minimum support price (MSP) programme in wheat during the rabi marketing season (2020-21) was about 11.7 tonnes by end-April versus 19.6 million tonnes (mt) in the same time last year. However, in the subsequent two months, procurement increased significantly: by June 12, total procurement by FCI and State agencies in wheat touched 37.7 mt (up 11 per cent YoY from 33.9 mt). And, given the MSP was at ₹1,925/quintal this year versus ₹1,840/quintal last year, it was a big relief for farmers.

In pulses too, procurement has been higher than last year benefitting over 8.7 lakh farmers. Since March NAFED has procured about 17 lakh tonnes of gram through 2,395 centres (at MSP of ₹4,875/quintal vs. market price of about₹4,200/quintal). Give that there is one more month left for rabi arrivals to end, total procurement in gram may be significantly higher; in rabi last year, total procurement in gram was 7.71 lakh tonnes.

Similarly, procurement in mustard seed has also been higher. So far, NAFED has procured about 7.53 lakh tonnes of mustard seed from about 2.96 lakh farmers.

Higher MSP procurement and PM-KISAN disbursements that have reached to over 9.5 crore farmers have actually boosted farm sentiment.

Greater liquidity

Farmers are spending more on agri inputs. Fertiliser sales in April and May were up almost 75 per cent over last year. Sales of major fertilisers including urea, DAP (diammonium phosphate), MOP (muriate of potash), NPK and others in the two months were at 60.3 lakh tonne, up from 34.6 lakh recorded last year. Sales of DAP and NP/NPK fertilisers more than doubled YoY. While this may be because of timely onset of monsoon and farmers increasing the area under cultivation, it also indicates liquidity in their hands.

 

The trend of higher fertiliser consumption has been observed since November — so, one can’t dismiss it off as a consequence of an increase in stocking by fertiliser dealers in anticipation of closure of production units due to the lockdown.

Over the past two months, the demand for seeds and pesticides has also been strong. Ram Kaundinya, Director General, Federation of Seed Industry of India, said: “Seed offtake since April has been pretty strong. Cotton, rice and millets have been picked up by farmers more than last year, showing around 10 per cent growth. In rice, too, we have seen a good uptake of direct sown rice, which needs less labour since there is no transplantation. Farmers have been a bit reluctant to plant perishable crops like vegetables for fear of not being able to transport and sell them due to lockdowns and also because of lack of availability of labour.”

Tractor sales also were also good in May, recovering from April’s lows. Tractor manufacturers are pointing to an increasing preference among farmers towards mechanisation. Mahindra & Mahindra, which holds an about 40 per cent share of the domestic tractors market, sold about 24,017 units last month, against 23,539 units in May 2019. Escorts (12 per cent share in tractor market) sold 6,454 units in May while Sonalika Group sold 9,177 units (up 18.6 per cent YoY).

Kharif sowing progressing well

The current kharif season, too, is expected to be strong, with a bumper output. As on June 12, the area under all kharif crops was up 13 per cent YoY at 92.56 lakh hectare (81.74 lakh hectare), per official data. Area covered under cotton was 18.9 lakh hectare (15.32 lakh hectare).

The monsoon so far has been surplus, reports the India Meteorological Department. Reservoirs also have sufficient quantities of water. Per data, as on June 11, the storage available in 123 reservoirs in the country that are tracked by the Central Water Commission was 54.636 BCM, against 31.372 BCM last year.

It is expected that the current season, too, will be good for agri input companies. Farmers may also see an income increase if procurement is high in cereals and cotton like last year.

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Published on June 17, 2020
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