Agri Business

Farm profit lags due to unseasonal rains

Our Bureau Mumbai | Updated on December 17, 2019 Published on December 17, 2019

But prolonged monsoon will increase rabi yields: CRISIL Research report

Despite higher mandi prices, farm sector profit is expected to decline to 7-9 per cent this financial year against 26 per cent logged in the previous fiscal, due to the impact of unseasonal rains.

However, a prolonged monsoon will improve soil moisture and increase rabi crop yields, said a CRISIL Research report.

The higher mandi prices and better kharif output would somewhat make for the losses incurred by farmers.

The profit would have been much more if not for the fall in production due to unseasonal rain, the report added.

In crop year 2018-19, farm profits jumped 26 per cent year-on-year on a low base of the preceding year, which had seen per-hectare profits decline due to low mandi prices following a bumper crop.

Unprecedented heavy rainfall between September and October had lowered kharif crop production by 4-6 per cent year-on-year.

On the other hand, a 10 per cent above-normal monsoon has filled reservoirs to the brim, which in turn has increased rabi crop productivity by 7-8 per cent.

While lower market supply of kharif foodgrains will push up mandi prices by over 10 per cent, a higher minimum support price (MSP) and government support for wheat (which accounts for over 50 per cent of the rabi crop output) is expected to push up prices in rabi, leading to higher per-hectare farm profitability in crop year 2019-20, it said.

Rabi sowing has been delayed due to late harvesting of the kharif crop. As of November, arrivals across 2,000 mandis were lower due to delayed harvesting.

This lowered the rabi sowing by 15 per cent as on November 8.

To the brim

The good news, however, is that all 120 reservoirs in the country have higher water levels compared with the long-period average, as on October 31, and this is expected to lead to higher rabi crop sowing.

After two years of erratic south-west monsoon, Gujarat and the southern States are expected to witness a healthy rabi output in crop year 2019-20.

Excess rainfall in less-irrigated regions has further brightened the scope of the rabi crop. The south-west monsoon was 9 per cent below normal on July 30, leading to delayed onset of kharif crop sowing this year.

However, a quick catch-up in August and September resulted in 10 per cent above-normal monsoon between June and September.

Published on December 17, 2019
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