Farm profit to rise 3-5% this kharif

Despite copious rain, the area under vegetables, cotton and maize cultivation is expected fall sharply in this kharif season due to sharp drop in realisations.

Weak domestic and international demand has exerted pressure on cotton and maize prices while price of vegetables has dropped sharply over the high base of last year largely due to transport restrictions amid bumper supply.

However, early onset and good distribution of the South-West monsoon has paved the way for a robust kharif output. As on August 21, rains were 7 per cent above the long-period average.

Good spatial and temporal distribution has prompted sowing across crops in most states, as per Crisil Research analysis of 25 key agriculture commodities.

Kharif sowing is expected to increase 2-3 per cent to 109 million hectares this year. The area under paddy cultivation is also set to increase because of both rains and reverse migration of labour to the eastern and southern states, it said.

Dharmakirti Joshi, Chief Economist, Crisil, said though lack of adequate rain in Rajasthan was a concern till early August, good rainfall recently has mitigated the risk substantially.

Boost to profits

Farm profit per hectare for field and horticulture crops is expected to increase 3-5 per cent during this kharif season, supported by higher acreage, improved productivity and rise in minimum support price, said the research report.

Adequate water availability for critical growth stages is also expected to increase productivity by 2-3 per cent over a low base of 2019, it said.

Kharif output could rise 5-6 per cent, putting pressure on the prices of various commodities. However, government support to paddy procurement (the most critical crop in terms of farm income), incremental sowing of more remunerative crops and improved productivity will boost profitability at an aggregate level.

Hetal Gandhi, Director, Crisil Research said the eastern states could see highest profit growth due to lower base while the southern and western states will bear the brunt of lower cotton and maize prices.

The northern region will be most profitable this kharif owing to a favourable crop mix and higher government procurement.

However, the spread of the Covid pandemic in rural India remains a key challenge. That’s because the rural share of Covid-19 cases, which was hovering about 20 per cent in June, has spiked to 45 per cent.

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