Agriculture Sector Report _ August 2013

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India holds the second largest agricultural land (179.9 million hectares) in the world. India is the largest producer of pulses, milk, tea, cashew and jute; and the second largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oilseeds. Total food grains production in India reached an all-time high of 259.32 million tonnes (MT) in FY12. Rice and wheat production in the country stood at 105.3 MT and 94.9 MT respectively. Gross Domestic Product (GDP) of agriculture and allied sectors in India reached US$ 151.8 billion in FY12. India is among the 10 leading exporters of agricultural products in the world; the country accounted for 2.07 per cent of global agricultural trade in 2012. Total agricultural exports from India registered 24.1 per cent compound annual growth rate (CAGR) to reach US$ 39 billion during FY07-12. Domestic demand for agricultural and allied products has not only been rising due to rising population, but also as a result of greater consumption by a wealthier population. Indian agriculture has also benefitted from rising external demand and the sector’s wider participation in the global economy. The Government of India has launched National Food Security Mission (NFSM) to increase production of rice, wheat and pulses. It has also implemented schemes like Rashtriya Krishi Vikas Yojana (RKVY) which incentivises states to increase private investment in agriculture and allied sectors

Transcript of Agriculture Sector Report _ August 2013

  • 11 AGRICULTURE AUGUST 2013 For updated information, please visit www.ibef.org
  • 22For updated information, please visit www.ibef.org Executive Summary..... 3 Advantage India 4 Market Overview and Trends.. 5 Growth Drivers.. 15 Success Stories: Green Revolution, Rallis India 32 Opportunities.. 36 Useful Information. 40 AGRICULTURE AUGUST 2013
  • 33For updated information, please visit www.ibef.org EXECUTIVE SUMMARY 2nd largest agricultural land At 179.9 million hectares, India holds the second largest agricultural land in the world. Favourable climatic conditions With 20 agri-climatic regions, all 15 major climates in the world exist in India. The country also possesses 46 of the 60 soil types in the world. Record production of food grains Total food grains production in India reached an all-time high of 259.32 million tonnes in FY12. Rice and wheat production in the country stood at 105.3 and 94.9 million tonnes, respectively. Largest producer of major agricultural and horticulture crops India is the largest producer of pulses, milk, tea, cashew and jute; and the second largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oilseeds. Source: Ministry of Agriculture, Kotak Securities, Aranca Research Increasing farm mechanisation India is one of the largest manufacturers of various farm equipments like tractors, harvesters and tillers. India manufactures one-third of tractors in the world; the number of tractors in the country is estimated to reach 16 million by 2030 from 4 million in 2012. AGRICULTURE AUGUST 2013
  • 44 The engineering sector is delicensed; 100 per cent FDI is allowed in the sector Due to policy support, there was cumulative FDI of USD14.0 billion into the sector over April 2000 February 2012, making up 8.6 per cent of total FDI into the country in that period Growing demand For updated information, please visit www.ibef.org ADVANTAGE INDIA Source: Ministry of Agriculture, World Bank, FAOSTAT, Aranca Research Robust demand A large population is the key driver of demand for agricultural products Rising urban and rural incomes have also aided demand growth External demand has also been growing especially from key markets like the Middle East Attractive opportunities Increasing demand for agricultural inputs such as hybrid seeds and fertilisers Promising opportunities in storage facilities; potential storage capacity expansion of 35 million tonnes under the 12th Five Year Plan Policy support Government is increasing Minimum Support Prices (MSPs) to ensure higher crop production Schemes like Rashtriya Krishi Vikas Yojana (RKVY) incentivises states to increase private investment in agriculture and allied sectors Launched National Food Security Mission (NFSM) to increase production of rice, wheat and pulses Competitive advantages High proportion of agricultural land (54.7 per cent or 179.9 million hectares) Leading producer of jute, pulses; second-largest producer of wheat, paddy, fruits and vegetables 196061 Food grain production: 69.3 million tonnes 201112 Food grain production: 259.3 million tonnes Advantage India AGRICULTURE AUGUST 2013
  • 55For updated information, please visit www.ibef.org EVOLUTION OF AGRICULTURE IN INDIA Source: RBI, Ministry of Agriculture, Aranca Research Notes: NFSM - National Food Security Mission, MNC - Multi National Company, MT - Metric Tonne, P.A. - Per Annum Stagnation in agriculture Low growth in crop and grain production (0.4 and 0.1 per cent p.a.) Food grain production of 59.2 mt in 195253, with a yield of 579.8 kg/ha Pioneering work of agricultural scientists and efforts of farmers led to Green Revolution High Yield Variety (HYV) of seeds, increased use of fertilizers and irrigation resulted in a significant spike in production Attained food security and reduced import of food grains Expanding cereal production Economic reforms introduced; greater encouragement to exports Surplus of production of agricultural commodities over domestic demand India emerges as a net exporter of agricultural products Increase in population and strong income growth MNC players brought in better technology Rise in institutional credit for agriculture Government launched NFSM to increase production of commodities Schemes like National Horticulture Mission (NHM) and Bringing Green Revolution in Eastern India (BREI) helped achieve record production Commodity exchanges helped in fair pricing of commodities 1950s 1960-80 1980-2000 2000 onwards AGRICULTURE AUGUST 2013
  • 66For updated information, please visit www.ibef.org GROWTH IN AGRICULTURE (1/2) GDP of agriculture and allied sectors in India reached USD 151.8 billion in FY12 According to the Central Statistical Organisation (CSO), the agriculture and allied sector grew 2.8 per cent in FY12 Agriculture is the primary source of livelihood for about 58 per cent of Indias population GDP by value added size of agriculture and allied activities (USD billion) Source: Ministry of Agriculture, Aranca Research 129.0 136.5 136.6 138.0 147.7 151.8 FY07 FY08 FY09 FY10 FY11 FY12 Note: GDP Gross Domestic Product AGRICULTURE AUGUST 2013 CAGR: 3.3%
  • 77For updated information, please visit www.ibef.org Gross Capital Formation in agriculture and allied activities (USD billion) Source: Ministry of Agriculture, Aranca Research At USD30.5 billion, agriculture accounted for 6.8 per cent of total Gross Capital Formation in FY12 Under the FY14 Union Budget, planned outlay for various schemes under the Department of Agriculture and Cooperation (DAC) has been fixed at USD11.8 billion Allocation to the Rashtriya Krishi Vikas Yojana (RKVY) in the FY14 budget has been increased to USD2.1 billion, a rise of about 9 per cent from the previous financial year Note: RKVY is a central government scheme providing funds to state governments to spend on agriculture 19.2 22.0 26.5 27.3 27.3 30.5 FY07 FY08 FY09 FY10 FY11 FY12 AGRICULTURE GROWTH IN AGRICULTURE (2/2) AUGUST 2013 CAGR: 9.7%
  • 88 121.0 118.1 104.0 121.1 131.3 109.8 116.3 114.2 123.6 128.1 FY08 FY09 FY10 FY11 FY12 Kharif Rabi For updated information, please visit www.ibef.org Production of food grains (million tonnes) in Kharif and Rabi seasons Source: Finance Ministry, Ministry of Agriculture, Aranca Research Note: E - Second Advanced Estimates for FY12 There are two major agricultural seasons in India: Kharif and Rabi Kharif season lasts from April to September (summer); rice (paddy) is the seasons main crop Rabi season lasts from October to March (winter); wheat is the seasons main crop Total food grains production in India reached an all-time high of 259.32 million tonnes in FY12 CAGR:2.9% AGRICULTURE AUGUST 2013 MAJOR SEASONS: KHARIF AND RABI (1/2)
  • 99For updated information, please visit www.ibef.org Area sown in FY12* (lakh hectares) Rabi Kharif 289 140 83 37 13 39 Wheat Pulses Oil seeds Jowar Maize Rice 405 169 115 122 91 74 Paddy Oilseeds Pulses Cotton Bajra Maize Source: Finance Ministry, Ministry of Agriculture, Aranca Research Note: * Second Advanced Estimates for FY12 AGRICULTURE AUGUST 2013 MAJOR SEASONS: KHARIF AND RABI (2/2)
  • 1010For updated information, please visit www.ibef.org PRODUCTION OF RICE AND WHEAT ON THE RISE Production and yields of wheat and rice Source: Ministry of Agriculture, Aranca Research During the last five years, production as well as yields of both major crops - rice and wheat - increased significantly Production of wheat and rice reached an all-time high in FY12. Production of wheat reached 94.9 million tonnes, an YoY increase of 9.2 per cent. Production of rice, on the other hand, rose to 105.3 million tonnes, an YoY growth of 9.7 per cent 78.6 80.7 80.8 86.9 94.996.7 99.2 89.1 96 105.3 2.0 2.5 3.0 3.5 4.0 60 80 100 120 FY08 FY09 FY10 FY11 FY12 Production of Wheat (million tonnes) Production of Rice (million tonnes) Yield of wheat (tonnes/ hectare) - RHS Yield of rice (tonnes/ hectare)- RHS AGRICULTURE AUGUST 2013
  • 1111For updated information, please visit www.ibef.org FRUIT AND VEGETABLE PRODUCTION CONTINUES TO INCREASE Indian horticulture area and production Source: National Horticulture Board , Assorted Articles, FAO Stat, Aranca Research Note FY13* - Estimates, ** - CAGR Mentioned is for Production India ranks 2nd in global production of fruits and vegetables, and is the largest producer of mango and banana, and has the highest productivity of grapes in the world National Horticulture Mission, National Horticulture Board, Technology Mission for Integrated Development of Horticulture in North-East are some of the initiatives taken by the Government of India to boost the horticulture sector in the country Indias horticulture production rose at a CAGR of 6.4 per cent during FY05-12 Fruit and vegetable production of top four countries (2011) 166.9 182.8 191.8 211.2 214.7 223.1 240.5 257.3 265.9 10 15 20 25 150 200 250 300 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13* Production (million tonnes) Area (million hectares) 122.2 74.9 25.4 16.9 473.1 146.6 35.3 13.5 China India USA Italy Fruits (million tonnes) Vegetables (million tonnes) AGRICULTURE CAGR**:6.0% AUGUST 2013
  • 1212For updated information, please visit www.ibef.org SURGE IN DEMAND OF INDIAN AGR