Farm profits to be higher this kharif season due to higher output: Study

Overall profitability in the agriculture sector is expected to be marginally higher at the pan-India level in the 2024-25 kharif season, driven largely by higher production and low input cost, but offset by the declining price of some produce, according to a report released by Motilal Oswal Financial Services Ltd on Wednesday.

 

The report said that region-wise farm profitability in the northern belt was expected to be relatively better than in the southern belt, while the eastern and western belts presented a mixed bag. The report was based on researchers’ interactions with various Farmer Producer Organisations (FPOs) and farmers across India to gauge the on-ground situation regarding crop conditions, yields, and farm profitability during the kharif season in crop-year 2024-25 (July to June).

 

The country’s northern belt saw higher crop yields year-on-year as higher rainfall supported the production of paddy, while the southern belt and Gujarat were key laggards as the heavy downpours resulted in floods and significant crop losses, it said. Major states in the northern belt include Bihar, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana, and Rajasthan.

 

The report further stated that, according to the government’s first advanced estimate, the overall production of food grains and oilseeds (which cumulatively accounted for more than 84 per cent of the total acreage in CY24) is expected to increase by six per cent and seven per cent year-on-year, respectively. However, production of other key crops, such as sugarcane and cotton, is expected to decline by three per cent and eight per cent year-on-year, respectively.

 

However, declining crop prices (prices of key food grains and oilseeds have declined 3.2 per cent year-on-year) have partially offset the benefits of higher production during the year. At the same time, the cost of cultivation has marginally declined by 1.3 per cent during the kharif season due to controlled inflation and a high base effect.

 

“Accordingly, we (Motilal Oswal) expect overall farm profitability to be marginally higher on a pan-India basis for the kharif season 2024-25,” the report said.

 

Higher reservoir levels and higher sowing of rabi crops (up 2 per cent Y-o-Y according to the latest available data) promise a brighter outlook for the rabi season, it added. 

Next edition of South-Asia Agriculture Forum to be held from Jan 15-16 in Sri Lanka   The Bharat Sub Continental Agri Foundation (BSAF), a platform that aims to bring all stakeholders in the agriculture value chain together, will organize the next edition of South Asia Agri Forum 2025 in Sri Lanka from January 15-16. The meet will discuss both domestic and global market scenarios in crops such as pulses, oilseeds, sugar, wheat, rice and spices. Government officials, bureaucrats, senior industry representatives and associations and other stakeholders will participate in the two-day event. The first South-Asia Agriculture Forum was held in Nepal in 2023, the second in Thailand in 2024 in which about 50 countries and more than a thousand people participated. The forum’s comprehensive agenda, featuring expert panels, trade exhibitions, and B2B meetings, is designed to address the most pressing challenges and opportunities in the agriculture commodity trade. Exporters can leverage these sessions to enhance their understanding of the region’s trade dynamics and to identify lucrative opportunities for their products, a statement said.