You are here: Home » Economy & Policy » News
Business Standard

Higher food prices to aid farm income, even as costs rise: BofA Securities

A normal monsoon will help raise agri output while higher food prices will help increase farm incomes, says the report

BofA | farmer income | food prices

BS Web Team 

Rural sector
The rating agency see farm costs rising by seven per cent yoy in kharif season in FY23, up from 5.9 per cent yoy in FY22

Expectations of a and elevated food prices have brightened the outlook for rural income in rabi and for FY23, a report by Securities stated on Tuesday.

What the Securities report says:

  • in 2022 to aid agri output growth
  • Elevated to aid income, even as farm costs rise
  • Non-agri wage growth has started to improve

According to the report, the normal to good monsoon rains in the last three years have aided kharif food grain production, up 2.8 per cent year-on-year (YoY) on an average, and if in 2022 facilitates output, then kharif food grain production may go up 2.5 per cent YoY. This comes atop a 1.5 per cent YoY increase in rabi food grain output.

Over a period of time, share of crops in agriculture has come off, from 67 per cent in FY11 to 55 per cent in FY21.

Likewise non-crops have risen in importance, making farm incomes less vulnerable to rain shock.

The rating agency sees farm costs rising by seven per cent YoY in in FY23, up from 5.9 per cent yoy in FY22, this expecting kharif income to grow by 10.1 per cent YoY in FY23 atop 9.5 per cent YoY in FY22. Meanwhile, the net rabi income is estimated to have grown by 12 per cent YoY in FY22, much higher than the three per cent YoY in FY21.

The report highlights that a sharper increase in minimum support price (MSP) is unlikely to exert serious pressure on inflation, encouraging the farmers to sell their produce directly in 'mandis'.

The report also says that non-agri wage growth has started to improve after declining by 0.5% YoY in early FY22, it is up 4.2% YoY in 2H FY22 .

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, May 17 2022. 11:57 IST