Slight recovery: Farm sector bounces back, inflation rises in Q1

Farmers could pin their hopes for a better future on the rising inflation rate in some crops at 5.9 per cent in the quarter under review

Growth in agriculture and allied activities recovered a bit to 2 per cent in the first quarter (Q1) of the current fiscal year (2019-20 or FY20) from 0.1 per cent contraction in the last quarter (Q4FY19).
 
But, in Q1FY19, the farm sector had grown 5.1 per cent.
 
Farmers, however, could pin their hopes for a better future on the rising inflation rate in some crops at 5.9 per cent in the quarter under review. In the year-ago period, the inflation rate was 1.7 per cent.
 
“Food inflation has been rising in some crops. This has improved the gross value added (GVA) in agriculture at current prices, but that does not mean farmer realisations have improved as the rise is not uniform across all crops,” said Madan Sabnavis, chief economist CARE Ratings.
 
Experts said not too much should be read into the Q1FY20 number, as the residual rabi crop is taken for calculation. The real impact of farm output becomes evident in the third or fourth quarters of a fiscal year.
 
According to the Centre’s fourth Advanced Estimates for food grain production, released earlier this month, production fell to 143.24 million tonnes in the 2018-19 rabi season. This was marginally down from the output in the year-ago period — 144.55 million tonnes.

Fall in production of pulses and coarse cereals during the rabi season has pulled down production figures. The performance of the sector will now depend on how the southwest monsoon performs in the next few weeks.
 
This has become even more important as the rains made a patchy debut in 2019, adversely affecting the kharif crop. It did make a remarkable recovery though. But, the sowing of paddy and pulses had already been affected.
 
According to latest data from the agriculture department, crops have been sown in around 100.95 million hectares — 1.75 per cent less than in the year-ago period.
 
On Thursday, private weather forecaster Skymet said production of paddy, pulses and soybean was likely to fall because of uneven rains. Cotton might go up, jumping 14 per cent to 34.21 million bales.
 
It has also said rice production could fall 12.4 per cent year-on-year to 88.66 million tonnes.