Farm income to grow by 6.8% in 2018-19

by Amar Sehgal

Farm income is expected to increase by 6.8 per cent in 2018-19. This is due to an increase in crop prices this year. Lower production expectations are driving prices of major crops upwards. Prices of all kharif crops increased y-o-y since the start of the kharif harvesting season in September 2018. Major rabi crops, including wheat, rapeseed & mustard and barley have seen a y-o-y increase in their price for major part of 2018.

Among kharif crops, soyabean and bajra have seen the biggest increase in value of production. We estimate soyabean production in 2018-19 at 11.8 million tonnes, 7.5 per cent higher than last year. Average price of the commodity during September-December 2018 harvesting period was 14.8 per cent higher than last year. Thus, value of soyabean production is expected to grow by 23.3 per cent. However, this increase comes after a 21.5 per cent fall in the previous year. This implies that soyabean farmers have only recovered from the disastrous fall in incomes last year.

Production of bajra is expected to fall by 4.9 per cent to 8.6 million tonnes in 2018-19. Average price of the commodity during September-December 2018 was 28.4 per cent higher than last year. This implies a 22 per cent increase in its value of production in 2018-19. However, the increase this year will fail to make up for last year’s fall in value of production. The value of production of bajra fell by 22.6 per cent in 2017-18.

Paddy, the biggest kharif crop, is expected to see a third consecutive year of growth in its value of production in 2018-19. However, the magnitude of growth will be lower this year. Average market price of paddy during September-December 2018 was 3.8 per cent higher than last year. At this price, its value of production is expected to grow by three per cent. The crop saw a double digit growth in its value of production in 2016-17 and 2017-18.

Among kharif pulses, arhar and urad will see a fall in value of production for the second consecutive year in 2018-19. The value of production of arhar fell by 48.5 per cent in 2017-18 while that of urad fell by 27.8 per cent. This year, their value of production is expected to fall by over five per cent. Average price of arhar during September-December 2018 was 1.2 per cent lower than last year. During the same period, the average price of urad was 6.6 per cent higher y-o-y. Production of both the commodities is expected to fall in 2018-19. The production of arhar is expected to fall by 3.6 per cent while that of urad will fall by 12 per cent.

Cotton production is expected to fall by 3.8 per cent to 33.5 million bales in 2018-19. Average market price of cotton during September-December 2018 was 17.8 per cent higher than its price over the same period last year. At this price, its value of production will grow by 8.1 per cent. This will be the third consecutive year of a growth in its value of production. The value of production of cotton increased by 23.8 per cent and 1.6 per cent in 2016-17 and 2017-18, respectively.

Major rabi crops, namely wheat and rapeseed & mustard are expected to see their value of production grow by 11.3 per cent and 7.4 per cent, respectively, in 2018-19. Both the crops have seen a continuous increase in value of production since 2015-16. Wheat and rapeseed & mustard prices have increased y-o-y since April 2018.

The value of production of barley is expected to grow by 13.6 per cent in 2018-19. This increase is over a 3.9 per cent fall in value of production in 2017-18. Barley has seen a y-o-y increase in its price since July 2018. We expect wheat, rapeseed & mustard and barley to see a fall in production in 2018-19.

The value of production of gram is expected to fall by 0.6 per cent in 2018-19. This will be the second consecutive year of a fall in its value of production. In 2017-18, its value of production fell by 20.4 per cent. We expect gram production to fall by over 10 per cent to 10 million tonnes in 2018-19. Gram prices have been gradually moving upwards since June 2018. If prices increase further in the coming months, the value of production of gram is likely to see a positive growth.

At the current price, farm income is expected to grow by 6.8 per cent. Farm income saw a sluggish growth of 2.1 per cent in 2017-18. The rabi harvesting season is yet to begin. If prices of rabi crops increase further in the coming months, then better returns during the rabi season can drive farm income even higher.

The estimation of farm income for each crop is a multiplication of the average market price of the crop during the harvest period and the production estimate for a crop. The harvest period for kharif crops is taken as September-December. For rabi crops, the harvest period is March-May. However, for the 2018-19 rabi season, we have taken the average prices between November and December. For sugarcane, farm income is calculated using the fair and remunerative price (FRP).

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
7.7 +0.1
Consumer Sentiments Index
Base September-December 2015
44.7 0.0
Consumer Expectations Index
Base September-December 2015
46.9 -0.6
Current Economic Conditions Index
Base September-December 2015
41.2 +1.1
Quarterly CapEx Aggregates
(Rs.trillion) Sep 19 Dec 19 Mar 20 Jun 20
New projects 3.18 5.26 3.73 0.61
Completed projects 0.84 1.65 1.74 0.19
Stalled projects 0.41 0.61 0.77 0.11
Revived projects 0.43 0.83 0.42 0.55
Implementation stalled projects 0.90 0.15 9.55 0.08
Updated on: 09 Aug 2020 3:28PM
Quarterly Financials of Listed Companies
(% change) Sep 19 Dec 19 Mar 20 Jun 20
All listed Companies
 Income -2.3 -1.7 -4.8 -25.2
 Expenses -3.1 -2.2 -1.8 -27.0
 Net profit -1.3 -11.1 -45.0 -16.4
 PAT margin (%) 5.3 5.1 2.6 7.8
 Count of Cos. 4,450 4,422 4,068 815
Non-financial Companies
 Income -6.3 -5.5 -8.9 -35.8
 Expenses -6.7 -6.3 -4.9 -37.2
 Net profit -13.6 -14.1 -46.6 -37.9
 PAT margin (%) 5.8 5.7 3.6 7.0
 Net fixed assets 10.4 13.1
 Current assets 5.0 2.9
 Current liabilities 5.0 4.6
 Borrowings 8.4 14.6
 Reserves & surplus 5.9 2.2
 Count of Cos. 3,339 3,312 3,073 640
Numbers are net of P&E
Updated on: 09 Aug 2020 3:28PM
Annual Financials of All Companies
(% change) FY18 FY19 FY20
All Companies
 Income 8.4 13.2 5.6
 Expenses 9.8 13.4 3.8
 Net profit -40.0 21.8 27.0
 PAT margin (%) 2.0 2.4 6.3
 Assets 10.9 9.3 12.3
 Net worth 7.5 8.5 9.7
 RONW (%) 3.5 4.4 7.4
 Count of Cos. 26,669 25,353 1,255
Non-financial Companies
 Income 8.6 13.7 0.7
 Expenses 8.7 13.8 0.2
 Net profit -8.6 24.3 -2.8
 PAT margin (%) 2.7 3.2 8.5
 Net fixed assets 7.1 5.0 23.4
 Net worth 6.1 8.4 6.0
 RONW (%) 5.7 7.0 11.4
 Debt / Equity (times) 1.0 1.0 0.6
 Interest cover (times) 2.1 2.4 3.9
 Net working capital cycle (days) 77 70 18
 Count of Cos. 21,754 20,625 909
Numbers are net of P&E
Updated on: 05 Aug 2020 5:28PM