Financial Daily from THE HINDU group of publications
Tuesday, Nov 25, 2003
Industry & Economy - Economy
Agri-Biz & Commodities - Trends
Farm income surplus may top Rs 40,000 cr Foodgrains output seen at 108.45 mt
Chennai , Nov. 24
THE farming community in the country is likely to be left with a cash surplus of about Rs 40,000 crore after the kharif crop harvest compared to last year.
The surplus is seen in the light of a 19 per cent increase in the foodgrain production and a record oilseeds crop.
The Centre has projected foodgrains output at 108.45 million tonnes (mt) during kharif against 90.48 mt last year, while oilseeds production is seen at 15.8 million tonnes (9.22 mt).
The surplus comes from a rare phenomenon of high production and steady prices this season.
Prices of rice, pulses, oilseeds and cotton are ruling steady to firm in tune with the global trend.
The figures have been arrived at by multiplying the projected production and current average prices against last year's production and average prices.
For example, the value of the 75.05 mt rice estimated to be produced this year is Rs 86,382.55 crore with the average price of rice being Rs 11.51 a kg.
Last year, the production was 66.51 mt and the average price was Rs 10.66.
Rice prices are ruling higher since its global stocks are seen declining 20 mt to 102 mt.
The Food and Agriculture Organisation (FAO), in its latest report, says rice prices are seen steady in view of "consumption outpacing production". According to the report, rice stocks in China and India are seen down 16 mt and 2 mt respectively.
Though prices of coarse pulses such as jowar and bajra are a tad lower this year, a seven-mt rise in production has resulted in an increase in their value.
But the situation is different in the case of maize (corn) among coarse cereals.
Not only has a record production of 12.80 mt been projected but the prices are also higher by Rs 30 a quintal.
Oilseeds production is a revelation this kharif. The farmers have got higher yield and also competitive prices.
For example, in the case of soyabean, the average yield is up at around 1.2 tonnes a hectare (0.7 tonne).
This has more than compensated about Rs 21 per quintal fall in the prices. Farmers this year are getting around Rs 1,325 a quintal for soyabean (Rs 1,346).
Same is the case with groundnut, where the farmers are realising Rs 97 a quintal lower against Rs 1,897 fetched last year. However, the estimated output at 5.93 mt is seen coming good against 3.56 mt last year.
Despite a 63 per cent rise in oilseeds production, prices are ruling steady in the wake of global stocks seen falling 2.1 mt to 5.4 mt.
This is mainly in view of the soyabean crop in the US falling by over 4 mt.
Cotton is yet another crop that is seen benefiting the farming community.
The production has recovered to 170 lakh bales (of 170 kg) and the average return for the growers per bale has increased to Rs 6,192 a quintal (Rs 4,160).
Cotton prices are up this year on demand for exports.
Globally, the consumption is projected at 20.78 mt, while production is seen at 19.95 mt leaving a deficit of 0.838 mt.
A marked change this year is that farmers' produce is being sold off quickly. Still, the surplus cash will take sometime to be spent.
"The cotton crop is seen arriving till as late as February," say traders.
The farmers are currently engaged in rabi sowing and a small part of the surplus is being invested back in higher fertiliser and pesticide consumption besides purchase of certified seeds.
"During kharif, oilseed farmers, in particular, are seen making a minimum profit of Rs 10,000 - Rs 15,000 per hectare," industry experts say.
"The rest of the surplus the farmer has may be spent around January-February only, close to the Holi season," they say.
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