This report covers the agriculture sector in India, analyzing market trends through H2 2013 and also predicting the market outlook through 2014. The report also outlines the market position of leading players such as Tata Coffee, Ruchi Soya Industries, and McLeod Russel India.

Agriculture is the third-largest sector of India’s economy after services and industry. Though the country’s dependence on agriculture has fallen considerably, its importance endures. More than half of the Indian population still depends on this sector for their livelihoods. India has emerged as a global power in the agriculture sector by becoming a leading producer of food grains, oilseeds, commercial crops, and fruits and vegetables. Yet, the country needs to increase the yield of crops to feed its ever-growing population. India continued to lead the world in the production of rice, wheat, cotton, sugarcane, tobacco, fruits and vegetables.

But the major challenge for the country is the insufficient production of pulses and oilseeds. Scanty monsoon rainfalls in the second half of 2012 resulted in a reduced production of crops in the fiscal year 2013, especially the summer (Kharif) crops. However, the situation was much better in the five months of the 2013 monsoon season (June to October). Above-average rainfall has been registered during the current season, which is expected to yield a bumper harvest and an enhanced agricultural output in FY14.

The outlook for Indian agriculture is firm because of growing production and improving yields. Reforms, for instance the opening of the retail sector to foreign companies and the adoption of the model APMC act by states, will increase direct sourcing from farmers and in turn benefit the farmer and the sector as a whole. The only concern for India is to match the agricultural growth with population growth. The country needs to restrain its reliance on agricultural imports, which may put the currency under pressure and cause an imbalance in the current account.

Key Points:

• This report offers key statistics and financial information for leading market players including Tata Coffee Limited (TCL), Ruchi Soya Industries Limited (RSIL), and McLeod Russel India Limited (MRIL).

• According to MOSPI, the total GDP contribution of the agriculture and allied sectors at factor cost was around USD 303bn at current prices. Agriculture and allied sectors contributed around 13% to the country’s GDP as of FY13.

• The agriculture sector witnessed subdued growth in FY13. The sector registered a growth of 2% in FY13 against 3.7% recorded in FY12.

• The country’s food grain production grew at a CAGR of 4% during 2005–12. However, drought conditions witnessed by the country in FY13 caused a 0.8% dip in production.

• Less-than-normal rainfall was recorded in the 2012 monsoon season, which led to lower agricultural growth in FY13. However, in 2013 the country witnessed above-average rainfall during the monsoon months, which is expected to result in a large growth in agricultural output in FY14.