The agricultural sector is set to register another record-breaking year as food grains and horticultural output are estimated to scale 292 million tonnes and 313 million tonnes respectively. Significant increases in the production of cereals, pulses, oil seeds and vegetables is being credited for driving this growth.

However, high-value crops such as sugarcane, spices and fruits saw a slump in output. The agricultural production would have been significantly higher but for the excessive rainfall received during the Kharif season and a locust attack that destroyed seasonal Rabi crops in Gujarat and Rajasthan. A silver lining: the availability of water, and unusually high reservoir levels that augur well for continued high agri output into 2020.

Increasing agri commodity prices have been a boon for farmers, with the price realisation of rice and wheat being significantly higher compared to the Minimum Support Price. Recently released GDP estimates for the third quarter of FY-2020 show a healthy rise of 13.7%. But it also poses a fresh challenge to the government.

Around ~35% of wheat produced in the country is purchased by the Food Corporation of India and other state agencies. This means that approximately 28-37 million tonnes will be added to the existing inventory. Management of stored stocks and its timely liquidation will have a significant bearing on the price realisation in the months ahead.

Government spending on agriculture and rural development through income support schemes like PM-KISAN and higher employment under MGNREGA had seen significant increases by the end of FY-2019. This will likely benefit the cashflow in the rural economy.

Developing the collective strength of farmers through better access to quality inputs, technology, credit and marketing can be a fundamental strategy for the growth of the Indian agricultural sector. The Cabinet Committee on Economic Affairs’ approval for the formation and promotion of 10,000 new farmer producer organisations is a step in the right direction.