This report profiles India’s agriculture industry, discussing market trends and outlook into 2014 and beyond. The report also highlights leading players in the sector including Tata Coffee Ltd, Ruchi Soya Industries Ltd and McLeod Russel India Ltd.

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 cannot be forsaken. Still, more than half of the Indian population depends on this sector for their livelihood. India has emerged as a global power in the agriculture sector by becoming a leading producer of food grains, oilseeds, commercial crops, 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.

In FY14, the Indian agriculture sector recorded strong growth backed by good rainfall during the monsoon season. Surplus rainfall in FY14 led to strong agricultural harvest with production growth in all the major crops. However, the situation turned around in FY15 with the country witnessing a deficit in rainfall during the FY15 monsoon season. This scanty rainfall has led to drought like conditions in many parts of India, which will likely result in a lower agricultural output during the fiscal year.

The long-term outlook for Indian agriculture is firm, thanks to growing production and improving yields. Reforms, such as the opening of retail sector to foreign companies and adoption of 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:

• According to the Ministry of Statistics and Program Implementation (MOSPI), the agriculture and allied sectors contributed around 14% to the country’s GDP as of FY14.

• The country’s food grain production grew at a CAGR of 3% during 2005-14. Good monsoon rainfall received by the country in FY14 led to a y/y growth of 3% in food grain production.

• Agriculture sector witnessed strong growth in FY14 backed by good monsoon rainfall. The sector registered a growth of 4.7% in FY14 against 2% recorded in FY13.

• The country saw a 12% deficit in the rainfall during the FY15 monsoon season. This scanty rainfall has led to drought like conditions in many parts of India, which will likely result in a lower agricultural output during the fiscal year.