ECONOMICS & POLITICS / TRACTOR INDUSTRY

Indian Agriculture and Tractor Industry Update: July 2012

Posted on July 30, 2012 by BHUWANCHANDLeave a comment

Indian Agriculture and Tractor Industry Update: July 2012 Overview of current Demand & Supply side factors indicates a moderate growth (8-10%) scenario for 2012-13 tractor market in India. The Agriculture sector in India still has tremendous growth potential but the monsoon 2012 has been lower than normal in the key contributing Tractor Market (UP, Gujarat, Rajasthan, MP, Haryana, Punjab), triggering concern on drought 3333like situation in some states. Govt. support for Agriculture sector in terms of significant increase in MSPs continue Growth of non-agri usage may improve as the Govt. is expected to focuses on Infrastructure development as key area to revive the Economic Growth in India. The policy paralysis and visible lack of governance is as much, if not a bigger, reason for this gloomy outlook as the deficient monsoon.

Demand Side Factors Agriculture Sector: Deficient monsoon: A big cause of concern Major crop output to fall by 0.5% in 2012-13: CMIE Major crop production is projected to decline in 2012 -13 by 0.5%, owing to a fall in output of non-food crops like soyabean, cotton and rapeseed, the Centre for Monitoring Indian Economy (CMIE) said in its monthly report. Cotton production is expected to fall by 7.8% to 32.2 million bales in 2012-13 even though the acreage rose by over 12% to 29.3 lakh hectares by June. We expect the cultivation to slow down and settle at level lower than last year. Hence, a fall in acreage is expected to limit production in 2012-13, it said.

Kharif cultivation of foodgrains and oilseeds has been sluggish due to delayed rains. Weak precipitation has dampened the Central governments efforts and kharif sowing have been undertaken on a mere 127 lakh hectares by June 29, lower by 12% year-on-year, it said. The Prime Ministers Office has sounded an alert over a deficient monsoon Directing ministries to help states facing drought-like situations by operationalizing contingency plans to distribute seeds, augment fodder and power and deal with drinking water shortages. Food minister K V Thomas indicated that drought is impending in Maharashtra, Gujarat, Karnataka and western Rajasthan. PMO is monitoring the progress of the kharif season on a weekly basis. There is a reduction of eight million hectares in crop area sown compared to last year, the release says. Thomas feels rice production will not be majorly impacted. Food grain production and sugarcane will remain more or less the same. The problem is with pulses and oilseeds. These are the two crops, where production will come down, he said. Sowing of coarse grains like millet, jowar and ragi is short by 30 lakh hectares compared to normal and this is unlikely to be made up. There are concerns over the paddy crop in Haryana, Punjab and UP Although Indian Meteorological Department which predicted a normal monsoon this year allows for a 4% plus-minus error in its predictions, PMO has spelt out this year rainfall is likely to be at the lower end of the range or around 92% of LPA