Industry Trend Analysis - Ongoing Agricultural Reforms To Support Long-Term Sector Growth - MAY 2017
BMI View: The outlook for India ' s agribusiness sector is positive for the 2017/18 season, amidst early forecasts for normal monsoon rainfall this year. In the longer term, ongoing reforms to the agricultural sector will support slow yield improvement. After a weak start for investment in agriculture at the beginning of his mandate, Narendra Modi has enacted a number of new schemes and allocated more generous funds to the sector aiming at increasing farm income and modernising agriculture. However, efforts to commercialise more GMOs and to reform fertiliser subsidies remain fruitless for now.
The outlook for India's agribusiness sector is positive for the 2017/18 season, amidst early forecasts for normal monsoon rainfall this year. After two years of adverse weather with weak monsoon rainfall in 2014 and 2015, India's agribusiness sector started recovering in 2016 and will return to strong growth in 2017 and 2018. In April, the India Meteorological Department (IMD) estimated in its first forecast of 2017 that this year's summer monsoon rainfall will be normal, coming in at 96% of seasonal averages, and that the rain will be distributed across the country. India's private weather forecaster, Skymet, made similar predictions a few weeks earlier, with rainfall expected to be at 95% of long-term averages.
Grains: Near to normal monsoon rainfall in 2016 helped grain production pick up strongly in the 2016/17 season and we forecast this trend to continue in 2017/18. In spite of the ongoing recovery in production, the trade outlook is not improving due to low stocks and robust consumption growth. India will remain a net wheat importer in 2017/18 and will see its rice exports remain at lower levels than in recent years.
Sector Rebounding In 2017 India - Agribusiness Market Value & Select Commodities Production Growth e/f = BMI estimate/forecast. Source: National sources, BMI
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