Domestic cereal production has increased steadily over the last 50 years. Cereal prices, on the other hand, have risen faster. According to a report, the weighted average crop price index for cereal crops grew at a 3-4 percent CAGR (Compounded Annual Growth Rate) between fiscal years 2017 and 2022.
Even in the current fiscal year, cereal prices have risen significantly year on year in the first nine months, with wheat and paddy up 8-11 percent and maize, jowar, and bajra up 27-31 percent, according to the report.
In absolute terms, the price sentiment for cereal crops is expected to be strong, according to Crisil. Wheat production is expected to increase during the current rabi season, putting downward pressure on prices, though heatwaves remain a key monitorable, according to the report.
Production expectations for kharif crops such as paddy, maize, and millets are positive if the monsoon is normal and widespread.
"However, the National Oceanic and Atmospheric Administration's prediction of a higher chance of El Nino impact on the south-west monsoon would be a major monitorable as El Nino resulted in 14% lower rainfall and a 2-3% lower kharif cereal production during 2015," the report added.
CRISIL's Agriculture Report provides insights into rural India's field crops and production at the state and sub-regional levels. This provides a comprehensive view of farmer income in the upcoming cropping seasons.
