● Cereals matter less than widely believed. Of all agri. items, cereals
are impacted most by MSPs and are also most analysed. But they
were just 21% of FY05 agri. output, and likely lower now. They also
matter less for inflation, which is currently all about fruits & vegetables
and meat (and these are as important as cereals). Full report.
● Per capita consumption of cereals has been falling in India for
decades, as automation reduces need for calories. The decline
now exceeds population growth implying flat cereal demand. But
production is still rising with improving yields, creating surpluses.
Cereal inventory is at record levels despite surge in exports.
● A slowdown in Monsoons from mid-Aug has reduced the YoY
increase in acreage sown. Further, cereals, pulses, oilseeds,
fibres and sugar form 40% of agri GDP (only ~5.2% of total GDP)
● But the broader agricultural story remains robust. Rising yields for
laggard states will continue to push avg. yields up. Rising cereal
surpluses should aid exports; improving oilseeds/pulses acreage
should help cut imports. But for inflation to fall, fruits & vegetables
prices need to fall (and these are not as impacted by monsoons).
are impacted most by MSPs and are also most analysed. But they
were just 21% of FY05 agri. output, and likely lower now. They also
matter less for inflation, which is currently all about fruits & vegetables
and meat (and these are as important as cereals). Full report.
● Per capita consumption of cereals has been falling in India for
decades, as automation reduces need for calories. The decline
now exceeds population growth implying flat cereal demand. But
production is still rising with improving yields, creating surpluses.
Cereal inventory is at record levels despite surge in exports.
● A slowdown in Monsoons from mid-Aug has reduced the YoY
increase in acreage sown. Further, cereals, pulses, oilseeds,
fibres and sugar form 40% of agri GDP (only ~5.2% of total GDP)
● But the broader agricultural story remains robust. Rising yields for
laggard states will continue to push avg. yields up. Rising cereal
surpluses should aid exports; improving oilseeds/pulses acreage
should help cut imports. But for inflation to fall, fruits & vegetables
prices need to fall (and these are not as impacted by monsoons).