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Governments agricultural policies reinstate India’s position as a global agricultural superpower

  • Posted Date: June 16, 2020

Agriculture produce, prices, export, local demand and related government policies lay a significant bit of effect over stock prices of agricultural commodities. The same is affected by developments at a global scale as well. A stock advisory would be in a fine position to forecast the stock prices of agricultural commodities over long and short term. Stock tips and NCDEX tips offered by him would ensure profitable returns over investments over the time to come.

Let us take a look at the top driving factors in Indian agriculture.

1. The substantial population of India is the key driving factor in India’s demand for agricultural commodities. This is supported by an increase in rural and urban income.

2. External demand has given a rise to exports. Over the past 5 years, demands across Middle Eastern and central Asian nations have increased.

3. As mechanization in agriculture has enhanced, productivity and post harvest losses have both downsized. Indian government is further undertaking efforts to expand the reach of mechanization across areas wherein the farm power is low.

4. A number of favorable policies rolled out by present and previous governments are laying an effect over betterment of agriculturists and proper utilization of the produce. A few of the most significant among them are Parampargat Krishi Vikas Yojna and Pradhan Mantri Gram Sinchai Yojna. Similarly, a unified agrarian market also helps meet the same ends.

In a recent development, India has increased its import duty over wheat to 40% from 30% earlier. This is a step to appease and support local farmers, and India is world’s no.2 producer of wheat.

The step is vastly seen as a way to curb rural discontent in face of Lok Sabha elections. The voting began on 11th April and ends on 19th of May.

Wheat prices for 2019 have declined by 11% on a YOY basis. The underlying factor behind the same is a good supply from the previous year’s crop, and forecast of a fine output for the year.

Even while the prices of wheat have declined at a global scale, the flour mills across India may not want to import wheat in view of the hike in duty. They would be compelled to source the same from Indian farmers.

As the local production of wheat is now higher, the government is taking steps to ensure that sale of wheat to the Indian government comes above the support levels.

The government has increased the rates at which it buys wheat from local farmers by 6%. It now stands at Rs. 1840 per 100 kg.

As a trend, a quarter of wheat is purchased by the government at such state set prices. This helps create stocks in order to run an important food welfare program.

In 2019, it is forecasted that the wheat production across India will rise by 2% as compared to the previous year. It will stand at 99.12 million tones, which is a new record.

In India, the number of wheat crops grown yearly is just one. They are planted in late October and harvested in March.

The government’s wheat stock stood at 17 million tones on 1st April, as compared to the previous year. This stood at a value 30% higher as compared to the previous year.

Flour mill exports have been declining on a yearly basis, in view of government policies. In the 2017/18 fiscal year, Indian flour mills imported 1.65 million tons of wheat. This was a significant reduction from 5.7 million tons imported in the year prior to the same. The vast majority of the shipments were from Australia, Russia and Ukraine.

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