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 Agriculture in India: ISIC 01

AGRICULTURE

  • Being the single largest contributor to the nation’s GDP, Indian agriculture grew on average by an annual 12% between 2000 and 2010.
  • Throughout the review period, the value of agriculture more than tripled, reaching a total of INR18.4 trillion. It is noticeable that due to India’s favourable agro-climatic conditions, agriculture is the most important economical sector in the country, generating almost 17% of total economy, with more than half of the working population in India employed in this industry. Interestingly, agriculture in India is continuously growing, showing a significant jump during the last 60 years. The food grain production quadrupled, horticultural crops and milk by 6 times, and eggs by 27 times since the early 1960s. In 2008-09, India harvested 230 million tonnes of food grains and more than 100 million tonnes of milk.
  • In 2010, households remained the most important consumer group, accounting for more than a half of total demand for agricultural commodities and increasing their spending by 10% annually since 2000. Business buyers on the other hand, enjoyed average growth of 13% per annum and consistently increased their share, from 37% of total value in 2000 up to 41% in 2010. Government spending and capital purchases accounted for the remaining 1% and 7% respectively.
  • The turnover of local producers grew in the same manner as the overall industry, increasing by 12% per annum since 2000 and amounting to INR17.5 trillion at the end of the review period. Statistically, India was the leading country in the world in producing coconuts, mango, banana, milk and dairy products, cashew nuts, pulses, ginger, turmeric and black pepper. It was also the second largest producer of rice, wheat, sugar, cotton, fruits and vegetables. Thus, it is no surprise that the sector of crops, gardening and horticulture continued as the main source of income for agriculture, generating 70% of the turnover in 2010.
  • Moreover, the diversity of fruits and domestic animals that Indian farms produce is very high. Rice, for example, has been diversified into at least 50,000 distinct varieties. A mango has over 1,000 varieties, ranging from a size of a peanut to a melon. Over time, mixed farming, including crops grown and combined with the farming of animals, was overtaken by farming of animals and in 2010 comprised 14% of turnover. In the meantime, farming of animals recorded the fastest growth of 22% on average per annum and in 2010 accounted for 15% of the local industry’s income, up by eight percentage points as compared to 2000. The remaining 2% was generated by animal husbandry services and hunting.
  • Agricultural trade between 2000 and 2010 was still of only marginal importance compared to the size of the overall agriculture industry in India which can be boosted further if the export of traditional and new agricultural products like marine products, rice (basmati), other cereals, tea, coffee, cashew nuts, oil meals, floriculture, cotton, and niger seed, can be increased further. In percentage terms, imported products accounted for just 1% of total value share, with Myanmar and Canada being the leading partners. In the meantime, exports comprised more than 2% of local production output, and the main export destinations were neighbours Bangladesh and China.
  • Indian agriculture faces internal and external challenges. Factors such as monsoon dependence, water-management, fragmented land-holding, low level of input usage, antiquated agronomic practices, lack of technology application, and poor rural infrastructure are some of the key internal constraints that hold up robust growth of the industry in India. In the meantime, subsidies and barriers have distorted international agricultural trade, rendering agro-exports from developing nations such as India uncompetitive.
  • There are many associations and organisations in India, which play an important role in the production of food commodities and other raw materials. These institutions also apprehend the problems and accordingly formulate actions to achieve educational improvement, economic opportunity and social advancement and, thereby, to promote the national well-being. A few of the largest agricultural companies in India include Harrisons Malayalam Ltd, a part of RPG Enterprises, which cultivates and markets various agricultural products; Sakuma Exports Ltd , which is involved in developing and exporting a range of agro-based commodities such food grains, pulses, watermelon, onion, cashews, jiggery, turmeric, and cotton; Srinivasa Hatcheries Ltd which is engaged in the breeding of layers and broilers, rearing of commercial broilers, and trading in poultry and poultry related products; and JK Agri-Genetics Limited, a division of JK Tyre & Industries Ltd, engaged in the research and development, production, processing and marketing of seeds.
  • Agriculture, being the most important economic sector in India, enjoyed profit margins of 61% of total turnover EBITDA over the review period. It is noticeable that profit margins remained rather stable since 2000, with only minor fluctuations. Spending on suppliers remained the largest expense item for the industry, accounting for 84% of the total costs on average, and increasing in value by 12% annually since 2000. Costs related to labour comprised approximately 23% of the costs, and increased nominally by 9% per annum since the beginning of the decade.
  • Growth of agriculture in India is predicted to continue at a 13% per annum pace from the review period years over the forecast period of 2011-2016. Rapidly rising prices of most agricultural commodities make life harder for many Indians, but increase the cash flows of farmers. The performance of the industry will depend on further legislation being imposed or changed. It is expected that there will be additional governmental programmes in promoting agricultural development and increasing output, which will aim to optimally and efficiently utilise the different sources of human, animal, and mechanical/electrical power; increase the productivity of land and labour; seeds, fertilisers, pesticides, and irrigation water; improve the quality of farm operations by promoting equipment with appropriate technology, thereby reducing the cost of production and the drudgery associated with various agricultural operations. For future development it is expected that the strategy and programmes of the Department of Agriculture and Cooperation will be more directed towards the promotion of eco-friendly and selective agricultural equipment and practices.

Chart 1 Hierarchical Position of Agriculture Industry

Source: Euromonitor International

DEFINITIONS

  • Category: A – Agriculture, hunting and forestry
  • Division: 01 – Agriculture

This division includes:

Crops, gardening and horticulture:

  • growing of crops; market gardening; horticulture
  • growing under cover

Farming of animals

  • farming of cattle, sheep, goats, horses, asses, mules and hinnies; dairy farming
  • other animal farming; production of animal products n.e.c.

Mixed farming

  • mixed farming; growing of crops combined with farming of animals

Animal husbandry services:

  • animal husbandry activities on a fee or contract basis: activities related to artificial insemination; herd testing services, droving services, agistment services, poultry caponising, coop cleaning, etc; activities to promote propagation, growth and output of animals; farm animal boarding and care

Hunting:

  • hunting and trapping of animals for food, fur, skin, or for use in research, in zoos or as pets
  • production of fur skins, reptile or bird skins from hunting or trapping activities
  • game propagation
  • service activities to promote commercial hunting and trapping
  • catching of sea mammals such as walrus and seal

Exclusions: provision of feed lot services; service activities to promote commercial hunting and trapping; marketing activities of commission merchants and co-operative associations; activities of agronomists and agricultural economists; veterinary activities; production of fur skins, reptile or bird skins from ranching operations; raising of animals on ranching operations; catching of whales; production of hides and skins originating from slaughterhouses; hunting for sport or recreation.

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