With the monsoon forecast to be only slightly below average, we expect crop production in 2010/11 to increase significantly owing to higher yields, according to a new report, India Agribusiness Report Q4 2010, from Companies and Markets.

Over the five-year forecast period, production across all agricultural sub-sectors will be positive, spurred by increased demand, foreign direct investment. Dairy and livestock will also benefit from improved technology adoption, which could set a strong example and produce a model for other sub-sectors to follow.

Sugar production growth to 2013/14 will be 105 per cent. Growth will be dictated by increasing domestic per capita consumption. However, this growth is also a function of base effects.

Beef and poultry production will both increase – by 29 per cent and 41 per cent, respectively – to 2013/14 due to increased demand from higher incomes and prevalence of western style restaurants.

Because of marketing schemes targeted at the general population and generally greater demand for high-value dairy products such as yoghurt and cottage cheese, the report forecasts butter and milk production to grow by 38 per cent and 26 per cent, respectively, to 2013/14.

2010 real GDP growth will be 7.8 per cent and is predicted to average eight per cent from now until 2014.

Consumer price inflation will reach 16.6 per cent year-on-year in May 2010, up from 5.7 per cent in May 2009.

With the monsoon registering only slightly below average up to 7 July, the sectors deeply affected by the previous year's drought (rice, sugar, grains) should increase production considerably year-on-year in 2009/10. However, we note that these are generally due to base effects and when harvest yields are compared internationally, India's agricultural production still has room to improve.

Indian agriculture will benefit greatly from increased multinational investment and technological improvements in various sectors. In dairy, large firms Reliance, DCM, Bharti and ITC have all entered the market, while in coffee, Segafredo Zanetti, News Café and Starbucks are finally gaining a foothold in a market experiencing moderate but consistent growth. The dairy and livestock sectors should get a significant boost in the form of information holding micro-chips and other technological advances.

Strong economic growth will lead to increased incomes among India's vast population. This, combined with a youthful population and increasing urbanisation, means Indian demand for sugar and meat products. Producers should certainly benefit from this, but the government will also be keeping a keen eye on production levels in order to ensure what they consider manageable prices in order to control food price inflation.

Further Reading

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You can view the full report (fee payable) by clicking here.