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Agricultural Industry - Market Overview, Future and Impact of COVID-19

Approximately 58% of India's population relies mostly on agriculture for their livelihood. Following the pandemic-driven recession in 2021, consumer expenditure in India would grow by as much as 6.6%. Due to its enormous potential for value addition, particularly within the food processing industry, the Indian food industry is primed for tremendous expansion and will likely increase its contribution to the global food trade every year. Food processing, one of the largest sectors in India, contributes 32% of the nation's total food market and is rated fifth in terms of production, consumption, export, and expected growth.

 

According to the Indian Council of Agricultural Research (ICAR), growing consumer awareness about the benefits of eating vegetables to meet a variety of dietary demands and nutritional requirements has increased consumer demand, which has in turn increased vegetable output.

 

Exotic vegetables have recently become more popular in India among urban residents and gourmet hotels, including mushrooms, green olives, fresh broccoli, and many more products.

The Nilgiris district in Tamil Nadu produces the finest quality of lettuce, while freshly grown avocados can be found in Himachal Pradesh.


By 2025, the Indian agricultural sector is expected to grow to a value of US$24 billion. With 70% of sales coming from retail, India has the sixth-largest food and grocery market in the world. The output of food grains in India is projected to be 316.06 MT in FY 2021–2022, according to the second advance estimate. Moreover, Agriculture in India is projected to register a CAGR of 4.9% during the forecast period (2022-2027).


Undoubtedly, the main source of employment in India is the agricultural sector, especially in the vast rural areas. Additionally, it makes a considerable contribution to the GDP (GDP). Some of the reasons promoting agriculture in the nation include the large share of agricultural land and the variety of agroclimatic conditions for farming different crops. Programs like the Parampara at Krishi Vikas Yojana (PKVY) encourage farmers to produce goods free of pesticides and residue, which is helping to boost organic farming.


In terms of vegetable output, India comes second behind the United States in the production of potatoes, onions, tomatoes, okra, eggplant, cabbage, and cauliflower. If better and higher-quality seeds are used, together with improved traits under the nation's superior crop agronomy, significant productivity gains can be made even with diminishing land and water resources. In India, the average yields in open fields have been continuously rising thanks to extensive hybrid agriculture.


Market Overview

Impact of COVID- 19 On Agricultural Industry

The harvesting process, which typically begins in mid-April, was entirely thrown off balance during the COVID-19 outbreak, posing serious financial problems for the Indian agriculture industry. The infrastructure that supports India's agriculture industry was also impacted by a lack of labour. Due to the severe restrictions on crossing state borders, prevented the movement of crops and negatively impacted sales. Additionally, lockdowns in the nation's major economies caused delays and backlogs in supply chains while exports encountered logistics and transport issues, and there were more onerous customs regulations, among other effects.

Market Trends

The expansion and improvement of agriculture in India have been greatly aided by the Indian government. By introducing numerous policies, the government is making every effort to promote the expansion of agriculture through the Ministry of Agriculture. 


To increase farmers' incomes in the upcoming years, the government, for instance, introduced three agri-reform bills in September 2020: the Farmer's Produce Trade and Commerce (Promotion and Facilitation), the Farmer's (Empowerment and Protection) Price Assurance and Farm Services Agreement, and the Essential Commodities (Amendment) Act. 


The government provided USD 505.1 million for the Paramparagat Krishi Vikas Yojana (PKVY) programme in 2018, encouraging and assisting farmers to grow vegetables organically.


15.9 billion dollars (Rs. 1.24 lakh crore) have been allotted for the Department of Agriculture, Cooperation, and Farmers' Welfare in the Union Budget for 2022–2023. 


The Department of Agricultural Research and Education has been given a budget of Rs. 8,514 crore (US$ 1.1 billion). 


The Indian government intends to introduce Kisan Drones for nutrient and pesticide spraying, crop evaluation, and digitization of land data.

 

NABARD will help to establish a blended capital fund that will focus on the agricultural start-up ecosystem that would be used to finance agricultural and rural enterprise startups.


Looking at the trends and other factors it can be concluded that the increased investments and constant improvements in the agricultural industry would give the nation's agriculture sector a much better momentum in the upcoming years.


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