Agricultural Productivity in India

Written By: Jagriti Shahi, Business Analyst at Global Launch Base

Agriculture is the backbone of the Indian economy, contributing to around 16.5% of India’s GDP and employing over 50% of the workforce. The Indian agriculture market is valued at USD 435.9 billion as of 2022 and is expected to reach USD 580.82 billion by 2028, growing at a CAGR of around 4.9% between 2023 and 2028.

Figure: Indian Agriculture Market Size — 2019–2023

As you can see, the Indian agriculture market has grown steadily in recent years, with a CAGR of 6.2% from 2019 to 2022. The market is expected to continue to grow in 2023 but at a slower pace.

Major crops are grown in India.

The major crops grown in India include rice, wheat, maize, pulses, oilseeds, fruits, and vegetables. India is the world’s largest producer of rice, wheat, pulses, and milk. It is also the second-largest producer of fruits and vegetables in the world.

Rice: Rice is the staple food of India and is grown in almost all parts of the country. It is the second-largest producer of rice in the world. India produces over 120 million metric tons of rice per year. The major rice-growing states are West Bengal, Punjab, Haryana, Uttar Pradesh, and Andhra Pradesh.

Figure: Average Rice Productivity (Ton/Ha) — 2022

As we can see, India’s average rice productivity is lower than that of the Netherlands and the United States. However, India has made significant progress in improving rice productivity in recent years, and it is now one of the top 10 rice-producing countries in the world.

There are a number of factors that can affect rice productivity, including:

• Climate: Rice is a tropical crop, and it requires warm temperatures and plenty of water to grow well. India’s climate is generally favorable for rice production, although some regions can experience drought or excessive rainfall.
• Soil: Rice grows best in rich, loamy soil. India has a variety of soil types, but some regions have soil that is not well-suited for rice production.
• Irrigation: Rice is a water-intensive crop, and it requires irrigation to grow well. India has a large network of irrigation canals and wells, which helps to ensure that rice crops have enough water to grow.
• Fertilizer: Rice crops require fertilizer to grow well. India has a large domestic fertilizer industry, which helps to ensure that farmers have access to affordable fertilizer.
• Varieties: Many different varieties of rice can be grown, and some varieties are more productive than others. India has a large number of rice varieties, and farmers are increasingly choosing to grow high-yielding varieties.

The Netherlands has a higher average rice productivity than India due to a number of factors, including:

• Climate: The Netherlands has a mild climate with plenty of rainfall, which is ideal for rice production.
• Soil: The Netherlands has mostly sandy loam soil, which is well-suited for rice production.
• Irrigation: The Netherlands has a highly developed irrigation system, which ensures that rice crops have enough water to grow well.
• Fertilizer: Farmers in the Netherlands have access to affordable fertilizer, which helps to boost rice productivity.
• Varieties: Farmers in the Netherlands have access to a wide variety of high-yielding rice varieties.

The United States has a higher average rice productivity than India due to a number of factors, including:

• Climate: The United States has a variety of climates, but most of the rice-growing regions have a warm, temperate climate that is suitable for rice production.
• Soil: The United States has a variety of soil types, but most of the rice-growing regions have soil that is well-suited for rice production.
• Irrigation: The United States has a well-developed irrigation system, which ensures that rice crops have enough water to grow well.
• Fertilizer: Farmers in the United States have access to affordable fertilizer, which helps to boost rice productivity.
• Varieties: Farmers in the United States have access to a wide variety of high-yielding rice varieties.

Wheat: Wheat is the second most important food crop in India after rice. It is grown in the northern and western parts of the country. India is the second largest producer of wheat in the world, after China. India produces over 113 million metric tons of wheat per year. The major wheat-growing states are Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, and Rajasthan.

Figure: Average Wheat Productivity (Ton/Ha) — 2022

As we can see, the Netherlands has the highest average wheat productivity, followed by France and Canada. India has the lowest average wheat productivity, but it has been steadily increasing in recent years.

There are a number of factors that can affect wheat productivity, including:

• Climate: Wheat is a cool-season crop, and it requires a moderate amount of rainfall to grow well. The Netherlands has a mild climate with plenty of rainfall, which is ideal for wheat production. India has a more varied climate, with some regions being hot and dry and others being cool and humid.
• Soil: Wheat grows best in rich, loamy soil. The Netherlands has mostly sandy loam soil, which is well-suited for wheat production. India has a variety of soil types, but some regions have soil that is not well-suited for wheat production.
• Irrigation: Wheat crops require irrigation in some regions, especially in drier climates. The Netherlands has a highly developed irrigation system, which ensures that wheat crops have enough water to grow well. India also has a well-developed irrigation system, but some regions do not have access to irrigation water.
• Fertilizer: Wheat crops require fertilizer to grow well. Farmers in the Netherlands and France have access to affordable fertilizer, which helps to boost wheat productivity. Farmers in India also have access to fertilizer, but it is often more expensive than in other countries.
• Varieties: There are many different varieties of wheat that can be grown, and some varieties are more productive than others. Farmers in the Netherlands and France have access to a wide variety of high-yielding wheat varieties. Farmers in India also have access to high-yielding varieties, but they are not as widely available.

Maize: Maize, also known as corn, is a versatile crop that is used for food, feed, and industrial purposes. It is grown in all parts of the country. India is the fourth largest producer of maize in the world, after the United States, China, and Brazil. India produces over 105 million metric tons of maize per year. The major maize-growing states are Andhra Pradesh, Karnataka, Telangana, Madhya Pradesh, and Maharashtra.

Figure: Average Maize Productivity (Ton/Ha) — 2022

As you can see, the United States has the highest average maize productivity, followed by the Netherlands and France. India has the lowest average maize productivity.

There are a number of factors that can affect maize productivity, including:

• Climate: Maize is a warm-season crop, and it requires a moderate amount of rainfall to grow well. The United States has a variety of climates, but most of the maize-growing regions have a warm, humid climate that is ideal for maize production. The Netherlands has a mild climate with plenty of rainfall, which is also suitable for maize production. India has a more varied climate, with some regions being hot and dry and others being cool and humid.
• Soil: Maize grows best in rich, loamy soil with a good drainage system. The United States has mostly sandy loam soil, which is well-suited for maize production. The Netherlands has mostly clay loam soil, which is also suitable for maize production. India has a variety of soil types, but some regions have soil that is not well-suited for maize production.
• Irrigation: Maize crops require irrigation in some regions, especially in drier climates. The United States and the Netherlands have highly developed irrigation systems, which ensure that maize crops have enough water to grow well. India also has a well-developed irrigation system, but some regions do not have access to irrigation water.
• Fertilizer: Maize crops require fertilizer to grow well. Farmers in the United States, the Netherlands, and France have access to affordable fertilizer, which helps to boost maize productivity. Farmers in India also have access to fertilizer, but it is often more expensive than in other countries.
• Varieties: There are many different varieties of maize that can be grown, and some varieties are more productive than others. Farmers in the United States, the Netherlands, and France have access to a wide variety of high-yielding maize varieties. Farmers in India also have access to high-yielding varieties, but they are not as widely available.

Oilseeds: Oilseeds are grown for the oil that is extracted from them. Oilseeds are used for cooking, making biodiesel, and other industrial purposes. India is the world’s fourth largest producer of oilseeds, after China, the United States, and Brazil. India produces over 38 million metric tons of oilseeds per year. The major oilseed-growing states are Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, and Andhra Pradesh.

Figure: Average Oilseeds Productivity (Ton/Ha) — 2022

As you can see, the Netherlands has the highest average oilseeds productivity, followed by Canada and the United States. India has the lowest average oilseeds productivity.

There are a number of factors that can affect oilseeds productivity, including:

• Climate: Oilseeds are a diverse group of crops, and they have a wide range of climate requirements. Some oilseeds, such as soybeans, require a warm, humid climate, while others, such as rapeseed, can tolerate cooler temperatures. The Netherlands has a mild climate with plenty of rainfall, which is ideal for many oilseeds. India has a more varied climate, with some regions being hot and dry and others being cool and humid.
• Soil: Oilseeds grow best in rich, loamy soil with a good drainage system. The Netherlands has mostly clay loam soil, which is well-suited for many oilseeds. India has a variety of soil types, but some regions have soil that is not well-suited for oilseeds.
• Irrigation: Oilseed crops require irrigation in some regions, especially in drier climates. The Netherlands has a highly developed irrigation system, which ensures that oilseed crops have enough water to grow well. India also has a well-developed irrigation system, but some regions do not have access to irrigation water.
• Fertilizer: Oilseed crops require fertilizer to grow well. Farmers in the Netherlands and France have access to affordable fertilizer, which helps to boost oilseed productivity. Farmers in India also have access to fertilizer, but it is often more expensive than in other countries.
• Varieties: There are many different varieties of oilseeds that can be grown, and some varieties are more productive than others. Farmers in the Netherlands and France have access to a wide variety of high-yielding oilseeds varieties. Farmers in India also have access to high-yielding varieties, but they are not as widely available.

Fruits and vegetables: India is a major producer of fruits and vegetables. It is the second largest producer of fruits and vegetables in the world, after China. India produces over 185 million metric tons of fruits and vegetables per year. The major fruit and vegetable-producing states are Maharashtra, Andhra Pradesh, Karnataka, Gujarat, and Madhya Pradesh.

Figure: Average Fruits and vegetables: Productivity (Ton/Ha) — 2022

As you can see, the Netherlands has the highest average fruit and vegetables productivity, followed by the United States and France. India has the lowest average fruit and vegetables productivity.

There are a number of factors that can affect fruit and vegetable productivity, including:

• Climate: Fruits and vegetables are a diverse group of crops, and they have a wide range of climate requirements. Some fruits and vegetables, such as tomatoes and cucumbers, require a warm, sunny climate, while others, such as apples and potatoes, can tolerate cooler temperatures. The Netherlands has a mild climate with plenty of rainfall, which is ideal for many fruits and vegetables. India has a more varied climate, with some regions being hot and dry and others being cool and humid.
• Soil: Fruit and vegetables grow best in rich, loamy soil with a good drainage system. The Netherlands has mostly sandy loam soil, which is well-suited for many fruits and vegetables. India has a variety of soil types, but some regions have soil that is not well-suited for fruits and vegetables.
• Irrigation: Fruits and vegetable crops require irrigation in some regions, especially in drier climates. The Netherlands has a highly developed irrigation system, which ensures that fruits and vegetables crops have enough water to grow well. India also has a well-developed irrigation system, but some regions do not have access to irrigation water.
• Fertilizer: Fruits and vegetables crops require fertilizer to grow well. Farmers in the Netherlands and France have access to affordable fertilizer, which helps to boost fruit and vegetable productivity. Farmers in India also have access to fertilizer, but it is often more expensive than in other countries.
• Varieties: Many different varieties of fruits and vegetables can be grown, and some varieties are more productive than others. Farmers in the Netherlands and France have access to a wide variety of high-yielding fruits and vegetable varieties. Farmers in India also have access to high-yielding varieties, but they are not as widely available.

Challenges facing Indian agriculture

Despite its significant contribution to the economy, Indian agriculture faces a number of challenges, including:

• Small landholdings: The average landholding size in India is less than 2 hectares, which makes it difficult for farmers to adopt modern agricultural practices.
• Dependence on monsoon: Over 60% of India’s cultivated land is rainfed, which makes agriculture vulnerable to monsoon failures.
• Soil degradation: Soil degradation is a major problem in India, affecting over 30% of the country’s land area.
• Water scarcity: Water scarcity is another major challenge facing Indian agriculture.
• Lack of technology adoption: Many Indian farmers are reluctant to adopt modern agricultural technologies due to a lack of awareness, affordability, and access.

Government initiatives to promote agriculture

The Indian government has launched a number of initiatives to promote agriculture, including:

• Pradhan Mantri Krishi Sinchai Yojana (PMKSY): PMKSY is a flagship government program that aims to improve irrigation facilities in the country.
• National Food Security Mission (NFSM): NFSM is a program that aims to increase the production of food grains in India.
• Soil Health Card Scheme: The Soil Health Card Scheme provides farmers with information on the nutrient status of their soil, which helps them to make informed decisions about fertilizer application.
• Pradhan Mantri Kisan Samman Nidhi (PM-KISAN): PM-KISAN is a program that provides income support to small and marginal farmers.

Agritech in India

Agritech is the use of technology to improve agricultural productivity and efficiency. The agritech sector in India is growing rapidly, with a number of startups and established companies developing innovative solutions to address the challenges facing Indian agriculture.

Some of the key trends in Indian agritech include:

• Precision agriculture: Precision agriculture is the use of technology to apply inputs to crops more precisely, which can help to reduce costs and improve yields.
• Internet of Things (IoT): IoT-enabled devices are being used to collect data from farms, which can be used to improve decision-making and optimize agricultural operations.
• Artificial intelligence (AI): AI is being used to develop solutions for a variety of agricultural challenges, such as pest and disease detection, crop yield prediction, and water management.

Why should we invest in Indian agriculture?

There are many reasons to invest in Indian agriculture. Here are a few of the most important ones:

• Large and growing market: India is the world’s second most populous country, with over 1.4 billion people. This means that there is a large and growing market for agricultural products in India.
• Favorable government policies: The Indian government is committed to promoting agricultural growth and development. It has introduced a number of policies and programs to support farmers, such as subsidies on inputs, minimum support prices for crops, and investment in irrigation and research and development.
• Diversified agricultural sector: India produces a wide variety of agricultural products, including rice, wheat, pulses, milk, tea, fruits, vegetables, and spices. This diversification reduces the risk of crop failure and makes the Indian agricultural sector more resilient to shocks.
• Potential for productivity gains: India’s agricultural productivity is still relatively low compared to other developed countries. This means that there is significant potential for productivity gains in the Indian agricultural sector.
• Growing demand for processed foods: The demand for processed foods is growing in India, driven by rising incomes and urbanization. This presents an opportunity for investors to invest in the food processing industry.

In addition to these general factors, there are also a number of specific investment opportunities in the Indian agricultural sector. For example, investors can invest in:

• Contract farming: Contract farming is a growing trend in India, where farmers agree to sell their produce to a buyer at a pre-agreed price. This arrangement benefits both farmers and buyers. Farmers are assured of a market for their produce and buyers are assured of a supply of quality produce.
• Agri-tech: Agri-tech startups are developing innovative solutions to address the challenges facing the Indian agricultural sector. These startups are working on technologies such as precision agriculture, drone-based crop monitoring, and online marketplaces for agricultural inputs and outputs.
• Food processing: The food processing industry in India is growing rapidly. Investors can invest in food processing companies that are producing packaged foods, frozen foods, and ready-to-eat meals.

Overall, the Indian agricultural sector is a promising investment opportunity. The sector is large and growing, the government is supportive, and there is significant potential for productivity gains. Investors can find opportunities to invest in contract farming, agri-tech, and food processing.

Conclusion

The Indian agriculture market is expected to grow significantly in the coming years, driven by factors such as increasing population, rising incomes, and growing demand for processed foods. However, the sector faces a number of challenges, such as small landholdings, dependence on monsoon, and soil degradation. The government is taking a number of initiatives to promote agriculture and the agritech sector is growing rapidly.

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