Agri sector likely to remain resilient from COVID-19 impact; to grow 2.5% in FY21: Crisil

Even as coronavirus pandemic has impacted many sectors, the agriculture could be the only bright spot as real agriculture is likely to witness a 2.5 per cent growth in 2020-21, according to a report.

The report by Crisil Research however listed risks such as any likely impact of locust attacks and impact of lockdown on horticulture produce.

With the pandemic and the ensuing lockdown, demand for horticultural produce is likely to be impacted more than that of food grains.

Food grains have the government's minimum support price (MSP) and procurement support, the report explained.

The government has announced MSP hike for 14 kharif crops, assuring farmers 50-83 per cent returns on their cost of production, it added.

However, horticulture produce is highly perishable in nature and its wholesale prices collapsed in April despite a sharp reduction in their mandi arrivals.

Also a number of standing crops, horticulture produce, which was not harvested because of problems in selling, witnessed locust attacks, the report said.

Similarly, demand for flowers has collapsed as religious places are shut down and marriage ceremonies are kept in abeyance or muted, it added.

Livestock, milk is the largest contributor to this sector with a two-thirds share, followed by meat and a very small share of eggs.

Fortunately, milk consumption from the household segment has remained largely stable despite the lockdown.

Demand from the hotels and restaurants segments, which contributes 15-20 per cent to total milk consumption, has collapsed but is expected to pick up gradually once the lockdown is lifted.

Going forward, the report opined that growth in agriculture and allied activities this fiscal hinges on a bumper food grains production coupled with a normal monsoon.

Horticulture might have to bear some burns because of perishability, it said.

Milk, which comprises the biggest chunk of livestock, is expected to do well and on the other hand, meat, eggs, fishing and aquaculture are likely to face a prolonged impact, as there is a tendency to reduce consumption of non vegetarian food during the pandemic.

A fall in exports in these commodities too is expected to hem in demand, but with the contribution of these items in the agriculture and allied activities sector being relatively lower, the overall agricultural growth may stay resilient, it added.