Annual Report FY 2011-12 - PI Industries

MANAGEMENT DISCUSSION AND ANALYSIS
1. INDUSTRY STRUCTURE, DEVELOPMENTS
AND PI’S GROWTH STRATEGY
Domestic Agriculture & Agri-Input Scenario:
Agriculture continues to be the single most important source
of livelihood for the masses in India. Ensuring food security
for a population of more than 1.21 bn with diminishing
cultivable land resources is a critical challenge for India. The
declining arable land, fragmentation of land holdings, low
productivity vs. global peers and differential yields across
states further compounds problems, making it imperative
to use crop protection products, high yielding variety of
seeds and balanced use of fertilisers to improve yields. These
measures need to be coupled with education of farmers on the
use of modern farming techniques.
In FY12, the kharif foodgrain production stood at 128.4 m.t.,
which is the largest ever kharif harvest, while the rabi crop
estimated at 122.0 m.t. came in lower than the record of
123.6 m.t. last year. There has been a decline in overall area
under foodgrains during 2011-12 (2nd Advance Estimates)
as compared to 2010-11. The area covered under foodgrains
during 2011-12 stood at 125.50 million ha compared to 126.77
million ha last year. The area under cotton however increased
significantly to 12.18 million ha as compared to 11.23 million
ha during 2010-11.
Rainfall continues to influence crop production and
productivity in a substantial manner. Around 75 per cent of annual rainfall is received during the south-west monsoon season
(June-September). During the south-west monsoon season 2011, the country received 1 per cent more rainfall than the long
period average (LPA). However, the situation in the north east monsoon was just the opposite. The north east monsoon season
registered significantly lower than its normal rainfall (only 52% of LPA) and the distribution was also scanty which affected
crop acreages and yield in several parts of country.
Consequently the agricultural production for the year FY12 has shown a mixed picture. While output levels for rice and wheat
peaked last year, the output levels for pulses and oilseeds were a cause of concern. The crop prices also exhibited volatility
during the last year, and were not necessarily driven by traditional demand-supply dynamics.
With rising population and growing per capita income, domestic demand for food grains is expected to rise significantly.
Demand for food grains is expected to increase from 192 million in 2000 to to 355 million tonnes in 2030 growing at an
annual CAGR of 2.1%. Hence, production of food grains needs to be increased at an absolute rate of ~5.5 million tonnes annually
to meet the domestic requirements. India has a 2.3% share in world’s total land area while it is home to 17.5% of the world
population and this is a major challenge to ensure food security.
Most of the Indian farmers have small and fragmented landholdings leading to sub-optimal / marginal scale of operations.
The average farm size in the country has been declining over the years. This poses a major challenge for increasing the level of
farm mechanization as well as generating steady income from farm operations. While consolidation of land holdings may yield
better economies of scale, land laws in the country present an issue and options such as leasing with sufficient safeguards
built in for the farmers need to be explored.
Another major challenge for the sector is storage capacity which is currently inadequate and leading to substantial postharvest
losses. Addressing infrastructure requirements especially storage, transportation, communication, roads, and markets
through Public Private Partnership models can help in enhancing productivity, efficiency and output of the agriculture sector.
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PI Industries Ltd.