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Resource centre on India's rural distress
 
 

For agri input providers, rising crop acreages is bittersweet news -R Sree Ram

-Livemint.com

While the good news is that crop acreages are not hit, the bad news is that the cash crunch is impacting sales—if this lasts long, demand destruction can be severe

The winter or rabi crop sowing has gathered pace after a setback.

The past two readings from the ministry of agriculture show crop sowing growth of 4-8% from the year-ago levels. In the first week after demonetisation, sowing dropped 0.7%.

Sowing has now been completed in more than three-fifths of the normal winter crop area. But the readings are bringing no cheer for agriculture inputs providers.

Shares of notable companies in the sector—Coromandel International Ltd, Rallis India Ltd and Gujarat State Fertilizers and Chemicals Ltd—fell in the range of 6-10% in the past month. Even the shares of companies that are not completely dependent on the Indian market, such as PI Industries Ltd and UPL Ltd, fell.

What explains the trepidation?

The 2016-17 agriculture season started on high expectations. Predictions of a normal monsoon and demand recovery expectations drove up share prices in the first half of this year.

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