Agricultural growth is a key to the country’s economic progress and hence it is quite important to provide the farmer the right policy framework and access to latest technologies enabling increased productivity and sustainable growth. With the country’s population growing and the area of arable land being limited, all help should be given to the farmer to get reasonable price for his agricultural produce. Focus on rural welfare, creation of rural infrastructure and financial support for enhancing irrigation are some of the key areas that should help sustain livelihood and enhance productivity. The agri sector is considered to be the backbone of the nation’s economy and with 58% of India’s households in rural areas, it is one of the largest contributors to the Gross Domestic Product. The agricultural sector needs a fatherly support from the government and by creating the necessary framework, the government can help farmers prosaper by dramatically improving from their present rough socio-economic conditions. With growing consumer demand, limited natural resources and a changing climate, the need of the hour is to make the agricultural sector less vulnerable to vagaries of the weather. Declining yield also leads to reduced income, impacting overall consumption and thus slowing down economic growth of the country. The Indian economy is projected to grow at 7.4% in 2019 on the back of favourable indicators such as moderate level of inflation and anticipated growth in the industrial sector. Government, on the other hand, has introduced schemes like the Pradhan Mantri Fasal Bima Yojana, distribution of Soil Health Cards, the Agri Udaan programme, launch of the Rs 50,000 crore Pradhan Mantri Krishi Sinchai Yojana for improving the country’s agri health. Seeds are an integral part of the agri business and an important input to the farmer. It can change the fortune of the farmer in terms of saving and increased productivity. Monsanto India is in the business of agri inputs including chemical pesticides and hybrid seeds. Global chemical and pharmaceutical giant Bayer is the new owner of Monsanto worldwide, having successfully acquired the company in June last year for around US$60 billion. In India, Monsanto had introduced an upgraded cotton seed variety in 2006, which had helped transform the country into one of the world’s largest exporters of fibre. But newer varieties could not be made available from the company during the last few years due to a royalty dispute with the government and worries over patent claims. Recently, a favourable court order has raised hope among farmers that Monsanto would now launch its latest variety of seeds in the market. Agri experts feel that biotechnology research is quite expensive and a low rate of royalty along with improper patent protection laws could deter foreign companies to bring investment and latest technologies into the country. The company had posted improved second quarter FY2019 results with a total income at Rs 128 crore and net profit of around Rs 24 crore. The current FY19 expected earnings per share should be at Rs 110 while it is expected to improve further to Rs 130 by the next financial year. This should propel the Monsanto stock to appreciate by at least 25% from the present levels of Rs 2,585 in the next one year time-frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.