Top Agriculture Stocks in India

In the Union Budget 2024-2025, the Indian government has “sown the seeds” for increased productivity and resilience, allocating ₹2,65,808 crores for rural development and ₹1,51,851 crores for agriculture and allied activities. India is a land of agriculture. It is a primary source of livelihood for almost 55% of the country’s population. In global ranking, India ranks 1st in milk production and 2nd largest producer of food grains, fruits and vegetables. It is also the 3rd largest fish-producing country, accounting for 8% of the global fish production. Therefore, it opens up exciting opportunities for investors.

Which are Agriculture Stocks?

Agriculture stocks are basically listed entities in the stock market. The companies are majorly involved in farming, production of seeds, manufacturing fertilizer and pesticide, engaged in machinery and equipment production, or any related activities which are directly or indirectly involved in the agriculture and allied sector of India. 

What are the factors to consider before investing in agriculture stocks?

Here are some key factors to consider before investing in agriculture stocks:

1. Market Demand: First and foremost assess the current and projected demand for agricultural products, which can be influenced by population growth, dietary changes, and global food security needs. For instance, the sales of processed food in the Indian market have been increasing at a faster pace. The domestic food processing market is expected to be worth US$ 535 billion by 2025, with a CAGR of 15.2%.
2. Government Policies: Understand the impact of government regulations, subsidies, and support programs for agriculture, as these can significantly affect the profitability of agriculture companies. In the current union budget 2024-2025, our finance minister announced that in the next two years, one crore farmers across the country will be initiated into natural farming. Indis is witnessing a rise in demand for organic products, and it is anticipated to rise with a CAGR of 25.25% between 2022-27. 
3. Climate and Weather Risks: Consider the vulnerability of agricultural operations to climate change, natural disasters, and seasonal weather patterns, which can impact crop yields and production costs. The monsoon in India is one of the key factors which indicates a favorable climate for cultivation of major crops in India. You can read one of our blogs to find out How will the monsoon impact the stock market in 2024?
4. Technological Advancements: Evaluate the use of modern technologies like precision farming, biotechnology, and mechanization in the companies you are considering, as these can enhance productivity and reduce costs. The union budget 2024-2025 emphasized undertaking a comprehensive review of the agriculture research set-up to bring the focus on rising productivity and developing climate-resilient varieties.  
5. Commodity Prices: Monitor the prices of key agricultural commodities, as fluctuations can directly affect the revenue and profitability of companies involved in their production and processing.
6. Supply Chain Stability: Investigate the stability and efficiency of supply chains, including logistics, storage, and distribution, which are crucial for getting products to market and maintaining profitability.

Read the complete article here: Agriculture stocks list