Sown area under pulses declines

The large oilseeds and pulses harvest of kharif 2016 is unlikely to be repeated

With the south-west monsoon gradually moving northward, there is heightened interest not only in industry and trade circles but also within the government in the progress of rainfall and pace of planting of kharif crops — mainly rice, maize, cotton, pulses and oilseeds.

Although it is a little early to come to any final conclusion, the signs are ominous. True to expectation (see “Centre’s clueless policies leave oilseeds, pulses growers in lurch” in BusinessLine dated May 18, 2017), the preliminary report on area coverage under kharif crops 2017-18 as on June 23 clearly shows area planted to pulses (mainly tur/arhar, urad and moong) lagging last year’s level. At the same time, sown area for cotton shows a marked improvement over last year’s.

According to the latest report of the Ministry of Agriculture and Farmers Welfare, pulses have been planted to only 6.0 lakh hectares as of June 23 versus 9.0 lakh hectares this time last year. The normal area under pulses in the kharif season is a little over 100 lakh hectares.

Oilseed plantings have fared better. As of June 23, area planted is 11.2 lakh hectares versus 7.2 lakh hectares this time last year. Both soyabean and groundnut sown area has expanded. The normal area for kharif oilseeds is a little over 180 lakh hectares.

On the other hand, area planted to cotton has expanded to a robust 24.7 lakh hectares as of June 23, higher than 19.1 lakh hectares this time last year. The last five-year average area for cotton is a little over 120 lakh hectares.

Admittedly, these are early days for making any prognosis on eventual planted area and crop size. The final planted acreage data will be available by end-July.

Notwithstanding that, the initial trends in planting provide a clue to the shape of things to come. In case of pulses, the record planting of kharif 2016 and consequent large harvest is unlikely to be repeated. (See “Ghosts of Centre’s muddled farm policies will come back to haunt it” in BusinessLine dated June 15, 2017).

Going by the initial planting trends so far for pulses, not only is last kharif season’s record harvest of 91.2 lakh tonnes most unlikely to be achieved, even the Agriculture Ministry’s production target of 87.5 lakh tonnes for kharif 2017-18 may not be reached.

In the case of oilseeds too, we need to wait and watch the progress of sowing. Soyabean growers in Madhya Pradesh have been protesting against low price realisation. The kharif production target of 254 lakh tonnes (oilseed-wise break-up not provided by the government) runs the risk of not being achieved. It should come as no surprise if soyabean harvest falls well below last kharif’s record 140 lakh tonnes while groundnut production may also lag last kharif’s 62.6 lakh tonnes.

Brace for production drop

At this point in time, it would be speculative to quantify the decline or predict the extent of decline in harvest from last year; but clearly the country should not expect a repeat of kharif 2016. It is important for policymakers and the trade to brace for a decline in pulses production. Already, the country’s dependence on imported pulses (66 lakh tonnes) is alarming. There is risk the situation may worsen in 2017-18. The price implications of such a harvest shortfall can well be imagined. Fortunately, under the lead of palm oil, the global vegetable oil market prices are expected to remain consumer-friendly in the second half of the year. Lower import prices and a firm rupee will help contain any price rise in edible oil.

However, the same cannot be said of pulses. The forward commitments for import made by the private trade this year are not as high as last year. So, prices of pulses can escalate, driven mainly by festival demand from August to October, prior to harvest.

Cotton has the potential to be an exceptional crop with record plantings and likely record crop size. If anything, cotton harvest in our country may reach a new high and exceed the production target of 355 lakh bales (170 kg).

Given large harvests likely elsewhere in other major origins like the US and limited export opportunities, domestic cotton prices risk a price collapse similar to tur/arhar and soyabean. It is best avoided.

The author is a global agribusiness and commodities market specialist

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