‘Normal’ rains may not yield a rich harvest

While tentative production targets appear achievable, there remain some concerns

Now that the South-West monsoon has officially set in over Kerala, it is time to contemplate the scenario that is likely to unfold in the months ahead.

Within the India Meteorological Department’s overall ‘normal’ monsoon prediction for this season, information about spatial and temporal distribution of rains should bring a sense of relief. North-West and Central India — regions that are deficient in soil moisture — are likely to receive slightly above-normal precipitation, boosting production of kharif crops — rice (paddy), coarse cereals, pulses, oilseeds, cotton and sugarcane.

The tentative production targets for the 2018-19 kharif crops generally appear achievable, although there are concerns regarding pulses and cotton.

Loss of acreage

Pulses are likely to lose acreage. Prices of tur/arhar (pigeon pea), urad (black matpe) and moong (green gram) have been ruling well below the specified minimum support price.

Procurement efforts by various government agencies have been ineffective.

The loss of acreage in kharif season could be as much as two million hectares, which would translate to a loss of 1.2-1.4 million tonnes of kharif pulses. In particular, the planted area and production of tur/arhar will take a hit. There is risk that actual harvest may fall well short of the target of 8 million tonnes.

Another crop that needs to be closely tracked is cotton — it, too, risks about 10 per cent, or at least one million hectare, loss of acreage.

Many States — Telangana, Andhra Pradesh, Maharashtra — have suffered attacks of bollworm, and interventions to contain the pest menace have been tardy. Growers are likely to shift to other crops.

The most likely beneficiary of the possible shift in acreage is soybean. Until early this year, bean prices were hovering around the MSP, but of late have substantially improved (by a fifth to about ₹3,700 a quintal), making it an attractive option for growers. Groundnut will also likely benefit.

Among grains, rice and maize stand a good chance of achieving production targets.

So, is everything hunky dory? Will the upcoming kharif season bring relief to growers and consumers? Not really. For one, growers in many parts of the country are angry — low and unattractive prices, inadequate procurement support and unchecked pest attacks have upset them. This will be reflected in not only loss of acreage but also input management.

Growers may compromise on expenses relating to inputs and agronomy as there is a lack of motivating factors. This in turn can impact yields, notwithstanding normal monsoon.

Worse, till the time of publication, the government has not announced the MSP for various kharif season crops. While MSP has significantly lost its relevance in recent years, it is strange that the government should delay what should have been done the latest by mid-May. This lackadaisical approach to agriculture is unpardonable.

Incongruous estimates

Will satisfactory precipitation and crops bring relief to consumers? Will food inflation be in check? Doubts persist.

The wheat production estimate of 97 million tonnes, as recently put out by the Ministry of Agriculture, is overstated by at least 5 per cent. The industry believes the actual crop size will be 91-92 million tonnes. Wheat prices may begin to rise after August.

Similarly, at 11 million tonnes, chana (chickpea) production is substantially overstated — the reality is closer to 9 million tonnes.

Give that consumption will rise manifold during the upcoming festival season, some supply tightness may occur after September, and prices may rise.

Sugar presents an anomalous picture. The industry’s sugar production estimate and the government’s cane output estimate are not in sync — either the sugar production is overstated or the cane harvest is understated. It is necessary to reconcile the data. If sugar production is overstated, tightness could set in sooner, and result in price spikes.

High crude-oil prices and depreciating rupee will make imports expensive. By the time of kharif harvest, the situation may warrant a review of the customs duty on food commodities such as edible oil, and possible partial roll-back of restrictions on pulses import.

The political implications of upside risk to food inflation are also stark.

The author is a policy commentator and a commodities market specialist

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