India, which fell a victim to unacceptably high rates of food inflation for over two years, is now breathing a sigh of relief because of a benevolent monsoon. The weighted average precipitation of southwest monsoon (June to September), the world’s most reliable rain-bearing system, this year has been almost 8% above normal. The bounteous rainfall is to herald a bumper production of rice, oilseeds, pulses and vegetables. This should allow reining in food inflation. The country, which is required to feed a population of 1.2bn is highly dependent on monsoon rains since only about 40% of cultivable land has access to irrigation water. Moreover, there is official admission that irrigation efficiency is low for both surface and ground waters. Industry official Om Prakash Dhanuka says “while the good southwest monsoon is to allow us to harvest bountifully the crops that we grow during the summer-monsoon period, the strong precipitation will leave good amount of moisture in the soil facilitating growing of wheat, oilseeds and some rice varieties in the coming winter months. Hopefully, the winter rains too will oblige.” The just retreated monsoon has also had a beneficial impact on cash crops like sugarcane, cotton and jute. The bumper production, according to Dhanuka, will lift the farm sector’s annual growth rate this time to over 5% from last year’s disturbingly low 1.9%.
The point is by how much India’s foodgrains production combining the summer-monsoon and winter crops this year will exceed the record output of 259.32mt (million tonnes) in 2011/12. What now is a major relief for the government is that bumper production will give a push to exports of rice, wheat and sugar and possibly curb imports of edible oils and pulses, the two items for which the country is highly import dependent. Last year, the country spent $11.31bn on edible oils imports of which the principal item was palm oil. India also spent a record amount of $2.34bn in 2012/13 for imports of pulses. Reuters says in a report that combination of falls in prices of oils and pulses in the world market and India’s own big crops has created the scope for effecting a saving of as much as $4bn this year on imports of oils ($3bn) and pulses ($1bn). The government owned Food Corporation of India is poised to export another 2mt of wheat worth about $600m following its sale of 4.2mt in the world market at a unit value of $311.38 a tonne. At the same time, the highly encouraging outlook for summer-monsoon rice production should give a push to Indian exports of rice, including the aromatic long grain basmati rice. “India in a struggle to narrow a gaping current account deficit will find some relief in higher exports of wheat and rice and any fall in imports of oils and pulses,” says Dhanuka.
Riding on a 3.7% rise in land coverage to 36.6m hectares, the country, according to agriculture ministry officials, is poised to harvest a bigger amount of rice during the current phase than the record 92.78mt in 2011/12. Trade officials say this will be in spite of rain deficiency till almost August end in some important rice growing states like Orissa, Bihar and Andhra Pradesh. But agile farmers there did not lose time in replanting as soon as rains started falling well. As with plain rice, the basmati rice crop is shaping well and production will be much higher than last year’s 7.1mt. Basmati exports are doing well. In the June ended quarter, basmati exports were up 17% to 1.116mt year-on-year basis. In contrast non-basmati exports during this period were down to 1.416mt from 1.584mt. Trade officials, however, are hopeful of exports of plain and broken rice picking up on the strength of bumper production. Unlike in basmati, where India has to contend with some competition from Pakistan, the world plain and broken rice market is a lot more crowded with Thailand, Vietnam and China present as keen exporters. Vietnam’s rice production is poised to fall next year in over a decade as the world’s second largest shipper gives a push to growing other crops like corn to boost income of farmers. This will work to the advantage of Thailand and India.
The monsoon is also having a major beneficial impact on production of pulses for which India has remained the world’s biggest importer. Besides good rains, the government raising the minimum support prices for pulses by as much as 30% in two years has encouraged farmers to increase the land coverage by at least 1.43m hectares to close to 10m hectares. This estimate, however, falls short of the normal area by over 1m hectares in a good monsoon year. Trade officials say when the final count of sowing is made, land coverage stands a chance of exceeding what is taken as normal. Whatever it finally is, pulses production is set to rise to at least 7mt from 5.91mt during this summer-monsoon period. Production during this phase forms 35% of annual pulses harvest with the major portion grown during the winter. The trade is putting a bet that winter pulses production will be good too to bring the year’s total to a record 18.45mt.
That India will have a good oilseeds harvest is a given for the same reasons for other crops. But what is keenly watched is whether oilseeds output this time will be better than the 2010 record 21.922mt. Much will depend on the harvest size of soybean which alone constitutes over half oilseeds production during summer- winter. While soybean is cultivated over 12.2m hectares against 10.7m hectares last time raising the prospect of a bumper harvest of 12mt, the jury is still out on the damage caused to the crop by excess rains in two major growing states of Madhya Pradesh and Maharashtra. BV Mehta, director general of Solvent Extractors Association, is hopeful of groundnut staging a smart comeback this season after faltering for two years. Gujarat, the single largest groundnut producing state, will have a minimum crop of 4.2mt, provided it receives one more spell of rains.