Patchy monsoon could impact pulse and oilseed output, fueling inflation

All eyes on rains in the weeks ahead till August-end to assess final impact

A farmer casts urea on her mustard field in Allahabad
File photo of a farmer in her mustard field in Allahabad
Sanjeeb Mukherjee New Delhi
5 min read Last Updated : Jul 21 2021 | 7:46 PM IST
The southwest monsoon has started showing much-needed signs of revival during the past few days, after having been subdued from the end of June till mid-July
 
The rains, which are not only crucial for Indian agriculture but also provide a big impetus to the overall economic sentiment in the country, were 10 per cent above normal in the first half of June.

But after June 19, they virtually stopped progressing, leaving large parts of North, West and Central India parched.

Data shows that between July 1 and 18, the southwest monsoon was cumulatively 26 per cent below normal.

However, since then, there has been a revival of sorts and the southwest monsoon not only covered the whole country but also managed to wipe off some of the deficit in several parts.

Till July 19, the southwest monsoon has been six per cent below normal on average, with about 42 per cent of the the 694 districts in the country having received sub-normal rain.

According to a Crisil Research Report, northwest India recorded a high deficit of 55 per cent between June 23 and July 12.

The rains were 58 per cent deficient between June 23 and July 12 over Rajasthan and the shortfall in Central India was 39 per cent during this period, with Gujarat accounting for 67 per cent of the deficit.

The uneven showers and the long gap in between impacted sowing of kharif crops and cast a huge shadow on their final yields, particularly of the early sown varieties.

Most experts and analysts believe that the progress of the southwest monsoon would be the most crucial factor and keenly watched over the next few weeks to determine the pace of sowing of kharif crops and their final output.

Sowing falters

Sowing of kharif crops was 11.5 per cent lower than the same period last year (till July 16), expanding a fall that was 10.45 per cent during the previous week (till July 9).

More importantly, the area covered under kharif crops dropped below the normal acreage (which is the average acreage of the last five years).

Sowing was down almost four per cent from the normal area till July 16.

Among major crops, acreage of urad is almost 23.30 per cent lower than last year, while that of moong is about 21 per cent lower, bajra acreage is down 39.85 per cent. The area under groundnut is 18.16 per cent lower than last year till July 16, 2021, while soybean area is down 11.92 per cent.

Cotton has been planted in 12.94 per cent less area till July 16 this year as compared to the same period last year.

“There are concerns of moisture stress in some areas, mostly in MP and Rajasthan, where early sowing was done. If it does not rain soon, it may cause yield loss,” the Soybean Processors Association of India (SOPA) had said.

In Madhya Pradesh, the country’s largest soybean growing state, SOPA added that soybean area is expected to drop by 10 per cent over 2020, as farmers have switched to other crops such as black gram, maize and moong.

Crisil Research in its report also said that there could be a shift in soybean, cotton and maize acreages across the rainfall deficit states if the monsoon fails to revive as forecast.

“Hence the monsoon trajectory needs to be monitored closely to understand its impact on kharif crops in the coming months,” Crisil added.

Impact on prices

Among all the crops, sowing of pulses and oilseeds will be most keenly watched, as any drop in their acreage could further aggravate the already high retail prices and jeopardise not only household budgets but also government’s inflation math.

This is all the more vital as edible oil along with pulses are among the high-consumption items during the festival season that starts in August.

There is no such fear in the case of rice, which is the biggest food grain grown during the kharif season, as the country has sufficient reserves.

Edible oil prices in the domestic markets have risen sharply during the past one year, with retail rates of some, such as soybean oil, doubling from around Rs 90 per litre in May 2020 to almost Rs 165-170 currently.

Prices of other edible oils have also risen sharply and the main reason for this is a spike in global markets as India imports more than 60 per cent of its annual requirement of edible oils.

In the case of pulses too, data shows that prices had risen sharply in April and May. After a series of measures were announced to contain the spike, prices have cooled down but are still 6-15 per cent higher than those of last year in most major pulses, including arhar, urad and masoor.

Traders and market watchers said that with international markets of both, pulses and edible oils expected to rule higher due to rising demand and low production in major growing countries, inflation in both the commodities could be firm in the next few months atleast till December after which the new domestic kharif crop will start hitting the market.

Any shortfall in their production during the current sowing season due to uneven monsoon will further fuel the inflationary expectations.

Topics :Inflationsouthwest monsoon and Kharif sowingKharif cropsrainfall deficitfood inflation

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