"The flood fury in Assam, West Bengal, Bihar, Gujarat, Rajasthan, Uttar Pradesh alongside shortfall in rains in southern states would significantly dent the kharif output," Assocham said in a statement.
The association estimated production to fall to 129.5 million tonnes this year against 138.5 million tonnes in the same season of 2016-17.
Production of rice, pulses and coarse grains is expected to decline, it said.
The sowing/transplanting of rice as on September 8 was at 371.46 hectares against normal sowing of 396 lakh hectares at this time of the year.
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Floods/drought in several rice growing states could result in a fall of about 5 per cent in the output to 91 million tonnes this year from 96.39 million tonnes in the last kharif season, the statement said.
"We had pinned big hopes on agricultural production doing well in the wake of good monsoon, but floods have played a spoilsport," Assocham Secretary General D S Rawat said.