Poor rainfall in Gangetic plains may spike food inflation in near-term

Major agricultural states, such as Bihar, Jharkhand and Uttar Pradesh, have had poor rains during the just concluded season, which may lead to an increase in the prices of rice due to lower production

The deficient rain in the Northern plains, especially in the Gangetic region, is likely to increase food inflation in the near term as overall paddy production will be hit in these areas due to poor monsoon, according to a report.

Major agricultural states, such as Bihar, Jharkhand and Uttar Pradesh, have had poor rains during the just concluded season, which may lead to an increase in the prices of rice due to lower paddy products in the near term.

The share of these states in overall rice sowing in the Kharif season (as of September 23) has declined to 24.1 per cent from 26 per cent in the previous year, according to an assessment by India Ratings.

 

This is despite the fact that the 2022 monsoon has been above normal but has not spread adequately across the regions. As of September 30, the rainfalls fared well at 92.5cm, which is 6 per cent above the long period average (LPA) of 86.86 cm.

At the disaggregate level, while 12 states/Union territories had excess rainfall (deviation from LPA greater than 20 per cent), 18 states/UTs recorded a normal rainfall (deviation from LPA between negative 19 per cent and positive 19 per cent).

However, six states/UTs registered a deficient rainfall (deviation from LPA less than negative 20 per cent) and it includes key Kharif crop-producing states of Uttar Pradesh, Bihar and Jharkhand, resulting in the 1.2 per cent lower area sown at 109.8 million hectares as of September 23, mostly contributed by a decline in sowing of paddy (5.5 per cent), pulses (3.9 per cent) and oilseeds (0.8 per cent).

According to the Agri ministry's first advance estimate for FY23, Kharif food production is 3.9 per cent lower at 149.92 million tonne.

Lower Kharif production, especially of rice and pulses, can aggravate inflation in these commodities, the agency said.

Inflation in rice and rice products at the wholesale level has already firmed up by 6.6 per cent in August to a 63-month high, while pulses and products inflation (at the wholesale level), although benign, rose to a six-month high of 2.6 per cent in the month.

The late withdrawal of the monsoon and its spillover into October, however, augurs well for the Rabi production, the report said.