Weak monsoon intensifies drought like conditions in India


The Economic Times

NEW DELHI: Drought-like conditions are intensifying as the monsoon hasn’t moved an inch for 10 days now, leaving oilseeds, pulses and paddy fields parched and posing the threat of food inflation and weak rural demand in the first year of the Narendra Modi government.

Prices of vegetables and onions are already rising because June rainfall is among the lowest in a century. The rainfall deficit for the country is 37%, even before El Nino has developed.

The weather phenomenon is associated with a bad monsoon. Adding to the concerns of policy-makers is the rapid depletion of water in India’s biggest reservoirs, which was 33% more than last year’s level at the beginning of June because of unseasonal heavy showers before the monsoon.

The water level has now fallen to last year’s level because of scanty rainfall.

In many reservoirs, the level is lower than last year. India’s southwest monsoon runs from June to September. Experts say unless the monsoon advances rapidly, the country will have to deal with rising food prices.

The weather office offers little comfort. The monsoon is unlikely to progress in the next two-three days, said BP Yadav, head of the National Weather Forecasting Centre at the India Meteorological Department.

India will largely remain dry,” said BP Yadav of the National Weather Forecasting Centre. Food prices are already a concern for the government, which has imposed export restrictions on onions, ordered the release of more rice and advised states to crack down on hoarding and take steps to cut out the middlemen in farm products.

Prices of vegetables are already rising in some parts of the country, and farmers are worried. “Progress of sowing of vegetables, oilseeds, pulses and paddy is slow this year.

We expect prices of all vegetables to double three months from now. This will not translate into higher margins for farmers, as the production cost will go up,” said Ajay Jakhar, chairman of the Bharatiya Krishak Samaj, a farmers’ association headquartered in Delhi with members across the country.

He said the prices of oilseeds and pulses may also rise due to weak rainfall in the western and central regions, but the situation would be comfortable for grains because of adequate stocks.

Onion prices have increased about 16% to Rs 14-20 per kg in recent days, said Nashik District Onion Traders Association president Sohanlal Bhandari. “The cheap quality onion at Rs 14 a kg is smaller in size and the skin cover has peeled off.

I will not like to say how prices will move. You can see they are firm,” he said. Prices of some vegetables are rising in Delhi’s wholesale market and fruits are expected to become costlier as Ramadan, the Muslim month of fasting, begins end-June.

“Prices of vegetables, from bitter gourd, bottle gourd, cucumber, tomato and lemon, which were selling below Rs 10 per kg a week ago, are now at Rs 25 a kg,” said Mahinder Sanpal, member, Azadpur Mandi APMC.

 

“Onion prices in the mandi are in the range of Rs 12-20 a kg from Rs 9-11 a week ago. Potato prices will also rise if the government doesn’t keep a check on exports of potatoes to Pakistan,” he said.Vegetable prices have increased 20% in Mumbai, according to Prakash Thakkar, secretary of the vegetable and fruit association at the Vashi mandi.

He said prices of ladyfinger and onions were already rising. “With Ramadan beginning June 30, even fruit prices will increase by 25%,” he said. Official data show that on June 21 farmers had sown rice on 7.59 lakh hectares, down sharply from 16.4 lakh hectares a year ago. Anil Monga, chairman of the non-basmati rice committee of the All India Rice Exporters Association, said that apart from Punjab, Haryana and Andhra Pradesh, which had strong canal irrigation network, progress of sowing was slow in other states.

“If rains pick up by July, it should not be a matter of concern. In a year like this when monsoon rains are weak, rice production can fall by 40-50 lakh tonnes,” he said.

As per the third advance estimate, rice production in 2013-14 is expected to be 106.29 million tonnes.To be sure, as of June 1, Food Corporation of India and other agencies had 27.6 million tonnes of rice, much higher than the buffer stock norm (for July 1) of 14.8 million tonnes.

Meanwhile, oilseeds are lagging. “Only 10% of the total area under soyabean has been sown in Maharashtra and some parts of irrigated places in Madhya Pradesh. The sowing season will be extended till mid-July.

We are worried about pricing, stock position and operating margins this year,” said Rajesh Agarwal, coordinator and spokesman of the Soyabean Processors Association.Sowing of oilseeds dropped 85% to 1.23 lakh hectares on June 21 compared with the corresponding period of previous year.

With 70% area under soyabean being rainfed in Madhya Pradesh, Maharashtra and Rajasthan, the scenario is worrisome, but Agarwal said farmers still had a cushion of 15 days.

India’s edible oil imports this year (November 2013 to October 2014) are expected to rise to 11 million tonnes from 10.4 million tonnes in the year-ago period.

“Till monsoon sets in over the country, prices of edible oil will remain firm.

Imports of soyabean and sunflower will increase along with palm oil,” said BV Mehta, executive director of the Solvent Extractors Association. Sowing of pulses has also been delayed in Maharashtra and Karnataka, said Sunil Baldeva, an importer and wholesale trader in Delhi’s Naya Bazar.

“Dependence on Myanmar, Uzbekistan, Australia and even African countries for pulses might increase this year,” he said. Meteorologists say the El Nino phenomenon is likely to strike towards the end of the rainy season.

The development of El Nino has slowed in recent weeks, but the Australian weather office said “most climate models surveyed by the bureau still indicate El Nino is likely later this year”.

For Reprint Rights: timescontent.com

Copyright 2014 Bennett Coleman & Co. Ltd. All Rights Reserved
Terms and Conditions     Privacy Policy
Partners