The acreage of major Kharif crops presents a mixed picture. While planted acreage as of August 10 for rice, coarse cereals, pulses and cotton has slipped 3 to 4 percentage points below the levels seen this time last year, oilseeds, led by soyabean, have shown an increase.
However, it is not so much the area planted but aberrations in the spatial and temporal distribution of the South-West monsoon so far that is beginning to cause concern. As of August 15, all-India area weighted rainfall was 9 per cent below normal. In fact, ten meteorological subdivisions covering the whole of Gujarat, the whole of the northeast, Jharkhand as also Rayalaseema and parts of Karnataka are red in colour with deficient rainfall since June 1.
Many other subdivisions are actually borderline cases and risk slipping into the deficient category. These include Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana and Bihar. All these are important for kharif crop production.
The less-than-satisfactory rainfall distribution pattern so far is likely to impact yields of crops such as pulses, oilseeds and cotton. Our yields are already rather low by global standards. On current reckoning, it is clear the eventual kharif crop size may fall short of tentative production targets suggested for the season as well as fall below last year’s output, especially in the case of pulses, coarse cereals and cotton.
Cooked up numbers
One has often seen government estimates overstating the crop size for whatever reason. But reality invariably begins to bite soon. More recently, we have seen this in the case of wheat and chickpea (chana) crop estimates for 2017-18. With the market taking cognisance of the ‘real’ harvest size, chana prices have moved up by over 10 per cent to about ₹4,200 a quintal, while wheat is seen testing the psychological ₹2,000 a quintal mark.
Precipitation over the next 3-4 weeks will be crucial and the market has taken note of the emerging crop situation. A lower kharif crop together with a weak rupee is a potent combination that can unleash inflationary tendencies. Caution is necessary in trading far forward positions as the outlook is clouded.
With consumption of various food commodities set to expand in the upcoming festival season, a lower kharif harvest size is sure to tighten the supply side further. This will have consequences for open market prices of essential food commodities.
The saving grace is the large buffer stock of fine cereal and pulses with government agencies. Open market sale of wheat and pulses should be accelerated. Because of regional and seasonal variations in production and consumption, it may be necessary to adopt a pricing policy that best serves consumers across the country.
In order to advance nutrition security, government policies must seek to expand domestic consumption. Our per capita availability and consumption of major food products, especially protein-rich foods, is rather low by world standards. Various welfare programs provide an excellent medium for liquidating burdensome stocks while improving the nutrition status of large sections of consumers.
The author is a policy commentator and global agribusiness specialist. Views are personal