Weak monsoon, El Nino could hit farm output

Tags: Agriculture
India’s agriculture production may be impacted this year, after three straight years of bumper crop harvest or if a likely El Nino weakens the June-September monsoon rains, resulting in fewer yields and putting pressure on food prices.

The economic survey on Wednesday said farm output and food prices are likely to be impacted on the back of a sub-normal or deficient monsoon and spatial distribution of rains. Monsoon provides more than 70 per cent of the annual

rainfall.

The survey said there were concerns about the likely occurrence of El Nino, when surface temperatures in the Pacific Ocean rise above average for several months, which adversely affects weather in many regions.

According to K Bhasker Reddy, managing director of Creamline Dairy, “The increased preference for value added products is a reason for the growth. Also, the sector is moving to be an organised industry from the unorganised sector and has seen good consolidation,” Reddy said.

However, due to 43 per cent deficient rains till June this year had resulted in delay in sowing of crops. The total kharif crops planting up to July 4 was also lower by 43 per cent at 182.4 lakh hectares.

The survey has also listed the major challenges faced by the Indian agriculture such as low productivity levels, soil degradation and market distortions that prevented the creation of a national common market and phased shifting to direct transfer of fertiliser-food subsidies.

"A shift to direct cash transfer system or food stamps would anchor our food policy to the requirement of people and would additionally reduce the fiscal deficit," the survey suggested. Among key reforms, the survey suggested the government to review Agriculture Produce Marketing Committee (APMC) Act, Essential Commodities Act and Land Tenancy Act to encourage free trade to boost supplies and curb price rise.

“The government move to bring agriculture marketing under the concurrent list would benefit the farmers and the consumers, provided they set up well developed retail chains under organised sector,” PK Joshi, director (South Asia), International Food Policy Research Institute, told FC.

According to Madan Sabnavis, chief economist at Care, a credit rating agency,’’ the likely El Nino impact on monsoon rains is a major risk given that food inflation is already high. We do not have stocks to supplement shortages. The curbs on hoarding or exports can only touch the periphery and higher prices are but natural in case of monsoon failure.’’

“Though, rainfall has somewhat improved in July, June witnessed 43 per cent below normal rainfall, the lowest since 2009. Since food has 50 per cent weightage in CPI, a 5 per cent increase in food prices means a 2.5 per cent increase in CPI,” Prerna Sharma, research analyst at Emkay Commotrade, said.

Akshay Bector, managing director at Cremica Group, engaged in food processing segment, the high inflation was largely due to perishables like vegetables and milk. “Though were are adequately provided in the cereals wing, a lot needs to be done in the perishable segment. There have to be ways to extend the longevity of the vegetables. The prices of these commodities will spiral upwards very quickly and will have cascading effect,” he said, calling for focused approach to food procession.

michaelgonsalves@mydigitalfc.com

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