For the first time since 2009-10, India’s farm sector faces the prospect of a negative growth, which isn’t a great start for the Narendra Modi-led government at the Centre.
The Agriculture Ministry’s latest data on plantings for the ongoing rabi (winter-spring) season shows progressive crop acreage, at 470.74 lakh hectares (lh), to be below the 503.66 lh covered during this time last year.
Farmers have sown less area under wheat (241.91 lh versus 251.32 lh) and also the two other major rabi crops: gram or chana (71.51 versus 85.75) and rapeseed-mustard (61.48 versus 64.54).
The rabi setback comes on top of a not-so-good kharif (summer-autumn) season that saw production declines in most crops, courtesy a poor south-west monsoon. “Going by the current acreages trends, it looks the rabi crop may not make up for the kharif shortfall. In that case, registering a positive growth for agriculture in 2014-15 would be a challenge”, said Ashok Gulati, former chairman, Commission for Agricultural Costs and Prices.
But it is farmers, not consumers, who are likely to pay the price this time round. The current drought-like situation notwithstanding, prices in mandis are ruling lower compared to levels a year ago for most crops (see table).
Also, annual consumer food price inflation fell to 3.14 per cent in November, from 5.59 per cent the previous month, as per official numbers released on Friday.
“Farmers are facing a double whammy, from both declining output and prices. The time has come to think more about them than consumers”, noted Gulati.
According to V N Saroja, Chief Executive Officer of Agriwatch, a Delhi-based agri-commodity consultancy firm, the price drops are happening mainly in crops where India is a major producer and exporter. This is the case with rice, wheat, maize, cotton, soybean or sugar.
“The crash in global prices of these crops over the last 7-8 months is getting transmitted to the domestic market. But prices are ruling firm in commodities where we are a large consumer and importer, especially pulses and oilseeds such as rapeseed-mustard. They may even go up as the effects of the drought are felt,” she added.
Atul Chaturvedi, CEO of Adani Wilmar that manufactures the Fortune brand of edible oils, said that a reduced rabi harvest is unlikely to cause any significant food inflation, “when the world is awash in commodities”. Prices may rise only in “niche” products such as rapeseed-mustard or groundnut oil, as against globally-traded and mass-consumed commodities like palm and soybean oil.
The lower rabi plantings are being attributed mainly to the lack of adequate soil moisture. Cumulative rainfall in the northeast monsoon season (which runs from October to December) has so far been 31 per cent below the normal long-period average for this period at an all-India level. This is over and above the 12.5 per cent deficit during the main southwest monsoon season from June to September.
The impact of weak winter precipitation has been felt the most in Madhya Pradesh, which has recorded a 75 per cent northeast monsoon rainfall deficit. As a result, progressive area sown under wheat in the state is down from 48.89 lh to 41.42 lh this time, while also falling from 32.35 lh to 26.42 lh for chana. The possible withdrawal of a Rs 150 per quintal bonus paid by the state government in 2013-14, in addition to the Centre’s minimum support price of Rs 1,400, is also seen as a reason for farmers planting less wheat this year.
In 2013-14, India’s wheat production hit an all-time-high of 106.54 million tonnes (mt), with similar records for wheat (95.91 mt), maize (24.35 mt), pulses (19.27 mt), total foodgrains (264.77 mt) and oilseeds (32.88 mt).
The Modi government may not be as lucky in its first year.