Deficient monsoon rains have resulted in lower production for most crops this year, though the impact of it is likely to be more on farmers than consumers.
The agriculture ministry has estimated total foodgrain output for 2014-15 to plunge to a four-year-low of 257.07 million tonnes (MT), following than the record 265.57 MT level of 2013-14.
All crops, barring sugarcane, are expected to post production declines, as rainfall has been deficit in both the south-west (12.3 per cent below long period average) as well as North-East (33 per cent below normal) monsoon seasons.
The lower production is, however, unlikely to have any inflationary impact for two reasons.
The first is foodgrain stocks with government agencies. These, at 48.50 MT (which includes un-milled paddy in terms of rice) as on January 1, are almost twice the required minimum buffer norm of 21.41 MT for this date.
The second reason is global prices. These are currently lower for most agri-commodities, undermining the prospects for exports even while rendering imports cheaper. The possibility of domestic prices going up is more in pulses (where import options are limited) or indigenous edible oils like mustard and groundnut (as opposed to globally-traded and mass-consumed oils such as palm and soyabean).
The latest consumer price index numbers for January put out by the Central Statistics Office (CSO) shows food inflation at 6.13 per cent year-on-year.
Within this, the commodities recording higher retail-level inflation include pulses (9.37 per cent), dairy products (9.38 per cent), fruits (10.62 per cent) and vegetables (9 per cent), even as the same is low or negative in cereals, sugar, edible oils, eggs, fish and meat.
Lower production, on the other hand, would be a double whammy for farmers who are already facing price declines in cotton, sugar, rice and many other crops. That, to an extent, may also adversely affect rural incomes and consumption.
The CSO has pegged the overall growth rate for “agriculture, forestry and fishing” at 1.1 per cent this year, against the 3.7 per cent in 2013-14.
According to its assessment, the negative growth in agricultural crops will be more than offset through high output of horticultural produce (fruits and vegetables) and livestock products (milk, eggs and meat).
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