How a ‘Goldilocks combination’ in agriculture has kept food inflation at bay

The year 2025, on the other hand, presented a near-Goldilocks situation (an optimal mix of various factors, the term is from the fairy tale) of both the monsoon rain and temperatures being “just right”.

The Goldilocks impact on agriculture 

The combination of a poor monsoon and high temperatures during 2023 adversely affected India’s agricultural production. It resulted in prolonged episode of retail food inflation, averaging over 8.5% year-on-year during July 2023 to December 2024.

The effects of a surplus monsoon in 2024 were not felt that year, partly due to the lag factor (the main rainfall season is from June to September) and also the record temperatures. Food inflation, hence, stayed elevated till December 2024.

The turnaround happened in 2025. Annual consumer food price inflation averaged minus 0.2% during the year and minus 2.7% for July-December 2025. This was enabled by the above-normal monsoon as well as below-normal temperatures (especially from May). The benefits of that are being particularly seen in the current rabi (winter-spring) cropping season.

In end-October, before the peak sowing period, water levels in India’s 161 major reservoirs were at 90.8% of their full storage capacity. The surplus rains also filled up farm ponds and other small water bodies, besides recharging groundwater tables.

These, in conjunction with cool temperatures conducive to germination, have led to farmers sowing an all-time-high area of 334.17 lakh hectares (lh) under wheat so far this season (against 328.04 lh for the corresponding period of 2024-25). They have similarly increased acreages in mustard (from 86.57 lh to 89.36 lh), rabi maize (23.49 lh to 25.24 lh) and red lentil/masoor (17.66 lh to 18.12 lh).

Crop status

The wheat crop sown during November is in tillering (shoot development) and stem elongation stage. This stage matters because the more the shoots that grow from the base of the main stem, the more the potential spikes or grain-bearing ‘ears’.

“The germination, crop vigour and tillering have been excellent this time. As things stand and assuming no sudden jump in temperatures, we are headed for a record harvest,” said Rajbir Yadav, principal scientist at the Indian Agricultural Research Institute in New Delhi.

The wheat crop comes to heading (i.e. for the ears to fully emerge from the tillers) 80-95 days after sowing. This is followed by flowering, pollination and seed setting, before the final grain development stage from mid/late-February.

Maximum temperatures should be in the early-thirty °C range during the 35-40 days of grain formation, filling and ripening. Any surge in March temperatures – like in 2002, when the mean temperature departure above normal was 1.61°C for all-India and 3.22°C for the wheat belt of Northwest India – could cause premature ripening and drying of grains, translating into lower yields.

But that possibility looks unlikely – thanks to the prevailing La Niña (opposite of El Niño) conditions, which are generally associated with colder-than-normal winters in India.

The prospect of bumper harvests seems likely in most rabi crops for now.

Take potato, where India’s production in 2024-25 was officially estimated at 58.1 million tonnes (mt). “This year, it will be at least 3-4% higher,” according to S. Soundararadjane, CEO of HyFarm, the agri-business unit of the Ahmedabad-based French Fries maker HyFun Foods Pvt. Ltd.

Last season, high temperatures during sowing time from mid-October to November meant that the seed potatoes couldn’t sprout properly and form sufficient number of tubers. The subsequent period, however, was marked by low night temperatures and long daylength with bright sunshine, ideal for photosynthesis and growth. Therefore, even the tubers that were formed had larger size and higher weight.

“This season, both tuberisation and tuber bulking are good. And there’s hardly any disease either,” added Soundararadjane.

The only crop of concern is mustard, with damage from Orobanche aegyptiaca, a root parasitic weed, being reported many growing areas of Haryana and Rajasthan. The extent of overall yield and production loss from it – in an otherwise extremely favourable agroclimatic environment for the oilseed crop – is not clear though

Food inflation outlook

Potato is currently wholesaling in the mandis of Uttar Pradesh at Rs 600-700 per quintal, as compared to Rs 1,200-1,300 a year ago.

But it’s not the tuber alone. Retail inflation in all vegetables, as per the consumer price index, was minus 18.5% year-on-year in December, while minus 15.1% for pulses.

The reason for this isn’t only the Goldilocks combination of munificent rains and moderate temperatures yielding bumper harvests. Equally important is the domestic stocks and international supply position.

Table 2 shows total rice and wheat stocks in government godowns, at 95.4 mt as on January 1, to be nearly 4.5 times the required level and also more than the previous high of 87.1 mt for the same date of 2022. Even wheat stocks are comfortable now, relative to what they were over the last three years.

The US Department of Agriculture has projected record/near-record global production in 2025-26 of wheat (largely driven by Argentina), rice (India), corn/maize (US), barley (European Union), soyabean (Brazil) and palm oil (Indonesia).

Unlike in 2021 and 2022, there are no supply shocks – whether from pandemic, war, weather or export controls – exerting upward pressure on world prices today. The disturbances in Iran and Venezuela have caused minimal disruptions to the global agri-commodities trade, which was not the case just after the war in Ukraine broke out.

Simply put, save in the event of any sudden extreme weather event (say, a new El Niño), a resurgence of food inflation appears remote.