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Wednesday, September 30, 2020

Explained: In farm promise, some concerns

Robust kharif plantings and fertiliser sales are a good sign, both with a strong correlation with the monsoon. But there are areas of uncertainty — the monsoon itself, desert locusts, and milk.

Written by Harish Damodaran | New Delhi | Updated: August 3, 2020 11:26:34 am
The increased plantings have been largely due to a normal southwest monsoon, with the all-India area-weighted rainfall during June-July, at 453.3 mm, marginally above the long-period average of 452.2 mm for these two months. (File)

To say agriculture is roaring may be an exaggeration, but it is definitely one sector where things are closest to business-as-usual in today’s Covid-ravaged Indian economy.

One indicator of that is sowings. Farmers have in the current kharif (monsoon) season so far planted 13.9% more area compared to last year’s coverage at this time. Moreover, acreages are higher in all major crops, barring jute (Table 1).

The increased plantings have been largely due to a normal southwest monsoon, with the all-India area-weighted rainfall during June-July, at 453.3 mm, marginally above the long-period average of 452.2 mm for these two months. The same period last year, by contrast, recorded 412.3 mm rain — an 8.8% shortfall.

A second indicator of agricultural operations going on unhindered is sale of fertilisers to farmers. July marked the ninth consecutive month of it registering double-digit growth (Table 2).

That, again, has a strong correlation with the monsoon. Last year, rainfall was 32% below normal in June and the cumulative deficiency remained at 18.6% till July 24. A spectacular recovery followed thereafter and the monsoon season as a whole (June-September) ended up with 10.4% surplus precipitation. But the main kharif sowing window was already over by then. The benefits from the monsoon’s second-half turnaround, leading to a significant recharging of groundwater tables and filling of dam reservoirs, were reaped only in the rabi (winter-spring) cropping season. Rabi plantings went up 9.5% over the previous year and it was also reflected in fertiliser sales from November.

Trends carried forward

The ongoing kharif is basically a continuation of the trend from the 2019-20 rabi season, which produced a bumper crop. Farmers could, moreover, harvest this crop, as the movement of labour and machines for agricultural operations were exempted from the coronavirus-induced lockdown restrictions. The Food Corporation of India and state agencies also procured an all-time-high 389.75 lakh tonnes (lt) of wheat and 504.86 lt of rice (111.18 lt after lockdown) from the 2019-20 crop. That, along with the minimum support price-based purchases of rapeseed-mustard, chana (chickpea) and arhar (pigeon-pea) plus direct benefit transfers under the Pradhan Mantri Kisan Samman Nidhi scheme, injected roughly Rs 1,38,000 crore of government liquidity into the farm economy between April and July.

The above liquidity is being redeployed into production during this kharif. Farmers have simultaneously sought to take maximum advantage of the improved soil moisture conditions — thanks to the surplus rains right from the second half of 2019 and extending to the winter and pre-monsoon seasons — by sowing aggressively and investing in fertilisers and high-yielding seeds.

Also in Explained | Challenges before RBI as it decides monetary policy next week

Sources of uncertainty

There are, however, at least three sources of uncertainty for agriculture right now.

The first one is from the monsoon itself. The country received 17.6% above-normal rains in June. But July reported a 9.9% deficit, with this widening to 19.2% in the second half of the month. The India Meteorological Department has forecast rainfall during August-September to be 104% of long-period average with a model error of ± 8%. The prediction assumes “neutral” ENSO (El Nino) and Indian Ocean Dipole conditions continuing during the remaining part of the monsoon season. As things stand, though, Madhya Pradesh, Rajasthan, mainland Gujarat, Vidarbha, Jammu & Kashmir and Himachal Pradesh are among the regions beginning to experience some moisture stress. That could have a bearing on the already-planted crop in vegetative growth stage. The next few days, therefore, matter.

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The second threat is from desert locusts. The UN Food and Agriculture Organization has warned that the breeding of these insects is under way along both sides of the Indo-Pakistan border. “In India, numerous adult groups and swarms are laying eggs over a wide area of Rajasthan between Jodhpur and Churu, while hatching and band formation from earlier laying have occurred further south from Phalodi to Gujarat,” its latest report dated July 29 has said. The problem would arise when the immature winged adults resulting from this breeding form swarms that can feed on the growing kharif crop. Government agencies, on their part, have undertaken pesticide spraying and control operations in almost 4.57 lakh hectares area across 10 states till July 30. Earlier swarm invasions in May-June, it may be noted, caused no damage because the rabi crop had already been harvested.

The final pressure point is from milk, India’s largest “crop” both by volume and value. As a crop that is harvested and sold daily, it is source of supplementary income as well as liquidity for most farmers. The crash in milk prices by Rs 10 per litre or more since the March 25 lockdown will certainly impact rural incomes. Out of the country’s estimated 50 crore litres of daily production, 12-12.5 crore litres is handled by organised cooperative and private sector dairies. A Rs 10/litre price fall even on this means an income loss of Rs 120-125 crore per day. The losses could mount with the start of buffalo calvings and milk production rising in the natural course as temperatures dip along with improved fodder availability. A lackluster festival season and poor demand for milk-based sweets isn’t going to help matters either.

Agriculture until now has been a bright spark amid the economic gloom unleashed by Covid. But the coming days may also expose weak spots.

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