Weak Monsoon Stokes Fears of Food Inflation

Jayashree Bhosale, The Economic Times, 04 June 2015

The monsoon is poised to hit the Kerala coast in two days, however concerns over weak rainfall have stoked fears of food inflation and tough days for farmers and onsumers, although industries' use of oilseeds and cotton will be cushioned by a global surplus. Pulses, coarse grains, rice, fodder, milk, eggs and chicken may see pressure on prices in the coming months, as the weather office has forecast a 12% deficiency in the monsoon, and the Pune-based Indian Institute of Tropical Meteorology said rainfall will remain mostly confined to the southern tip of the country and the North-Eastern parts.

This will delay sowing of key kharif crops by 10-15 days. "Already, prices of pulses are very high. We expect farmers to take a very good crop of pulses due to the high prices. However, if the rainfall in pulses-growing areas is not good, then there can be psychological impact on the prices in July," said Bimal Kothari, vicepresident, Indian Pulses and Grains Association (IPGA). Due to a fall of about 10% in pulses production in 2014-15, retail prices have increased by about 20% to 40% in past two months, forcing government to warn traders against speculation. Onion prices are steady at the retail level, but traders said the wholesale market signals that traders are bullish.

"Prevailing wholesale onion prices are already on the higher side. Due to the unseasonal rains, only about 50% of the total rabi crop remained in storable condition," said Ajit Shah, president, Onion Exporters Association of India. "The early kharif crop from the South is in very good condition. Yet, the prices may move up further in July, when the government may have to import onions," he added. In a drought year, milk gives assured liquidity to farmers. But decreased exports of milk products have resulted in decrease in farmer-end milk prices. With deficient rains, the production cost of milk will go up, with bleak possibility of commensurate increase in procurement prices by dairies. De-oiled rice bran, corn, ground nut cake, de-oiled soyabean cake, etc go in the manufacturing of animal feed.

Balram Yadav, managing director, Godrej Agrovet, said, "Milk farmers are losing money. If commodity prices move up, it will result in increase in prices of compound cattle feed and compound animal feed. With less greens, prices of dry fodder will increase too, resulting in a disastrous impact on the farmers." Yadav, RS Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation (Amul), said, "There will not be immediate impact of a deficient monsoon on milk procurement. However, it will result in less productivity of animals, animal stress and increased cost of production for farmers, which will have a serious impact on milk availability in next summer season." Despite its repeated requests, dairies in Maharashtra continue to offer less than the government prescribed rate of Rs 20/litre for cow's milk.

The heat wave has also sent chicken prices moving northwards, particularly in the eastern and southern markets. In Bengal, Odisha, Assam, Tamil Nadu, Karnataka, Telangana and Andhra, these have risen by nearly Rs 20 -30 per kg in last fortnight. According to poultry traders, there has been nearly 25% reduction in chicken production in the last fortnight due to high mortality rate. Delayed monsoon has raised concerns among the paddy farmers of eastern Indian states of West Bengal, Bihar, Jharkhand, Assam, Odisha, Chhattisgarh and eastern Uttar Pradesh that contributes around 56 millon tonne rice out the country's total production of around 104.5 million tonne. "These areas solely depend on rains for sowing and transplantation.

If monsoon is delayed then the crop will get affected," said Mukund Variar, officer-in-charge of Central Rainfed Upland Rice Research Station. Variar said early indications show that there will be a deficient rainfall. "We are advising farmers of Bihar and Jharkhand to use drought-tolerant seeds and go for direct seeding of paddy," Variar said. Pradip Majumdar, agricultural adviser to the West Bengal government said that farmers are being advised to go for staggered sowing if the rainfall is delayed. Farmers in Punjab, who depend on irrigated water for paddy cultivation are being advised to use basmati varieties that mature early."Normally, transplantation begins in first week of July. But for this variety transplantation can be done between July 20 and August 15," said Vijay Sethia, past president, All India Rice Exporters Association.