Uneven Rainfall Raises Concerns Over Grains, Pulses Output, Inflation

India’s top food-producing states are likely to see a drop in the output of rice, pulses, oilseeds, and sugar cane, which may further spike food inflation and keep the Reserve Bank of India (RBI) from softening interest rates -- much-needed for spurring economic growth. Rising food inflation also doesn't bode well for the ruling dispensation at a time when elections are due in the key states of Rajasthan, Madhya Pradesh, Telangana and Chattisgarh this year and national elections in April-May next year.

Rice output in India, the world’s largest rice exporter, is likely to be at least five percent lower than a year ago, The Economic Times quoted Cuttack-based National Rice Research Institute’s director Amaresh Kumar Nayak as saying. Government officials often tend to underplay food grain shortages.

More critically, deficient rainfall in the ongoing June-September monsoon season could also reduce the output of pulses, particularly pigeon pea (arhar or tur) and black gram (urad), as the delay in planting these predominantly rain-fed crops could lead to lower-than-normal yields.

Though the area under rice is about one million hectares more than last year as per government estimates, uneven rainfall in key rice-producing regions could affect output.

India received 10 percent less rainfall than the 50-year Long Period Average (LPA) from June until 13th September the Indian Meteorological Department data showed. Rainfall in the southern peninsula and northeast India was 10 percent and 19 percent lower, respectively, during the season.

In Punjab and Haryana, which produce rice mainly for the public distribution system (PDS), the deficits of one percent and nine percent, respectively, were within the ‘normal’ range. About 99 percent of Punjab’s production and 85 percent of Haryana’s output is procured for distribution at subsidised rates to the poor.

Among the major rice-producing states, only Odisha, which accounts for 7.2 percent of total rice production, received normal rainfall through the kharif, or summer, season.

Gone With The Rain

Punjab experienced flooding in June and July when rice was planted, forcing farmers to replant on about 86,500 hectares. But paddy acreage this year at nearly 32 lakh hectares, including about six lakh hectares under basmati, is the highest in its history, The Indian Express reported.

Farmers in the cotton belt, who have suffered from poor yields due to pest attacks, have switched to rice this year. Though the weather office said Punjab logged ‘large deficient’ rainfall in August, the United States Department of Agriculture (USDA) staff who visited the state last month said the crop was in good condition. The USDA publishes monthly bulletins on the world production of crops of interest to its farmers. It expects India’s rice production to be three percent lower than last year.

In West Bengal, sowing was affected due to deficient rainfall in June and July. At 12.7 percent, the state has the highest share of rice production, but consumes most of it. Rainfall was deficient in Uttar Pradesh as well, which is the second largest rice producer, with a share of 11.8 percent. Andhra Pradesh and Chhattisgarh, producing 6 percent each, had normal sowing seasons but deficient rainfall in August. Telangana, which is the second largest supplier to the PDS after Punjab, selling 81 percent of its production, had excess rainfall in June-July but deficient rainfall in August. Tamil Nadu (5.6 percent share) and Karnataka (3.2 percent) had normal sowing seasons, but rainfall was deficient in the August vegetative phase. Farmers in these states have coped by planting short-duration varieties that mature early.

Anticipating a shortfall in production, on July 20, the government banned the export of non-basmati white rice, which was subjected to a 20-percent duty earlier. The food ministry said it wished to quell retail prices. Official data showed average retail prices of rice in the country’s four zones were 11-17 percent higher in August than a year earlier. On August 25, basmati rice exports below US$1,200 a tonne were prohibited, to curb exports of ordinary rice in the guise of basmati.

As for pigeon peas, the government expects to import 12 lakh tonnes during the year, up from 8.9 lakh tonnes last year. Production was 30 lakh tonnes last year, against 39 lakh tonnes in 2021-22. A shortfall is again expected this year due to lower acreage planted, and yield losses caused by uneven rainfall in Maharashtra and Karnataka, which together account for 56 percent of production.

Retail prices of pigeon peas per kilogramme were 25-30 percent higher in August at Rs 132-155 across the country’s four zones versus a year ago. Black gram and green gram are also slightly more expensive compared with the year earlier, official data showed. The government has imposed stock limits on pulses to prevent hoarding and ensure more availability in the market.

A shortfall in oilseeds production too is expected. Soybean acreage is about the same as last year, but yield losses are expected. Sunflower sowing is down by 85 percent, but it is not a major oilseed crop. The winter mustard crop could be hit by rising temperatures and deficient rainfall. Weather is expected to remain dry in winter as the El Nino weather pattern, a warming of surface sea temperatures in the Equatorial Pacific gathers strength.

Reservoir levels in the northern and eastern regions, where mustard is grown, are 86 percent and 65 percent respectively compared with year-ago levels and 82 percent and 69 percent of the last 10 years average. However, retail prices of cooking oil are likely to be lower than last year when they spiked due to the military conflict in Ukraine.

Export Bans

A dry winter will affect wheat production as well. Production in the 2021-22 winter wheat season was 107 million tonnes against the government’s initial estimate of 111 million tonnes. This year, against the official rice production estimate of 112-113 million tonnes, market estimates suggest it will not exceed 103 million tonnes.

The government will revamp its crop estimation mechanism to reduce the gap between projections and actual harvest, Food Secretary Sanjeev Chopra said at a meeting with the Roller Flour Millers Federation of India.

Wheat output in 2021-22 was affected by higher-than-normal temperatures in northwest India in March when the wheat crop entered the grain-filling stage. Exports were banned to augment domestic availability and curb prices. But production bounced in 2022-23 to nearly 113 million tonnes.

Though the sugarcane area at nearly 60 lakh hectares is about 4 lakh hectares more than last year, India is set to ban exports of sugar for the first time in seven years as deficient rainfall has affected crop yields, news agency Reuters reported in August. The sugarcane crop in Maharashtra and Karnataka have been damaged by scanty rainfall, Atul Chaturvedi, Executive Chairman, Sree Renuka Sugars Ltd., said. He said the crop in Uttar Pradesh, India's top cane producer, is largely unaffected despite the uneven distribution of rainfall in the eastern part.

When asked whether a ban on exports was likely, Chaturvedi countered, “Will restrictions be lifted?”

India had moved sugar exports from ‘free’ to ‘restricted’ in June last year. For the sugar season - from October 2022 to September 2023 - it had allowed exports of 60 lakh tonnes. The quota was exhausted in May. The speculation is that no export quota will be announced for the next sugar season.

Reuters also reported that India, the world's second-biggest producer of sugar and wheat, was considering wheat imports for the first time since 2017.

No government can take chances with price rises, especially in a country like India where a majority of people spend a large chunk of their income on food.But the series of measures taken to increase domestic availability betray nervousness in a government heading for elections. Some of them, like the ban on rice exports, could have been nuanced and graded to balance the interests of farmers and consumers.

(Vivian Fernandes is an author, journalist and columnist, writing mainly on agriculture. He edits www.smartindianagriculture.com. Views expressed are personal)