Record output of foodgrains estimated; may dampen prices

Record output of foodgrains estimated; may dampen prices

New Delhi: The government’s latest estimates show that foodgrain production in the crop year 2010-11 rose sharply by 10.75% to a record 241.56 million tonnes (mt), a move that could potentially have a dampening effect on inflationary expectations.

The impressive increase led by wheat, maize and pulses is revealed in the final estimates for 2010-11, and is partially explained by the fact that 2009-10 was a drought year.

The crop year extends from July to June and covers the two main crop seasons, kharif (summer crop) and rabi (winter crop).

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The agriculture ministry puts out four estimates: the first advance estimate around September (based on kharif projections), the second one around December-January (based on rabi projections), the third one around March (before the rabi harvest) and the final one in July.

“Despite a setback in the production of kharif rice due to drought in some of the major rice-producing areas in the country, significant improvement in production of rabi rice, wheat, pulses and coarse cereals has resulted in the highest-ever production of foodgrains," the press release issued by the ministry of agriculture stated.

Two experts hailed the achievement of the agricultural sector, but said there were challenges ahead as India needs a higher food and commodities growth for the sake of its rising population.

“We are in a tunnel and this is a little ray of light we are seeing," said P.C. Kesavan, distinguished fellow at the MS Swaminathan Research Foundation. “We have a long, long way to go."

Kesavan said stagnating yields in the absence of proper technology, diversion of land for industrialization and depletion of ground water were just some of the issues hurting agriculture.

India is more or less sufficient in major foodgrains and sugar cane, but it has to depend on heavy imports of cooking oils and pulses, which are items of everyday use. Poor foodgrain management and an insignificant position in international agricultural trade are some other setbacks for this sector.

“We have a bumper production, but we also have foodgrains rotting on the side of the roads," said T.K. Bhaumik, chief economist and adviser with JK Group. “We need to privatize foodgrain management and increase productivity."

Bhaumik said the high production for 2010-11 was expected because the monsoon of last year coupled with the unseasonal rains this year were broadly beneficial for the crops.

The data showed estimated production of wheat, coarse cereals, maize, pulses, oilseeds and cotton would be the highest ever.

Wheat production was estimated at 85.93 mt in 2010-11, against 80.8 mt in 2009-10. Coarse cereals were estimated at 42.22 mt, up from 33.55 mt in the previous year. Pulses were estimated at 18.09 mt, up from 14.66 mt in the previous year.

The earlier record for foodgrains production was at 234.47 mt in 2008-09, the release said.

Food inflation has been persistently high in the last one year, putting pressure on headline inflation and keeping it well above above the central bank’s comfort level of 5%. However, foodgrain inflation is but marginal, rising by little over 1%. The food inflation of 8.31% for the week ended 2 July was caused by higher prices of fruits and vegetables.

Graphic by Yogesh Kumar/Mint