Govt admits production of wheat will fall

Govt admits production of wheat will fall

New Delhi: India’s wheat harvest is expected to decline from last year’s record, the government said on Friday in the first official forecast of a drop in the output of the staple, as a poor monsoon takes its toll on winter-sown crops.

The country’s farms are likely to produce 79 million tonnes (mt) of wheat in 2009-10, according to a report released by the ministry of agriculture on its website. That’s lower than last year’s record production of 80.58 mt and would mark the first year-on-year decline in output for four years.

Wheat constitutes 72% of India’s total foodgrain output. The projection is the first indication of expectations for the likely harvest in the world’s second largest producer of the grain, based on the assessment of scientists, farm ministry and feedback from districts.

The lower forecast flies in the face of an assertion of confidence by agriculture minister Sharad Pawar last month that the harvest of winter-sown rabi crops would help offset the losses from the drought that gripped half the country’s districts. Concerns may also stem from some states predicting that a dip in the kharif, or summer crop, output is likely to lead to seed shortages for next year’s kharif crop as well.

Still, government officials and analysts downplayed the expected decline in the wheat harvest, saying the 2% dip would be within manageable limits and unlikely to have a cascading impact on inflation, which entered positive territory for the first time in 14 weeks in the week ended 5 September at 0.12%. India also has plentiful food stocks, amounting to 47 mt.

S. Mahendra Dev, chairman of the Commission for Agricultural Costs and Prices, said there was no cause for worry. He noted that the price of wheat was close to the government mandated minimum support price, at which the government buys the grain for public distribution, saying the likely decline in output was manageable.

“All the key rabi crops aren’t as water-intensive as wheat, and the water levels in the reservoirs are adequate," Dev said. “The only thing to worry about is high temperatures in February and March. This could affect the wheat."

Weak monsoon rains have reduced soil moisture, a key factor for yields of winter-sown crops such as wheat and rapeseed.

“In high productivity areas, wheat yields seem to be plateauing. The decreasing soil fertility due to reduction in carbon and increasing deficiency of micronutrients are other important factors responsible for low productivity," the report said.

The target may be reviewed next week at a two-day conference of state government officials and the farm ministry, when they will discuss the availability of fertilizers, seeds and irrigation resources as well as the likely crop area.

“The real damage has been to kharif crops. A 2% dip for next year’s wheat projection is unlikely to significantly affect inflation trends. However, government estimates can sometimes undermine the real picture. We will have to wait the next couple of weeks to get a clear picture," said Himanshu, an agriculture expert at the Jawaharlal Nehru University and a columnist for Mint.

India hopes to boost the use of better seeds and fertilizers and encourage early sowing to maximize output of wheat, which makes up three-quarters of India’s winter-sown grain, the report said.

“Because of late revival of monsoons, ground water levels have gone up, which is giving the government the confidence to predict a 79 million tonne wheat production, which largely depends on irrigation," said D.K. Joshi, principal economist at credit rating agency Crisil Ltd. “In 2004-05 also, we saw while kharif production fell by 11%, rabi turned out to be normal, which also resulted in normal food production. So the target of 79 million is not implausible."

The target for winter-sown rice is 14.5 mt, down from 14.57 mt harvested a year ago. India grows only one wheat crop in a year, which is sown from October and harvested from March. It grows two rice crops and the bulk of the harvest comes from the summer-sown crop.

The monsoon has been 20% below normal this year, the worst since 1972. Low rains have also hit the cane crop, raising the prospects of large sugar imports.

Sangeeta Singh of Mint and Himangshu Watts of Reuters contributed to this story.