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Mint Primer: Making sense of India’s record food production

Food production in 2022-23 is estimated at a record 329.7 million tonnes, about 4.5% higher than the year before, according to the agriculture ministry. (Bloomberg)
Food production in 2022-23 is estimated at a record 329.7 million tonnes, about 4.5% higher than the year before, according to the agriculture ministry. (Bloomberg)

Summary

India's robust food production numbers are at variance with the decision to curb exports of wheat and rice

Data released last week by the agriculture ministry shows food production touched record highs in 2022-23. The robust numbers are at variance with India’s decision to curb exports of wheat and rice, and the trajectory of food inflation across multiple crops. Mint explains.

What do the official statistics show?

Food production in 2022-23 is estimated at a record 329.7 million tonnes, about 4.5% higher than the year before, according to the agriculture ministry. While production of major cereals like rice and wheat rose by 4.9% and 2.6%, production of coarse grains was up a sharp 12%. Production of pulses fell by 4.4% year-on-year (y-o-y) but was 6% higher when compared to the five-year average. The estimated rise was despite a 7 million tonnes hit to kharif rice output after subpar rains in rice growing areas, forecast by the ministry in September 2022. Late rains during harvest also damaged crops in several states last October.

Why are these numbers inconsistent?

In September ’22, the government banned export of broken rice and imposed a 20% duty on some varieties, due to an anticipated hit to domestic production. The latest production estimates do not reflect the ground reality of high cereal prices due to which export curbs were tightened further. From July, export curbs on rice were strengthened. Last year, India had miscalculated its wheat harvest, which was severely blighted due to a heat wave. It had promised to meet a global shortfall in supplies following Russia’s invasion of Ukraine. But exports were hastily banned—in May 2022—due to a domestic shortfall.

Graphic: Mint
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Graphic: Mint

What about the food inflation trajectory?

Record production of food grains and export curbs were expected to check prices. But retail inflation in cereals have been in double digits for some time—driven by wheat and rice. Consumer cereal prices, in September, were 11% up y-o-y, and pulses were 16.4% higher. As on 21 October, retail rice and wheat flour prices were 12.7% and 5% up y-o-y.

What about estimates for 2023-24?

The first advance estimate of kharif production is usually released in September but is yet to be published. The monsoon this year had the lowest rains in five years besides being unevenly spread. Production of rice, the main kharif crop, is expected to take a hit both due to excess and deficit rains. Less rain in several states is likely to hit production of pulses and oilseeds. Consumer affairs ministry data show that for certain varieties of pulses like tur (pigeon peas) retail prices are 38% higher than last year.

How can crop estimates be robust?

For crop yield estimates at the national level, the government relies on crop cutting experiments by state revenue and agriculture departments. Experts have raised concerns on reliability of data collected by understaffed state departments—which often tend to overestimate production. India is using remote sensing to cross check this data. Moreover, reliability is low for crops with multiple plucking. Unlike food grains, horticulture crops are not harvested in one go, and estimating yield is more difficult.

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