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Business News/ Opinion / Views/  A rain dampener for kharif crops this monsoon poses price risks
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A rain dampener for kharif crops this monsoon poses price risks

An uneven distribution of rainfall has left several key rice-producing states parched even as others had to battle excess water

Photo: PTIPremium
Photo: PTI

The patchy progress of the southwest monsoon this year has cast a long shadow on India’s kharif crop produce, particularly of rice, which is an important constituent of the government’s food distribution programmes. The threat comes right after wheat production in the rabi season took a hit from heatwaves and at a time when global rice supplies are at risk in major foodgrain exporting countries.

The southwest monsoon season runs from June to September and typically provides around three-fourths of the country’s annual rainfall. Most of the kharif sowing is completed by mid-August.

The problem is not overall precipitation as much as the distribution of the southwest monsoon rains. As of 23 August, rains were 9% above the long period average (LPA) at the national level. The La Nina effect, expected to persist until year-end, augurs well for precipitation during the rest of India’s monsoon season.

Yet, distribution has been uneven. Rainfall has been deficient in Uttar Pradesh (45% below the LPA), Manipur (43% below), Bihar (42%), Jharkhand (28%), Tripura (28%), West Bengal (20%) and Nagaland (20%).

Irrigation availability provides some relief. However, in Uttar Pradesh, high irrigation cover (81% against the national average of 54.3%) is insufficient for rice (which has very high water dependency) amid the state’s large rainfall deficit. Note that the rice-sowing season is virtually over.

The country’s rain-deficit states together account for around 30% of our kharif foodgrain production and horticulture output.

Data for horticulture is not available as widely as for foodgrains, nor on a timely basis. Many horticulture items, especially vegetables, are grown mostly by small and marginal farmers, and on farms of small acreage.

The supply of such produce has an impact on general price levels in India. In the Consumer Price Index (CPI) food basket, inflation of fruits and vegetables (horticulture items) was in double digits (12.3%) in the April-June quarter.

Some states are more dependent on agriculture than others. The share of agriculture of Tripura (27.5%), Uttar Pradesh (22.3%), West Bengal (19.5%) and Bihar (19.0%) in the overall economy is higher than the national average. Poor agricultural performance in these states could hurt their economic performance disproportionately.

Overall, kharif is still lagging last year’s levels. It remains considerably lower than last year’s (8.3% as on 18 August) for rice due to reduced sowing in eight of the top 10 rice-producing states, led by West Bengal and Uttar Pradesh.

Rice sowing was delayed due to uneven rainfall initially last year as well, but rice sowing had reached its last 5-year average by end-July.

This time around, an extended delay in rice sowing means an overall decline in rice acreage.

To be sure, despite some reduction in the central pool of rice stock, it remains comfortably above the buffer norms. Against a requirement of 13.54 million tonnes as on 1 July, the Food Corporation of India had rice stock of 31.71 million tonnes. But due to lower acreage and subsequently lower production, this gap is expected to narrow going ahead. Whether the situation becomes bad enough to lead to curb in rice exports remains to be seen.

Domestically, rice prices have already started firming up. The wholesale price of rice on average (across 60 cities in four zones) rose 1.3% on-month in July, with some cities reporting a double-digit increase. Typically, wholesale prices of rice decline or remain stable on-month in July. This July, West Bengal, Uttar Pradesh and Bihar (the larger kharif producers among the rain-deficient states) recorded the largest increase in retail cereal prices.

At the same time, nine states have received excess to large excess rainfall. Major crop growers Tamil Nadu and Telangana have received rainfall 67% and 57% above the LPA, respectively.

Parts of Maharashtra recently reported crop losses due to excess rainfall. Such crop damage in other states which are receiving excess rainfall, therefore, remains monitorable.

A shortfall in food production could fuel India’s already-high food inflation. While the situation is not yet alarming, the uneven distribution of rainfall remains a key challenge to be kept under watch for the risks it poses.

Climate change has impacted rainfall and therefore agricultural production over the years. Not only has the mean monsoon rainfall declined, but also extreme precipitation events and dry spells have increased.

India was buffeted by five cyclones last year, three of which were in the severe and above categories. As for the season as a whole, the country received normal southwest monsoon.

According to the Germanwatch Global Climate Risk Index (CRI), which is based on extreme weather events such as storms, floods and heatwaves in a year, India is among the world’s most vulnerable countries. The country ranked seventh on the CRI in 2019, compared with 31st in 2010.

The rising frequency of extreme weather events poses a risk to agricultural productivity. It could also make weather forecasts miss the mark and thus hinder planning for crop sowing.

Dharmakirti Joshi & Adhish Verma are, respectively, chief economist and senior economist at Crisil

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Updated: 24 Aug 2022, 10:36 PM IST
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