Floods dampen kharif outlook, but plentiful stocks to prevent shortfall

NEW DELHI: This year’s kharif harvest may be lower than 2016 because of floods in several states and lower planting of some crops, but the country has enough stocks to meet food requirements and keep prices under control, traders and analysts said.

Output of pulses and oilseeds is expected to fall because of lower planting, while production of rice, the main kharif crop, is likely to be the same as last year as higher yields will offset lower sowing, trade bodies representing buyers of pulses and rice said.

Cash crops are likely to do much better. Companies and traders were bullish about sugarcane and cotton, which have seen an increase in acreage by 9% and 18%, respectively, this year.

Floods in parts of Gujarat, Assam, Rajasthan, Bihar, West Bengal and Uttar Pradesh and weak rainfall in south India have hit crops. Agriculture secretary SK Pattanayak said the kharif harvest would be similar to last year’s levels.

“There is no cause of concern in terms of production. Farmers in flood-affected areas will shift to other crops once the water recedes,” he said. Till last week, an area of 3.82 million hectares was affected due to floods, heavy rain and drought, he added.

Cane Planting Up 9%
The state worst-hit by floods was Gujarat (1.1million hectares), followed by Rajasthan and West Bengal at 700,000 hectares and Bihar at 650,000 hectares.

Analysts are not so optimistic. “There will be a 5-10% fall in production level for kharif. In the previous year, production was 138.52 million tonnes,” said Prerana Desai, head of commodity research at Edelweiss Agri Value Chain Ltd.

The research company expects output of pulses to fall 10-15% from last kharif season’s 9.42 million tonnes. Production of rice is expected to be similar as last year’s 96.39 million tonnes, while oilseeds are expected to drop 15-20% from 22.4 million tonnes, said Desai.

A fall in prices prompted farmers to reduce the area under pulses plantation by 4% to 13.76 million hectares, according to agriculture ministry data.

“We can expect a 3% to 5% decrease in kharif pulses production in India. With the government holding 1.4 million tonnes of arhar and huge stocks in the domestic market, there is unlikely to be a price rise,” said Pravin Dongre, chairman of the Indian Pulses and Grains Association. He said that in the long term, the government will have to remove import restrictions.

This year, rice acreage fell 1.5% to 36.6 million hectares. “The output will remain similar to previous year as in key growing areas the weather was favourable and yields will be higher, too,” said Vijay Setia, president of the All India Rice Exporters’ Association.

The dry spell in Karnataka, Kerala and Telangana affected acreage under pulses, coarse cereals, oilseeds and cotton, according to the agriculture ministry.

India’s soyabean production this year will likely fall 10-15% from last year’s 13.79 million tonnes, said BV Mehta, executive director of the Solvent Extractors’ Association of India. The planting of all oilseed crops, including groundnut and sunflower, has been 8% less.

“Groundnut production will also fall by 10% from 6.2 million tonnes in the previous year,” said Mehta, who added that with 70% dependence on imports, a price hike was not likely.

Cotton is expected to benefit from higher acreage and favourable weather.

“This year’s cotton production will be 10% higher than last year’s production. Good weather can lead to a further increase,” said Nayan Mirani, president of the Cotton Association of India.

The area under cotton has increased almost 18% to 11.98 million hectares. Seeing a bigger crop, future prices for delivery in October-November have crashed to Rs 38,500 per candy of 356 kg each from current prices of Rs 42,500 per candy in Gujarat.

The sugar industry expects higher output as cane planting is up 9%.