The country is expected to reap a bumper grain harvest for the fourth year in a row, thanks to early showers and a sharp pick-up in sowing, the head of the country’s top state-run farm research body said on Monday.
“Grain production is expected to rise this year. Although it’s very early to say, but as things stand today, we are in a very good position (to expect higher output). If the crops get showers intermittently, it would augur well,” Indian Agricultural Research Institute director HS Gupta told FE.
Grain output in India, the world’s second-largest producer, hit 255.36 million tonne in the crop year through June on higher-than-expected output of rice, wheat and pulses, but production trailed at the 2011-12 record level of 259.32 million tonne. The production in 2013-14 is now expected to top the 2012-13 level.
Good harvest will keep key grain supplies steady in times of high food inflation and provide much-needed relief to the government as it gears up to implement a food security law. It will also bring to the fore problems of storage. Gupta said the spread of monsoon showers before the usual time has helped sowing activity and if the initial advantage is harnessed properly, production would be robust.
According to the latest farm ministry data, summer planting rose 10.5% to 10.90 million hectares till June 21, compared with the normal areas sown till this time. Sowing picked up this month as monsoon covered most parts of the country, barring the north-eastern region, by mid-June, a month earlier than the usual time. The country has also received 34% of more showers than the normal level till Sunday, the Indian Meterological Department said. The north-western regions saw 132% more rainfall till Sunday, which resulted in floods in Uttarakhand, while central India received 88% more.
Higher production would pressure global grain prices further, which are already depressed due to ample stocks in key producers. The Chicago Board of Trade December corn fell as low as $5.44-1/4 a bushel intraday, the lowest since June 18, while July wheat lost 0.5% to $6.94-1/4 a bushel after climbing to its highest since June 5 last week due to short-covering. Grain indices in the World Bank Commodity Price Index dropped by 2.4% between March and May and some analysts have forecast of a drop in prices this year due to ample supplies.
A good harvest, however, will compound the problems of storage in state-run warehouses. In 2012, thousands of tonne of grain stock were washed away or damaged by rough weather as bumper production and curbs on exports drove up stocks in warehouses. However, food ministry officials said the quantum of losses was significantly reduced to less than 1% last year and they have ramped up preparedness this time to prevent any losses.
However, a higher grain output augurs well for the Food Security Act.
The government wants to offer a legal guarantee to nearly 67% of of the country’s population for supplies of subsidized grains to ensure food security. It needs to buy more than 65 million tonne a year from farmers to implement it.
