Rains hit Kerala: Normal monsoon set to cheer up farm sector

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Published: June 2, 2020 2:30 AM

A decent expansion of the farm sector will partly soften the blow to the economy, which is ravaged by the Covid-19 outbreak and is widely expected to experience sharply negative growth in the current fiscal.

 If the forecast holds true, this will be the second consecutive year that the country witnesses normal/above-normal monsoon rainfall.If the forecast holds true, this will be the second consecutive year that the country witnesses normal/above-normal monsoon rainfall.

On a day when the southwest monsoon honoured its date by hitting the Indian Peninsula via its habitual Kerala gateway, the India Meteorological Department (IMD) said that the rainfall during the four-month season will be well in the normal range at 102% of the benchmark long-period average (LPA). If the forecast holds true, this will be the second consecutive year that the country witnesses normal/above-normal monsoon rainfall. Last year, the monsoon onset was delayed by 8 days, put it picked up during July, and the precipitation was finally ‘above-normal’ at 110% of LPA.

A normal monsoon with fairly good dispersion, as predicted, would augur well for the country’s agriculture sector and the rural economy at large, at a time when the Covid-19 pandemic has cast clouds on most economic activities and continues to pose uncertainty to the revival of economy, which is in the doldrums.

Separately, the Union Cabinet announced 2-13% increases in the minimum support prices (MSPs) for 14 crops for the 2020 kharif season, in sync with the policy announced two years ago that MSPs would be at least 50% higher than the full paid-out costs (A2+FL). The MSP increases for kharif 2019 were in the range of 1-9%, while in 2018, the year in which the cost-linked norm was announced ahead of the general elections, the increases were sharper in the range of 4-52%.

Gross value added (GVA) in India’s agriculture–and–allied sectors grew 4% in FY20 even as the overall GVA in the economy grew just 3.9%, according to the official data released on Friday. Experts predict the agri GVA growth in FY21 to be in the 2-3% range. The sector’s average growth in the past six years was about 3.2%.

The probability of a normal or above-normal monsoon rainfall this year is 80% while the chance of below normal or deficient rain is 20%, IMD’s director general Mrutyunjay Mohapatra said.

Last year, the robust seasonal monsoon rainfall led to 3.7% increase in food grains output to a record 295.7 million tonne during 2019-20 crop year (July-June). Floods occurred in many parts due to heavy rainfall in September, which aided the rabi-grown crops with adequate moisture and water for irrigation.

“As the base is already high as per the latest data on FY20, the agriculture growth can be between 2-2.5% this fiscal. Already prices of many farm commodities are low, so this will be also good under the current circumstances,” said noted economist Ashok Gulati.

Normal monsoon has boosted GVA in the farm and allied sector in Q4 last fiscal, as it emerged the second fastest-growing segment with 5.9% expansion, an eight-quarter high. The farm sector has witnessed a roller-coaster ride in recent years, with GVA growth ranging from -0.2% in FY15 to 6.8% in FY17.

The sector will likely remain insulated from the damaging impact of the pandemic and grow at 3% in FY21, contributing about 50 basis points to the country’s economic growth, Niti Aayog member (agriculture) Ramesh Chand had said in April following a normal monsoon prediction.

A decent expansion of the farm sector will partly soften the blow to the economy, which is ravaged by the Covid-19 outbreak and is widely expected to experience sharply negative growth in the current fiscal.

“The season’s rainfall is likely to be 94% of LPA over North-West India, 100% of LPA over Central region, 97% of LPA over South peninsula and 91% of LPA over East and North-East all with a model error of + or – 8 %. During July, the rainfall over the country as a whole is likely to be 95% of its LPA and 99% during August, both with an error margin of + or – 9%.

The ENSO (El Niño-Southern Oscillation) neutral condition (neither El Niño nor La Niña) in the first half and a weak La Nina in the second half will aid to the good rainfall this year, the IMD DG said. El-Nino, which is a weather phenomenon in the Pacific Ocean, influences the monsoon rainfall in India. While an El Nino, heating of the sea surface temperature in the Pacific beyond a threshold, brings drought in India while the opposite La Nina aids precipitation.

As the distribution is likely to be good over all the regions, including in the east and the north-east, production of all the kharif crops – cereals, pulses, oilseeds, coarse cereals, cotton and sugarcane will be robust and farmers may expand the acreage, experts said.

“Widespread rainfall occurred over Kerala, during the past 2 days. More than 70% of the 14 rainfall monitoring stations over Kerala have reported rainfall during the last 48 hours,” IMD said, detailing the meteorological conditions that define the onset. The four-month monsoon season (June- September) accounts for 75% of country’s rainfall and is vital for its crops like rice, corn, cane, cotton and soybeans.

“Westerly winds have picked up speed up to 20 knots in the lower levels and has deepened up to 4.5 km over South Arabian Sea. After the precipitation of cyclone Nisarga over Arabian Sea, we have alerted on heavy rainfall in nine Kerala districts,” Dr K Santhosh, director, IMD Centre, Thiruvananthapuram, told FE. The cyclone is likely to cross North Maharashtra and Gujarat coasts on June 3, he said, citing Met department.

While the increases in the support prices would themselves jack up the government’s expenditure, except for few crops primarily grains, the procurement mechanism is still not robust; the system put in place to compensate farmers if procurement fails hasn’t really been effective.

PM-AASHA, the reinforced price support scheme for pulses and oilseeds launched in 2018, continues to be slow as the overall procurement is around 10% of the country’s production while policy allows up to 25% of output. Madhya Pradesh, which launched its own Bhavantar scheme with Central assistance, could not sustain it as traders colluded to lower mandi prices while farmers expected the government to re-imburse them the difference against MSPs when market prices fell.

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