Foodgrain output in India may hit record, all set to keep inflation low

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Published: July 29, 2017 6:14:44 AM

India’s foodgrain production in the current kharif season might equal if not surpass last year’s record output of 138 million tonnes (mt), a prospect that will give a strong support to the economic growth in the current financial year besides mitigating inflationary pressure on food items.

Foodgrain output in India, Foodgrain output, Foodgrain, kharif season, kharif area, oilseeds, Agriculture, Agriculture experts, Maharashtra Dal Miller Association, agri-marketing stress, IMDAreas under all major crops except oilseeds higher than last year aided by well-distributed rains in the last eight weeks.

India’s foodgrain production in the current kharif season might equal if not surpass last year’s record output of 138 million tonnes (mt), a prospect that will give a strong support to the economic growth in the current financial year besides mitigating inflationary pressure on food items. By Friday, 75% of the “normal kharif area” was sown and areas under all major crops except oilseeds were higher than in the comparable period in the last kharif season. According to data released by the ministry of agriculture, 791 lakh hectares have already been sown, up 3% from the year-ago period. Well-distributed monsoon rains in the last eight weeks have indeed helped farming — only a few regions in south India like south interior Karnataka and all of Kerala have reported deficient rains. Sowing will be completed by mid-August. However, as standing oilseed crops in Saurashtra, Kutch and North Gujarat regions were partly destroyed by heavy rains, there are concerns over these crops, the robust harvest of which is critical to reducing India’s edible oil import bill.

Contrary to expectations that the cropping area under pulses might shrink this year following a sharp fall in their prices in the last few months, the area sown was 114.88 lakh hectares till Friday, 7% higher than in the comparable period in 2016-17. Agriculture experts say the good rains together with the hike in the MSP (minimum support prices) for pulses may have motivated farmers to sow more. The total production of pulses in 2016-17 is estimated at 22.40 mt, up from 16.35 mt in 2015-16. However, the area under arhar has declined 15% to 34.88 lakh hectares as retail prices have witnessed a sharp fall of more than 40% in the last few months because of a bumper output in last year’s kharif. “As there is no other remunerative crop, farmers have inclined towards the sowing of pulses. Even though the arhar area is down 15%, it will have no effect on prices as we have ample carry-forward stocks,” said Nitin Kalantri, secretary, Maharashtra Dal Miller Association.

Retail food inflation hit a fresh low of -2.12% in June. If the good monsoon, as has been forecast, results in a bumper farm production in 2017-18, inflationary pressure on food items will be kept in check in the coming months as well, according to analysts. “Higher acreage means food inflation would remain in check, giving the RBI (Reserve Bank of India) sufficient assurance when it decides to cut policy rates later this year. On the flip side, if prices do not recover sufficiently, owing to agri-marketing stress, it could dent farm incomes which will not only add to the clamour for loan waivers but also depress rural consumption,” a report by Axis Capital has stated.

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Foodgrain output in India’s crop year (July-June) is almost evenly divided between kharif and rabi seasons. Last year saw record output in both seasons — kharif 138 mt and rabi 135.34 mt. Because of normal rainfall last year, the country’s foodgrain production in the 2016-17 crop year is estimated to reach an all-time record of 273.38 mt, which is 8.7% more than the previous year. The acreage under cotton too has risen sharply by more than 20% to 111.55 lakh hectares, up from 92.33 lakh hectares last year. Gross value added in the farm and allied sector grew an impressive 4.9% in 2016-17, against just 0.7% in the previous year, thanks to a bumper harvest after two straight years of drought.

According to the India Meteorological Department (IMD), the cumulative rainfall received so far across the country has been 104% of the benchmark long period average (LPA). However, northwest India has received ‘excess’ rainfall of 117% and central India has a share of 113% of LPA. In the case of southern peninsula, the rainfall so far has been 84% of LPA while only the in east and northeast region has there been ‘below normal’ rainfall at 94% of LPA.

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