Business Economy

Favorable Monsoon Likely To Boost Farm Output And Maintain Crop Costs In Check

Inflation pressures build up in India as wholesale inflation (WPI) has been rising for five months. The impact can be seen on surging commodity prices for a few months now. While RBI is expected to look through supply-driven inflation surge along with supply-side measures taken by the government, Barclays in its recent monsoon report has noted that monsoon can also help balance this impounding pressure on prices for the medium term. “A favorable monsoon that boosts farm output could help to keep price pressures in check,” Barclays stated.

However, many areas are witnessing a monsoon dry spell as the rainfall remains subdued. According to the report, the rainfall received for the last 20 days has been below normal. Monsoon rains are expected to pick up during the second week of July and remain in a normal range for the rest of the month, the Indian Meteorological Department (IMD) predicted. As of now, the overall rainfall is 8 per cent below the normal range.

As a result of the dry spell, the impact can be seen of sowing of kharif crops. “The progress of monsoon during July-August is critical, as it has a significant bearing on sowing and crop yields for the year,” Barclays added. But with the monsoon being delayed, many farmers are delaying sowing of the kharif (summer) crop this season. The state governments have also urged the farmers to do so, the report said.

Pushpendra Singh, President- Kisan Shakti Sangh also told FE online that delay in monsoon has impacted the sowing of crops this year. The area sown through as of now is at 50 crore hectares whereas more than 56 crore hectares have been used for sowing last year by this time. While the farmers have been hopeful on monsoon recovery, by mid-July, there has not been much rainfall in northern parts of the country. For areas where rain remains scarce, Singh said farmers will have to use groundwater as a resource which will further stress their input cost and profitability. To be sure, the monsoon is also critical for water reservoir storage levels.

Barclays noted as of July 7, storage in 130 key reservoirs stood at 31 per cent of total capacity. “This amounts to 93% of the available capacity in the year-earlier period and 126% of the 10-year average for this point in the season.” Meanwhile, sowing trends for cotton, coarse cereals and oilseeds remain weak with a decline of 10 per cent, 15 per cent and 10 per cent year-on-year decline in sowing, respectively.

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