USHA TUTEJA, Financial Express
Posted: Saturday, Jul 28, 2012
The deficit monsoon rains, which are crucial for kharif output in India, caused great worry to farmers, media and policy makers. The rainfall has been below normal in all regions except east and north east India, during June and July. The key grain producing states of India, including Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, Himachal Pradesh and Uttrakhand are worst hit: The progress of the monsoon so far has not been satisfactory. In a recent forecast, the Met department predicted the rains would be 92% of the long-term average, lower than its April forecast of 99%. Rainfall is considered normal if it is between 96% and 104% of 89 mm of the long term 50 years average. The country as a whole has experienced monsoon deficit of 22% till July 20.
The rains are critical as more than 50% of Indians depend on farm income and 60% of cultivated area does not have assured irrigation. Also, the monsoon replenishes 81 water reservoirs vital for drinking water, power and irrigation.
Adequate rains, which act as a strong check on inflation by boosting farm output, are critical for fast recovery as growth of the India’s Gross Domestic Product (GDP) has slowed down sharply to 5.3% in the quarter ending March, 2012.
Deficient monsoon will impact agriculture sector as a whole and kharif output in particular. Risk to the rainfed crops is greater because their sowing season extends from June to August, when country receives two third of its monsoon rainfall.
The monsoon rains determine water availability for 58% of the country’s net sown area that produces major crops like rice, pulses, oilseeds and cotton. A set back to the monsoon could reduce agricultural growth and will have impact on overall economic growth of the country when other important sectors are not performing well.
Since more than 50% of workers households primarily depend on agriculture for their livelihoods, low rainfall could hit the household budget of the poor by pushing food prices further due to low production and shrinking supply of the food articles. This could reduce demand in rural areas for other items due to income contraction.
According to the information provided by the ministry of agriculture, government of India, there was a significant progress in sowing of most crops compared with June, however, the acreage under paddy is down by 6% against the year 2011. The area under total pulses has also plummeted from normal area of 5.2 lakh hectares to 4 lakh hectares by showing a decline of around 1.2 lakh hectares (22.3%). In addition, there was relatively lower acreage of oilseeds by 0.68% and cotton by 3.50% till last week. However, area under sugarcane has jumped by 12.50%.
The late sowing of these crops will lead to shorter crop cycle and will reduce yield significantly. Overall impact of monsoon rainfall on kharif output will depend on its quantum, regional and temporal distribution. If monsoon fails to pick up, the country’s rice production may fall below 100 million tonne during the year 2012-13.
Government can take some comfort from high procurement of wheat and rice. Overall stock of grain with the central government is around 80 million tonne. But, deficit in production of rice and other important crops like pulses and oilseeds could scupper the Food Security Act, the UPA government plans to introduce in the next session of Parliament.
Under the act, government proposes to promise a hunger free India by giving subsidised grain to majority of the population. According to the estimate of the Prime Minister’s Economic Advisory Council (PMEAC), around 74 million tonne of cereals are annually required for the distribution under the Food Security Act.
Fulfillment of this promise needs uninterrupted supply of grain through the public distribution system (PDS). The present buffer stock will help to cope with the problem to some extent but maintenance of minimum buffer stock would require replenishment of the stocks by increased domestic production.
The country could face further shortage of commonly consumed pulses like arhar, moong and urad, which are regularly imported by the country to bridge the demand supply gap. Similarly, oilseeds could be in short supply and country has to resort more imports. These conditions will exert pressure on prices of these essential commodities and hurt the consumption of poor.
The deficient rainfall in June and July has affected the supply of vegetables badly which is leading to rise in their prices. According to Delhi Agriculture Marketing Board, a decrease of 20% has been registered in the supply of vegetables this month in comparison to the last year. The prices of vegetables might elevate, if situation does not improve.
The retail prices of vegetables have seen a remarkable increase in the last one-month. The prices of vegetables such as cauliflower, tomato and potato have increased by 50%. The poor weather condition has also affected the quality of vegetables. Most of the vegetables are perishable and get spoiled due to increased temperature.
In such circumstances, the effective price regulation by the government is of vital importance. It is possible for the regulator to reduce gap between the prices paid by the consumer and prices received by the farmer. In order to achieve this objective, there is an urgent need to consider mechanisms to make price regulation more effective. The available technology enables the regulator to collect information, analyse, monitor and to take a decision in fast manner without incurring a financial burden.
At the end, the rains which act as strong check on inflation, are vital for not only the agricultural sector but also for the overall economy. A low monsoon could adversely affect food production and hit farm income which supports two-thirds of Indians.
The Central Government has announced some measures to deal with this situation. These steps include setting aside 900 MW of power for ramping up sowing operations in the grain basket states of Punjab, Haryana and Uttar Pradesh and enhancing diesel supply since producers will depend on pump sets to draw ground water for their fields. Further, a subsidy is likely to be announced on massar to curb the rise in prices. It is felt that these measures will help marginally. There is a lot at stake this year due to slow down in economy. The UPAs focus on the aam aadmi needs to deliver food security to poor and vulnerable sections of the society and this is possible when domestic production is sufficient and food is accessible and affordable for the common man.
The author is acting director, Agricultural Economics Research Centre, University of Delhi
Posted: Saturday, Jul 28, 2012
The deficit monsoon rains, which are crucial for kharif output in India, caused great worry to farmers, media and policy makers. The rainfall has been below normal in all regions except east and north east India, during June and July. The key grain producing states of India, including Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, Himachal Pradesh and Uttrakhand are worst hit: The progress of the monsoon so far has not been satisfactory. In a recent forecast, the Met department predicted the rains would be 92% of the long-term average, lower than its April forecast of 99%. Rainfall is considered normal if it is between 96% and 104% of 89 mm of the long term 50 years average. The country as a whole has experienced monsoon deficit of 22% till July 20.
The rains are critical as more than 50% of Indians depend on farm income and 60% of cultivated area does not have assured irrigation. Also, the monsoon replenishes 81 water reservoirs vital for drinking water, power and irrigation.
Adequate rains, which act as a strong check on inflation by boosting farm output, are critical for fast recovery as growth of the India’s Gross Domestic Product (GDP) has slowed down sharply to 5.3% in the quarter ending March, 2012.
Deficient monsoon will impact agriculture sector as a whole and kharif output in particular. Risk to the rainfed crops is greater because their sowing season extends from June to August, when country receives two third of its monsoon rainfall.
The monsoon rains determine water availability for 58% of the country’s net sown area that produces major crops like rice, pulses, oilseeds and cotton. A set back to the monsoon could reduce agricultural growth and will have impact on overall economic growth of the country when other important sectors are not performing well.
Since more than 50% of workers households primarily depend on agriculture for their livelihoods, low rainfall could hit the household budget of the poor by pushing food prices further due to low production and shrinking supply of the food articles. This could reduce demand in rural areas for other items due to income contraction.
According to the information provided by the ministry of agriculture, government of India, there was a significant progress in sowing of most crops compared with June, however, the acreage under paddy is down by 6% against the year 2011. The area under total pulses has also plummeted from normal area of 5.2 lakh hectares to 4 lakh hectares by showing a decline of around 1.2 lakh hectares (22.3%). In addition, there was relatively lower acreage of oilseeds by 0.68% and cotton by 3.50% till last week. However, area under sugarcane has jumped by 12.50%.
The late sowing of these crops will lead to shorter crop cycle and will reduce yield significantly. Overall impact of monsoon rainfall on kharif output will depend on its quantum, regional and temporal distribution. If monsoon fails to pick up, the country’s rice production may fall below 100 million tonne during the year 2012-13.
Government can take some comfort from high procurement of wheat and rice. Overall stock of grain with the central government is around 80 million tonne. But, deficit in production of rice and other important crops like pulses and oilseeds could scupper the Food Security Act, the UPA government plans to introduce in the next session of Parliament.
Under the act, government proposes to promise a hunger free India by giving subsidised grain to majority of the population. According to the estimate of the Prime Minister’s Economic Advisory Council (PMEAC), around 74 million tonne of cereals are annually required for the distribution under the Food Security Act.
Fulfillment of this promise needs uninterrupted supply of grain through the public distribution system (PDS). The present buffer stock will help to cope with the problem to some extent but maintenance of minimum buffer stock would require replenishment of the stocks by increased domestic production.
The country could face further shortage of commonly consumed pulses like arhar, moong and urad, which are regularly imported by the country to bridge the demand supply gap. Similarly, oilseeds could be in short supply and country has to resort more imports. These conditions will exert pressure on prices of these essential commodities and hurt the consumption of poor.
The deficient rainfall in June and July has affected the supply of vegetables badly which is leading to rise in their prices. According to Delhi Agriculture Marketing Board, a decrease of 20% has been registered in the supply of vegetables this month in comparison to the last year. The prices of vegetables might elevate, if situation does not improve.
The retail prices of vegetables have seen a remarkable increase in the last one-month. The prices of vegetables such as cauliflower, tomato and potato have increased by 50%. The poor weather condition has also affected the quality of vegetables. Most of the vegetables are perishable and get spoiled due to increased temperature.
In such circumstances, the effective price regulation by the government is of vital importance. It is possible for the regulator to reduce gap between the prices paid by the consumer and prices received by the farmer. In order to achieve this objective, there is an urgent need to consider mechanisms to make price regulation more effective. The available technology enables the regulator to collect information, analyse, monitor and to take a decision in fast manner without incurring a financial burden.
At the end, the rains which act as strong check on inflation, are vital for not only the agricultural sector but also for the overall economy. A low monsoon could adversely affect food production and hit farm income which supports two-thirds of Indians.
The Central Government has announced some measures to deal with this situation. These steps include setting aside 900 MW of power for ramping up sowing operations in the grain basket states of Punjab, Haryana and Uttar Pradesh and enhancing diesel supply since producers will depend on pump sets to draw ground water for their fields. Further, a subsidy is likely to be announced on massar to curb the rise in prices. It is felt that these measures will help marginally. There is a lot at stake this year due to slow down in economy. The UPAs focus on the aam aadmi needs to deliver food security to poor and vulnerable sections of the society and this is possible when domestic production is sufficient and food is accessible and affordable for the common man.
The author is acting director, Agricultural Economics Research Centre, University of Delhi
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