Late sowing this summer is expected to delay fresh supplies of crops in many parts of the country, likely keeping food inflation at elevated levels beyond October when prices usually start moderating due to the arrival of new crops.
The sowing of summer crops in many regions has been delayed by up to a month due to the late arrival of monsoon showers over the Kerala coast, from where it travels to other parts, and the subsequent halt in its progress as well as below-normal showers initially. Summer planting usually starts in June with the arrival of monsoon rains and picks up as the monsoon progresses.
Although sowing has rebounded in August, it raises fears of the delay in harvesting by one month, and lower yield where the farmer has resorted to the cultivation of short-duration crops to make up for the delay in planting, a senior scientist with the Indian Agricultural Research Institute said. Analysts said supplies of key crops will remain tight, potentially stoking high food inflation at least for one month beyond October.
“Delay in harvesting may affect supplies of pulses and oilseeds, which may impact food inflation, although I don’t see any problem in the availability of major food grains due to huge stocks. Vegetable production is also likely to be affected due to the vagaries of weather,” said D H Pai Panandiker, president of private thinktank RPG Foundation.
Analysts said with a substantial fall in areas under coarse cereal, pulses and oilseeds this summer due to a 13% departure from the average rainfall, food inflation is expected to remain at elevated levels in the coming months as output of such items may fall. Although food inflation fell to 10.06% in July from 10.81% the previous month, any sharp fall in the coming months is unlikely, but some moderation could be witnessed occasionally due to high base last year, they said.
Agriculture minister Sharad Pawar has said it would be difficult for farmers to match last two years’ production levels as monsoon is “playing hide-and-seek” this year.
Cereal planting until August 24 trailed last year’s level by 12.6% from a year before at 16.53 million hectares, official data showed. Area under pulses was down by 14% until August 24 at 8.83 million hectares, while the planting of oilseed declined 5% to 16.42 million hectares, showed the data.
India, the world’s second-largest vegetable oils buyer, imports around half of its annual requirement of cooking oils and one-fifth of pulse needs. Any fall in oilseed and pulse production would potentially drive up domestic prices.
Although the country is largely self-sufficient in cereals, any drop in output will drive up animal feed prices and lead to higher poultry prices. Moreover, any fall in the production of soyameal, which is extracted from soyabean and also used as animal feed, may also cause an upward spiral in the meat prices.
Cereal and feed prices have surged by up to 70% in July from a year before on lingering concerns of a wide-scale drought.
Analysts said the rise in feed prices would further drive up rates of protein-based food items. The average rise in prices of egg, meat and fish has been 17.62% since January, compared with the average primary food article inflation of 8.28%.
Inflation in milk, too, has remained in double digits this year, barring June and July, official data showed. Such items account for roughly 40% of food items in the primary articles segment. Overall food inflation remained in double digits in the five months through July.