A better monsoon in September for key agricultural regions has raised hopes that food inflation may ease, with higher precipitation helping the two major kharif crops, rice and soya bean, that have seen an increase in the area sown.
A sharply deficient August created moisture stress, raising concerns of a decline in output.
The paddy sowing area increased 2.7% on-year to 40.3 million hectares as of September 8, according to government data, while soya bean acreage has risen 1.3% to 12.54 million hectares.
“The rice-producing northern states of Punjab and Haryana have met their water requirement through irrigation. But the eastern states, which produce the bulk of the rice, have received good rainfall in September, helping in rice transplantation, which was a major worry for farmers,” said Amaresh Kumar Nayek, director of ICAR National Rice Research Institute.
Slowing food inflation could give the central bank more room to ease its monetary policy for bolstering economic expansion, according to experts.
Bihar, Chhattisgarh, Jharkhand, West Bengal and Uttar Pradesh have reported higher paddy sowing.
“If this momentum in rainfall continues for another few days, we do not see much difference in crop size compared with last year,” said Nayek.
Similarly, September rains have helped the growth of soyabean pods, from which oil is extracted, said DN Pathak, executive director of the Soybean Processors Association. “We were worried over the moisture stress of the soyabean crop. But now that (concern) has gone,” he said.
It rained in the central and southern parts of the country in the first few days of September, lowering the overall rainfall deficit to 6% in the first half of the month – from 36% in August, the driest in 122 years.
Central India, which had a deficit of 47% in August, has received 13% excess rain than the long period average (LPA), while the south saw 47% more rainfall than LPA this month. However, the north-west and east/north-east are still 30% and 44% deficient, respectively, in the first 15 days of September.
The southwest monsoon is expected to bring widespread rain to the central and eastern regions until September 21, according to the Indian Meteorological Department.
Harvest & Inflation
The total sown area for all crops is 108.85 million hectares, marginally more than 108.8 million hectares last year.
Economists say the rainfall will help, but the final harvest will determine the impact on inflation. “The increasing acreage is certainly a positive for rice, but it has to translate into getting produce to the market,” said Madan Sabnavis, chief economist, Bank of Baroda.
Paras Jasrai, senior analyst at Ind-Ra, said patchy rain could also play a key role. “Sowing has been good, but the spatial differences in rainfall would be a key lookout as that can have a major impact. For example, rainfall has been in deficit in West Bengal, Uttar Pradesh and Punjab,” he said.
