The Hindu Business Line : Unrealistic crop estimate may hit growers

IS there a systematic attempt on the part of domestic vegetable oil trade and industry to depress indigenous oilseed prices by giving exaggerated estimates of kharif 2003 oilseeds production? Seems a clear possibility going by recent press reports quoting association representatives.

Worse, even the Government departments may have fallen prey to the temptation of announcing unrealistic production forecasts, possibly to show successful performance on the farm front. Oilseed production estimate recently put out by Agriculture Department of the Government of Gujarat is a clear case in point.

Without doubt, in the last three months, rains countrywide have been satisfactory. By end-August, 34 out of the 36 meteorological sub-divisions had received normal to excess rains according to the met office, raising tremendous optimism on the farm front.

Going by estimates of area coverage for oilseeds, again without doubt, there will a strong recovery in output of cultivated oilseeds. Production is expected to rebound from the drought-hit 87-lakh tonnes of kharif 2002 with significant gains seen in both groundnut and soyabean.

The key question is by how much will oilseeds output recover and what will be the level of actual production. The president of Solvent Extractors' Association of India recently said oilseeds production in 2003-04 (November-October) would be 230 lakh tonnes.

It is unclear what is the basis of such a forecast. The kharif season crop is yet to be harvested. The crop needs one more round of crucial rains. Lack of sunny weather can affect yields.

Importantly, rabi (summer) crop is far away and no forecast can be made at this point of time. Even sowing intentions will be known only after kharif harvest and rabi crop size will be subject to favourable weather. Any estimate at this point of time is speculative. Possibly, the crop numbers given out by trade bodies reflect their expectation and nothing more.

Experience of last several years shows that industry and trade tend to exaggerate the crop size prior to harvest; and after completion of harvest the crop is downsized. These changes have serious implications for markets and prices. Exaggerated and speculative crop estimates depress produce prices and hurt growers.

The groundnut crop estimated by Gujarat government is a case in point. According to the State Department of Agriculture, groundnut in-shell production in Gujarat will be 39 lakh tonnes. It is an extremely unlikely estimate of production.

It is the admitted position that area coverage for groundnut in Gujarat is about 20 lakh hectares - indeed, 19.6 lakh hectares to be precise. Even under ideal weather conditions, groundnut yields across the State can average no more than 1,200 kg/ha, while under normal conditions average yield is just about 1,000 kg/ha. Indeed, some districts in Saurashtra have had much less sunshine than necessary, raising fears of fungal attack on crop.

Gujarat will surely harvest a bumper crop of groundnut this season; but the crop size would be around 24-25 lakh tonnes only (and not 39 lakh tonnes as stated by the State Agriculture Department). Independent surveyors and farm scientists closely monitoring the situation concur.

There is a danger in giving out unconscionable and speculative estimates of oilseeds production. The edible oil market is already in a state of panic. Prices are weakening. Growers will eventually bear the brunt of this faux pax.

During kharif 2002 too, very optimistic estimates of soyabean production were given out, despite the fact that dry conditions in July affected sowing and crop progress.

One of the major weaknesses of Indian agri-produce marketing is the lack of availability of authentic and timely information. Commodity markets are volatile; and information drives the market. Players in the market, especially primary producers such as oilseed growers, have to be wary of untrue information.

But they are not in a position to sift wheat from chaff. There is an urgent need to strengthen what is known as "soft infrastructure", which includes both historical and dynamic information relating to the marketplace.

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