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Thursday, Sep 23, 2004

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Kharif disappoints

IT WAS NOT unexpected, but many refused to see the unfolding reality; and now, it is official. The Government has announced a slippage in the area coverage for kharif 2004 (down 59 lakh hectares). Following the aberrant behaviour of the South-West monsoon, including a long dry spell in July, there has been a decline in the output of major crops such as rice, coarse grains, pulses, oilseeds and sugarcane. Perhaps, the only major crop to escape unaffected is cotton, which is expected to do as well as it did last year. Unfortunately, the Agriculture Ministry's crop estimates released on Monday may be over-optimistic. It is believed that in some cases the decline is understated or the output overstated for obvious reasons. But that is unlikely to mask the reality for long because the fundamentals will soon catch up and reflect in market prices.

At a time when the consumption demand for foodgrains is rising because of demographic and income growth pressures, and public stocks are not exactly too high, a 10 per cent fall in kharif output (100.3 million tonnes against 112.0 million tonnes last year) is a cause for concern. Coarse cereals are the worst hit with a decline of 7.3 million tonnes from last year's 31.8 million tonnes. There is hardly any support mechanism for growers of coarse cereals unlike those of rice and wheat. Oilseeds output estimates are clearly overstated going by the field reports from various regions, the yield estimates based on early harvests, and the preliminary production estimates made by industry and trade associations. The Minister for Agriculture and Food is sanguine that the shortfall in the kharif foodgrains output would be more than made good in the ensuing rabi season because of sufficient soil moisture. But going by rainfall deficiency data (13 per cent below normal), not many readily share the Minister's optimism. The South-West monsoon has already entered the withdrawal phase. As of September 15, several regions including Punjab, West Rajasthan, East and West Uttar Pradesh, East Madhya Pradesh, Jharkhand, Telengana (in Andhra Pradesh) and Vidharba (Maharashtra), experienced deficient rainfall. Rabi crop prospects would depend almost entirely on the winter precipitation.

Obviously, there is a problem on hand resulting from a fall in agricultural production. It is only appropriate that the problem is recognised and addressed. The Centre will have to revisit its foodgrains management policies. Storage and distribution logistics will have to be spruced up. The focus should be on ensuring uninterrupted supplies of essential food products through the public distribution system. Food-for-work schemes are another area deserving of attention, but leakages have to be plugged. The combination of cash and grains has to be appropriately balanced. The clampdown on subsidised exports of rice and wheat over the coming months will probably continue, and rightly so. Indeed, the agri-produce market has already taken cognisance of the farm production prospects. Wheat prices in the futures market are ruling firm at above Rs 800 a quintal. It is for the policymakers to monitor the market more closely and pick up signals for corrective action.

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