The Hindu Business Line : Disappointing kharif

For a country already buffeted by untamed inflation, slowing growth, stubbornly high commodity prices and generally unfriendly global environment, the first advance estimate of kharif 2008 crop brings little cheer. Not unexpectedly, estimated output of major crops — coarse grains, pulses, oilseeds, cotton and sugarcane — has declined from the record levels of the previous year. A marginal increase of a mere 0.5 per cent in rice production is some consolation; b ut it is unlikely to exert any influence on the market. High open market prices of the last two years have failed to translate into higher production. Krishi Bhawan has attributed the below-par farm performance to the protracted dry spell in July and the recent floods in some northern States, implying that things could have been worse. It is an admission that agriculture in India remains a gamble on the monsoon even after five decades of planning. The decline in output across the board means constricted availability of a range of food and non-food crops with concomitant impact on market prices. A sharp hike in minimum support price for major kharif season crops would buoy the market further. Compounding this is the prospect of export surpluses in rice, maize, cotton and sugar getting tighter making the macroeconomic scenario for agriculture somewhat sombre. The only silver lining is the government’s buffer stock of rice and wheat, which is large enough to make market interventions effective; but the key to success is timing, pricing and distribution. The message is clear. While demand for food is likely to continue to grow, inadequate domestic production means continued dependence on imports of essential food items such as pulses and cooking oil. With the rupee considerably weaker than it was at the beginning of the year, the landed cost of imported foods will be correspondingly higher. So, expect no major relief from high food prices.

As inflation hurts the poor the most, the policymakers should ensure supplies of essential foods at subsidised rates through fair price shops. The possibility of continuation of export ban on grains is real. Sugar may be added to the list because of a projected 20 per cent decline in output. Curbs on speculative activities may continue. Over the next six months, trade policy decisions are sure to be dominated by political compulsions, given the impending elections to several States, culminating in general elections. It is time for the Centre and the States to begin working towards maximising the rabi season output. Fortunately, soil moisture conditions are generally favourable. Input supplies need to be strengthened.

Related Stories:
Kharif schedule under threat as rains play truant
Drought, moisture stress threat to kharif crops
20 lh kharif crop area lost to floods, says Centre

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