In a year of resumption of growth, food production could experience a contraction
Although some parts of the country are affected by devastating floods, monsoons have been erratic and insufficient in many areas. As a result, planting during India’s main agricultural season, kharif, has been slower than in 2020. In this pandemic year, a heavy monsoon and a bumper harvest alleviated economic distress in rural areas. . How will the progress of the monsoon affect food prices, the rural economy and aggregate demand this year.
The timing and geographic distribution of the rains has been erratic so far. A first explosion in June saw monsoons reach western Uttar Pradesh on June 18, nearly 10 days ahead of schedule. A major lull followed. They only covered the whole country on July 13, a week later than usual. As of July 28, India was experiencing a marginal 2% monsoon rainfall deficit from its 1961-2010 long-period average (LPA), according to the Indian Meteorological Department. However, there were regional disparities. The southern peninsula had a surplus of 22% and central India 2%. But northwest India had a deficit of 7%, and east and northeast India had a deficit of 18%.
Despite a sharp increase last week, monsoon rains were insufficient in 13 states until July 28, including in important agricultural states such as Madhya Pradesh and Gujarat. Beyond the rains, reservoir levels are crucial for Kharif crops, especially irrigated crops like paddy. Data from the Central Water Commission shows that across India, water levels in reservoirs with irrigation links are 21% above the 10-year average. But these high levels are concentrated in the southern and western regions. Reservoirs in the northern, eastern and central regions have large deficits and need rainfall.
Lagging behind 2020
Although planting of four major Kharif crops has been slow compared to last year, a surge in monsoons over the past fifteen weeks has resulted in a resumption of planting. As of July 30, planting levels in 2021 were above ânormalâ – the average of the past five years – for two of the four crops. These are rice and oilseeds, respectively 2.3% and 3.3%. However, plantings of pulses and coarse grains are 2.5% and 5.4% below normal, respectively. Last year, on average, 83% of plantings for the Kharif season were completed by July 30.
Although agriculture accounts for only about 16% of India’s economic output, 60% of Indian workers find employment in agriculture. Their numbers increased after the pandemic-induced lockdown in 2020, as workers returned from cities to rural areas. The bountiful monsoon of 2020 brought some relief as agricultural production boomed. 2021 could turn out to be very different.
For 2021-2022, the evolution of the monsoon will impact the remaining 20% ââof the kharif sowing season, and consequently production levels. In the top 15 states in terms of overall food grain production, plantings in 2021 were below historical averages for major Kharif crops.
Oilseeds have overcome a high base and errant rains are the best. Against a background of rising prices, plantings are higher in nine of the 15 states, including three of the four states that dominate the cultivated area: Maharashtra, Gujarat and Rajasthan.
In three states – Andhra Pradesh, Chhattisgarh and Odisha – seedlings are below normal in the 4 major Kharif crops. Five other states are in deficit in three of the four cultures: Punjab, Rajasthan, Bihar, Telangana and Gujarat. Among the major agribusiness states with the greatest rainfall deficit, Madhya Pradesh records below-normal plantings of pulses and oilseeds, which are mostly rainfed. Haryana and Maharashtra, which received excessive rainfall, are doing well with regard to kharif seedlings.
The slower pace of planting compared to last year also has implications for consumers. Declining cereal production could push up food prices, which have already skyrocketed in recent months. A bumper kharif harvest in 2020 caused wholesale prices to drop steadily between April 2020 and February 2021. However, since March 2021, wholesale food grain prices have risen sharply due to bottlenecks in the second wave. of the covid-19 pandemic.
According to the latest estimates from the Ministry of Agriculture, the total production of food grains in 2020-2021 was 305.4 million tonnes. This is an increase of around 10% from the average of the previous five years (2015-2016 to 2019-2020) and the highest on record in a year. At the current rate of planting in this Kharif season, agricultural production in 2021-22 is unlikely to reach the peaks of the previous year.
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