After Kharif, Rabi crop too estimated to come down

Chennai: After a smaller Kharif crop, Rabi production too is expected to shrink this time. The first advanced estimate of 2018-19 Rabi crop indicates 14.3 per cent decline in production. While production drop is not good news in an election year, possible market watchers believe that possible price rise might not push inflation up.  

Total Rabi production is estimated to be 1235 lakh metric tonnes in 2018-19 as per the first estimate released by agriculture post-harvest management company National Collateral Management Services (NCML). This is 14.3 per cent down from 1441 lakh metric tonnes as per the government’s fourth advanced estimate of 2017-18. All the major Rabi crops, including wheat, gram and lentil are anticipated to have a smaller crop this time. Only mustard might see a growth over last year.

The second estimate of Kharif crop too has been tad lower by 2.83 per cent than 140.73 million tonnes of food grains produced in the year 2017-18.

With elections round the corner and the country witnessing farmer agitations in the recent past, production drop cannot be ruled out as insignificant. According to Sanjay Kaul, MD & CEO of NCML, the decline can have a minimal political impact.

However, Ajitesh Mullick, assistant vice president, retail research, Religare Commodities, finds that lower production and any further rise in minimum support price (MSP) may enable prices to recover from lower levels. “Hiking MSP, giving export incentives, limiting/banning imports and higher procurement by government agencies can support prices in the medium to long term,” he said.

Industry hopes that this price rise will not increase inflationary pressures. “Lower production of wheat and gram should ordinarily lead to inflation. However, this year it may not necessarily lead to inflationary pressures as government has sufficient stocks for both these commodities. Food Corporation of India is holding 27.21 million MT of wheat stocks by end of Jan 31, 2019 and NAFED is holding 2.06 million MT of gram stocks by the end of Jan 31, 2019,” said Kaul.

Both for Kharif and Rabi, rain has played spoilsport. The actual rainfall received in 2018-19 is 83 per cent of the Long Period Average (LPA).  This is similar to rainfall pattern observed during 2003-04 and 2013 -14.

“A decline in production is mainly because of lower Rabi acreage coupled with lower yields for some key crops on the back of lower rainfall departure for 2018-19,” said  Kaul.

Wheat acreage for the year 2018-19 are estimated to be lower by 2.6 per cent at 296.37 lakh hectares compared to 304.08 lakh hecatres in 2017-18 and production is estimated to be lower by 2.8 per cent at 969 lakh metric tonnes as against 997 lakh metric tonnes last year.

Gram acreage is estimated to be lower by 9.9 per cent at 96.99 lakh hectares and production could be down by a whopping 36.6 per cent at 71 lakh metric tonnes. Severe moisture stress has been observed in the states of Maharashtra, Andhra Pradesh and Karnataka owing to erratic rainfall. Lentil acreage and production are expected to be lower by 2.75 per cent and 36 per cent respectively for the year 2018-19.