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Delayed, Erratic Monsoon Rains to Reduce Cereal Production

Delayed, Erratic Monsoon Rains to Reduce Cereal Production

05 November 2014

INDIA - Harvesting of the 2014 main “kharif” season crops, including rice and maize, is currently underway. Late and below-average monsoon rains over the main cereal producing areas in June and early July significantly delayed planting and hampered early crop development. However, rains resumed at a more normal pattern since mid-July improving soil moisture and permitting rice transplanting operations to pick up.

Official estimates, as of 26 September, indicate that 37.5 million hectares have been placed under rice crop, slightly above the area planted at the same time in 2013. Successively, excessive rains during the second part of the monsoon season led to localized floods in late July and late September, resulting in crop losses in the some northeastern areas of the country, including parts of Assam, Bihar and Uttar Pradesh and Odisha states, and lowering yield potential.

As a result, FAO’s latest forecast puts the 2014 “kharif” rice production at 135 million tonnes, two per cent below last year’s same season bumper crop. Assuming an average forthcoming 2014/15 “rabi” secondary crop, FAO tentatively forecasts the 2014 aggregate rice production at 156 million tonnes, two per cent below the 2013 record output but four per cent above the five-year average.

Latest official forecasts put the 2014 maize production at 22 million tonnes, 10 per cent below last year’s record level. This is the result of a five per cent contraction in plantings and anticipated lower yields, as a result of the below-average rains at the start of the cropping season.

Planting of the 2015 “rabi” (winter) wheat crop started in early October and is expected to continue until December. The official target for the 2015/16 “rabi” wheat production has been set at 94 million tonnes, slightly below last year’s record high, as yields are expected to return to average levels.

Cereal exports forecast to decrease markedly in 2014/15 marketing year (April/March)

Cereal exports for the 2014/15 marketing year (April/March) are forecast at 13.7 million tonnes, some 32 per cent down from the 2013 high level and slightly below the previous five-year average.

Overall, the anticipated decrease in the exportable surplus is attributed to strong domestic requirement under the National Food Security Act, approved in 2013.

Wheat exports are forecast at 2.5 million tonnes, almost half the estimated exports in 2013/14, while those of rice and maize are expected to fall by 35 per cent to 2.7 million tonnes and 20 per cent to eight million tonnes from last year’s level, respectively, also as a result of anticipated lower harvests this year.

Rice and wheat prices generally stable but at high levels

Retail prices of rice in late October were stable or decreased in some markets reflecting the arrival of new supplies from the ongoing 2014 main season “kharif” crop and generally weak export demand. However, further price decreases were offset by the recently started Government’s procurement programme for the 2014/15 marketing year (October/September), which targets to procure 30.05 million tonnes of rice.

Common rice varieties are purchased at INR 13,600 (USD 223) per tonne while Grade A paddy at INR 14,000 (USD 229) per tonne, both four per cent higher than in the previous year. Prices of wheat, another important staple, remained generally firm in most markets and above the levels of the same month last year, despite ample state reserves. Prices were supported by large Government procurement purchases, which began in April at a higher Minimum Support Price (MSP) compared to the previous year.

Floods and high food prices in some markets cause food insecurity to increase at local level

The overall food security in India is considered to be satisfactory given the 2013 and 2014 good cereal harvests, ample food stocks and the provision of highly subsidized rice and wheat through distribution programmes, especially for the below-poverty line families under the National Food Security Act. Under the “Food Security Bill”, about 75 per cent of the rural and 50 per cent of the urban population (nearly 800 million people) are entitled to receive subsidized food grains, including rice at INR 3 per kg, wheat at INR 2 per kg and coarse grains at INR 1 per kg.

However, the recent floods in northeastern parts of the country caused the loss of hundreds of lives, displaced almost one million people and adversely affected more than three million. Severe damage to housing, infrastructure and agriculture is also reported. Furthermore, the relatively high prices of primary commodities in some markets are affecting the food security of the population with low incomes constraining their access to food.

TheCropSite News Desk

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