Agri commodities recover from June dip on reports of rain deficiency

Farmers switch to sowing high-yielding, short-duration seeds to minimise impact of rainfall deviation

After falling initially on normal monsoon forecast, prices of agri commodities bounced back in July after the Indian Meteorological Department (MD) reported nearly 17 per cent of rainfall deficiency so far this season.

Barring maize, which faces acute shortage due to lower output last year, prices of all other kharif crops had declined by up to 8 per cent in June. In July, however, there was significant recovery following reports of massive crop damage in major growing states such as Maharashtra, Assam, Bihar, Uttar Pradesh and part of Gujarat, Madhya Pradesh and Uttar Pradesh.

This year, a three-week delay in the onset of monsoon impacted most early sown crops badly. That was followed by uneven distribution of rainfall, with fears of a repeat of last year’s drought in Maharashtra, while Assam, Bihar and Uttar Pradesh faced floods.

“Price movement in agri commodities are based on the progress of the monsoon rainfall, as their demand-supply fundamentals remain intact. Farmers monitor the actual rainfall to take sowing decisions. The current price movement can solely be attributed to the variations in rainfall,” said Madan Sabnavis, Chief Economist, CARE Ratings.

The delay in the onset of the seasonal rainfall has become a usual phenomenon. Hence, the precipitation in June is no longer a matter of concern for farmers. Actual rainfall in July and August, however, continues to remain crucial for kharif sowing of agri commodities, and their germination and growth for harvesting in September–October.

Maize prices continued to remain firm on supply scarcity, following which the government recently allowed import of 400,000 tonnes to meet poultry-sector demand.

Interestingly, farmers have switched to sowing high-yielding and short-duration seeds to minimise impact of rainfall deviation.

“Consequently, it is premature to estimate a decline in kharif output this year despite monsoon deficiency. Most farmers across major soybean growing states like Maharashtra and Madhya Pradesh have reported their leaves growing pale, which may eventually force plants to die in weeks. This has caused a serious concern for farmers this kharif season,” said Ajay Kedia, Managing Director, Kedia Commodity.

Last year, large quantities of kharif and rabi crops were damaged due to deficient monsoon during both seasons, rendering farmers clueless this sowing season.

Data compiled by the Ministry of Agriculture showed that the total area covered under kharif sowing stands at 60.9 million hectares (ha) so far this season, down seven per cent from the same period last year.

Many agriculturists have advised farmers to sow less water-guzzling crops such as paddy and sugarcane, and switch to short-duration, water resistant crops like pulses and oilseeds. Despite this, kharif output this year is likley to match that of last year, when India had produced 142.75 million tonnes of food grains even with a nine per cent deficit in monsoon.

“The state government has pushed farmers to sow maize as a substitute to paddy. This may not yield the desired results immediately, as the minimum support price (MSP) is too low and there is no assured buyback of the crop,” said Kedia.

Paddy could be sown till August-end. Since IMD has forecast better monsoon for August and September, hopes are still alive for paddy farmers.