Possible sub-normal monsoon brings worries over food prices

India could see a massive surge in food prices like the one after the 2009 drought

As India once again braces for less than normal rains in 2014 because of the El Nino weather phenomenon, food price movements during the last big drought in 2009 could be repeated.

In 2009, the prices of pulses and vegetables surged the most and experts said these two could witness sharp spikes if the monsoon rains were below normal in 2014.

Global and some local forecasters have predicted the re-occurrence in 2014 of the El Nino, a warming of the Pacific Ocean that upsets weather patterns across the globe. Credit rating agency CRISIL said in a recent report that if the El Nino affected the monsoon it could slow GDP growth to 5.2 per cent in 2014-15 from a projected six per cent. It, however, pointed out there was a fair degree of uncertainty in early monsoon forecasts.

Data from the department of consumer affairs shows the average nationwide price of moong dal had shot up by over 76 per cent between January 2009 and January 2010, while tur dal cost 65.2 per cent more during the same period.

 

Rains during the 2009 monsoon were almost 22 per cent lower than normal with precipitation deficient over 60 per cent of the country. The worst drought in 30 years was most severe in the eastern, central and northern parts of the country. Rains were 34 per cent lower than normal in Punjab, 35 per cent in Haryana, 43 per cent in western UP, 28 per cent in Bihar, 30 per cent in Madhya Pradesh and 25-30 per cent in Maharashtra.

In vegetables, the biggest price impact in 2009 was in onion and potatoes. Potato prices shot up by over 82 per cent between January 2009 and January 2010 and onion moved up by 27.13 per cent. The least impacted were edible oils and, surprisingly, tomato. Soybean oil prices dropped by almost 9 per cent during the period, while tomato prices were nearly 39 per cent less.

"Edible oil prices managed to buck the trend as imports grew to compensate for the loss in production during the kharif and rabi season," a leading trader said.

In tomatoes, officials said a good rabi crop kept a lid on prices. In 2008-09, India produced 11.14 million tonnes of tomatoes, in 2009-10 this rose to 12.43 million tonnes, and to 16.82 million tonnes in 2010-11.

India's leading private weather forecaster, Skymet, had said in January that the monsoon had a slightly higher chance of being below normal in 2014 than being normal due to the emergence the El Nino.

The India Meteorological Department classifies monsoon rain between 96 per cent and 104 per cent of the last 50 years' average as normal while that between 90 per cent and 94 per cent is considered below normal. The department will come out with its first official monsoon forecast for 2014 next month.