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Price rise, early rains may spur above normal kharif acreage for many crops

Market participants anticipate a shift from pulses to oilseeds and cotton in several areas

Sanjeeb Mukherjee New Delhi

6 min read Last Updated : May 20 2022 | 12:03 AM IST

With prices of most rabi crops trading much above their respective minimum support price (MSP), and with overall bullishness in farm commodities, there is a likelihood that the acreage under kharif crops in the forthcoming season will be higher than normal, provided monsoon remains on track.

This could provide some relief to consumers, the government and policy makers reeling under the impact of sky-high inflation, but whether or not it will last long remains to be seen.

This is because, most experts believe that international commodity prices, particularly of food items, will remain elevated at least for the next six to eight months.

Why prices will rule high

NITI Aayog member and eminent agriculture economist, Ramesh Chand, believes that post-Covid prices of agricultural products are settling on a new equilibrium both in the domestic and global markets.

“Food inflation started rising in May and June, 2020 with the advent of Covid and the current Russia-Ukraine war has only aggravated (the situation). So you see, food inflation was happening everywhere even before the Russia-Ukraine war and there are two reasons for that,” Chand explained in a recent interview to Business Standard.

The first of these was disruption of supplies due to Covid and second, which very few people are talking about, is the increase in cost of production of agricultural goods.

“Be it diesel prices, petrol prices or fertiliser rates, more than anything else the increase in input costs will not allow food prices to soften quickly as the pass through effect comes with a lag,” Chand said.

He said more than the availability of wheat or any other commodity, it is the high fertiliser prices that will continue to rattle the world and local markets for quite a while.

“Remember, the erstwhile USSR countries are the biggest suppliers of urea to the world and second biggest suppliers of P&K. And, if they remain in conflict for long, I feel that more than wheat and sunflower, there will be high fertiliser rates which will impact crop prices in the coming months,” Chand said.

In the kharif season, crops are planted on 107-108 million hectares of land across India, of which rice, pulses, oilseeds, cotton and sugarcane are grown on a sizable chunk (see chart).

Sowing for kharif crops starts in earnest with the advent of monsoon in June and usually follows the rain's progress over Central and Northern parts of the country.

In the pre-kharif season, which is also called the summer harvest, crops have been sown in almost 4 per cent more area than last year, with summer pulses crops planted in about 37 per cent more acreage than last year.

Monsoon

A major positive factor fueling optimism about healthy initial kharif sowing is the indications of early arrival of monsoon and normal forecast so far for the entire season.

The India Meteorological Department and also private weather forecasting agency Skymet both said that the onset of southwest monsoon over the Kerala coast is expected to be around 26th or 27th of this month, almost four to five days ahead of normal and the quickest in the last five years.

If rains arrive on time in the key agriculture states of central, northern and western India, it could spur sowing of kharif crops where acreage this year is expected to be good due to remunerative return to farmers in the just concluded rabi harvest.

Farm production depends not only on the quantum of total rains but also on the timeliness and geographical spread of the monsoons.

Already, private weather forecasting agency Skymet has said that monsoon in the first half of the 2022 season (June and July months) is expected to be much better than the second half.

Last month, the India Meteorological Department (IMD) predicted that the southwest monsoon over the country as a whole in 2022 is expected to be ‘normal’ at 99 per cent of the Long Period Average (LPA). Skymet too had said that the southwest monsoon in 2022 was expected to be 'normal' at 98 percent of the Long Period Average (LPA).

The shift

If rains remain on course, then there is a chance of a rise in kharif acreage of main crops and a shift from pulses to oilseeds, cotton and even rice in major growing regions of central and western India. Vegetables could also be the gainers.

“My understanding is that farmers could bring around 5-7 per cent more area under soybeans this year because the prices have been very remunerative all through the year and going forward too it looks healthy,” said D.N Pathak, Executive Director of Indore-based Soybean Processors Association of India (SOPA).

He said the high ruling prices could lure more farmers towards soybeans this time around.

Normally, as per government estimates, soybean is grown in around 11-12 million hectares of land across India but largely in Madhya Pradesh, Maharashtra and Rajasthan.

Same could also be for groundnut and other oilseeds grown in the kharif season.

“Pulses farmers could go towards cotton, paddy and oilseeds as he has seen how their prices moved up in the last two years while pulses were relatively untouched by this rally. With diesel prices rising sharply in the last one year so also the cost of other inputs, any average farmer will go for those crops in which he gets a remunerative return,” Suresh Agarwal from the All India Dal Millers Association said.

Agarwal said the actual impact of any shift will be seen around August and if by then oilseed prices come down and rains are normal, then the shift from pulses will be lower. Otherwise significant areas could move away from pulses this year.

Chand, too, was hopeful that farmers will respond to high wheat prices in the next season with higher acreage that starts around October-November after kharif.

Table: Normal Kharif Area Of Major crops (in million hectares)