Rural retail sales drop with rain deficit

Companies in the rural retail business are feeling the impact of erratic rains this monsoon, as sales of segments like agricultural inputs and apparels have been coming down. Sales of FMCG products have also been marginally affected.

“Sales of agricultural inputs like pesticides and fertilisers have been impacted during the last one and half months. Some impact has also been felt on sale of apparels and FMCG products. People are pushing back purchase of these items,” said said Ajay S Shriram, chairman and senior managing director, DSCL, which runs 300 rural stores by the name of Hariyali Kisaan Bazaar. Shriram adds that there has been no impact on sales of staple food products.

Since the start of the monsoon season on June 1, rainfall has been 29 percent below normal. Acreage of crops like paddy, oilseeds and coarse cereals has been severely impacted. So far, 171 districts have been affected by drought. Only 40 per cent of the country’s agricultural land is irrigated, while the rest is dependent on monsoon rains. The kharif output, which accounts for over 52 per cent of the total, is certain to get impacted.

Though no official estimates of the impact have been made so far, experts see kharif crop output falling by up to 10 per cent. Farm income is likely to get impacted when harvesting of kharif begins in October. Prices of food products like sugar, milk and pulses have already moved up sharply, forcing consumers in urban and rural areas to spend more on food.

Rural retailers had been doing handsome business over the past couple of years, on rising farm incomes due to sharp increase in the minimum support price of crops like paddy and wheat. Rural income had also got a boost due to the Rs 70,000 crore farm-loan waiver announced in February last year.

Agricultural input sales are down by about 10 per cent. However, all other categories are not impacted, said S Sivakumar, chief executive of the Agri Businesses Division at ITC, which operates 24 large-format retail outlets by the name of Choupal Saagar.