Summer grains output seen just short of record high

Will help boost growth, trim inflation ahead of elections

Grains production this summer is likely to be just short of an all-time high, according to a preliminary government forecast on Tuesday, leaving plenty for exports and helping to boost growth and trim inflation ahead of elections due by May.

A heavy monsoon has ensured bumper harvests even though rice output could be lower than last year as rains were patchy over the rice-growing areas of some eastern states. The monsoon waters 55% of farmland without irrigation.

"Growth in agriculture ... will rebound this year because rains are good," Agriculture Minister Sharad Pawar told reporters as he announced the output forecast, which is usually conservative.

"Today's estimates are the first projections for 2013/14 and invariably we have seen that final estimates are 5-10% higher than the first estimate," Pawar said.

Total output of summer-sown grains is likely to be 129.3 million tonne in the current crop year from July, Farm Commissioner J S Sandhu said on Tuesday, just below the record 131.3 million tonne of 2011/12 and up 0.9% on last year. Bumper output should mean India can continue exporting crops such as cotton, corn, rice and sugar.

Output of oilseeds, which could trim India's imports of edible oils, should rise around 15%. Production of lentils - another foodstuff that India imports - should be up 3.2%.

Rice production is seen at 92.3 million tonne against 92.8 million tonne in the previous year. That marginal fall in rice output is not a great concern as India's stocks are 21 million tonne, more than double its target for September 1.

The government is relying on a bumper harvest to push agricultural growth and help the wider economy, as well as provide ample supplies of rice and wheat to support food subsidy programmes and cool double-digit food inflation.

Farm growth could be 4.8% this year, according to C Rangarajan, Prime Minister Manmohan Singh's economic adviser, up from 1.8% in 2012/13.

India is one of the world's largest producers and consumers of grains and sugar, and has recently been exporting rice, wheat, sugar, cotton and corn.

But at home, food inflation touched a three-year high in August as production of vegetables, especially onions, was hit by patches of heavy rain in the south, centre and west.

"Onion prices will start falling in the next 10-15 days due to the arrival of the crop and imports by some organisations," Pawar said. "I'm sure farmers will soon start complaining of falling prices."

Farmers in India plant rice, corn, cane, cotton and soybeans in the rainy months of June and July, the first half of the four-month monsoon season. Harvests start from October.

Bumper harvests since 2007 have led to massive stocks of rice and wheat, forcing the government to store food in open fields where stocks are exposed to rains and rodents.

The farm ministry's first estimates for the summer sown crops forecast higher output numbers for corn, soybeans, pulses, cane and cotton. Corn, soybeans and cotton could also hit record highs, Pawar said.

Pawar said increases in government-set floor prices for certain crops had also encouraged higher output. The government sets Minimum Support Prices (MSPs) for a range of crops including wheat, cotton and corn.