Favourable monsoon will have positive impact for firms like Ruchi Soya Industries

The India Meteorological Department (IMD's) recent prediction of favourable monsoon in India is likely to have a positive impact for companies in the agricultural sector like Ruchi Soya Industries Limited.

"India looks likely to receive higher monsoon rainfall than previously forecast as concern over the El Nino weather condition has eased" quoted IMD in its latest forecast.

This has raised the prospects of the farm sector and the economy as a whole.

The monsoon delivers about 70 percent of India's annual rainfall, critical for crops such as rice, cane, corn, cotton and soybean because nearly half of the country's farmland lacks irrigation.

The last few years have not been easy for companies in the edible oil sector. 2013 saw floods devastate farmlands. Moreover, back to back droughts followed in 2014 and 2015, which occurred only the third time in the last 143 years! 2016 offered some hope, but even that was dashed when erratic rainfall didn't allow any relief.

To add to the woes was the increase in import of refined edible oil by importers taking advantage of the lack of duty differential between unrefined and refined edible oil.

The entire agri industry raised a silent prayer which seems to have been answered. For farmers reeling under debt, for agricultural markets and warehouses lying empty for lack of produce, for companies that expanded and have capacities lying idle of closed, this forecast of a good monsoon couldn't have come at a more vital point of time. Coming on the back of four years of difficult conditions, this promises to be a big positive not just for the edible oil sector, but for the entire agri sector.

For companies in the edible oil sector, crushing capacities have been lying idle due to shortage of raw material. Normal rainfall would ensure supply and come as a lifeline for the oilseed extraction industry.

Mr. Dinesh Shahra, Founder and Managing Director, Ruchi Soya Industries Ltd. said, "It was not just farmers but the whole country that heaved a sigh of relief after the India Meteorological Department forecast higher monsoon rainfall than previously forecast after concern over the El Nino weather condition eased. Coming after four years of adverse climatic conditions, the hope of a good monsoon comes as a big positive for the agri sector reeling under challenges. Good supply from the farmers will help us to utilize our capacities for crushing and refining to optimal levels. A revival of crushing operations would in turn benefit the nation by promoting "Make In India" and reducing the dependence on imported refined edible oil that uses precious foreign exchange. We look forward to a year of positive growth in our edible oil operations."

From GST to the National Agricultural Market, from schemes to promote palm oil plantations to subsidies for farmers, the Government has made many policy announcements to support the farmers and agri industry. Combined with the incentives for the agricultural sector and the promise of a nationally addressable market, the monsoon this year can be the turning point to jumpstart Indian economy. It is now imperative for the Government to seize the day and ensure policy implementation in time for edible oil companies to get the maximum benefit from a national market.