Ind-Ra: FY16 Kharif Crop Production Likely to be Better Than Last Year

Kharif production is likely to cross the FY15 level in FY16 if the rainfall pattern during the rest of the monsoon period remains similar to that seen during 1 June-15 July 2015, says India Ratings and Research (Ind-Ra). This is in view of this year's higher sowing of , increased acreage under pulses and higher reservoir levels than in FY15.

Kharif food grains represent close to half (FY15: 49.6%) of the total food grain output in India and sowing of this crop was 63% higher by mid-July 2015 than in the corresponding period last year. Although this was because FY15 was a bad monsoon year, sowing is currently 8.72% higher than the normal kharif sowing area by mid-July.

Higher sowing is mainly due to 13% more than long-period average rainfall in June 2015. Total kharif crop sowing area on 17 July was 56.33 million hectares compared with 34.63 million hectares in the corresponding period last year. Sowing of key crops such as rice, pulses and oilseeds is higher than last year's. Sowing of rice is 4.4% higher than in FY15, but is 11.4% lower than normal sowing. In case of pulses, sowing is 134% higher than in last year and 36% higher than normal sowing. Sowing of oilseeds is 234% yoy higher and 44.7% higher than normal area.

FY16 kharif food grain production outlook depends on the amount of rainfall in the second half of July and in the remaining two months of monsoon, as rainfall in the first half of July was well below normal. A bad monsoon during FY15 pulled down the kharif production to 124.60 million tonnes from 128.69 million tonnes in FY14.

For kharif oil seeds, the probability of higher production is also brightened due to a 44.7% increase in its acreage from normal acreage. However, sugarcane, cotton, jute and mesta production is likely to be a shade lower than in FY15.

Reservoir water storage till mid-July 2015 was 33% higher than the previous 10 year's average. Reservoir level was only 12% higher for the same period last year. This could be a major source of support to the standing kharif crops in the event of a shortfall in rain during the remaining months of the monsoon period.

Global food prices are at a multi-year low. Despite two adverse agricultural shocks (low monsoon affecting kharif production and unseasonal rains affecting rabi production), the prices of food grains have not increased rapidly in the domestic market. Food inflation, though still high, has come down compared with earlier years. In the scenario of a deficient rainfall, effective government intervention in the food market by the timely release of food stocks and effective monitoring is crucial. Any supply shortages due to a production shortfall can also be augmented by timely imports.

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