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Rain shortage can be weathered, says study

Morgan Stanley says forecasts so far don't point to severe outcomes; however, FAO says big problem if shortage prolonged; both agree on need to track spread and amount

Dilip Kumar Jha  |  Mumbai 

With the deficiency of rainfall due to the El Niño occurrence forecast at seven per cent this monsoon season, its impact on India’s agricultural output is likely to be relatively moderate in this kharif and ensuing rabi seasons, says a Morgan Stanley study.

A seven per cent deficiency is a country average. The spatial distribution forecast shows northwest India could receive eight per cent below normal monsoon rain, with a 71 per cent probability. Forecasts for southern and central India put an even chance of a normal monsoon and the eastern and northeastern regions are likely to see normal or excess rainfall. Assuming this is correct, impact on the kharif crop output will be minimal. A prolonged period of higher deficient rainfall, however, could impact its principal crops of rice and oilseeds badly.

“During the 2014 monsoon season, while north-western India is likely to face the largest shortfall, it is also the most irrigated region and currently has full reservoir levels. Even in 2009, the impact on the region’s food production was minimal. Hence, north-west India (Punjab, Haryana and Western Uttar Pradesh), which produces most of the kharif season (summer crop) rice, should see a near-normal crop. However, pressure is likely to be felt in the southern and central India parts, which largely produce pulses and oilseeds. Consequently, price pressures for these items might build up,” said Upasana Chachra, an analyst with Morgan Stanley.

While current indications point towards a moderate impact, it will be important to track the actual rainfall data (as the monsoon proceeds) to assess the impact on crop production. Tracking the temporal distribution of the rainfall trend to assess if rainfall deficiency is concentrated towards either the beginning or the end of the season (June-September) will also be key to assess the impact on the kharif or rabi crop outlook.

“Maharashtra tends to be a water-deficient state. The major crop in Maharashtra is sugarcane, which needs more water. We will need to be watchful of the situation in the Vidarbha region and if Maharashtra is impacted, the crops that could suffer are sugarcane, cotton and pulses,” T Nandakumar, chairman of National Dairy Development Board, told Morgan Stanley.

He hinted at a revision in dairy prices in September if need arose.

However, the Food and Agricultural Organisation (FAO) of the United Nations has forecast a huge impact of El Niño on India’s kharif crop on prolonged continuation of rainfall deficiency. In a report on Tuesday, it said, “Northern India has tended to receive below-average monsoon rains (June-October). This is likely to have a limited affect on the secondary rabi season crops (harvesting begins in April) but a more pronounced impact on the main kharif season crops (predominantly rice), planted from May and harvested during the last quarter of the year. The crop is largely rainfed (monsoon rains) and low-cumulative seasonal rains increases the probability of growth retardation, negatively impacting on crop yields. In addition, a prolonged period of poor rains might also impact the irrigated crops.”

With nearly 55 per cent of the cropped area dependent on rains, the monsoons still influence growth in the agriculture sector. However, the impact of a poor monsoon is likely to be felt more on the summer crop, as it is more rain-dependent than the winter crop. The kharif crop accounts for 49 per cent of total food production and about 7.5 per cent of India’s gross domestic product. The winter crop outlook (which accounts for the remaining half) will depend upon the magnitude of shortfall in rains and its impact on reservoir levels.

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First Published: Tue, June 17 2014. 22:35 IST