A silver lining

Expected surplus farm output will need careful handling

With the highest-ever crop planting and copious monsoon rain, the stage seems set for a bumper harvest in the current kharif season. In fact, the conditions appear favourable for bountiful output in the subsequent rabi season as well. One of the key reasons for that is the abundant rain in August, the highest since 1988, which has refilled the reservoirs and recharged the groundwater to meet the irrigation needs over an extended period. The agriculture ministry, therefore, seems confident that farm production in 2020-21 may scale a new peak, outstripping last year’s record output by a good margin. If this optimism comes good — and it would depend on the incidence of pests and diseases and the weather in the rest of the season — the agriculture sector may continue to be a silver lining in the pandemic-battered economy. The attendant surge in rural demand for industrial goods and services can be expected to aid the revival of other sectors too. More importantly, it may soften retail inflation, bringing it down from the worrisome 7 per cent to within the Reserve Bank of India’s comfort zone of 2-6 per cent. This should allow the central bank greater latitude to manoeuvre monetary policies to stimulate economic recovery.

Going by the official numbers, crop sowing in the current kharif has touched an all-time high level of 109.5 million hectares, beating the previous record of 107.5 million hectares in 2016. Almost all crops, including paddy, coarse cereals, pulses, oilseeds, cotton, and sugarcane, have registered tangible gains in acreage. In fact, the area under the main kharif cereal, rice, may go up further as its sowing is still continuing in some parts of the country. This is a remarkable achievement, given the pandemic-related constraints, labour shortage, and floods in several regions. The credit for this goes as much to the grit and perseverance of the farmers as to the proactive measures taken by the Centre and state governments to shield the farm sector from the fallout of the pandemic.

This aside, the monsoon, too, has been rather benevolent this year. Rain till now is 7.5 per cent above normal across the country. While June and August recorded excess rain, July saw a marginal dip in precipitation. That, in fact, proved a blessing as it provided the farmers the needed break from steady downpours to undertake land preparation and sowing operations. Moreover, the good monsoon has also replenished the country’s water resources. The water stock in 123 major reservoirs monitored by the Central Water Commission is about 20 per cent above the long-period average and around 4 per cent higher than last year’s corresponding level. The sale of seeds and fertilisers, too, has increased this year. These factors strengthen the optimism about ample agricultural production.

However, there is a potential downside to the situation as well. If the surplus output is not effectively managed, crop prices might collapse, especially during the post-harvest peak marketing season. That would spell doom for farmers and the rural economy. Well-judged measures would, therefore, need to be taken to absorb the additional output and offer effective price support for farm commodities at the time of harvest. Otherwise, the plentiful farm output might prove counterproductive.