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G. Chandrashekhar

MUMBAI, July 15

THE aberrant behaviour of the southwest monsoon has started to exert its impact on the country's agricultural operations and is seen provoking the commodity markets.

Inadequate rains in most parts of the country covering the southern, central and western regions are seen hurting kharif crop prospects.

Although it is too early assess the damage the current dry spell is causing, it is clear that farmers in many regions including in States as Madhya Pradesh (the worst affected) have begun to look at alternatives.

Major cultivated kharif crops of the country are foodgrains, that is paddy, coarse grains (mainly maize, bajra, jowar) and pulses (pigeon pea, other pulses), oilseeds (groundnut, soyabean) and cotton.

Given the poor spatial and temporal distribution of rainfall so far, the production prospects for each of these crops are going to be affected. On current reckoning and even assuming normal rains from now on till the end of the season (September 30), the actual output of each of these crops is expected to fall short of the production target.

As many as 20 meteorological sub-divisions across the country have suffered deficient to scanty rains as of July 10 as per the latest weather report of the India Meteorological Department. Chances of a major revival of monsoon rains in the next few days are rated none too bright.

Commodity markets flare up: Importantly, the long dry spell over the past 3-4 weeks has provoked the commodity markets to react. Speculators here are beginning to build inventory in anticipation of a price rise, while overseas suppliers of commodities as edible oil, cotton and pulses are keenly watching developments here.

The Malaysian palm oil market has been quick to react. On Monday, palm oil prices opened on a strong note on India's weather concerns and the Malaysian futures gained 100 points (limit up).

Last Friday, soyabean oil too rallied at the Chicago Board of Trade on expectation of larger Indian demand following the threat of soyabean crop failure here. A further price rise this week is not ruled out. It is significant, Madhya Pradesh which produces the bulk of soyabean in the country is facing acute moisture stress in many parts of the State.

The domestic market too has been on the rise for last few days in the wake of weather concerns. In the Mumbai wholesale market, groundnut oil ready spurted from Rs 420 per 10 kg trading lot on July 6 to Rs 438/10 kg by July 13. Refined palmolein gained Rs 17 during the same period to close at Rs 347 and refined soybean oil jumped from Rs 330 to Rs 346 per 10 kg. On Monday, groundnut oil jumped further by a massive Rs 10 to Rs 448 and palmolein to Rs 358. Quite expectedly, lobbying will soon start for more liberal imports and reduction of customs duties in case of essential commodities. Some of the prime candidates that could become the target of attention are edible oils, cotton pulses and maize.

It is course too early to write off the Southwest monsoon altogether. It still has some ten weeks to run its course. But the truant monsoon has shaken the confidence of the farming community which faced disastrous kharif season in 1999 and 2000, but only partially recovered from the losses last year.

The current agricultural status arising out of the wayward behaviour of the Southwest monsoon presents a challenge to the government, both at the Centre and in the States. Without loss of time, policy makers have to assess the fall-back position. Contingency plans, if any, have to be kept ready for implementation.

Assessment of input availability (mainly seeds) for second sowing is necessary. Only short-duration crops will fit the bill for the rest of the season. The country's massive foodgrain stocks are of course a major source of strength.

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