Rains surge in crucial agri zones, benefit rice and soya bean

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After appalling August comes soothing September. Higher precipitation in September in crucial agricultural zones has improved the prospect of cooling food inflation that propped up retail inflation in July and August far beyond the comfort level of the policymakers. The rains might be particularly beneficial to two major crops rice and soya bean that have already witnessed an increase in acreage, The Economic Times has reported.

Government data as on September 8 shows that paddy has been sowed on 4.03 crore hectare which indicates a year-on-year rise of 2.7% and that for soya bean has risen by 1.3% to reach 1.254 crore hectare.

“The rice-producing northern states of Punjab and Haryana have met their water requirement through irrigation. But the eastern states, which produce the bulk of the rice, have received good rainfall in September, helping in rice transplantation, which was a major worry for farmers… If this momentum in rainfall continues for another few days, we would not see much difference in crop size compared with last year,” said the director of ICAR National Rice Research Institute Amaresh Kumar Nayek.

If rice and soya bean output can help cool inflation, it can have a direct bearing on the wider economy with the Reserve Bank closely tuning monetary policy in response to inflationary pressures. While the easing inflation in April-June period led to speculation on easing the monetary policy, the spike in inflation in July and August have put an end to hopes of the central bank easing key interest rates anytime soon.

An increase in the acerage of rice has been reported from West Bengal, Jharkhand, Bihar and Chhattisgarh.

Soya bean output, too, might be helped by the monsoon munificence in this month. “We were worried over the moisture stress of the soya bean crop. But now that (concern) is gone,” said executive director of the Soybean Processors Association D N Pathak.

Economists are of the opinion that higher precipitation will certainly help but the actual quantum of harvest will determine the real impact on inflation. “The increasing acreage is certainly a positive for rice, but it has to translate into getting produce to the market,” said Bank of Baroda chief economist Madan Sabnavis.

“Sowing has been good, but the spatial differences in rainfall would be a key lookout as that can have a major impact. For example, rainfall has been deficit in West Bengal, Uttar Pradesh and Punjab,” said senior analyst at Ind-Ra.

The first week of September witnessed improved rains in central and southern parts of the country that were particularly deficient in August, which earned the distinction of being the driest August since the beginning of the twentieth century. It has also lowered the deficit in rainfall to just 6%.

Central India suffered a deficit of 47% in August. It received 13% excess rain than the Long Period Average. In September, the southern states also got 47% more rains than the LPA. But the north-west and east/north east are still lagging behind by 30% and 44% compared to the LPA.