Decline in kharif output likely to be 20%: Experts

Weak monsoon this year is adversely impacting the whole economy. With average rainfall shortage at 23%, worries are that this could tip the balance in an already precarious economic environment in the country.

Speaking to CNBC-TV18, the Commodity Editor at Business Line G Chandrashekar says that oil seeds, pulses, cotton and sugarcane are going to be the crops that are going to be hit the hardest. “In Maharashtra there is going to be a crop loss of about 20% and in Karnataka the same. Therefore, sugarcane, cotton, pulses, oilseeds are the four major crops which are going to be affected,” he said. He goes on to say that a 20% decline in kharif output is likely this year. However, chairman and commissioner of Agricultural Costs & Prices Ashok Gulati says a clearer picture will be available only by the end of this month of early August. “But all said and done, there could be an impact on the yield; even if the sowing is done the yields will not be the best possible that you can get otherwise,” he said. Below is an edited transcript of their interview with Latha Venkatesh and Ekta Batra. Also watch the accompanying video. Q: We know that the rainfall shortage is 23% as of now. What can be the impact on crops on the Kharif harvest and can that be assessed at this point? Gulati: I think it’s very clear that the situation is not very much under control. There are states where the deficiency is much more than 23%. Even the averages has to take little cautiously; your one foot can be in the snow and the other on fire and you can say that the average temperature is fine although both legs will be gone. The Eastern belt is fine, I think it is the Western part, Central and even some portions of the Southern belt is where the problem is coming. Normally if June is somewhat delayed we can still catch up, but now half of July has gone, so everyday counts a lot. Q: Is it possible at all to assess the damage to the Kharif output at this point in time, and if it is what do you think the extent of the damage would be? Gulati: Picture will be clearer by the end of July or first week August, because then we will have a precise picture of how much sowing has been covered totally. But all said and done, there could be an impact on the yield; even if the sowing is done the yields will not be the best possible that you can get otherwise. Q: Which are the crops already damaged, where definitely we are going to see some impact on output and prices? Chandrashekar: Oil seeds, pulses and cotton are the three major crops which are going to be affected. My sense is sugarcane is already affected. In Maharashtra there is going to be a crop loss of about 20% and in Karnataka the same. Therefore, sugarcane, cotton, pulses, oilseeds are the four major crops which are going to be affected. Although it is too premature to put a number, we shouldn’t be surprised if there is a decline of 20% in terms of output in the kharif season. Q: If in case there is a shortfall in the particular commodities that you spoke about, give us a sense in terms of a possible price hike that we could see in the current situation that we are working with on the monsoon? Chandrashekar: The market has already taken cognizance of aberrant behaviour of the monsoon. Chana prices are up, oilseed, mustard prices are up, soybean prices are up. Therefore the market has already taken cognizance. Markets don’t look at what happened until yesterday, it looks at today and what is likely to happen tomorrow. I think the market does have a sense of what is likely to happen tomorrow, which means over the next three months. Therefore market is pricing in the effect of a bad monsoon and prices are up and I will not be surprised if prices go up further from the current levels for oilseeds and pulses and for cotton and certainly sugar.