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Rice, Sugar Production to Increase on Monsoon Rains in India, Nomura Says
Food grain production in India, the second-biggest grower of rice, wheat and sugar, will increase as the La Nina weather phenomenon brings more rain after a weak start to the annual monsoon season, Nomura Holdings Inc. said.
Output may rise 6 percent to 230 million metric tons in the year to March, from 218.2 million tons, Sonal Varma and Ketaki Sharma, economists at Nomura’s Indian unit, said in a report. Agriculture, which makes up 15 percent of the economy, may grow 5.4 percent, compared with 0.2 percent a year ago, they said.
Prime Minister Manmohan Singh is betting on a rebound in farm output to cool inflation after a drought last year drove up food costs and forced record imports of sugar, edible oils and pulses. The health of the monsoon-sown crops is good and there will be “substantial improvement” in planting during the rest of the four-month rainy season, Farm Minister Sharad Pawar told reporters yesterday.
“The crop-sowing patterns suggest good progress in coarse cereals, cotton, sugar cane and pulses, despite lower rainfall in July,” Nomura said. “High food prices from last year should provide an incentive to increase food production this year.”
Rains have been 16 percent below normal in first 20 days of this month, posing a risk to crop output, the economists said. July is the wettest month of the June-September monsoon season, accounting for about a third of the total rainfall.
The monsoon is 15 percent below normal since June 1, the India Meteorological Department yesterday. The slow start to the season makes the state forecaster’s prediction of the country getting normal rain this year a “tall order,” Nomura said.
‘Catching Up’
Rainfall may be 102 percent of the 50-year average, helped by La Nina, the forecaster said last month. Most parts of the sugar cane, rice, cotton and oilseed areas of the country will receive widespread showers over the next two days, the weather office today on its website.
“With La Nina weather conditions developing, monsoon rains may play catch up in August and September,” Nomura said.
The erratic nature of the monsoon means that the forecasts can go wrong. The weather bureau failed to predict last year’s drought and the “normal” forecast in 2002 preceded the country’s worst drought since 1987.
To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net
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