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Monsoon Worst in Three Years Threatens India Food Harvests

India, the world’s second-biggest rice, wheat and sugar producer, faces challenges in sustaining record food grain harvests as a 22 percent deficit in monsoon rain threatens planting, Agriculture Minister Sharad Pawar said.

“With the monsoon playing hide and seek, it is a challenge for our farmers and scientists to maintain the food-grain output achieved in last two years,” Pawar said in New Delhi. Rainfall in July, the wettest month in India’s June-September rainy season, will be less than a 50-year average of 98 percent predicted in June, L.S. Rathore, director general of the India Meteorological Department, said in a phone interview.

Dry weather from the U.S. to Australia has parched fields, pushing up corn, wheat and soybean prices in Chicago on concern global supplies will be curbed. Prime Minister Manmohan Singh is counting on growth in farm output, which accounts for about 15 percent of gross domestic product, to curb inflation in India, where the World Bank says more than 75 percent of the people live on less than $2 a day.

“Food inflation is still ticking up and with monsoons having so far delivered below-normal rains, there are upside risks to food inflation,” Leif Eskesen, Singapore-based chief economist for India and Southeast Asia, at HSBC Holdings Plc, said in a report. “We are only still mid-way through the summer monsoon, so there is a chance that heavier rains in the second half can eradicate the deficiency. But, there is obviously no guarantee that this will happen.”

Contingency Plan

India’s inflation unexpectedly exceeded 7 percent for a fifth straight month in June. The wholesale-price index rose 7.25 percent from a year earlier, after climbing 7.55 percent in May, the commerce ministry said in a statement in New Delhi today. The median of 36 estimates in a Bloomberg News survey was 7.61 percent.

The government is ready with a contingency plan to deal with a drought, Pawar said. The country won’t ban exports of rice and wheat as it has ample stockpiles, he said.

“We have not come to level where we can apprehend a drought,” Pawar said. “We will wait up to second week of August.”

Soybean and mustard futures in India rallied on concern that dry weather will hurt oilseed harvests. August-delivery soybeans jumped as much as 3.9 percent to a record 4,692.50 rupees ($85) per 100 kilograms on the National National Commodity & Derivatives Exchange Ltd. in Mumbai, while mustard for delivery in the same month surged as much as 2.9 percent to 4,379 rupees per 100 kilograms. Sugar for July delivery advanced as much as 3.3 percent to 3,245 rupees per 100 kilograms.

Wheat Exports

Food-grain production reached a record 252.6 million metric tons in the year ended June 30 after a second year of normal rains boosted harvests, according to the farm ministry. That prompted the government to lift curbs on exports of wheat and rice last year. The State Trading Corp. (STC), MMTC Ltd. (MMTC) and PEC Ltd. last week offered a combined 240,000 tons of milling wheat for exports from state stockpiles of about 50 million tons.

Monsoon, which accounts for more than 70 percent of India’s annual rainfall, was 22 percent less than a 50-year average since June 1, the weather bureau said yesterday. The nation got 232.5 millimeters of rainfall in the June 1 to July 15 period, compared with the 298.6-millimeter average considered normal for the period, it said.

More than 235 million farmers depend on monsoon for growing crops such as rice, peanuts, soybean and cotton. Sowing of monsoon crops begins in June and harvesting starts in September. A delay in onset of rain over some oilseed and rice growing areas has lowered sowing, according to the farm ministry.

El Nino Threat

Rice planting dropped 19 percent to 9.68 million hectares (24 million acres) this year from 12.04 million hectares a year earlier, the farm ministry said July 13. Oilseeds area declined 22 percent to 6.77 million hectares from a year earlier, while corn was sown over 2.17 million hectares, less than the 3.13 million hectares a year earlier, it said.

“There may be some deficiency in rains in July and September,” the weather bureau’s Rathore said. El Nino weather conditions, which parch parts of Asia, may emerge in August or September, he said.

Rainfall in the northwestern region, the nation’s grain belt, and some parts of southern Karnataka state may be deficient in the next four days, while showers may improve in the rice-growing areas in the east, Rathore said.

Good showers in central India will help soybeans while deficient showers in oilseed-growing areas of Gujarat state may hurt peanut sowing, he said. Sugar cane won’t have any problem as it’s mostly irrigated, Rathore said.

To contact the reporters on this story: Pratik Parija in New Delhi at pparija@bloomberg.net; Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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