Monsoon in India Set for Worst in Three Years Hurting Crops

India’s monsoon, which brings more than 70 percent of its rain, is set to be less than normal in the whole season for the first time in three years, hurting crops and boosting food costs in Asia’s third-biggest economy.

Rainfall may be “approximately” 92 percent of the 50-year average from June to September, D.S. Pai, head of long-range forecasting division at the weather bureau, said by phone today. That’s less than the 96 percent predicted in June. The bureau defines normal rainfall as 96 percent to 104 percent of the average received between 1951 and 2000.

Prime Minister Manmohan Singh is betting on sufficient rain to harvest record amounts of food grain for a third year to cool inflation that exceeded 7 percent for a fifth straight month in June. Less than normal rain may curb exports of rice, wheat, sugar and cotton and increase imports of cooking oils. The country is the world’s second-biggest grower of wheat, rice and sugar, and the largest buyer of palm oil.

“The risk from the monsoon has clearly risen and if this pattern continues then both growth and inflation will be adversely impacted,” Dharmakirti Joshi, Mumbai-based chief economist at Crisil Ltd., the local unit of Standard & Poor’s, said by phone. “Oilseeds, pulses and coarse cereals, which are rain dependent, have been the worst impacted.”

Monsoon rain was 22 percent less than average in the June 1-July 23 period, the weather office said yesterday. Rainfall in July, the wettest month, may miss a June forecast for normal amounts, said L.S. Rathore, director general of the India Meteorological Department, July 16.

Rain Shortage

Rice planting dropped 10 percent to 14.5 million hectares (35.8 million acres) this year from 16.1 million hectares a year earlier, the farm ministry said July 20. Cotton sowing declined to 8.37 million hectares from 9.24 million hectares, and oilseeds shrank to 10.9 million hectares from 12.1 million hectares, it said. Corn was planted over 4.78 million hectares, less than the 5.29 million hectares a year earlier, it said.

“The progress of the monsoon so far has not allayed earlier concerns,” the prime minister’s office said yesterday. “The rainfall deficiency which existed at the end of June has lessened somewhat, but the intensity and spread of rainfall over the next week or so needs to be watched carefully, especially in Karnataka, Maharashtra, Gujarat and Rajasthan.”

The weather office will update its forecast by the end of this month, Pai said.

Stockpile Curbs

Food-grain production reached a record 257.44 million tons in the year ended June 30 after a second year of normal rains boosted harvests, the farm ministry said July 17. That prompted the government to lift curbs on exports of the grains last year. Non-basmati shipments totaled 5.25 million tons since September, according to the food ministry.

India will review its farm-goods export rules after 15 days and consider setting limits on food crops that traders can stockpile to check a rally in prices of oilseeds and grain, Food Minister K.V. Thomas said July 18.

“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,” Farm Minister Sharad Pawar said July 16 in New Delhi. The country won’t ban exports of rice and wheat as it has ample stockpiles, he said.

More than 235 million farmers depend on the monsoon for crops such as rice, peanuts, soybean and cotton.

To contact the reporter on this story: Prabhudatta Mishra at pmishra8@bloomberg.net; Swansy Afonso in Mumbai at safonso2@bloomberg.net

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

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