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Monsoon Rain Seen Normal in India to Boost Planting, Exports

India, the world’s second-biggest rice, wheat and cotton grower, may get normal monsoon rainfall for the third time in four years in 2013, potentially boosting plantings and exports.

“The monsoon is likely to be normal because this is an El Nino-neutral year,” said Jatin Singh, chief executive of Skymet Weather Services Pvt. The chances of a drought are only 4 percent, said Singh, who correctly predicted a drought in 2009. El Nino is a warming in the Pacific Ocean, which can parch Asia and bring cooler weather to the U.S. The India Meteorological Department will issue its first monsoon forecast next month.

A normal monsoon is critical to Prime Minister Manmohan Singh’s efforts to galvanize growth as 55 percent of farmland does not have access to irrigation. The economy will expand 5 percent in 2012-2013, the least in a decade, according to the government. Agriculture accounts for about a fifth of the economy and bigger harvests may cool the highest food inflation among major economies and sustain exports of rice and wheat.

“Monsoon is always a prerequisite for getting a minimum growth in the economy,” Madan Sabnavis, chief economist at Credit Analysis & Research Ltd. (CARE), said in a phone interview from Mumbai. “The situation is as critical as last year, when India had to face low demand and high inflation.”

Cutting Harvests

The weakest monsoon in three years in 2012 parched parts of Maharashtra, Karnataka and Gujarat states, cutting harvests of sugar, cotton and rice. The agriculture sector is set to expand 1.8 percent this year, the least in 3 years, according to the government’s annual Economic Survey.

India’s more than 235 million farmers depend on rain for irrigating crops such as rice and cotton. The monsoon, which brings more than 70 percent of the nation’s annual rain, usually makes landfall in the south in June and covers the whole country by July 15.

“Food inflation has always been a main concern, having a normal monsoon is definitely a necessary condition for inflation to be under control, though by itself cannot be sufficient,” Sabnavis said. While there hasn’t been a nationwide drought in the past two decades, patchy rains always drive up prices of specific commodities, he said.

India’s consumer price inflation is high and being driven by food increases, Finance Minister Palaniappan Chidambaram said in New Delhi today. Prices climbed 10.91 percent in February from a year earlier, according to government data yesterday.

El Nino

The correlation between the monsoon and El Nino conditions is very strong, Skymet’s Singh said. “There is a 60 percent chance of a drought in an El Nino year.”

Model forecasts and expert opinion suggest that the likelihood of El Nino or La Nina conditions developing during the first half of 2013 is low, 7the World Meteorological Organization said in a statement on March 11.

“We will forecast our estimate next month after taking all parameters until March 31,” said D.S. Pai, head of long-range forecasting at India’s weather bureau. El Nino conditions may stay neutral, he said.

India received only 92 percent of the 50-year average of 887.5 millimeters of rain in the June-to-September monsoon season in 2012. Rainfall between 96 percent and 104 percent of the average between 1951 and 2000 is considered normal, while anything from 90 percent to less than 96 percent is classified as below-normal. Below 90 percent is a drought.

A ban on exports of sugar, rice and wheat was extended in 2009 following the weakest monsoon since 1972. Record harvests of rice, wheat and cotton in 2011-2012, following two normal monsoons, led to the bans being scrapped. Sugar production will probably decline to 24 million tons in the year starting in October from 24.5 million tons this season on drought in Maharashtra, Agriculture Minister Sharad Pawar said today.

India may produce 110 million tons of rice in 2013-2014 if rains are normal and more farmers adopt new technologies and higher-yielding seeds, said Vijay Setia, a past president of the All India Rice Exporters Association.

To contact the reporter on this story: 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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