MAHARASHTRA KHARIF CROPS - NOT A GOOD STORY

By Ruma Dubey

For us city dwellers, where pulses and vegetables means going to the market and getting it, what could probably be the significance of rabi and kharif crops? Do they even mean anything to us?

Well, if it does not mean much, it should! Because it is these crops which will decide all the economic data which we track sitting in the comfort of our homes/offices. And it is these crops which will decide the swing of the stock market.

Kharif crops are sown during April-July, and harvested by October, with the most important Kharif crop being paddy. On the other hand, Rabi or winter crops, are sown between October to February and harvested by June. And the most important rabi crop is wheat.

Naturally, based on the timeline, we will now wait and see how the kharif crops have fared. And the news currently, at least from Maharashtra is not very good. The drought in the state, about which we rarely hear or even speak about, is one of the worst. And if that was not enough, the unseasonal rain of last week further destroyed whatever little crops that there were there. The drought between June to Oct 2014 has been one of the worst in recent times and more than 75% of the villages in Maharashtra reported half the standard crop yield during the kharif season. And this has led to a steep fall in the production of food crops, mainly pulses.

The State Agriculture Department has put out estimates and they are not good. Moong dal production in the state is estimated to drop by a huge 61%, soya bean production is to drop 59%, tur yield is to fall 42% and udid by 48%. In cereals, maize is badly affected, expected to fall 52% while jowar and bajra could fall over 30%. Even ragi, which is not sown as rampantly as the others, is to fall 20%. And in cash crops, apart from soya bean, cotton is expected to fall 27% and oilseed is set to fall 56%. The mandi’s in the state have already started feeling the heat as farm produce arrival have reduced.

As usual, the Agriculture Minister has refuted this and stated that though yield is down, it will not cause any shortage and the state expects to get the ‘shortfall’ made up through supplies from other states. Yes, this will affect me and you as this is sure to increase prices – tur dal price is already at Rs.6000/quintal v/s Minimum Support Price (MSP) of Rs.4200/quintal.

This does not bode well for just the agriculture sector but for the economy as a whole. A rich harvest with normal monsoon means that prices will stabilize but this time around, maybe the lower fuel costs could help cap the inflation. Also the lower MSP which is essential to protect the farmer also could cap the price hike unless MSP is hiked by the Govt.

Forget us urban people; we are anyway destined to pay more for all basics of life. But a good monsoon and a rich harvest means more money in the hands of the farmers and with over 60% of India living in villages, surely it would mean consumerism will once again pick up. Thus if production is down, demand is sure to see a shrinkage.

Yes, rural consumers today hold the key to the Indian economy and this means, those at the bottom of the pyramid, might not show a very strong consumption.  If one may recollect, there was a report put out in August 2012, which showed how rural consumption had outpaced urban consumption. Apart from the harvest, social schemes like Mahatma Gandhi National Rural Employment Guarantee Scheme and others have provided employment to farmers during lean periods, helping them supplement this agriculture earnings. And what did come as an eye-opener was that more than half of India’s stock of consumer durables and two-wheelers are now in rural India. Bikes, trucks, tractors and cars will see a flat demand or a fall is rabi does not pick up. Also, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care and hot beverages.

Every company, in the FMCG, auto, consumer durables, are all targeting aggressive marketing drive in rural India. And a rich harvest will surely means richer harvest for these companies. Thus it is not just the farmers who should be worried but we all should pray for a bountiful harvest this year, keeping away El Nino.