Winter Crops in India
Current situation:
- The Indian monsoon, which runs from June to September, ended recently with a 5.6% shortfall in comparison to the long-period average (LPA). This falls somewhat short of the typical rainfall, which ranges from 96% to 104% of the LPA.
The impact of the monsoon on this year’s main cropping pattern:
- Although there has been a significant variation in its temporal distribution, particularly in August, which has been the driest since 1901, the area planted with sugarcane and paddy has increased by 7.64 percent and 1.9%, respectively, over the previous year.
- However, the area planted to pulses has decreased dramatically, by 4.2%, with arhar (tur) seeing a 4.9% decline in cultivated area. Tur may experience inflation as a result.
- It appears that importing one million tonnes of goods from Burma and African nations is the only method to control the inflation of Tur prices.
The difficulties that winter crops will present and how to overcome them:
- The primary crop for rabi is wheat, which is vulnerable to heat waves. The ICAR organisation has responded to it by releasing a number of heat-resistant wheat varieties, which will likely account for about 60% of the sown area this year, up from 45% the previous year.
- Over the past nine years, 2,200 distinct crop types have been issued by India’s agri-research system, 1,800 of which are resistant to climate change. Based on these guarantees, there will soon be another “record” rabi crop.
Wheat crop price fluctuations and the factors influencing them:
- The procurement of wheat fell to less than 19MT in 2022, a decrease of more than 50% from the year before. Wheat retail prices were subsequently pressured.
- On May 13, 2022, GoI banned the export of wheat out of concern that the conflict between Russia and Ukraine may drive up prices. From less than 10% in May to 15.7% in August, wheat inflation increased.
- The inflation continued after the GoI outlawed the export of atta. The percentage increased steadily, reaching 22% in December 2022 and 25% in January 2023.
- The minimum support price (MSP) for the upcoming wheat marketing season is Rs 2,125/quintal, however the wholesale wheat prices in mandis are currently averaging about Rs 2,700/quintal.
- For fear of running out of supplies for the public distribution system (PDS), the FCI has sold off its stocks for far less than their true cost.
- By offloading 3.4 MT in February and March, FCI was able to secure around 26 MT of wheat, ensuring that market prices had dropped to MSP.
- Similarly, FCI sells rice for less than Rs 3,000 per quintal even though its economic cost is closer to Rs 3,700 per quintal.
- This represents a typical pro-consumer bias in the policy framework since it represents a transfer of resources from producers to consumers.
Does a policy that favours consumers benefit farmers?
- When more than 800 million people receive free wheat or rice (5 kg/person/month) via the PDS under the National Food Security Act, pro-consumer policies help the urban class more than the farmers who already receive benefits under the NFSA.
- Consequently, it doesn’t encourage farmers to increase their output. In their seminal study, Political economy of agricultural prices, economists Ann Krueger, Maurice Schiff, and Alberto Valdes referred to this as the “plundering of agriculture.”
To increase farmers’ incomes, technology needs to be adequately evaluated and adopted:
- Improved and more precise output predictions are required, as is oversight of the prices farmers receive.
- Technology adoption will also lead to improved assessment and increased crop yield. Consequently, it is necessary to replace the patwari-based production estimate system with a high-tech one.
- In addition to helping to resolve crop insurance claims, this will provide the government enough notice to import in case there is a shortage.
In summary:
- Therefore, in order to guarantee that farmers receive their fair share, stronger rules and technologies are required. India won’t be able to become a global leader in agriculture till then. Stocking limits and abrupt export prohibitions are not the best course of action.
