The monsoon rainfall in India, the main source of irrigation for the nation’s 263 million farmers, will be below normal this year as an El Nino emerges, weakening prospects of crops from rice to soybeans and sugar.
Showers in the June-September season will be 93 percent of a 50-year average of 89 centimeters (35 inches), the state-run India Meteorological Department said on its website today. That’s less than the 95 percent of the average predicted in April. Rainfall in July, the wettest month of the monsoon season, may be 93 percent of the average and August may record 96 percent, the forecaster said.
Prime Minister Narendra Modi’s government is preparing contingency plans to deal with a sub-normal monsoon, while pledging to contain the fastest consumer-price increases among Asia’s biggest economies. A drought in the main growing regions may curb farm output and hamper efforts to revive the country’s economic growth from near the lowest in a decade.
“Out of the two things which the market is closely watching, one is budget and the other is monsoon,” Anubhuti Sahay, an economist at Standard Chartered Plc in Mumbai, said by phone. “The monsoon is extremely important because in case it turns out to be bad it will direct government’s effort from reviving investment cycle to managing drought.”
India’s consumer-price index increased 8.59 percent in April from a year earlier, compared with a 8.31 percent gain in March, the Central Statistics Office said May 12. The economy grew 4.9 percent in the year ended March 31, after a decade-low expansion of 4.5 percent a year earlier.
Rains Delayed
The onset of the monsoon was delayed this year with rains reaching India’s Kerala state on June 6, compared with the normal date of June 1, according to the weather bureau. Rains, which provide water for 55 percent of the farmland, have been 44 percent below normal since June 1, bureau data show.
“Food grains output may fall by at least 10 percent as major rice growing areas of the country in the northwest may get less rains,” said Indranil Mukherjee, an analyst with Religare Commodities Ltd. in New Delhi. “Farmers will not go for early sowing which will impact yield of many crops. The latest forecast may increase prices of many commodities.”
To stem inflation, Modi has called for price stabilization funds and measures to prevent hoarding of food, which makes up 50 percent of the consumer price index basket. The outlook for agriculture is clouded by the delayed onset of the monsoon with a 60 percent chance of the occurrence of El Nino, the Reserve Bank of India said in its monetary policy statement on June 3.
El Nino Impact
A below normal monsoon will influence monetary policy as inflation may accelerate and curb rural demand, Sahay said.
Forecasters from the U.S. to the United Nations have warned an El Nino event may happen this year, and ABN Amro Group NV said confirmation could spur support for coffee, sugar and cocoa prices. El Ninos can roil agricultural markets worldwide as farmers contend with drought or too much rain.
India received normal or more-than-normal rains during only three El Nino years out of the past 10 occurrences, while the remaining were drought years, according to data from the meteorological department. Monsoon rainfall was the least in almost four decades in 2009, when El Nino occurred last, data show. Rice and oilseed harvests fell 10 percent, Agriculture Ministry data show.
Ocean Warming
India is the world’s second-biggest producer of rice, sugar and wheat and meets more than 50 percent of cooking oil demand through imports.
El Ninos, caused by the periodic warming of the tropical Pacific, occur irregularly every two to seven years and are associated with warmer-than-average years. The last El Nino was from 2009 to 2010, and since then the Pacific has either been in its cooler state, called La Nina, or neutral.
Rains will be 85 percent of the long-period average in the country’s northwest, which includes cotton, rice and sugar cane growing states of Punjab, Rajasthan, Uttar Pradesh. Monsoon will be 99 percent of the average in the northeastern region and 94 percent in central India, the top cotton and soybeans growing region, Singh said.
Southern states of Karnataka, Kerala and Andhra Pradesh, which are the main producers of coffee, rice and rubber, may get 93 percent of the 50-year average rain, the bureau said.
To contact the reporters on this story: Prabhudatta Mishra in New Delhi at
pmishra8@bloomberg.net; Pratik Parija in New Delhi at
pparija@bloomberg.net
To contact the editors responsible for this story: James Poole at
jpoole4@bloomberg.net Thomas Kutty Abraham, Ovais Subhani