Poor Monsoon May Hurt India Oilseed and Cotton Output, NCML Says

(Bloomberg) -- Production of oilseeds and cotton in India will probably drop this year as deficient monsoon rains in main growing areas have hit plantings, according to Siraj Chaudhry, managing director and chief executive officer of National Commodities Management Services Ltd.

“We started this monsoon season with high hopes and a lot of optimism,” Chaudhary said in an interview with Bloomberg Television’s Haslinda Amin and Rishaad Salamat, Friday. The country received good rainfall in June, the start of the four-month rainy period, but there have been disappointments after that, he said. 

There are some specific crops that have got affected, he said. Oilseed and cotton will see a drop in production as weaker rains have reduced their sowing areas, said Chaudhary, the head of the provider of post-harvest solutions such as procurement, storage, transportation, inspection and testing.

Rains in some areas of the western Gujarat state, a key producer of cotton, have been 50% lower than average during the monsoon season so far, while showers in parts of both Punjab and Rajasthan have been 22% below normal, according to the India Meteorological Department. Similarly, parts of Madhya Pradesh, a major soybean grower, have received 17% lower than average rainfall, it said. 

The monsoon, which waters more than half of the country’s farmland, is critical for agriculture as it also fills reservoirs for crops sown in the winter. It shapes the livelihood of millions of rural people and influences food prices. Patchy rainfall in the country, the second-largest producer of rice and wheat and top buyer of palm oil, often leads to lower crop output, higher imports of edible oils, firmer food prices and weaker economic growth.

Chaudhary said the current rain situation doesn’t warrant panic, but requires caution. The price management, especially of food items, was important, he said.

Other main points from the interview:

• No significant impact seen on overall food grain production.
• India has enough stockpiles of rice and wheat; the government can manage food inflation.
• The government is aware of the risk of higher food prices. It has taken some measures, such as reducing duties on pulses and edible oils and allowing import soybean meal for the poultry industry.
• “Let’s see how much they impact or they actually help to solve the problem of food inflation, but the government has certainly made the moves.”

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