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Just under a month ago, last week in May, the Department of Agriculture and Farmers Welfare released the Area Covered Key Crops for the fall 2022-23 season.
While the area sown with rice (paddy) showed a decrease of 2.03 thousand hectares, the area sown with oilseeds showed a decrease of 0.85 thousand hectares, pulses showed a marginal increase of 0.72 thousand hectares and coarse grains showed a marginal increase of 0.45 thousand hectares. All of these combined, the area under cultivation decreased from 71.99 thousand hectares to 70.30 thousand hectares – a decrease of 1.69 thousand hectares compared to last year.
In the same week, the Agriculture Minister Narendra Singh Tomar, releasing the third prior estimate for major crops, announced that the production of food grains was estimated at 3,305.34 thousand metric tons, with ‘record’ rice at 1,355.42 thousand metric tons, and ‘record’ wheat. 1127.42 LMT, and the oilseed at a “record” 409.96 LMT. Among other crops, bajra is estimated at 111.66 litres, coarse grains at 547.48 litres, pulses at 275.04 litres, maize at ‘log’ of 359.13 litres, and sugarcane at 4942.28 litres among other crops.
According to the government’s third advance estimate, total food grain production for 2022-23 is higher by a low 149.18 liters compared to the previous year, with all staple crops – rice, wheat, maize, coarse grains, pulses and oilseeds – recording higher production when compared to previous years.
Late dates, elections in key states are worrying
However, there are concerns. The onset of the monsoon was delayed by a week this year and reached Kerala on June 8 as compared to May 29 the previous year. According to IMD, the natural onset of the southwest monsoon is June 1 with a deviation of seven days. In fact, if one looks at the start dates closely, the other time in the last five years when the monsoon was similarly delayed is 2019, when Kerala finally hit on 8 June.
IMD also said that the southwest monsoon rains on the country as a whole are likely to be normal. However, in June, the International Institute for Administrative Development said that precipitation is expected to be lower than normal in most parts of the country with some exceptions.
As on June 14, parts of West Bengal, Odisha, Bihar, Jharkhand, East and West Uttar Pradesh, Uttarakhand, Haryana, Punjab, Himachal Pradesh, Jammu and Kashmir, East and West Rajasthan, East and West MP, Maharashtra, Gujarat except Saurashtra and Chhattisgarh are reported And Andhra Pradesh, Telengana, Rayalaseema, Karnataka and Kerala reported significant deficits (-60% or less). Only Arunachal Pradesh, Assam, Meghalaya, and Sikkim in the northeast, Tamil Nadu and Puducherry in the south, and Lakshadweep received normal or excess rain.
Farmers across India depend heavily on the monsoon for farming and late, excessive or sudden rains can affect production which in turn can exacerbate inflationary trends in food prices. With crucial assembly elections in Madhya Pradesh, Chhattisgarh and Rajasthan later this year, and major general elections next year, the government does not want to leave anything to chance and hence, has announced a host of measures to ensure availability and keep inflation under control. .
Government interventions to check price hikes
On June 2, the government announced stock limits on tur and urad dal, applicable to wholesalers, retailers, large chain retailers, millers and importers until October 31. Stock limit is set at 200 MT for wholesalers, 5 MT for retailers, and 200 MT for large chain retailers. For mills, the inventory limit is set at 25 percent of installed annual capacity or three months of production, whichever is higher. Meanwhile, importers were prohibited from holding their stocks for more than 30 days of customs clearance.
The government said in a statement that this was done “in order to prevent hoarding and unscrupulous speculation”, “improve availability”, and “suppress commodity prices”. Approximately two weeks after stock limits were imposed, Additional Secretary, Department of Consumer Affairs, Nidhi Khare, reviewed stock disclosures with all stakeholders, including states, CWC and SWCs.
Ten days after imposing stock limits on Al Tur and Warad, the government imposed wheat stock limits also on June 12 which will be effective till March 31, 2024. While for traders and sellers, it is 3,000 MT, for retailers and retail outlets, it is 10 MT each. For processors, the inventory limit is 75 percent of annual installed capacity or a quantity equal to monthly installed capacity multiplied by the remaining months of 2023-24, whichever is less.
This came after the sharp rise in wheat prices in “Al Mandas” compared to the same period in the past month and year. The data of the Ministry of Food and Consumer Affairs for the week commencing June 7, 2023, showed a sharp rise of 8.13 percent in the price of wheat in “Al-Mandes” and 11.59 percent compared to the same time last year, which may be reflected in local wholesale and retail prices.
Similarly, the wholesale and retail prices of rice also showed an increasing trend over a week, month and year. According to joint data from the same department, the retail price of rice jumped 9.24 percent over the same period last year.
A day later, the Secretary for Food and Consumer Affairs, Sanjeev Chopra, reviewed the inventory situation with all states, and asked them to obtain disclosures for wheat with wholesalers, retailers, retailers, big chain and processors. The government has also taken the decision to offload 15 liters of first-stage wheat and rice under the Open Market Sale System (OMSS). The government said in a statement that this is expected to “calm the rise in prices of wheat and rice, as well as products derived from it.”
In addition, in another major move, the government reduced import duties on refined soybeans and refined sunflower oil from 17.5 percent to 12.5 percent from June 15 to March 31, 2024, in order to cool prices and ensure availability. “Basic import duties are an important factor affecting the cost obtained from edible oils which in turn affects domestic prices. Reducing import duties on refined sunflower oil and refined soybean oil will benefit consumers as it will help ease domestic retail prices,” the government said in a statement. .
The government intervention, according to data shared by the Ministry of Food and Consumer Affairs for the week starting June 14, showed a reversal in the increasing trend of the wheat price, as the price of “Mandi” wheat fell by 2.20 per month. cent. However, the monthly comparison for rice shows an increase of 1.21 percent.
The government has announced that in an open market sale the maximum amount a single bidder can buy is 10-100mt as opposed to 3000mt previously to accommodate small and marginal buyers and ensure maximum reach to the scheme. The stock position of wheat and rice as on June 14 are 308.84 liters and 265.08 liters respectively, for a total of 573.92 liters. “In order to ensure that inflationary trends are kept under control while ensuring adequate stock levels in the central pool, it has been decided to exclude State Governments from the scope of OMSS (D) in accordance with the revised policy dated 13.06.2023,” the government said.
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