Monsoon worry mounts, food prices rise sharply

Despite a pickup in rainfall last week, the southwest monsoon remains in deficit by a significant 22%, almost certainly lowering annual production of grains, pulses and oilseeds, the three crops where sowing has been worst hit.

The Met office’s estimate coincided with the release of food inflation data that showed a worrying 10.81% rise in June from a year earlier, up from a 10.74% rise in May, an increase driven largely by weak rainfall and the absence of pre-monsoon showers in large parts of the country.

Key central Indian states received normal rains for the first time last week, reducing the overall deficit between July 12 and July 15 by 1 percentage point, but showers were patchy.

None of the states has so far asked the Centre to declare a drought but Maharashtra (40% deficient) and Karnataka (50%) are the worst hit and are key crop-growing areas.

Agriculture minister Sharad Pawar acknowledged the problems the sector faced, and outlined some fire-fighting measures.

“This year it will be really a challenge to maintain the excellent performance of the last two years,” he said, adding that the government had enough late-sown seeds to give to states that needed them, and that seeds for winter-sown pulses would have to be sent early to make up for the summer shortfall.

The deficient sowing is likely to result in a large dent in India's coarse cereal or millet output, which could push up prices of manufactured food products, such as biscuits. 

The rains are critical as 70% of Indians depend on farm income. The monsoon replenishes 81 nationally monitored reservoirs, whose available water stands at 60% of last year's level.

From being negative briefly in January, food inflation -- which has been the hardest to control - has remained in the double digits since March. Monday's data showed potato prices rose the sharpest (75%) in June, followed by other vegetables (48%) and pulses (20%).


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