Threat of food inflation looms as India grapples with delayed heavy rains

10 Oct 2022 --- Unseasonal heavy rains in India ahead of the harvest season have reduced and deteriorated summer-sown crops such as rice, soya bean, cotton, pulses and vegetables, while also impacting the plantation of wheat. This could prompt food inflation and additional restrictions on exports.

Monthly rainfall in October is expected at 115% of the long-term average, according to the India Meteorological Department (IMD). This above-average rainfall in major agricultural parts of eastern and northern India could add to the existent food shortages and ban on exports in the country.

According to local sources, as much as 1.5 lakh paddy crops were damaged in Punjab due to widespread rainfall last week. The state’s agriculture department’s emergency surveys revealed that some areas have seen total crop damage.

Apart from causing crop losses, the sudden surge in the rain due to the retreating southwest monsoon is expected to delay the harvest of paddy, bajra and jowar in Uttar Pradesh and Haryana.

The rainy season usually draws close in northwest India from mid-September and across the country by mid-October.

According to local sources, as much as 1.5 lakh paddy crops were damaged in Punjab due to widespread rainfall last week.Food insecurity not yet peaked?
The northern state of Uttar Pradesh, the country’s second biggest producer of rice, received 500% more rainfall than usual in October, reported Reuters.

Indian farmers usually plant summer-sown crops in June-July with the arrival of monsoon rains, with harvesting starting from mid-September. Autumn crops, or “Kharif crops,” are generally harvested at the end of the South-West monsoon season in October-November.

“The government and Reserve Bank of India are under pressure to bring down inflation. The downward revision in crop production numbers means more and prolonged export curbs,” says a Mumbai-based dealer with a global trading firm to a national daily.

It is predicted that the central government could levy additional charges on exports while the RBI raises interest rates again.

Efforts to drive down local prices
Earlier in September, India moved to curb exports of its broken variety of rice, together with a 20% levy on other rice types, which pushed off-balance domestic and international suppliers of the commodity.

The world’s second-largest wheat producer also placed restrictions on wheat flour exports to drive down local prices, which soared up to a record ₹24,500 (US$307) per metric ton – a price increase of almost 20%.

The government shuttered the export of whole wheat in mid-May when a searing heatwave hindered agricultural productivity, which surged domestic prices to an all-time high.

Next to the damaged harvests resulting from rising global temperatures, India’s vast wheat stocks – acting as a buffer against famine – were already strained by the distribution of free grain during the COVID-19 pandemic to around 800 million people.

Climate change’s impact on the food industry is supercharging inflation numbers in many other countries, with consumers paying record amounts for food even though general inflation numbers are decreasing in most nations. Cost explosions in 2023 might be on the horizon.

By Radhika Sikaria

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