By Rajendra Jadhav
MUMBAI, Sept 4 (Reuters) – India’s weather office has forecast rains in September that are below average, with temperatures above average, after accruing a rainfall deficit in August, amid a strengthening El Niño weather phenomenon.
The monsoon has been erratic until now, with many subdivisions receiving rainfall substantially below average, while only a handful got average rainfall.
Even in areas where seasonal rainfall was normal, prolonged dry spells followed by intense downpours left totals looking healthy but stressed farming.
Below-average rains in September could widen the seasonal monsoon deficit to make this India’s weakest monsoon in nearly two decades.
WHY IS SEPTEMBER RAINFALL MORE CRUCIAL FOR CROPS THIS YEAR?
The monsoon rains arrived late in June, with rainfall 35% below normal in the first month of the season. The weak start delayed planting of summer crops, such as cotton, soybean, corn and rice, because of inadequate soil moisture.
These crops were already facing moisture stress after below-average rainfall in August and are entering critical stages such as pod formation and grain filling, when adequate moisture is essential.
If below-average rainfall persists through September, yields could fall.
WHAT ROLE DOES SEPTEMBER RAINFALL PLAY FOR WINTER CROPS?
The monsoon typically begins to retreat from India’s northwest around September 17, to withdraw completely by mid-October, the month when farmers usually start planting winter crops such as wheat, rapeseed, corn and chickpeas.
September rainfall determines soil moisture and low moisture can hamper seed germination and crop growth. In some states, farmers could suffer yield losses and lower incomes if soil moisture stays below normal.
WILL A BELOW-AVERAGE MONSOON BRING CHANGES IN INDIA’S AGRICULTURAL TRADE POLICY?
India’s agricultural production and trade policy is heavily influenced by the monsoon, with this year unlikely to be an exception.
Below-normal rainfall is affecting the growth of water-intensive sugar cane, which sugar mills will start crushing from next month, and is likely to reduce new cane planting for the next season.
Lower sugar output could force India to boost imports beyond the 1 million tons of raw sugar it has already allowed free of duty this year.
The rainfall deficit is also likely to reduce yields of summer-sown soybeans and peanuts and curb the area planted with winter-sown rapeseed. This could force India to increase imports of vegetable oils from Indonesia, Malaysia, Argentina, Russia and Ukraine.
Pulses such as chickpeas, pigeon peas and green gram are largely grown in rain-fed areas. A decline in production could lead to an increase in India’s imports from Myanmar, Australia, Canada and African countries.
Cotton production could also suffer, potentially prompting New Delhi to allow limited duty-free imports to bridge any domestic supply shortfall.
India is the world’s second-largest producer of wheat, cotton and sugar and the world’s largest producer and exporter of rice. Large rice stocks, however, give New Delhi greater room to allow exports to continue without interruption.
HOW DOES THE MONSOON AFFECT INFLATION AND CENTRAL BANK POLICY?
The monsoon is emerging as a fresh risk to India’s inflation outlook. Food makes up more than a third of the consumer-price basket, making rainfall crucial for household costs and Reserve Bank of India policy.
Above-average rainfall over the past two years helped boost food supplies and contain inflation, giving the central bank room to cut borrowing costs. A weaker monsoon could reverse that trend if crop losses push up food prices.
Higher commodity costs linked to the Iran conflict add to the risk. Retail inflation rose to 4.45% in July, while food inflation climbed to 5.52%.
A mix of weaker growth and higher inflation would complicate the RBI’s policy choices, while potentially deterring foreign investment and putting further pressure on the rupee.
(Reporting by Rajendra Jadhav; Editing by Clarence Fernandez)
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