Agriculture sector continues to remain at risk due to regional disparities in rainfall: CareEdge Ratings

Mumbai: Despite an overall improvement in monsoon rains as compared to last year, the agriculture sector continues to remain at risk due to regional disparities in rainfall, according to CareEdge Ratings.

The shortfall will negatively impact overall agricultural productivity and output as approximately 97 per cent of kharif sowing has already been completed, leaving limited scope for recovery, CareEdge said in a press statement on Tuesday.

“At this juncture, monitoring food prices is crucial, especially as the base effect is expected to turn adverse ahead of the early festive season this year. These factors could slow the moderation of the already high food inflation, increasing the risk of entrenching higher inflation expectations. Recent surveys indicate that since March 2024, inflation expectations have risen. Lagged sowing of pulses compared to years with normal monsoon and narrowing of deflation in edible oil prices warrant close monitoring,” said Rajani Sinha, Chief Economist, CareEdge Ratings.

.Controlling chemical contamination in agricultural raw materials must: FSSAI. The CareEdge Ratings report reveals that major agrarian regions, particularly in northern India and the Gangetic plains, continue to experience significant deficit in rainfall.

As of the last week of August, Kharif sowing is 97 per cent complete. However, compared to recent years with normal monsoons (2021 and 2022), the sowing of pulses and some oilseeds has lagged, potentially adding to price pressures given their import dependence. Global edible oil prices have recently exited a deflationary period due to global factors, and the risk of these prices passing through to the domestic consumption basket remains a key concern.

Additionally, lower reservoir levels, reflecting the rainfall pattern in some regions like northern India and few states in east India could impede the prospects for Rabi sowing, which largely depends on irrigation.

According to CareEdge Ratings, following a sluggish onset in June, the southwest monsoon gained significant momentum, achieving surplus levels in July (2 per cent above normal) and further strengthening this surplus throughout August (6.6 per cent above normal). In August, north-west India and east and northeast India narrowed the cumulative deficit witnessed in June and July. In the same month, the rainfall in the southern peninsula slowed in thereby reducing the cumulative surplus.

Although the monsoon in this season has been above normal at the national level, significant regional variations persist. As of August end, approximately 42 per cent of the 36 meteorological sub-divisions experienced cumulative rainfall deficits, including key agrarian regions, which is a cause for concern. While central and southern India saw substantial surplus rainfall, it was notably muted in eastern India and the major agrarian states of northern India.

Key regions such as Punjab, Bihar, Haryana, Uttar Pradesh, Gangetic West Bengal, and Odisha experienced double-digit deficits in rainfall.

Agriculture sector continues to remain at risk due to regional disparities in rainfall: CareEdge Ratings

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