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11 May 2017

India's foodgrain output forecast to hit a record in 2016-17

Centre's forecast for foodgrain production in 2016-17

With robust production of wheat, rice, and pulses, India's foodgrain output would increase by 8.7% to a record-high 273.38 million ton in the 2016-17 crop year, according to the government's third advanced estimate.

After a normal southwest monsoon, rice production rose 4.5% to 109.15 million ton, wheat output rose 5.6% to 97.44 million ton, and coarse grain output rose 15.2% to 44.39 million ton.

In context

Centre's forecast for foodgrain production in 2016-17

Pulses, Grains

Record output of grains to moderate prices

In the 2016-17 crop year, ending in June, the output of all major pulses would increase by 37% to 22.4 million ton, which may reduce the dependence on imports and cool food inflation.

A record production of grains would increase supplies and moderate prices.

It would help farmers tide over the losses suffered post-demonetization that crimped the demand for food items and decreased prices.

Oilseeds, Cash crops

Cotton production to go up despite lower coverage area

Oilseeds output is estimated to rise 29% to 32.52 million ton, higher than the last five years' average.

The production of cotton is forecast to increase by 8.6% to 32.58 million bales despite lower area coverage in 2016-17.

However, production of sugarcane (at 306 million ton), jute and mesta (at 10.27 million bales) would be lower than last year.

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Upside risk if government raises MSP


Upside risk if government raises MSP

Chief Economist of Care Ratings, Madan Sabnavis, said there would be an upside risk if the government raises the MSP (minimum support prices) for certain food items.

He forecast the CPI (Consumer Price Index) inflation at 4.5-5% in 2017-18.

As demonetization dampened consumer demand, the CPI inflation slumped to a five-year low of 3.17% in Jan'17 and firmed up to 3.8% in Mar'17.

Higher output, lower prices

The bumper harvest isn't good news for many farmers. With a good monsoon and higher output, the farmers had to sell their produce, especially pulses, at prices much lower than MSP. Demonetization had only depressed the already low prices in November and December 2016.

Better Incomes

Centre needs to move beyond production targets

Kavitha Kuruganti of Alliance for Sustainable and Holistic Agriculture (ASHA) said breaking past records of food output is not an achievement at a time when the southern states are "reeling under" severe drought.

She said the Centre needs to move beyond production targets to ensure better incomes.

India last recorded a high foodgrain output of 265 million ton during 2013-14.

Madan Sabnavis's statement

"Largest-ever foodgrain production this year will keep food prices subdued till the next harvest. Prices of wheat, rice, and pulses are expected to remain weak due to surplus crop, unless, of course, the 2017 southwest monsoon does not match projections."

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