India's summer-sown harvest may have fallen at least 10% this year, setting the stage for large sugar imports, the country's first imports of rice in decades and record vegetable oil imports.
The farm ministry is expected to issue its first formal estimates of summer-sown crops next week, which will signal the extent to which the country's billion-plus people will consume imported farm commodities.
Farm output is set to plunge after the worst monsoon rains since 1972 dried up fields where rice and cane were sown in the Uttar Pradesh, while unseasonal rains earlier this month flooded key rice- and corn-growing southern states.
"We expect a roughly 10% decline in summer foodgrain output," a senior farm ministry official, who did not wish to be identified, told Reuters.
Industry officials say India's move to abolish import taxes on rice, and plans by state firms to start importing the staple, signal a bigger-than-expected drop in output.
India initially estimated a fall of about 10 million tonnes in rice output, but the US department of agriculture on Monday forecast a 15-17 million-tonne decline from last year's record output of 99.2 million tonnes.
"Removal of rice import duty reflects the demand-supply mismatch. Import (of rice) is the need of the hour," Venkat Chary, the chairman of the Multi Commodity Exchange, told Reuters.
Chary, a former bureaucrat, also said the government should ease controls on commodities such as sugar to allow market forces to operate freely.
Analysts said rising prices in recent weeks were another indicator of falling crop output.
"The recent rise in food prices reflects the likely shortfall in summer-sown food crops," said S Raghuraman, head of research of Agriwatch, a commodity research firm.
Comments