Indian Take Away

I've been doing some research over the long weekend into the situation brewing in India, and it's likely impact on crop production there.

With monsoon rains down by 26% so far this season (starting June 1st) most analysts estimates are that final rainfall could finish up around 20% down this season.

That seems to assume that rainfall will be plentiful in this the last month of the rainy season. Not everybody is convinced, September normally only provides 20% of total monsoon rains. In addition some forecasters are saying that the El Nino effect could also mean a premature end to the monsoon season.

Checking back through the records there are only three years in the last thirty when monsoon rains in India have been 15% or more below normal: 1979, 1987 and 2002.

In each of these years, not only did summer crop production fall significantly, winter output was also sharply lower.

There hasn't been a year in the last thirty when monsoon rains were 20% or more below normal.

With reservoir levels low (only 42% of capacity), threatening electricity shortages as well as irrigation of winter crops, there is a school of thought that planting rapeseed this year may provide a more viable option for Indian farmers than wheat.

Rapeseed demands less water for one, and for two it's price is more closely aligned to that of soybeans, providing potentially higher returns for India's cash-strapped farmers.

Another factor being discussed is that the late arrival of the monsoon (June was the driest in over 80 years) means that many paddy fields were planted with late-sown varieties of rice. Many of these fields would normally go on to be planted with winter wheat, but because the rice harvest will be delayed getting wheat in here will be problematic, and at the very least impact on yields.

In the most recent drought year of 2002, soybean production fell 22%, rice 23.5%, corn 15.3% and wheat 9.3%. Total food crop production was 24 MMT lower.

Since 2002 the population of India has grown by an estimated 250 million people. Think about that, there's four times the size of the entire population of the UK more mouths to feed in India than there was just seven years ago.