June 9, 2009

Indian farmers may plant more of the key crops like paddy, soy, sugarcane and pulses in the ongoing kharif sowing period between June-September due to better income and government buying, experts said.

 

However, the outlook for the farm sector will largely depend on the four-month south-west monsoon rains, economists added.

 

Madan Sabnavis, chief economist of National Commodity and Derivatives Exchange, India's biggest exchange for agri-commodity futures, said good acreage will help output and economic growth but rainfall distribution may alter all that. He added that the monsoon has just entered and a clear picture may emerge around mid-July.

 

Monsoon rains, which hit the country's mainland on May 23 ahead of normal schedule of June 1, encountered a weak phase in the last week of May and early June.

 

Asia's third-largest economy sees a revival from the economic slowdown and is closely tracking the farm sector, which accounts for the livelihood of more than three-fifth of the population and one fifth of gross-domestic product.

 

Kharif or summer-sown crops, which accounted for 52 percent of the estimated food crop output of 229.85 million tonnes in the year to June 2009, may continue with another year of good output, helped by an expected good monsoon and good quality seeds.

 

Higher intervention prices and active government procurement may increase paddy acreage in most states, but higher returns from cotton may cut some areas in Punjab and Haryana, officials said.

 

Last year, India produced a record 99.37 million tonnes of the grain, according to federal estimates, and the government has purchased about 30 percent so far at attractive prices. India increased paddy prices by 32 percent last year.

 

According to industry players, average returns this year on soy, which is crushed to produce edible oil, have been more than 2,200 rupees per 100 kg, against the government set support price of 1,390 rupees.

 

A rise in acreage in soy, the main kharif oilseed, may translate into higher output, which would help in lowering edible oil imports, said S. Venkatraman, director & head, food and agribusiness research and advisory, Rabo India Finance Ltd.

 

India is the second biggest edible oil importer after China.

 

The returns are also much higher than corn, a competing crop in some states.

 

Amit Sachdev, India-based representative of US Grains Council said farmers may reduce their corn crop size as prices of competing crops like soy and turmeric have been higher and may remain strong this year.

 

Corn is also likely to lose area to soybean in Andhra Pradesh, the biggest producing state.

 

Acreage of kharif pulses may increase by 10 to 15 percent in 2009-10 season.