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India Poor monsoon forecast to weigh on agri commodity prices, supplies

With Indian Meteorological Department (IMD) forecasting below normal rains for South West Monsoon (June to September 2014), concerns have been raised about its impact on agri-commodity prices and inflation even as Agriculture Minister Radha Mohan Singh assured the people that government is committed to tackle any situation arising out of poor monsoon with contingency plans in place to face any adverse situation.

The forecast released by the IMD indicated that rainfall over the country as a whole for the 2014 southwest monsoon season (June to September) is likely to be below normal (90-96% of LPA).

It said that quantitatively, monsoon season rainfall for the country as a whole is likely to be 93% of the long period average. Region wise, the season rainfall is likely to be 85% of LPA over North-West India, 94% of LPA over Central India, 93% of LPA over South Peninsula and 99% of LPA over North-East India. Moreover, the monthly rainfall over the country as whole is likely to be 93% of its LPA during July but improves to 96% of LPA during August.

Associated Chamber of Commerce and Industry (ASSOCHAM) pointed out that “one of the main implications of the country witnessing deficient rainfall is increased import bill of vegetable oils and pulses. While the second major implication of the country facing drought is the food inflation.”

“High food prices inflict a strong ‘hidden tax’ on the poor and inversely impact the ability of the Government to focus on development activities,” said D.S. Rawat, Secretary General of ASSOCHAM.

“On the whole, the extensive forward and backward linkages that the agriculture has in supplying raw materials to the secondary sector as well as it being a source of demand for its products makes its impact reverberated in the overall economic activity,” said Rawat.
Source: Commodity Online