MILLIONS of farmers are hoping that the south-west monsoon, expected to set in over India in the first week of June, will be abundant this year. The India Meteorological Department has forecast an ‘above normal’ monsoon this year, with total rainfall pegged at 106pc of the long-term average.

For the first time in decades, India suffered from two successive droughts in 2014-15 and 2015-16. Last year was one of the worst in recent times, with a 14pc deficiency in rains, which led to severe drought in over 250 of the country’s 640 districts. Drought was declared in a dozen states, with eight of them being declared severely drought-hit. In 2014-15, the monsoon deficiency was 12pc.

The back-to-back droughts have impacted agricultural production, though not to the extent that was feared. According to figures released by the agriculture ministry recently, foodgrain production in crop year 2015-16 (July to June) is expected to be marginally higher than in the previous year.

The Indian government releases four advanced estimates of agricultural production during the course of the year, followed by a final estimate. The fourth advanced estimate is released in July or August.

According to the third advanced estimate, foodgrain production added up to 252.23m tonnes (MT) in 2015-16 crop year as against 252.02m in the previous year. (Agricultural production touched a record high of 265.04MT in 2013-14).

Wheat production is estimated to be significantly higher at 94.04MT (as against 86.53MT last year), while rice production is slightly lower at 103.36MT (105.48MT in the previous crop year).

Production of coarse cereal is also estimated to have fallen to 37.78MT as against 42.86MT in 2014-15. The production of pulses has also fallen marginally to 17.06MT from 17.15MT last year. Oilseeds production too has dipped marginally to 25.9MT.

Pulses and oilseeds are two agricultural commodities in which India is not self-sufficient. Demand for pulses has soared in India in recent years, thanks to rising per capita incomes and a gradual improvement in the standard of living, which encourages the poor to consume dals.

India being a largely vegetarian country, the only source of proteins for millions of people is a variety of dals. But the price of pulses has soared in recent years, forcing the government to import the commodity from Australia and Canada.

While the country produces a little over 17MT of pulses, demand is estimated at 27MT, with the breach being partly filled by imports.

According to Nirmala Sitharaman, the commerce and industry minister, India imported 5.5MT of lentils valued at $3.69bn in the April-February period in 2015-16. In the previous two financial years, it had imported 4.58MT (valued at $2.79bn) and 3.64MT ($2.12bn) respectively.

Last year, the government was caught napping as the price of dals shot up to record levels. This year, the government has created a buffer stock of 50,000 tonnes of tur and urad dal, which was procured in the kharif season last year, and is also procuring more pulses raised in the rabi season. About 100,000 tonnes of pulses are expected to be procured for the buffer stock.

However, experts say that the government must build a buffer stock of at least 2MT of pulses to prevent prices from soaring. The price of dals has shot up by almost 40pc in recent weeks.

The government has set up a price stabilisation fund with a corpus of Rs9bn for creating buffer stocks for pulses and other essential commodities.

STRANGELY, many farmers are still not comfortable with raising pulses and prefer to grow rice, wheat or even sugarcane, which also requires huge amount of water. Years of neglect of pulse production has seen India’s yield stagnate at 750 kg per acre, as against 1,200 to 1,800 kg per acre in the developed world.

In Latur, one of the worst-affected districts in Maharashtra – which lies in the rain-shadow region, and does not have much by way of irrigation – farmers still prefer sugarcane.

The Maharashtra government has now started encouraging farmers to move away from water-intensive crops and diversify into pulses. It has offered to pay a guaranteed price that is almost 10 per cent higher than the minimum support price (MSP) offered by the central government.

The state government is also willing to provide free seeds and fertilisers to farmers raising pulses. In a state dominated by sugarcane, this is a major move which could convince farmers to go for pulses.

The government is also revising the MSP on some pulses, but a recent report by the Commission for Agricultural Costs and Prices urged the government to go in for a substantial hike in MSP for pulses

Both the central and state governments are also imposing tough stock limits on traders and importers and are conducting raids to prevent hoarding. However, importers and traders are critical of the government’s move and say decisions are taken arbitrarily to curb prices.

The severe drought has also taken a toll on two other crops – for the first time in five years, sugar and cotton production is expected to record negative growth. Output of both commodities is expected to be lower by 10pc this year.

Ratings agency ICRA forecasts domestic sugar production of 25.5M tonnes, a 10PC decline over the previous year. It attributes this fall to the drought in Maharashtra, the largest sugar producing state.

The Cotton Association of India has revised cotton production estimates to 34.5M bales (of 170 kg each) in 2015-16, as against 38.2m bales in the previous year.

Published in Dawn, Business & Finance weekly, May 23rd, 2016