At 7% above the long period average, monsoon rains up to September 22, 2022, are deemed normal. However, abnormality lurks beneath the headline data. While some states in the north and northeast had deficient rains, many others saw excess.

The uneven progress of monsoon could lead to some reduction in kharif output (CRISIL’s preliminary estimates suggest kharif rice production this year could be lower by 6-7% and pulses production could also be at risk given lower sowing) as overall sowing lags last year’s levels and there are reports of crop damage in states that have suffered continuous excess rains. To be sure, agriculture ministry’s first advance estimates of food grain production for fiscal 2023 has pegged kharif output this year at 149.92 million tonne, a tad lower than 156.04 million tonne last year (though higher than the previous 5-year average of ~7 million tonne), due to lower rice production estimate. Also, overall kharif sowing caught up pace after lagging in the initial months, and lower sowing is restricted largely to rice and pulses.

The prospects of lower production have already started reflecting in high food prices, which was the leading contributor to the rise in Consumer Price Index (CPI) inflation in August to 7.0% on-year from 6.7% the previous month. Retail food inflation surged to 7.6% from 6.7%. While the rise in food inflation was broad based, sequential movement suggests that cereals and pulses were the key pressure points. Compared with a 0.4% on-month rise in overall CPI food inflation in August, cereals and pulses saw much larger increase of 2.4% and 2.1% on-month, respectively. Wheat inflation is already in double digits, thanks to the heat wave in the early part of this year.

While there is some sketchy information on damage from excess rains, it is difficult to quantify the impact at this juncture. On the positive side, area sown under sugarcane and cotton is higher than the last kharif season. Additionally, soil moisture in most of the states will be heathy and that, along with improved reservoir levels, will support rabi production.

Uneven rainfall seems to be becoming the new normal, largely due to climate change impacts, and calls for more preparedness and better agri techniques to weather such anomalies. As for this year, it may be too early to assess the impact of patchy monsoon on overall agriculture growth, and some clarity will emerge once the harvesting starts. Moreover, overall kharif production may not suffer much, thanks to higher sowing in coarse cereals, sugarcane and cotton. But importantly, the prospect of lower kharif production in rice and sowing is already being reflected in high food prices and will bear watching. Despite the erratic nature of monsoon, the government has pegged crop production target for this fiscal 4% higher on-year at 328 million tonne, which bakes in a higher rabi production. And, CRISIL maintains its real gross value added growth in agriculture at 3.0% this fiscal, albeit lower than the decadal average of 3.8%.