Synopsis
If farm laws were the reason for the sector to hog headlines in 2021, this year, a raft of factors dotted the agriculture-food firmament. While rain deficit and heatwaves in winter hit production of a few major crops, Russia-Ukraine conflict pushed higher the prices of many commodities and fertilisers.
Wheat and paddy crops withered, and retail prices surged this year as vagaries of the weather clouded the country’s agriculture sector growth, triggering various policy measures, including export curbs, to efficiently manage foodgrain supplies in the recovering economy.
If farm laws were the reason for the sector to hog headlines in 2021, this year, a raft of factors dotted the agriculture-food firmament. While rain deficit and heatwaves in winter hit production of a few major crops, Russia-Ukraine conflict pushed higher the prices of many commodities and fertilisers.
Amid high inflation, the government provided additional five kilograms of foodgrains free to more than 80 crore people through 2022 under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which is ending on Saturday.
The government has now decided to make free the regular monthly 5 kg per person quota under the National Food Security Act for one year till December 31, 2023.
Government officials and farm experts hope that the New Year will be better as the area under coverage in the ongoing rabi season is higher as farmers were encouraged mainly by the hike in Minimum Support Price (MSP).
Against the backdrop of prices of some essential food items remaining high, the challenge to balance the interest of farmers and consumers will remain in 2023 also.
“Overall, the agriculture sector performed well in 2022 but for weather aberrations that affected some crops. We are hopeful the next year will be better and as of now wheat crop prospects seem to be bright,” National Rainfed Area Authority CEO Ashok Dalwai told PTI.
The production loss due to abnormal weather events is difficult to check but the loss to farmers is being neutralised through the PM-KISAN and Pradhan Mantri Fasal Bima Yojana (PMFBY), he said.
India achieved a record foodgrain production of 315.72 million tonnes in the 2021-22 crop year (July-June), beating the previous high of 310.74 million tonnes in 2020-21, as per the government data.
However, the achievement of back-to-back record foodgrain production was partly overshadowed by concerns over production and prices of wheat, rice and edible oils.
“Overall, it was a challenging year but then the proactive measures paid dividends,” Consumer Affairs Secretary Rohit Kumar Singh told PTI.
According to him, managing buffer stock coupled with stable import policy has helped keep the supply of key commodities and their prices stable throughout the year.
“The moral of the story is that prices are not just a function of supply and demand as traditional economists believe. It is also a question of managing the sentiments in the market,” Singh said.
The agriculture sector’s reliance on weather was on stark display as sudden heatwaves in few states led to a shortfall in domestic production of wheat while deficit rains in eastern parts of the country affected paddy crops.
Wheat production declined to 106.84 million tonnes in 2022 from 109.59 million tonnes in the previous year but trade experts said that the production fall was more steep at around 95 million tonnes.
The Centre’s wheat procurement dropped by around 50 per cent this year, putting stress on the buffer stock.
With hardening of retail prices of wheat and wheat flour (atta), the government swung into action to ban wheat export from May 13, 2022 to check the retail price rise. It also started supplying more rice and less wheat through ration shops.
The story of rice is no different as deficit rains, mainly in the eastern states, pulled down the output during the kharif season. Rice production is pegged lower at 104.99 million tonnes during 2022 kharif season as against 111.76 million tonnes in the same season previous year.
The government banned export of broken rice and slapped a 20 per cent customs duty on non-basmati rice export. This helped in arresting a sharp rise in rice prices. The average retail price of rice is now ruling at Rs 38.43 per kg.
However, All India Exporters Association Former President Vijay Setia said rice exports rose 7 per cent to 126.97 lakh tonnes during the April-October period of 2022 from over the year-ago period.
In the case of edible oils, import duties were reduced on multiple occasions to boost domestic availability and control local prices.
Meanwhile, the fertiliser subsidy bill could touch Rs 2.5 lakh crore this fiscal as the government kept retail prices unchanged despite a sharp rise in global fertiliser prices.
In another major development during the year, the government set up a committee to look into ways to strengthen the MSP mechanism.
With the United Nations declaring 2023 as the International Year of Millets following a suggestion from India, the government is taking steps to increase consumption of millets.
Dalwai observed that the extreme weather faced this year was one of the erratic events of nature. Right now, PM-KISAN and PMFBY are the only financial risk mitigating tools available right now.
If erratic weather events continue for next five years, then crop diversification is a solution, he added.
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