Drought fears stalk Indian farmers

Penny Macrae Yahoo News 11 Aug 09;

NEW DELHI (AFP) – In vast parched swathes of rural India, farmers are eyeing their bone-dry fields with despair as they face the grim prospect of drought.

The so-called "rain deficit" or shortfall from the monsoon, which sweeps across the subcontinent from June to September, stands at an average 25 percent so far and many farmers say their crops are going to fail.

"Almost 80 percent of the country is under the threat of drought due to a shortage of rainfall," Food Minister Sharad Pawar told reporters this week with rice, a key staple, and sugar among the worst-hit crops.

Monsoon rains for the past week were 64 percent below average.

The monsoon is dubbed an "economic lifeline" in a country of nearly 1.2 billion people that is one of the world's leading producers of rice, wheat and sugar.

With only 40 percent of arable land under irrigation, India's 235 million farmers rely on the annual rains to soak the rock-hard earth and turn it into fertile soil.

"There's no doubt agricultural growth is going to be hit," Dharmakirti Joshi, principal economist at India's leading credit rating agency, Crisil, told AFP.

"Many poor states are extremely vulnerable, they're in a very precarious position," he said, adding the rains could be the weakest since 2002.

On Monday, Bihar, India's poorest and second-most populous state and a major rice producer, declared 26 out of its 40 districts were hit by drought.

"We have not even been able to start sowing," one farmer in eastern Bihar state told India's NDTV network, standing on cracked, barren ground that normally should have been a brilliant green paddy field.

Uttar Pradesh, India's most populous state and a leading sugar producer, has declared drought in 47 out of its 71 districts.

Global sugar prices are at their highest level in 28 years due to bad weather that is hurting output in India and Brazil.

The stagnant farm sector's contribution to India's gross domestic product is just 16.6 percent, down from 50 percent in the 1950s.

But agriculture is still vital as it supports about 700 million of India's population who live in the countryside and fuels consumer demand for everything from TVs and refrigerators to motorcycles and gold.

India's Prime Minister Manmohan Singh said on the weekend the government would seek to ensure no citizen goes hungry.

"We are in a position to ensure adequate availability of foodgrains in drought-affected areas," he said, thanks to bumper crops in the past two years.

"In no case should we allow citizens to go hungry," Singh said, promising strong action against "hoarders and black marketeers."

But food, earmarked by the government under ration schemes for India's poorest, is often stolen by corrupt officials and sold on the open market.

And food price inflation, already soaring before the monsoon, has been pushed higher by the meagre rainfall, hitting India's poor masses hardest.

"The lower the income category, the more of their total income they spend on food," said Crisil's Joshi. "The more food prices rise, the more it hurts the 'common man.'"

"Primary product prices have begun to spiral," said Citi economist Rohini Malkani, noting a 19 percent year-on-year jump in the price of pulses, a 15.5 percent leap in the cost of rice and similar rises for fruits and vegetables.

More is riding on this monsoon than just the summer crop.

An abundant monsoon is necessary to ensure good moisture conditions for the next winter wheat crop, which is sown in November and harvested in March.

The truant monsoon has come as India's economy shows tentative signs of recovery after being slowed by the global financial crisis.

While economists believe agricultural growth could contract this year, many believe stronger industrial output will counter the fickle rains.

The poor monsoon could be offset by the "improvement in industrial activity, continued focus on infrastructure" and a government budget that targeted help for the poor, said Macquarie Securities economist Rajeev Malik.