Rating agency for credit Crisil has stated in its report that the Grain costs are likely to be 14-15 percent higher for the upcoming financial year than average over the past five years. If we consider the reasons, it is an upswing in volatility that comes with climate changes, high global demand, and domestic demand. In the current financial year, the costs of cereal grains have gone up each year for the first 10 months. The report stated that, while the cost of paddy and wheat has gone up by 8-11 percent. However, the costs for maize, jowar, and bajra are up 27-31 percent.
Crisil anticipates that the production of wheat will increase during the rabi season.
That is currently in full swing. Despite a restriction on exports beginning at the beginning of January 2023 (the free food grain program launched on April 20, 2020). And the end of Pradhan Mantri Garib Kalyan Anna Yojana is anticipated to reduce the stock to a manageable level to the previous year.
The report says that these measures could impact wheat prices in FY2024.
According to Crisil the report, for important Kharif crops like paddy and maize, as well as bajra, and jowar, the output is expected to rise for the upcoming financial year in the event that the monsoon remains normal and evenly distributed. However the National Oceanic and Atmospheric Administration has predicted 49 percent of El Nino having an impact on the southwest monsoon from June to July 2023, and 57 percent between July and September in the report.
It is important to keep this in mind, Crisil said.
Adding this could impact the amount of rainfall for Kharif and result in dry conditions, similar to what happened in the most recent intense El Nino year (2015) where the southwest monsoon was 14 days less than normal. The proportion was lower, as the amount of Kharif food grains fell by a couple of percent per year.
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