Onion farmer’s optimism
Nashik onion farmer Karbhari Jadhav lost almost a quarter of his crop due to untimely rains in Maharashtra in April. Still, the 48-year-old is more optimistic than he was a year ago.
Last year, Jadhav struggled to sell his onions at a higher price ₹12 per kg. Wholesale prices have already climbed this season ₹Prices have increased to Rs 27-28 per kg due to low Rabi stocks and fears of weak monsoon.
“I will compensate for the production losses through better prices,” Jadhav said.
The temporarily higher prices have eased Jadhav’s immediate concerns. But as he prepares to plant the next crop, uncertainty looms. Like millions of farmers, they too need consistent monsoon rains in the coming weeks. While farmers fear that deficient rainfall may reduce this year’s crop, wholesale traders have already started raising prices of onions, pulses, edible oils and some vegetables in anticipation of tight supplies in the coming months.
More than half of India’s districts have received deficient or substantially deficient rainfall so far this monsoon, highlighting the uneven spread of rainfall despite the nationwide deficit being less severe. According to the India Meteorological Department (IMD), 53% of the districts are currently classified as either deficient or largely deficient, even though cumulative rainfall across the country is only 21% below the long period average (LPA). The disparity shows that while some areas have received adequate rainfall, large parts of the country are facing prolonged drought, which could lead to damage to kharif crops.
This impact is likely to be magnified for rainfed crops such as pulses, soybean and maize, for which the timing of rainfall often matters more than seasonal totals. Prolonged drought during sowing and subsequent rainfall during the early stages of crop growth can also reduce yields.
Those concerns are becoming visible on the ground. According to Garima Jain, chief executive officer, Torque Commodities, low rainfall since July 8 in parts of Madhya Pradesh, Maharashtra, Karnataka and Gujarat has led to rising temperatures and reduced soil moisture. “Similar situation is expected to continue for the next 7-10 days, we can say with confidence that the area under pulses, millets and oilseeds is likely to decline,” he said.
The first signs of this are already visible in retail markets. As of Tuesday, onion prices were about 20% higher than a year ago and about 33% higher than a month ago, data from the consumer affairs department showed. Potato prices have increased by about 11% in the last month. Among pulses, urad prices were up nearly 4% from a year ago and tur prices were up nearly 2%. Edible oils turnover continues to be 12-17% higher than last year.
Economists have warned that some rise in prices of perishable vegetables is common ahead of the monsoon as extreme heat affects supplies. However, delayed or reduced rainfall could increase profits as traders start anticipating lower kharif production. “Perishable vegetables like potatoes and tomatoes often become costlier during May and June due to the heat. Part of the increase this year is due to concerns that delayed monsoon rains could impact production after the kharif season,” said Yuvika Singhal, economist at Quanteco.
After recording the driest June since 2009, the IMD expects below normal rainfall for both July and the entire monsoon season. It has predicted rainfall of 94% of LPA and seasonal rainfall of 90% of LPA in July. Global forecasts have also become more pessimistic. In its latest fortnightly outlook, the Australian Bureau of Meteorology said most international climate models indicate the ongoing El Niño could strengthen into one of the strongest events since the 1950s. El Nino is usually associated with hot, dry conditions over large parts of India.
The Center has said that an El Nino year does not automatically translate into below normal rainfall and said it is prepared for any eventuality. After reviewing the monsoon earlier this month, the government said rainfall deficit has reduced after the revival in July and pointed to contingency plans at the district level, adequate seed stocks and preparedness measures to protect the kharif crop.
But the increase in food prices has also given ammunition to the opposition. A day after retail inflation hit a 17-month high of 4.38% in June, driven mainly by food prices, the Congress accused the Center of failing to rein in inflation. In a post on Twitter, Congress general secretary Jairam Ramesh said rising prices during the 12-year tenure of the BJP-led government have hit the household budget and questioned when Prime Minister Narendra Modi will address the concerns of common citizens.
Will prices increase further?
Often prices start rising long before crop damage is visible. Traders closely monitor weather forecasts, sowing progress, reservoir levels and crop conditions to estimate how much produce may ultimately reach the market, and set prices.
Soybeans offer perhaps the clearest example of how expectations can outweigh existing supply. According to the latest balance sheet of Soybean Processors Association of India (SOPA), the country has enough stocks to meet domestic demand till fresh arrivals, which usually start around September 15. Yet soybean prices continue to rise. According to the government’s Unified Portal for Agricultural Statistics (UPAG), the average wholesale price of soybean has increased ₹From Rs 6,684 per 100 kg this month ₹5,509 more in April ₹Rs 4,221 a year ago.
“The market is valuing what could happen in the next two months and not what is available now,” said a local trader in Indore. “Despite comfortable stocks, domestic soybean prices are trading at almost double the global level as traders have started considering the possibility that an El Nino-affected monsoon could reduce the size of the upcoming crop.”
Whether these expectations translate into lower production will largely depend on how El Nino develops over the next two months. Quantaco Research, which examined 12 previous El Niño episodes since the 1980s, found that years in which El Niño was active during the main southwest monsoon months almost always recorded below normal rainfall. Current forecasts suggest that El Nino could be of weak to moderate intensity during July and August – the most critical period for kharif crops.
Another concern is the possibility of a sharp decline in water available for irrigation. According to the Central Water Commission, storage in reservoirs across India is 36.5% less than a year ago. Quanteco said storage has declined sharply compared to the past six years, with southern India seeing the sharpest decline.
“Reservoirs usually start filling in June with the onset of monsoon. This year it has not happened to the expected extent and this trend continues in July as well,” Singhal said.
Lower reservoir levels matter because they determine how effectively farmers can protect crops if rainfall weakens late in the season. Even where sowing has been completed, yields may be reduced by moisture deficiency during the vegetative stage.
Low rainfall may reduce the availability of fodder, which may increase the cost of fodder for livestock and poultry. Plantings of maize, a key ingredient in animal feed, fell by nearly 20% to 5.6 million hectares as of July 10. Retail prices already reflect this pressure, with milk prices up nearly 3% from a year ago, ghee up 5% and eggs up 8%.
Former NITI Aayog member and agricultural economist Ramesh Chand said Indian agriculture is much better prepared than during the drought of 2002 or 1979, due to expanded irrigation, improved seed varieties, crop insurance and mechanization. However, he said this year’s scenario will depend on how the monsoon fares in the next few weeks. “If rainfall deficit stabilizes around 16%, agricultural gross value added (GVA) growth may slow to about 1%. If rainfall deficit increases beyond 20%, agricultural GVA may fall into negative territory,” he said. GVA in 2025-26 was 3%.
However, economists do not expect sharp food inflation as the government has comfortable grain reserves and larger buffers than before.
Government wheat stocks stood at 42.8 million tonnes, up from 35.7 million tonnes a year ago. Rice stocks remain comfortable at 38.95 million tonnes, while the Center has also created a pulse buffer of about 4.5 million tonnes through procurement and imports. These stocks give the government scope to release supplies or increase imports if shortages arise.
For now, the market has rewarded Jadhav. Whether the monsoon will do the same or not will become clear in the next fortnight.
