As El Nino approaches, staple companies stock up.
As El Nino approaches, staple companies stock up.
Companies that deal in consumer basic foods have begun accumulating larger-than-usual supplies as the threat of El Nino grows, just in case the weather phenomenon that reduces rainfall manifests itself in all its wrath.
Companies that deal in consumer basic foods, such GRM Overseas, LT Foods, and Tirupati Agritrade, have begun accumulating higher-than-usual stockpiles as the threat of El Nino grows, in case the weather effect that reduces rainfall manifests itself in all its ferocity. According to The Economic Times, staple businesses are also advising their distributors to hold inventories for around 25 days rather than the customary 15 to maintain seamless supply and avert any potential crises.
“Whether the monsoon will be good or bad is uncertain. Suraj Agarwal, CEO of Tirupati Agritrade, told the newspaper, “We have ordered our distributors to hold a stock of 25 days instead of 15 days.
Agarwal added that they were advising customers to purchase 26 kg boxes rather than the customary 10 kg ones.
Significantly, on June 8, when announcing the results of the most recent meeting of the monetary policy committee, RBI chairman Shaktikanta Das stressed that the threat of El Nino, which might have an impact on agricultural output, was one of the problems the economy was confronting despite slowing retail inflation.
The delayed kharif crop sowing has raised the most red flags. These are planted in June at the beginning of the monsoon and harvested in September and October. Rice, maize, ragi, pulses, millet, soybeans, and groundnuts are the most popular kharif crops. For the majority of them, planting seeds in the fields requires 2-2.5 inches of water.
Paddy planting, for instance, requires ankle-deep water in the fields, which hasn’t happened yet in nearly all of the key states that produce rice. West Bengal, which produces the most rice in the nation, has yet to see conditions that are favourable for the sowing of paddy.
Midway through June, the monsoon often sweeps over states like Maharashtra, Odisha, parts of Telangana, Chhattisgarh, Jharkhand, and Bihar.
Sugar and non-basmati rice, the primary food of many Indians, were affected by uneven and erratic rainfall. In fact, there have been reports of a number of commodities’ prices increasing, just as a result of the delayed sowing season, including rice, flat rice, puffed rice, jowar, and bajra.
According to private weather forecaster Skymet, the normal monsoon may experience a delay until the first week of July. This means that the expected onset and progress of the monsoon season, which is crucial for agricultural activities and overall water availability, might be delayed compared to the usual timeline. Such delays can impact various sectors, including agriculture, as farmers heavily rely on monsoon rains for irrigation and crop growth.
On the other hand, the Indian Meteorological Department (IMD) has forecasted regular trains this year. This indicates that the official weather forecast agency expects the monsoon to follow its typical pattern and duration, with no major disruptions or deviations. Regular monsoon rains are generally positive for agricultural production and can contribute to better water resources, supporting overall economic activities.
Market observers have also taken note of political statements that could potentially boost demand for staples. For example, the government of Karnataka has announced plans to distribute 10 kg of free rice each month to individuals living in poverty. Such initiatives aim to provide essential food supplies to vulnerable sections of society and alleviate the impact of economic hardships. Increased government support for staples like rice can lead to higher demand for these products, particularly among the economically disadvantaged segments of the population.
These developments highlight the intersection of weather patterns, government policies, and market dynamics. Delayed monsoon can impact agricultural productivity, affecting the availability and pricing of various agricultural commodities. On the other hand, government initiatives that support staples can influence consumer demand and market trends.
For businesses operating in sectors such as agriculture, food processing, or retail, it is important to closely monitor weather forecasts and adapt their strategies accordingly. Companies may need to adjust their production schedules, supply chains, and inventory management to account for any potential delays or fluctuations in the availability of agricultural inputs.
Similarly, market participants, including suppliers, distributors, and retailers, should consider the potential impact of government policies and initiatives on consumer demand. The distribution of free rice in Karnataka, for instance, can influence consumer preferences and purchasing patterns, particularly in the local market.
Overall, understanding the interplay between weather forecasts, government policies, and market observations is crucial for businesses and market participants to make informed decisions, manage risks, and identify potential opportunities in a dynamic and evolving market environment.
