India~s farm situation grim after weak rains-govt

Aug 21 2009 3:47PM

* Food, water, livelihood situation in rural areas grim

* Govt seeks steps against rising sugar prices

* Late rains may help only reservoirs and winter-sown crop

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By Mayank Bhardwaj and Ratnajyoti Dutta

NEW DELHI, Aug 21 (Reuters) - Failed monsoon rains in India have created a critical situation for rural livelihood, drinking water and crops, and late-season rainfall will not reverse crop damage, top officials said.

The government expects early sowing of winter-sown crops over a larger area this year to offset some of the crop loss, but the farm situation remains disturbing, Farm Minister Sharad Pawar told a conference of state farm ministers.

"The situation is grim, not just for crop sowing and crop health but also for sustaining animal health, providing drinking water, livelihood and food, particularly for the small and marginal farmers and landless labourers," he said.

Monsoon rains have been more than a quarter below normal this year, hitting the oilseeds and cane crops, potentially turning the country into an even bigger importer of sugar and edible oils next year. For full monsoon coverage,

Finance Minister Pranab Mukherjee said adequate rainfall in September could help the winter-sown crop and raise water levels in India's main reservoirs.

"All these consequential problems can be taken care of by the late rains, though they cannot take care of sowing and additional productivity of the summer-sown crops, but it can help us in the winter-sown crop," he said.

"It is an extraordinary situation," he said, adding that the government would take all necessary steps, including imports, if needed.

The latest weather forecast says rainfall will decline again in the next five days, but traders said the soybean crop, which can still gain from good rains, could withstand dry weather for a week.

FOOD PRICES

Food prices in India have risen more than 10 percent annually, although the overall wholesale price index has seen a year-on-year decline for several weeks in a row.

Sugar prices have risen sharply in India as output has fallen and the cane crop has fallen for two consecutive years, driving raw sugar futures to their highest in nearly three decades.

"Effective enforcement actions and other steps would be taken to ensure that the prices of commodities do not rise abnormally," Pawar said.

The government said it would help cane growers with low-interest loans for seeds, fertilisers and pesticides to improve productivity and sugar recovery, but sugar industry officials were worried about use of a particular type of pesticide.

Pawar said authorities need to help farmers plant alternative crops, and provide food, fodder, drinking water and employment to people, particularly in the drought-hit districts.

"At this critical stage we need to assess the current situation correctly," he said.

Pawar said efficient use of irrigation and judicious use of ground water and reservoirs was necessary.

Official data shows that India's main reservoirs rose barely one percentage point last week and stood at 38 percent of total capacity, down from 58 percent a year ago.

The rains improved in the past week, with the highest rainfall in a month, but soybean-growing regions in central India remained largely dry.