“Accept certain inalienable truths, prices will rise, politicians will philander, you too will get old, and when you do you’ll fantasize that when you were young prices were reasonable, politicians were noble and children respected their elders.” ~wrote Baz Luhrmann in the song Everbody’s free to wear Sunscreen.
True words. With an abysmal monsoon in India and flooding in China, agrarian economies both India and China are suffering huge crop failures that threaten to increase prices further and make basic commodities such as rice, cotton and tea further out of reach for the common man. Potentially curbing exports for the first time in three years, India’s cotton production has drastically dropped owning to parched fields. The monsoon as a result is playing havoc with India-China trade, as a majority to Indian exports to China are raw materials including those that have been affected by the season. Indian exports to China are anyways a bone of contention between the two countries as India’s trade deficit with her neighbour yawns to an even wider US@42 billion. Even as New Delhi seeks to rectify the situation at a diplomatic level, the rains are ruining their plans. With limited supply, prices are expected to escalate and India might even impose export quotas in order to protect the domestic market as its done before. This will subsequently not only hurt Indian exporters but also severely dampen profit margins of Chinese buyers.
India being the worlds second largest cotton exporter, more than 70 percent of India’s cotton exports go to China, where Indian exports amount to 1/3rd of China’s cotton imports, the Chinese textile industry is still a big employer. China uses a majority of Indian cotton to spin into fabrics retailed internationally by the worlds leading brands. India’s monsoon has the potential there to not only affect jobs in China, but also the price of your summer 2013 dress.
The monsoon, which brings more than 70 percent of India’s rain, was 17 percent below average since June 1, according to the India Meteorological Department. Rainfall is forecast by the department this year at 85 percent of the average between 1951 and 2000. That would be the least since the 2009 monsoon season when rainfall was 21.8 percent below average.
Rainfall in some parts of Gujarat on India’s Western front is as much as 81 percent below a 50-year average as more than 50 percent of India is threatened by drought. As reported by bloomberg, the cotton crop in Gujarat, the country’s largest producer, may plunge as much as 30 percent in the harvest starting Oct. 1 from 12 million bales of 170 kilograms each a year earlier, said Hasmukhbhai Raval, chairman of the Gujarat State Cooperative Cotton Federation.
Similarly the tea industry which is fueled by the masses that drink the antioxidant concoction is heading for a major decline in production this year, having lost a significant crop in the first six months including part of the monsoon crop, an Indian Tea Association (ITA) official said. The price of tea has jumped to a 2½-year high as poor crops in some of the world’s most important producers strain supplies. Statistics available with the Tea Board of India till May and with the ITA indicate tea production is down by at least 31 million kg during January to June 2012.