The El Nino Threat: An Opportunity For The New Government To Weather Agricultural Challenges

On Tuesday (2 April 2019), the Australian Bureau of Meteorology (ABM) said that there was a 70 per cent chance of warm weather phenomenon El Nino (little boy in Spanish) striking the globe this year. The bureau said the likelihood was three times more than the normal probability of the warm weather setting in.

Over the last five weeks, indications of El Nino setting in have been strong, though the ABM says that predictions at this time of the year have lower accuracy.

El Nino is a weather phenomenon that is triggered by the warming up of the ocean surface in the Pacific Ocean, leading to dry weather and lower rainfall during the south-west monsoon phase between June and September.

El Nino also leads to an opposite phenomenon La Nina (little girl), resulting from a cooler ocean surface in the Pacific Ocean, leading to plenty of rainfall. La Nina usually follows El Nino, which means if the warm weather phenomenon strikes this year, expect bounty rainfall next year.

El Nino and La Nina have cast their imprints in India, harming and helping agricultural prospects in their own way. Whenever El Nino has set it, rainfall during south-west monsoon has been affected. During La Nina, the country has seen more than normal rainfall that has sometimes resulted in floods.

At times, we have witnessed some unusual phenomena resulting from El Nino, particularly. In 2015, when El Nino set in, Tamil Nadu received record rainfall during November and December, leaving many parts of Chennai under water and at least six other districts in the state reeling under floods.

For India and its government, the El Nino setting in is of concern since the south-west monsoon that begins on 1 June could be affected. The Indian Meteorological Department hasn’t yet commented on the setting in of El Nino this year or its likely impact on the south-west monsoon, which contributes 70 per cent to the country’s annual rainfall.

The National Collateral Management Services Limited (NCML), a company floated by National Commodities and Derivatives Exchange, IFFCO and four Indian banks and now controlled by Fairfax, in a report, has said that prices of agricultural produce are unlikely to be affected by El Nino.

What NCML, which specialises in storage management, procurement and collateral services, says is that prices of foodgrains, in particular, will not witness a spike. The reason why prices of essential commodities like rice and pulses might not increase is that there is ample stock of these within the country.

Currently, India has over 46.5 million tonnes of rice and wheat besides over 20 million tonnes of unmilled paddy in stock. This is against the mandatory norm to stock 21 million tonnes of rice and wheat, including 5 million tonnes of strategic reserve, as on 1 April.

El Nino will not have any impact on prices of crops such as wheat, rapeseed/mustard, gram (channa) as they are rabi crops that are sown after October. Problems could be with the kharif crops that are sown during May-June-July and harvested around October.

The real danger of El Nino is the impact it could have on oilseeds production as well as coarse cereals such as maize (corn) and bajra. India is already importing over 70 per cent of its edible oil requirements.

In the 2017-18 oil year (November-October), edible oil imports were a little over 15 million tonnes. The Solvent Extractors Association of India says that edible oil imports have increased 27 per cent in the last five years.

India is already reporting that it might have to import a good quantity of maize in view of a lower production this crop year (July 2018-June 2019). User industries are asking the Centre to allow them to import at a lower customs duty, if not at zero duty.

Other crops that could see their prospects being hit are sugarcane and cotton. Sugar production is estimated lower at 30.7 million tonnes (mt) this season against 31.5 mt last season. Despite this, production is expected to be at least 5 mt higher than the demand, thus keeping the prices depressed. A carryover stock of over 11 mt, which can meet nearly five months’ demand in the country, will also put a leash on the prices.

Globally, signs of economic growth are not healthy. China has cut its economic growth target, and growth in the United States slowed down last month.

Prospects for rise in prices of agricultural commodities are bleak. This is because warehouses are bulging with stocks, while weather for production has been good across the globe. El Nino will actually help nations in the Pacific with bountiful rainfall.

Production glut on top of all these aren’t something farmers can look forward to, particularly when harsh weather is on the anvil. They simply cannot afford poor remuneration on top of a fall in production.

On the other hand, prices of oilseeds, particularly, might rise if crude prices spike. Vegetable oils are seen as an alternative to fossil fuels, especially when crude oil prices flare up.

For India, there is an additional concern in view of the European Union proposing to curb use of palm group of oils in production of biodiesel. This could result in prices of palm group of oils being lower and flooding the Indian market. Flooding of imports could affect oilseed farmers getting better prices.

This leaves the new government that will be in place by 1 June, when the south-west monsoon usually sets in, with no option but to spring into action right away.

Apart from coming up with a higher minimum support price, the government will have to take all precautionary measures to face any drought or effects of lower rainfall. It will have to ensure that farmers get remunerative prices for their produce.

Over the last couple of years, growth in agricultural gross domestic product has been lower than 3 per cent. This is mainly in view of huge stocks and production glut in the global market, leading to prices for agricultural produce being depressed.

Weather insurance for farmers, which the Congress alleges has not been up to expectations, has to result in quick and prompt payment for the losses.

The other issue is that IMD should begin forecasting these weather problems well in advance like the ABM’s alert. IMD is good in short-term weather forecasts but it is time for India, which now boasts of various capabilities including shooting down enemy satellites in space, to improve its long-term weather prediction abilities.

El Nino should be seen as an opportunity rather than a challenge to rectify the current drawbacks in the Indian system.