el nino event and impact on indian agriculture & economy

8/10/2019 El Nino Event and Impact on Indian Agriculture & Economy

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Impact of El Nino on Indian Agriculture & Economy

Research & Analysis Group 1

El Nino Event and Impact on Indian Agriculture & Economy

The El Niño Southern Oscillation (ENSO): Formation and Effects on Weather

ENSO, or El Niño-Southern Oscillation, is a quasi-periodic climate pattern that occurs in the tropical

Pacific Ocean. When the conditions change, the atmosphere responds in many different ways. In certain

locations, it is cloudier and it rains more, while in others it’s clear and dry.

Formation

El Niño is a temporary change in sea surface temperatures of the Pacific Ocean near the Equator. Under

normal conditions, trade winds on the equatorial Pacific normally blow from east to west; however,

during the event in the mid-latitudes, winds blow from west to east. Since the winds blow this way over

extended periods of time, water in the western Pacific “piles up”. The water that piles up in this region is

warm (approximately 30°C), since the wind pushes the sun-warmed shallow layer of the ocean to the

west. With warmer waters, you tend to see an increase in thunderstorm activity. So this region that has

warmer water, like the northern coast of Australia, typically sees thunderstorm activity.

The water further east is colder (approximately 22°C) because the deeper water is pulled up, or upwells,

to replace the water that has been pushed away. So areas along the western coast of Equatorial South

America will see cold sea surface temperatures.

In a positive phase, also known as El Niño, the winds that push the water to the west weaken. Since the

winds are weaker or even reverse, not as much water piles up in the western Pacific, so the water slides

back toward the east. With the warmer water sliding back toward the east, not as much cold water rises

along the coast, which results in warmer waters off the coast of equatorial South America. Once this gets

going, the situation continues and strengthens: the warmer waters cause the winds to weaken even further,

which results in the ocean warming further, which causes the winds to further weaken, which results in

the further ocean warming, etc. This is known as positive feedback and allows El Niño to grow.

What happens if the east to west winds actually strengthen? This results in even more warm water piling

up in the western Pacific and even more cold water upwelling along the western coast of Equatorial South

America. This scenario is known as La Niña, or the negative phase of ENSO, and it brings with it

different weather patterns. As with El Niño, there is a positive feedback that happens with the winds and

allows the event to strengthen: the colder waters cause the winds to strengthen even further, which results

in the ocean cooling further, which causes the winds to strengthen, which results in the ocean cooling,

etc.





Effects of ENSO on Weather

Even though the sea surface temperature anomalies are happening along the equator in the Pacific Ocean,

weather all over the world is influenced by ENSO. The exact effects depend on the phase of ENSO andthe time of year (December through February and June through August). For example, if El Niño starts

this June, India may experience dryer than normal conditions through August and then warmer conditions

December through February (depending on how long El Niño lasts).





Impact on India

El Nino event affects rainfall in India during the monsoons. Due to more heating, warm water off eastern

coast of South America increase the sea surface temperatures above normal by 0.5 degree Celsius andleads to diversion of flow of moist winds from the Indian Ocean towards the eastern coast of South

America. This change in wind pattern reduces the amount of rainfall in the Indian subcontinent.

El Niño and the Indian summer monsoons are inversely related. Six of the most prominent droughts in

India since 1871, have been caused due to this effect, including the recent ones in 2002 and 2009.

However, not all El Niño years have led to droughts in India. The year 1997-98 was a strong El Niño year

but did not cause draught in India. Contrarily, a moderate El Niño in 2002 resulted in one of the worst

droughts in India. According to historical data of 126 years (1880-2005), about 90% of all evolving El

Niño years have led to below normal rainfall and 65% of the El Niño years have brought about droughts.

Thus, El Niño through its effect on monsoon causes lesser rainfall and consequently, an impact on crop

production. As a result of adverse effects on crop production, related agro-based industries also suffer.

Impact of El Niño and La Nina on Indian Monsoon

Year Occurrence Impact Monsoon*

2002 Mild El Nino Severe Drought < 90%

2003 Neutral Normal ≥ 100%

2004 El Nino Drought 88%

2005 Neutral Normal 101%

2006 Neutral Normal 103%

2007 La Nina Excess 110%

2008 La Nina Above Normal 105%

2009 El Nino Severe Drought 79%

2010 La Nina Normal 100%

2011 La Nina Normal 104%

2012 Mild El Nino Below Normal 92%

2013 Neutral Above Normal 106%

*Monsoon as percentage of 50-year average

Source: Skymet





2014 as an El Nino Year

Forecasts by leading Metrological Departments

The Australian Meteorological Bureau:

According to the latest estimates by The Australian Meteorological Bureau as on 6th May 2014, the

tropical Pacific Ocean has warmed steadily in recent months, with large anomalies in the ocean sub-

surface and increasing warm sea surface temperatures. Climate models surveyed by the Bureau suggest an

El Niño development is possible as early as July. These factors indicate that while El Niño in 2014 cannot

be guaranteed, the likelihood of an event developing remains at least 70%.

National Oceanic and Atmospheric Administration:

According to the estimates issued on 8th May 2014, the El Niño/ Southern Oscillation (ENSO) continued

during April 2014, but with above-average sea surface temperatures developing over much of the eastern

tropical Pacific. The model predictions of ENSO for the summer and beyond are indicating an increased

likelihood of El Niño as compared to the previous month. There remains uncertainty as to when exactly

El Niño will develop and how strong it may become, however the chances of El Niño increases during the

remainder of the year, exceeding 65% during summer.

Indian Meteorological Department:

The ENSO conditions in the equatorial Pacific continues to be neutral. However, the sub surface

temperatures in the tropical Pacific have warmed to the levels generally observed prior to an El Niño

event. Latest forecast from a majority of the models also indicate a warming trend in the sea surface

temperatures over the equatorial Pacific reaching to El Niño level during the south west monsoon season

with a probability of around 60%.

Impact on Indian Agriculture, Related Industries and Economy

Production and Trade

The kharif crops (monsoon crops) are projected to get effected most by an El Nino event. Crops grown in

Indian sub-continent during the onset of monsoon (June to August) are known as kharif crops. Major

crops grown during this period in India include paddy, maize, coarse cereals, cotton, pulses, soybean,

guar and castor. An accurate prediction of El Nino and its impacts though is limited, an analysis of

production and trade of select kharif crops over the El Nino years shows some supporting trends.





Rice

Rice in India is mainly a rain-fed crop. The production of rice has reduced in each of the El Niño years

(Exhibit 1). The production of rice declined by 23% during the period 2002-03 from 93.34 million tonnes

in 2001-02 to 71.82 million tonnes in 2002-03.A similar trend can be observed in the subsequent El Nino

years 2004-05 and 2009-10, when the production reduced by a y-o-y rate of 6% and 10%, respectively.

Thus, the less than normal rainfall this year might have an impact on the rice production.

Exhibit 1

Highlighted figures corresponds to El Nino years

Source: Ministry of Agriculture, Govt. Of India

No distinct trend in rice trade was recorded during 2002 and 2004 El Nino years; however, rice trade was

negatively affected during the subsequent El Nino year 2009. Rice being a food security crop in India, its

trade is governed by various policy environments. Non-basmati rice trade has been often subjected to

bans as a measure to control domestic prices. Hence, analyzing trade in rice in India in relation to an El Nino event is limited.

India’s export and import of rice

Years Exports Y-O-Y Imports Y-O-Y

(US$ million) (%) (US$ million) (%)

2000-01 644.3 3.89

2001-02 665.55 3 0.01 -100

2002-03 1218.27 83 0.23 2200

2003-04 907.04 -26 0.06 -74

2004-05 1506.5 66 - -

2005-06 1405.19 -7 0.08 -2006-07 1556.85 11 0.09 13

2007-08 2927.56 88 0.11 22

2008-09 2454.09 -16 0.11 0

2009-10 2365.73 -4 0.08 -27

2010-11 2544.74 8 0.2 150

2011-12 4940.36 94 1.16 480

2012-13 6216.01 26 0.73 -37

Highlights corresponds to El Nino years

Source: DGCIS





Pulses

The major kharif pulses grown in India include moong (green gram), urad (black gram), and tur (pigeon

pea). Pulses are largely grown on non-irrigated land and water requirements are highest during July,

August and September. Lesser rainfall particularly in August has the greatest impacts on crop yields.

Green gram is primarily a crop of the rainy season. It is sown in the first week of July. Black gram is one

of the most important kharif pulses grown in India and is sown in the latter part of June. As can be seen in

the exhibit below, the production of kharif pulses have fallen in the years of reduced rainfall. The

production of kharif pulses decreased by 14%, 23% and 10%, respectively in the years 2002, 2004 and

2009. Trade in pulses also recorded negative trends in the El Nino years.

Exhibit 2

Highlighted figures corresponds to El Nino years Source: Ministry of Agriculture, Govt. Of India

India’s export and import of pulses Years Exports Y-O-Y Imports Y-O-Y


2000-01 117.78 110.32

2001-02 77.68 -34 694.36 529

2002-03 72.92 -6 611.29 -12

2003-04 73.2 0 562.68 -8

2004-05 135.24 85 441.07 -22

2005-06 254.02 88 631.03 43

2006-07 174.04 -31 1010.11 60

2007-08 136.02 -22 1406.85 39

2008-09 118.15 -13 1405.65 0

2009-10 86.95 -26 2249.2 60

2010-11 191.47 120 1645.14 -27

2011-12 228.02 19 1961.34 19

2012-13 236.39 4 2452.34 25


Source: DGCIS





Sugarcane

India has about 5 million hectares of land under sugarcane cultivation. The total water requirement for

sugarcane crop in India is 80-100 BCM (billion cubic meters) per sugar season. The crop takes around

twelve to eighteen months to grow and requires plentiful supply of water during the months of July to

September. Thus, erratic rainfall during south west monsoons has an impact on the total acreage of

sugarcane for the current and subsequent season. However, since there was good rainfall in September

and October in 2013 as compared to 2012, an increase in acreage during 2014-15 can be expected. Impact

of El Nino on sugarcane production in the El Nino years (2002, 2004, and 2009) has not been significant.

However, trends in sugar trade had reported significant decline during the El Nino years of 2004 and

2009, in particular. Sugar as a commodity is vital to India’s economy, hence, the industry and its trade is

highly regulated. As a measure to control domestic supplies and prices, trade in sugar is often regulated;

this may be evident from fluctuations in trade even in years other than El Nino.

Exhibit 3

Highlighted figures corresponds to El Nino years Source: Ministry of Agriculture, Govt. Of India

India’s export and import of sugar



2000-01 94.6 6.97

2001-02 360.1 281 6.84 -2

2002-03 365.27 1 6.78 -1

2003-04 263.92 -28 13.65 101

2004-05 32.6 -88 217.26 1492

2005-06 128.26 293 147.17 -32

2006-07 689.2 437 0.76 -99

2007-08 1344.17 95 0.55 -28

2008-09 1037.24 -23 117.19 21207

2009-10 21.74 -98 1270.4 984

2010-11 1196.2 5402 609.31 -52

2011-12 1835.95 53 63.76 -90

2012-13 1571.98 -14 568.13 791


Source: DGCIS





Cotton

Cotton is one of the principal crops of India and plays a vital role in the country’s economic growth by

providing substantial employment and making significant contributions to export earnings. The planting

period of cotton is from March to September, while the harvesting period is from October to February.

The textile industry of India is predominantly cotton based, and hence fluctuations in cotton production

due to any weather event may have repercussions on the textile industry as well. Cotton crop in India has

the highest penetration of biotechnological innovations with significant no. of varietal options. Except in

the year 2002, no other El Nino years had recorded any significant impact on production of cotton in

India. However, trade in cotton had recorded negative growth in the El Nino years with exception during

2009-10. Cotton trade in India is largely influenced by both pricing and foreign trade policy, imparting

considerable impact on its trade. In the recent years, under the macro policy environment of India, trading

policies have made India the world’s second largest exporter of cotton (next to US).

Exhibit 4



India’s export and import of cotton

Years Exports Change Imports Change(US$ million) % (US$ million) %

2000-01 2408.22 290.15

2001-02 1994.02 -17 479.31 65

2002-03 2202.35 10 343.51 -28

2003-04 2465.72 12 483.74 41

2004-05 2262.86 -8 448.51 -7

2005-06 2984.21 32 438.08 -22006-07 3940.94 32 465.59 6

2007-08 5171.64 31 544.53 17

2008-09 3148.7 -39 636.21 17

2009-10 4612.28 47 499.1 -22

2010-11 6925.71 50 415.9 -17

2011-12 8922.04 29 511.09 23

2012-13 8937.03 0 789.01 54


Source: DGCIS





Soybean

Soybean, an oilseed crop is a comparatively weather resilient crop. The critical issue in soybean

production is that there should not be long intervals between rainfalls; with this criterion soybean can be

cultivated even in deficient monsoons. July and August are the relatively important months in cultivating

soybeans and have an influence on the crop production. Similarly, for other oilseeds, such as ground nuts,

the output is generally good, if rainfall is received at regular intervals even if the overall rainfall is below

normal. The production of soybean declined by 22% and 12% in 2002 and 2004 El Nino years, while it

rose by 1% in 2009. Trade in soybean has been showing fluctuations even in years other than El Nino

years.

Exhibit 5



India’s export and import of soybean



2000-01 15.67 0.07

2001-02 1.12 -93 0.02 -71

2002-03 0.39 -65 0 -100

2003-04 63 16054 0 -

2004-05 0.79 -99 0 -

2005-06 1.9 141 0 -

2006-07 1.49 -22 0.08 -

2007-08 3 101 0.03 -63

2008-09 18.82 527 0.05 67

2009-10 11.95 -37 0.04 -20

2010-11 8.52 -29 0.01 -75

2011-12 22.89 169 0.1 900

2012-13 48.72 113 0.66 560


Source: DGCIS





Wheat

The production of wheat is also affected by this weather condition as water that is percolated in the

ground during the rains is the main source of water for the production of the rabi crops. The figure below

shows the production of wheat in India, which has reduced in all of the El Niño years. The production of

wheat declined by 9.6%, 5.0% and 0.9%, respectively in 2002, 2004 and 2009. Trade in wheat had

recorded a negative growth only in the El Nino year 2004. A negative trend in wheat exports was

recorded during 2008-09, perhaps in an anticipation of an El Nino event during 2009.

Exhibit 6



India’s export and import of wheat



2000-01 31.78 1.14

2001-02 40.3 27 0.29 -75

2002-03 58.22 44 0.22 -24

2003-04 74.55 28 1.11 405

2004-05 29.48 -60 1.55 40

2005-06 9.98 -66 1.11 -28

2006-07 12.08 21 1.87 68

2007-08 12.32 2 0.66 -65

2008-09 3.41 -72 0.84 27

2009-10 15.62 358 0.92 10

2010-11 23.06 48 0.98 7

2011-12 42.36 84 0.85 -13

2012-13 84.89 100 2.05 141


Source: DGCIS





Food Prices

The relationship between monsoon and food grain production is quite direct. Lower food grain

production usually translates into high food inflation. The fall in food grain production during

2009-10 and 2012-13 was followed by a surge in food inflation. Food inflation rose from 9.1% in

2008-09 to 15.21% in 2009-10. The subsequent year saw a further rise in food inflation to

15.8%. Again, in 2012-13, food inflation jumped to 9.93%, from 7.4% in 2011-12. However,

with timely and effective measures by the Government of India, even with a shortage in

production estimates in foodgrains due to any weather-related event, foodgrain prices may be

kept under control. Given that food articles have less than 15% weight in the wholesale price

index inflation (WPI), the effect on WPI has not been profound. For instance, despite a rise infood inflation during 2009-10, WPI fell to 3.86% from 8.09% in 2008-09. Similarly, despite the

surge in food inflation, WPI fell to 7.36% in 2012-13 from 8.96% in 2011-12.

Also it has been observed that year 2009-10, an El Nino year recorded high inflation both in

foodgrains, food articles and sugarcane; however, inflation in raw cotton has been negative. This

when analysed with production of cotton shows that cotton production has increased during

2009-10. This also explains that during a drought year there is a tendency of shift in cultivation

towards drought resistant high value crops resulting in higher output of such crops.

Impact of Deficient Monsoon on Commodities

Year Monsoon *

Change in Food

Production (%)

Inflation#

Foodgrains

Food

Articles

Raw

Cotton Sugarcane

All

Commodities

2004-05 -13.8 -7.0 -- -- -- --

2005-06 -1.3 5.2 7.3 5.4 9.8 0.15 4.4

2006-07 -0.4 4.2 14.1 9.6 7.2 0.8 6.6

2007-08 5.7 6.2 6.9 7.1 15.7 0.7 4.7

2008-09 -1.7 1.6 11 9.1 26.3 (-)0.4 8.1

2009-10 -21.8 -7.0 14.5 15.2 (-)1.86 5.2 3.9

2010-11 2 12.1 4.9 15.8 43.9 46.8 9.6

2011-12 1.6 6.1 3.6 7.4 13 6.4 8.9

2012-13 -7.5 -0.8 14.6 9.9 (-)8.5 3.7 7.4

2013-14 (P) 5.6 2.8 9.1 12.8 14.8 9.3 5.9

*% departure from long period average; #Growth Rate (Inflation) of Wholesale Price Index (BASE: 2004-05=100)

Source: MoA, MoCI, GoI & Exim Bank Analysis





An analysis of industrial production of cotton items also reveals that an El Nino event during 2004 and

2009 had no impact on the cotton based industries, with all items registering significant growth (y-o-y) in

production during 2004-05 (an El Nino year) over 2003-04 (raw cotton ~ 35.8%; cotton yarn ~ 7.1%;cotton fabric ~9.2%) and 2009-10 (an El Nino year) over 2008-09 (raw cotton ~ 5.2%; cotton yarn ~

6.3%; cotton fabric ~7.5%). A reduction in raw cotton and industrial production was however, reported

during 2002-03, which was also an El Nino year.

Industrial Production of Cotton in India

Item Unit2001-

02

2002-

03*

2003-

04

2004-

05*

2005-

06

2006-

07

2007-

08

2008-

09

2009-

10*

2010-

11

2011-

12

201

13

(Ap

Au

(P

Raw Cotton-(cotton year

Oct-Sept)

Lakh bales 158 136 179 243 241 280 307 290 305 339 353 3

Cotton Yarn Million Kg 2,212 2,177 2,121 2,272 2,521 2,824 2,948 2,896 3,079 3,490 3,126 1,4

Cotton Fabric Million Sq Mtr 19,769 19,296 18,849 20,578 23,873 26,225 27,196 26,898 28,914 31,718 30,593 14,1

*El Nino Years

Source: Ministry of Textile, GOI

Outlook & Way Forward

The impact of El Ni˜no– southern oscillation (ENSO) on Indian foodgrain production has been

studied by many researchers. According to a research paper in International Journal ofClimatology, the ENSO impact on rice production was greatest among the individual crops. The

average drop in rice (Kharif season crop) production during a warm ENSO-phase year was

around 7%. In a cold ENSO-phase year the average production increase was around 3%. Wheat

(Rabi season crop) production was also influenced by ENSO, as it depends on the carryover soil

water storage from the Kharif season. Dryland crops sorghum and chickpea production are not

significantly influenced by ENSO extremes. Nevertheless, forecasting ENSO and its impact at

lead times longer than a few months remains a challenge and more so as it is influenced by other

atomospheric-ocean interactions.

Like the Pacific Ocean, the Indian Ocean also shows interannual climate fluctuations, which are

known as the Indian Ocean Dipole (IOD). Positive phases of the Indian Ocean Dipole tend to co-

occur with El Niño, and negative phases with La Niña. Research has also revealed that a neutral

IOD have also been able to neutralise the impact of El Nino. Scientists claim that an IOD event





is possible to project 14 months prior to its occurrence. Recent meteorological reports by various

global meteorological departments observing oceanic movements in Indian ocean reveals that

there has been no significant development in IOD. This may result in a mild El Nino impact on

Indian monsoon.

A recent report, released by the National Oceanic and Atmospheric Administration (NOAA),

USA, states that the chances of a positive ENSO occurrence in 2014 is over 65%. However,

climate models suggest that ENSO occurrence will be established only by August and peaking

around late winter. This is supported by a near average tropical rainfall across Indonesia and the

tropical Pacific. With such movements, a normal monsoon may be expected in India or a

marginal deflection in average rainfall during the period June-August.

Nonetheless, in an event of severe impact of ENSO on Indian monsoon, these predictions offer

opportunities to adjust macro-economic objectives, including import – export policies, fertilizer

and input subsidies, maintenance of national foodgrain buffer stock, and duty on the import and

production of fertilizers and seeds at the national level. The farm-level application includes crop

and varietal selection, decision on selection of appropriate cost-effective technologies and inputs

to manage risk and opportunities.

In line with the current forecasts, Governments across Asia is taking all steps to face the

situation. For instance, Government of India agencies may procure 8% more wheat this year.

Higher procurement will add to higher stocks and consequently enable the government to meet

inflationary pressures if El Nino happens. In Indonesia the agriculture ministry has instructed

farming advisors to assist farmers with modern techniques, to bring forward planting of certain

crops. They are also being trained in ways to adapt to changing weather patterns, and depending

on the province, urged to plant alternative crops to rice that can cope better with dry conditions.

The Malaysian government has formed a water crisis committee that will work with various

ministries to monitor any El Niño impact. The government is also encouraging industry to use

underground or recycled water and increase the capacity of water storage tanks.

el nino event and impact on indian agriculture & economy

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