Monsoon blues

A 42 per cent rainfall deficit this month, with over 90 per cent of India recording deficient/scanty precipitation, has meant very little progress in kharif plantings so far. While July could well see a pick-up in monsoon activity, there is still the added uncertainty from a developing El Nino. The World Meteorological Organisation has forecast a 60 per cent likelihood of it establishing fully by August. In the event, even if good rains in July prompt farmers to undertake large-scale sowing, a renewed dry spell in August-September could affect crop yields due to moisture stress during the flowering and late growth stages. This is what happened in 2009. That year saw 47 per cent below normal rainfall in June, which narrowed to 4 per cent in July. But then El Nino struck and the poor rains in August-September resulted in an overall 22 per cent deficient monsoon.

A repeat of 2009 is a worst-case scenario. But it is something that policymakers need to be prepared for. The consolation is that global agri-commodity prices are relatively subdued, with the FAO Food Price Index ruling about 13 per cent below its 2011 peaks. Also, the Centre has responded more proactively this time. It has asked states to de-list fruits and vegetables from the Agricultural Produce Marketing Committee (APMC) Act to enable farmers to sell these directly to retailers/consumers. Besides, it has ordered the release of an additional 50 lakh tonnes of public rice stocks into the open market, while actively monitoring prices and supplies of key commodities. Last week’s move to raise minimum support prices for kharif crops by only 2 to 4 per cent, unlike the sharp hikes in the past, will also help in not adding to inflationary pressures. However, the imposition of minimum export prices on onions and potatoes to discourage their shipment and the crackdown on so-called hoarders and blackmarketers are reminiscent of a time when draconian provisions under the Essential Commodities Act were used to target even ordinary traders. Impeding free movement and stocking of produce only ends up disincentivising farmers from increasing output and eventually harming consumer interest.

The best way to plan for a monsoon failure is by putting in place broader mechanisms that help deal with future natural calamities. A robust agricultural insurance system triggering automatic payouts to farmers against weather-induced yield losses, dismantling the APMC and all other trading restrictions in agri-produce, disseminating real-time and area-specific weather/crop price information, promoting plant varietal improvement research for water-stressed environments, and incentivising adoption of micro/sprinkler irrigation technology for increasing productivity per unit of water are some of the things that need to be done, drought or no drought. The threat of a drought in the first year of a new government is serious, but it also presents a larger opportunity.

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