El Nino Event and Impact On Indian Agriculture & Economy

Impact of El Nino on Indian Agriculture & Economy
El Nino Event and Impact on Indian Agriculture & Economy

The El Nio Southern Oscillation (ENSO): Formation and Effects on Weather
ENSO, or El Nio-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 its clear and dry.
Formation
El Nio 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 30C), 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 22C) 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 Nio, 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 Nio 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 Nia, or the negative phase of ENSO, and it brings with it
different weather patterns. As with El Nio, 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.
Research & Analysis Group
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 and
the time of year (December through February and June through August). For example, if El Nio starts
this June, India may experience dryer than normal conditions through August and then warmer conditions
December through February (depending on how long El Nio 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 and
leads 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 Nio 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 Nio years have led to droughts in India. The year 1997-98 was a strong El Nio year
but did not cause draught in India. Contrarily, a moderate El Nio 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
Nio years have led to below normal rainfall and 65% of the El Nio years have brought about droughts.
Thus, El Nio 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 Nio 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 subsurface and increasing warm sea surface temperatures. Climate models surveyed by the Bureau suggest an
El Nio development is possible as early as July. These factors indicate that while El Nio 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 Nio/ 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 Nio as compared to the previous month. There remains uncertainty as to when exactly
El Nio will develop and how strong it may become, however the chances of El Nio 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 Nio
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 Nio 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 Nio 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.
Indias export and import of rice
Years
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Exports
(US$ million)
644.3
665.55
1218.27
907.04
1506.5
1405.19
1556.85
2927.56
2454.09
2365.73
2544.74
4940.36
6216.01
Y-O-Y
(%)
3
83
-26
66
-7
11
88
-16
-4
8
94
26
Imports
(US$ million)
3.89
0.01
0.23
0.06
0.08
0.09
0.11
0.11
0.08
0.2
1.16
0.73
Y-O-Y
(%)
-100
2200
-74
13
22
0
-27
150
480
-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
Indias export and import of pulses

Years
Exports
Y-O-Y
Imports
Y-O-Y
(US$ million)
(%)
(US$ million)
(%)
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
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
2009-10
86.95
-26
2249.2
60
2010-11
191.47
120
1645.14
-27
2011-12
228.02
19
1961.34
19
236.39
2452.34
25
2012-13
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 Indias 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
Indias export and import of sugar

Years
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Exports
Y-O-Y
Imports
Y-O-Y
(US$ million)
(%)
(US$ million)
(%)
94.6
360.1
365.27
263.92
32.6
128.26
689.2
1344.17
1037.24
21.74
1196.2
1835.95
1571.98
281
1
-28
-88
293
437
95
-23
-98
5402
53
-14
6.97
6.84
6.78
13.65
217.26
147.17
0.76
0.55
117.19
1270.4
609.31
63.76
568.13
-2
-1
101
1492
-32
-99
-28
21207
984
-52
-90
791
Source: DGCIS
Cotton
Cotton is one of the principal crops of India and plays a vital role in the countrys 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 worlds second largest exporter of cotton (next to US).
Exhibit 4

Indias export and import of cotton
Years
Exports
(US$ million)
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2408.22
1994.02
2202.35
2465.72
2262.86
2984.21
3940.94
5171.64
3148.7
4612.28
6925.71
8922.04
8937.03
Change
%
-17
10
12
-8
32
32
31
-39
47
50
29
0
Imports
(US$ million)
290.15
479.31
343.51
483.74
448.51
438.08
465.59
544.53
636.21
499.1
415.9
511.09
789.01
Change
%
65
-28
41
-7
-2
6
17
17
-22
-17
23
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
Indias export and import of soybean

Years
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Exports
(US$ million)
15.67
1.12
0.39
63
0.79
1.9
1.49
3
18.82
11.95
8.52
22.89
48.72
Y-O-Y
(%)
-93
-65
16054
-99
141
-22
101
527
-37
-29
169
113
Imports
(US$ million)
0.07
0.02
0
0
0
0
0.08
0.03
0.05
0.04
0.01
0.1
0.66
Y-O-Y
(%)
-71
-100
-63
67
-20
-75
900
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 Nio 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
Indias export and import of wheat

Years
Exports
Y-O-Y
Imports
(US$ million)
(%)
(US$ million)
Y-O-Y
(%)
2000-01
31.78
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
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
2011-12
42.36
84
0.85
-13
84.89
100
2.05
141
2012-13
1.14
Source: DGCIS
10
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 in
food 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 *
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14 (P)
-13.8
-1.3
-0.4
5.7
-1.7
-21.8
2
1.6
-7.5
5.6
Change in Food
Production (%)
-7.0
5.2
4.2
6.2
1.6
-7.0
12.1
6.1
-0.8
2.8
Foodgrains
-7.3
14.1
6.9
11
14.5
4.9
3.6
14.6
9.1
Food
Articles
Inflation#
Raw
Cotton Sugarcane
--5.4
9.8
9.6
7.2
7.1
15.7
9.1
26.3
15.2 (-)1.86
15.8
43.9
7.4
13
9.9 (-)8.5
12.8
14.8
All
Commodities
-4.4
6.6
4.7
8.1
3.9
9.6
8.9
7.4
5.9
0.15
0.8
0.7
(-)0.4
5.2
46.8
6.4
3.7
9.3
*% departure from long period average; #Growth Rate (Inflation) of Wholesale Price Index (BASE: 2004-05=100)
Source: MoA, MoCI, GoI & Exim Bank Analysis
11
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
200102
200203*
200304
200405*
200506
200607
200708
200809
200910*
201011
201112
201213
(AprAug)
(P)
Lakh bales
158
136
179
243
241
280
307
290
305
339
353
334
Million Kg
2,212
2,177
2,121
2,272
2,521
2,824
2,948
2,896
3,079
3,490
3,126
1,434
19,769
19,296
18,849
20,578 23,873
*El Nino Years
26,225
27,196
26,898
28,914
31,718
30,593
14,140
Unit
Raw Cotton(cotton year

Oct-Sept)
Cotton Yarn
Cotton Fabric
Million Sq Mtr
Source: Ministry of Textile, GOI
Outlook & Way Forward
The impact of El Ninosouthern oscillation (ENSO) on Indian foodgrain production has been
studied by many researchers. According to a research paper in International Journal of
Climatology, 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 cooccur with El Nio, and negative phases with La Nia. 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
12
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 importexport 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 Nio impact. The government is also encouraging industry to use
underground or recycled water and increase the capacity of water storage tanks.
13

El Nino Event and Impact On Indian Agriculture & Economy

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Impact of El Nino on Indian Agriculture & Economy