Watch | Will Super El Nino ruin India’s agri prospects? 

In this episode we discuss if Super El Nino will ruin India’s agricultural prospects

In an earlier episode of Business Matters, we have seen how El Nino and La Nina phenomena affect rainfall patterns and hence agriculture. 2023 saw a Super El Nino. It means that the surface temperature above Pacific waters – which is where the phenomenon occurs – has been 2 deg C above normal. 

You may recall that the annual climate conference COP of 2015 had set a mandate for governments across the world to contain temperature increase to less than 2 deg above normal and if possible, to contain it at 1.5 degrees. 

In February, Businessline pointed out how crop yields have a poor outlook. Let’s take a look at some key numbers, especially to do with important Rabi crops such as wheat and maize.

Why are the monsoons and crop yields important? 

But before we look at the BL piece, here’s a question for you: Why would you care if wheat or mustard sowing was below par in a particular year? If that’s indeed the question on your mind right now, here’s why you should care. 

If crop yield is affected either because of poor or excess rains, or because not enough sowing has taken place or the transport system is unable to get your tomatoes or onions to your neighbourhood, the cost of those items goes up. If this happens across several crops then it has an overall impact on inflation. And remember, 45% of weightage in consumer inflation data is given to food and beverages. 

Once inflation goes up, you know the drill, the Reserve Bank gets into reining in mode and raises interest rates and draws out liquidity so that money supply in the system dips. The aim here is to make loans costlier so that consumption goes down, thereby lowering demand and hence tempering the rise in cost of consumption items.