India faces moderate to strong El Nino as monsoon threatens crops

Moderate to strong El Nino conditions are likely to persist through India's June-September monsoon season, the India Meteorological Department said Friday, threatening rainfall deficits that could cut output of rice, sugarcane and cotton in the world's second-biggest producer of those crops.

"The concern about El Nino is always on my mind 24x7," Agriculture Minister Shivraj Singh Chouhan said Tuesday, after the ministry identified 197 districts across the country as most vulnerable to the weather pattern. "We have prepared a contingency plan for each state. We will leave no stone unturned to tackle this."

The IMD has forecast the southwest monsoon at about 90% of the long-period average, indicating a below-normal rainfall season. The monsoon made onset over Kerala on June 4 and has since covered the remaining parts of the Northeast, Sikkim and parts of Sub-Himalayan West Bengal, with conditions favorable for further advance into Maharashtra, Telangana, Andhra Pradesh, Odisha, Jharkhand, Bihar and West Bengal over the next four to five days.

El Nino — a climate pattern marked by unusually warm sea surface temperatures in the central and eastern Pacific Ocean — has historically disrupted Indian monsoon rainfall, with implications for the nation's $450 billion agricultural sector that employs about 45% of the workforce. The last significant El Nino event in 2015 contributed to a 14% rainfall deficit and pushed food inflation above 6%, forcing the Reserve Bank of India to hold rates even as growth slowed.

Crop Vulnerability and Contingency Planning

The 197 vulnerable districts span major producing regions for rice, the staple food for more than 800 million Indians, as well as sugarcane and cotton. India is the world's largest exporter of rice and second-largest producer of sugarcane and cotton. Any shortfall in domestic production could tighten global supplies of these commodities, particularly rice, where India accounts for about 40% of global exports.

The government's contingency plans include state-specific seed replacement strategies, adjusted sowing calendars and enhanced irrigation support, Chouhan said. The ongoing five-day BRICS agriculture meeting in Indore, which started June 9, is discussing climate risks and financing for the agricultural sector, according to Ajit Kumar Sahu, joint secretary for international cooperation in the agriculture department.

Global Ripple Effects

The impact extends beyond India's borders. Malaysia's Economic Minister Akmal Nasir said this week that El Nino is expected to reduce Malaysian crop yields by 8% to 10% this year, with temperatures rising and rainfall potentially plunging by up to 60% in certain regions. A systematic review published in Humanities and Social Sciences Communications this month identified climate change, water scarcity and trade disruptions as the primary threats to global staple crop production, warning that export restrictions by major food-producing countries can trigger food shortages in import-dependent nations across the Middle East, North Africa and Sub-Saharan Africa.

India's agricultural output shortfall would likely push domestic food inflation higher, complicating the RBI's monetary policy path. The central bank has kept its benchmark repurchase rate at 6.50% since February 2023, with food price volatility cited as a key concern in its April policy statement. A sustained El Nino could delay rate cut expectations into 2027, according to economists tracking the monsoon's progress.

The IMD is expected to issue its next monthly monsoon update in early July, which will provide the first concrete data on whether the El Nino forecast is materializing into actual rainfall shortfalls.

This article is for informational purposes only and does not constitute investment advice.