Monday, 29 February 2016 00:00

India’s Agricultural Growth: Beyond El Niño And La Niña

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India’s agriculture sector growth in the recent past has been severely impacted by El Niño, an abnormal warming of the Pacific waters near Ecuador and Peru that has disturbed weather patterns around the world. The El Niño in 2015 (starting February 2015) has been the strongest since 1997 and continues to be strong.

Between 1981-82 and 2015-16, the El Niño years have seen average agriculture sector de-growth of 2.1% compared to average agriculture sector growth of 3.0% during this 35 year period. Clearly, the impact of El Niño has always been significant and it’s no different this time.

However, the economic survey of India 2015-16 provides some interesting facts about years subsequent to El Niño. According to the analysis in the report –

“Since 1950, there have been 22 El Niño events of varying durations and intensities, according to NOAA data. But out of the 21 prior to this one, 9 have been followed by La Niña, involving an abnormal cooling of sea surface waters along the tropical west coast of South America with an ONI less than minus 0.5 degrees Celsius. This phenomenon – there have been 14 such events since 1950 – has been associated with normal-to-excess monsoons in India, which may be a by-product of atmospheric convection activity shifting to the north of Australia.”

In other words, with the El Niño likely to weaken in 2016, there is a possibility of La Niña effect having a positive impact on the agriculture sector. As the chart below shows, the La Niña years have seen India’s agriculture sector growth surge to an average of 8.4%.


Indias Agriculture Sector Growth El Nino and La Nina Years


Clearly, amidst the concerns, there is silver lining and if 2016-17 indeed turns out to be La Niña years, there are reasons to be bullish on agriculture sector themes in India that include the irrigation, fertilizer and seeds sector among others.

However, I want to focus on the years beyond El Niño and La Niña and analyze if there is scope for higher growth in the agriculture sector from productivity driven factors.

I am indicating to the per hectare agriculture sector yield in India and there are several reasons to focus on this point and to be concerned about the current scenario.

The chart below gives the per capita availability of arable land for India, China and Brazil. It is clear that India’s per capita availability has witnessed the steepest decline in the last 50+ years.


Per Capita Availability of Arable Land China India Brazil


While China’s per capita availability of arable land is lower for China, the next point will put into perspective the key difference between India and China.

The factor that I want to single out is the per hectare agriculture yield in India, China and the rest of the world. For all major crops, the per hectare agriculture yield in India is at least half that of China and the two charts below back my point.


Average Yield of Paddy For India China and World



Average Yield of Pulses for India China and The World


Even for wheat, the average yield in India is significantly lower than China (except for states of Punjab and Haryana).

Therefore, with declining availability of arable land, there is urgent need to boost agriculture yield through advanced farming methods. I would also like to mention that in the recent past, pulses have witnessed surge in prices and if the agriculture yield were to double, the food inflation will significantly decline.

In addition to increasing crop yield, I see proper crop storage as a big problem in India. Overall, the warehousing infrastructure needs to improve in a country where 30% to 50% of the agriculture yield is wasted. If the agriculture resources are conserved, India can meet local consumption requirements and also export food crop to agriculture deficit countries.

However, it all has to start with initiates to improve yield along with initiatives to conserve fresh water resources. The availability of fresh water is likely to be a big challenge in the coming decade and the chart below on per capita availability of renewable fresh water resources puts things into perspective.


Per Capita Availability of Renewable Freshwater Resources India and China


In conclusion, there is huge untapped potential in the Indian agriculture sector and the sector can drive India’s GDP growth beyond 10% and potentially improve the country’s deficit scenario. While the Union Budget 2015-16 has focused on the agriculture sector, more needs to be done specifically on the yield improvement front coupled with building infrastructure to protect the crops.

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