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Linking farm sector fortunes to unpredictable monsoon could be premature

As the government pins its hopes on a normal monsoon this year to revive the Covid-19-hit farm sector, experts said unless this growth translates into tangible improvement in farmers' incomes, the rural sector will not revive.

Overdependence on the monsoon is fraught with risks, as the rains are highly unpredictable and a lot depends on their distribution, spread and timeliness, than overall quantum.

The reliance of Indian agriculture on monsoon is also gradually waning, which means even if the rains aren't too good, farm output may not drop dramatically. Still, the June to September season  does have a very strong influence not only on farming but overall economic growth in India.

That’s mainly because a large number of the population is dependent directly or indirectly on agriculture and related activities, though farming itself might contribute less than 20 per cent to the country’s GDP.

NITI Aayog member and eminent agriculture economist Ramesh Chand sain in an interview to Business Standard a few days back, that if agriculture and allied activities grow at 3 per cent in 2020-21 at constant prices on the back of good monsoon and strong sowing of summer crops, farmers’ income which is measured at current prices. could rise at a much higher rate. This, of course, would depend upon increase in agricultural prices relative to non-agricultural prices.

He said while there is fear of deflation in overall prices, the trend in farm prices is expected to be opposite.

Mahendra Dev, Director of Indira Gandhi Institute of Development Research (IGIDR) and former chairman of Commission for Agriculture Costs and Prices (CACP), feels that agriculture growth at current prices will be cushioned from the deflationary trend in other services and industries. This could make the terms of trade favourable for farm sector in 2020-21.

“In other years, while agriculture growth at current prices is lower than services and industry, farmers are at a disadvantaged position, but in the current fiscal they could be in a relatively better position than others, not because the farm sector has performed well, but because the other two sectors have fared poorly,” explained Mahendra Dev.

Monsoon & agriculture 

How important rainfall for Indian agriculture is, can be gauged from the 2017-18 Economic Survey, which devoted a full chapter on the impact on extreme weather shocks on farm yields. It estimated that an average Indian farmers’ annual income could get wiped off by Rs 3,600 due to extreme weather shocks that includes high temperature and low rainfall.

It based its analysis on two parameters -- Impact on yields due to extreme temperature shocks and extreme rainfall shocks.

It said an extreme temperature shock in unirrigated areas reduces yields by 7 per cent for kharif and 7.6 per cent for rabi, while extreme rainfall reduces the yield by 12.8 per cent in kharif on an average and 6.7 per cent in rabi. This includes both irrigated and non-irrigated areas.

At current levels of farm income, the Survey says the adverse impact of climate change translates into more than Rs 3,600 per year drop in income for the median farm household due to climate change-induced factors, such as extreme temperature or extreme and sudden bursts of rainfall.

According to NSS 70th Round of Survey (conducted between January-December 2013), the average income per agricultural households during the agriculture year July 2012 to June 2013 was estimated at Rs 6,426 a month, or Rs 77,112 per annum.

A fall of Rs 3,600 per year will mean that average monthly income will go down by another Rs 300 due to drop in yields. Clearly, extreme weather shocks are something which can have a big and tangible impact on farming.

Rainfall distribution & spread holds the key 

A major factor that impact Indian agriculture on the whole is distribution of rainfall. This typically refers to the wide regional disparities in recorded rainfall even as the nationwide aggregate is normal.

“This holds true particularly in rainfed and non-irrigated areas because here, every drop of rain will make a big difference,” says Mahendra Dev.

He said that in states such Rajasthan, Maharashtra, Madhya Pradesh, the rainfall distribution will play a major role in getting a good farm output.

“So to say a normal monsoon will automatically translate into 3 per cent growth at this stage, based on the forecast, is slightly premature unless a clear picture emerges on the distribution pattern of rainfall,” Dev said.

The met department in its first forecast for 2020 monsoon relased last month only said that India’s southwest monsoon in 2020 is expected to be ‘normal’ at 100 per cent of the Long Period Average (LPA). The LPA of seasonal rainfall over the country as a whole for the period 1961-2010 is 88 cm.

A more granular forecast with region-wise details is expected to be released later this month or in early June.

Delayed onset & withdrawal 

The monsoon pattern is changing according to the IMD with rains arriving late in the Central, western and Northern parts and its withdrawal also getting delayed.

Though it has been happening for some time now and several experts say that farmers have gotten used to this changing pattern of rains, how big an impact it will have on farming, farm yields and final harvest is still to be assessed properly.

The IMD’s report says its analysis of last 30 years’ data shows that monsoon onset and withdrawal dates over parts of North-West, Central and West India are getting delayed by 3-7 days in some cases and advanced by few days in some other cases.

The withdrawal dates over much of Central and North-West India, where a substantial part of the farming activities is dependent on rains, are also getting delayed by 7-14 days beyond their usual time. The annual rain onset date over Kerala coast remains at around June 1 but thereafter its progress over Central, West and North India is taking longer than usual.

Clearly, when it comes to the monsoon and its impact on agriculture growth nothing can be said with surety unless the showers actually arrive and finish their four-month journey over India. 

Impact of weather shocks on agriculture yields
(Percentage secline in response to temperature increase and rainfall decrease)
Extreme Temp Shocks  Extreme rainfall Shocks
Average Kharif 
-4.0%  -12.8%
Kharif Irrigated 
-2.7%  -6.2%
Kharif Unirrigated  -7.0%  -14.7%
Average Rabi  -4.7%  -6.7%
Rabi Irrigated  -3.0%  -4.1%
Rabi Unirrigated  -7.6%  -8.6%
NOTE: Extreme temperature shock is when a district is significantly hotter than usual and extreme rainfall shock is when it rains significantly less than usual. Unirrigated district is where less than 50 per cent cropped area is under irrigation. Source: Economic Survey 2017-18

 

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