Live Monsoon tracker: El Nino might compound woes

#ElNinoImpact As if we didn’t have enough to worry about with a deficient monsoon, the El Nino effect – a curious climatic phenomenon in the south pacific, which influences rainfall patterns in South Asia and South East Asia and in other parts of the world threaten to compound the damage. Last week, the brokerage CLSA reported, citing the International Research institute for Climate and Society, that the probability of El Nino influencing the current monsoon season is now up to nearly 50 percent. Anything in excess of 50 percent probability has traditionally proved to negatively influence the amount of rainfall. For instance, the rain shortfall in India in 2002, 2004 and 2009 were all attributed to the El Nino effect. During these years - FY 2003, FY 2005 and FY2010 - food grains and non-foodgrain production fell sharply; agricultural GDP growth slumped. #DroughtImpact Early response on the part of the government is critical to avert some of the more serious consequences of a drought or a profoundly deficient monsoon, of the sort that is currently playing out. To the extent that the government has already drawn up a contingency plan in the event of a drought, it can perhaps avert the crisis situation of widespread starvation deaths. Yet, it will be impossible to avoid the impact of a drought or a deficient monsoon in its entirety: for one thing, it will almost certainly cause food inflation - and particularly protein inflation - to spike. A drought will impact milk and meat prices rather than more than rice and wheat. And it is “protein inflation” that has in recent times proved stubbornly in double digits - and compelled RBI Governor D Subbarao to hold back from lowering interest rates despite the enormous political pressure he was under. The irony is that the dark cloud of the downturn in global manufacturing data this week came with a silver lining in the form of falling crude oil prices. There was a very possibility that India’s imported inflation would have fallen dramatically - in the way that it did in 2008 after the Lehman Brothers collapse pushed the world into a deflationary spiral. Oil prices dropped to $40 a barrel in 2009, driving inflation in India from close to 12 percent down to zero. Even if oil prices don’t fall so low, there was the prospect of a fall in the inflation rate, which would have freed the RBI to lower rates. Of course, this time around, central banks around the world are standing by to open the liquidity taps to avert a similar deflationary downturn as in 2009. A QE3 in the US, which seems more likely in the wake of the grim PMI data on Monday, could again drive oil prices up. The effect of that could be compounded by the secondary impact on protein inflation arising from a drought or a severely deficient monsoon. #Sharad Pawar not worried Agriculture Minister Sharad Pawar has said that the deficient rainfall in June affected the sowing of coarse cereals but said that there was no cause for worry for the paddy crop. “The monsoon rains have been 31 per cent below average up to 2 July”, Pawar told reporters in Delhi. He said the rainfall deficiency has affected the sowing of coarse cereals, but said that the situation in paddy was “not worrisome”. He also said that the government was looking at introducing drought resistant seeds to withstand a shortfall in rains and added that if required, the government could offer supplies from its stocks. [caption id=“attachment_365095” align=“alignleft” width=“380” caption=“Pawar says that the paddy crop will not be affected: Reuters”]  [/caption] “There are sufficient stocks of food grain available in the country and the government is ready to supply, if the states ask for it. Government will take appropriate decision to enter the open market at an appropriate time.” Pawar also said that states were ready with their contingency plan and have been told to keep sufficient feed ready. Stating that 2011 was the best crop production year, he said a comparison should be made with a normal year. On the back of good monsoon last year, India produced a record 252.56 million tonnes of foodgrain in 2011-12. “The situation this year may not be fully satisfactory, but it is not sad,” he said. Monsoon rains are crucial for the country’s agriculture as only 40 per cent cultivable area is irrigated.