An intensifying El Niño weather pattern in the Pacific Ocean could soon affect household budgets in India, with experts warning that below-normal rainfall may lead to higher prices for milk and several essential food items.
The problem occurs due to predictions regarding the possible influence of El Niño on India’s southwest monsoon that may impact agriculture, feed for livestock, and food supply systems as a whole.
Representatives of industry associations have already noted that milk prices, which have been recently raised, might experience yet another increase as a result of precipitation shortage in the major milk-producing areas.
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According to Devendra Shah, Chairman of Parag Milk Foods, quoted by The Times of India, milk prices have already risen by 2-3 per cent and might rise by another 3-4 per cent depending on the development of the situation with monsoon.
“Milk prices have already increased by around 2-3 per cent and, if rainfall remains below normal in key milk-producing regions, a further 3-4 per cent increase is possible by July,” Shah said.
How weak monsoons affect food prices
The phenomenon of association between El Niño and food inflation is one which is very clearly known to agricultural experts. A weak monsoon implies lower water levels as well as lower production of green fodder, resulting in higher costs for keeping up with the livestock and lower agricultural yield.
Lesser production of milk can result in a higher price for dairy products like curd, butter, paneer, cheese and ghee.
But it should be kept in mind that dairy products might not be the only food items that face inflation due to El Niño.
While speaking with Moneycontrol, Shashi Kant Singh, partner for Agriculture, Food and Agribusiness at PwC India, highlighted that an intensifying El Niño could pose a serious risk to the agriculture in India.
“A super El Niño is taking shape in the Pacific, and India’s rural economy is in the crosshairs. This is emerging as a key risk for India’s agriculture,” Singh said.
He added that the impact could extend beyond the current kharif season, potentially affecting winter crops as well if temperatures remain elevated.
Pulses, edible oils and vegetables face higher risks
Experts believe rain-fed crops are particularly vulnerable to monsoon disruptions.
Pulses such as tur (arhar) could witness production declines if rainfall remains weak. Oilseed crops, including soybean, may also suffer, increasing India’s reliance on imports and placing upward pressure on edible oil prices.
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Vegetables, especially tomatoes and other perishable commodities, have historically experienced sharp price increases during weak monsoon years due to supply disruptions.
Shailesh Tyagi, Partner and Leader for Climate Change and Sustainability at Deloitte South Asia, said weaker rainfall could also affect rural incomes and broader economic sentiment.
“The immediate concern remains for rain-fed crops such as pulses, oilseeds, maize and coarse cereals,” Tyagi said.
Livestock products, including eggs and poultry, could also become more expensive as feed costs rise.
India better prepared than during previous El Niño years
However, economists and agricultural experts have pointed out that India is much better prepared than in past El Niño occurrences due to improved irrigation systems and increased foodgrain buffer stock availability and policy intervention.
Rice and wheat are thought to be fairly safe since the government has enough reserves and improved irrigation systems.
It is important to note that the final effect on the price level would depend a great deal on the monsoon rains of July and August, which is the crucial period of India’s agricultural calendar.
Should the situation improve in the following weeks, then the problem with food prices will ease down. If, on the other hand, the situation worsens due to strong El Niño phenomena, Indians may expect more expensive groceries this fall.
FAQs
Q1. Does El Niño contribute to rising food costs in India?
Yes, since El Niño results in poor monsoon seasons that cause less agricultural produce and animal produce, thus resulting in an increase in prices of the food items.
Q2. What are those food items that will become costly?
Dairy products, pulses, edible oils, vegetables, and livestock produce are believed to be highly vulnerable to poor monsoons.
