India must reform its agriculture policies to minimise the monsoon gamble

A case in point is the heatwave last year, which came at a time when wheat was ripening on the stalk and India was expecting a bountiful harvest, based on which the government had announced grand plans to export wheat to counter a spike in global cereal prices owing to the war in Ukraine. Instead of ripening into a golden harvest, the wheat shrivelled, forcing India to slash state procurement of the grain and ban exports instead of offering succour to foodgrain importing countries.

This has been a year of bountiful monsoon but the wheat harvest, expected to be a bonanza, has been affected by untimely rains which have damaged the quality of the crop, if not yet significantly depressed output. The government of Punjab has already asked the central government, it has been reported, to relax the quality norms for procurement of wheat. Procurement of substandard grain would spare politicians the searing heat of farmer displeasure but burden the Food Corporation with more damaged stocks.

The IMD’s forecast is more optimistic than that of private forecaster Skymet, which forecasts deficient rains. It has predicted that the build-up of El Nino – a condition in which warming of the waters of the South Pacific reduces the force of monsoon winds – will reduce India’s rains this monsoon to 94% of the long-period average. The two forecasts are not all that far apart and if the spatial and temporal distribution of the rains proves to be benign, India can hope to have its economic recovery fortified by a robust agricultural sector at a time when the global economy is forecast to weaken.

If Indian agriculture has moved on from being a gamble on the monsoon to a gamble on the spatial and temporal distribution of the monsoon, how are policymakers supposed to respond?

There are three things to be done.

One is to reform crop insurance, make it less a form of state-funded political patronage and more of a genuine risk transfer mechanism, with realistic pricing and serious computational expertise in risk assessment. Crop insurance should bear the cost of damaged crops, not the Food Corporation of India. It should also bear the cost of additional food imports, if that becomes necessary.

That brings us to the second task: reforming farm trade. What goes by the name of a farm trade policy is sudden export bans and lobbying-induced export subsidies. Such knee jerks are injurious to the country’s health. India must bravely seize its potential to be one of the world’s biggest traders of farm produce and have a stable policy of export and import of farm output, with a sliding scale of tariffs to respond to local demand and supply. This must be supplemented with active markets in futures and option trading on agricultural output. The government will have to learn to find faith in this.

The third task is to develop resilience in the form of an array of short-duration substitutes for the varieties of grain Indian farmers are used to cultivating, drought and flood resistant varieties, food processing industries that make palatable fare from non-traditional staples such as millets, and a new business of location-specific agricultural advisory that tells farmers what to expect and what crops and varieties they should farm in each season, given the likely weather patterns.

And all this must be backed by sustained efforts to reverse climate change, leading the world to redouble efforts to capture carbon from the atmosphere and use it as an input for valuable commodities.