Asia Times Online reports about Indian government's "Demand-supply Management".
(emphasis mine) [my comment]
Sep 10, 2009
India's rain brings crop of doubt
By Santwana Bhattacharya
NEW DELHI - Some rain over the past two weeks has offered hope that the drought that threatened India, after a late and fickle monsoon, might not be as severe or as damaging as threatened at the end of June - or so some politicians and economists would like the public and business to believe.
Low reservoir water levels and a crop-sowing calendar already gone awry made the outlook six to eight weeks ago appear dire - and not just to those who worked directly on the land. But others, not least in government, warned against "alarmist" forecasts, and argued for a more optimistic outlook.
July and August were still left, and even if particular crop patterns were disrupted, late rains could always make the final figures look more respectable. Roughly speaking, if there is pain across the map, ignore it. At least technically, there wouldn't be a deficit.
It's as if someone has to be held accountable for the weather. The flinching from responsibility, the denial of a crisis until it can be postponed no more, suggests anticipatory guilt, as if the electorate might see some causal link between poor rains and the government.
About two months down the line, as of the first week in September, 252 out of about 600 districts in the country - or about half of India - have been officially declared to be hit by drought. The kharif, or summer monsoon, crop output - mostly paddy - is projected to be down by 20%.
As numerous mini-disasters pile up, their combined effect threatens to pull down India's growth rate from the 6.1% recorded during the first quarter of the financial year. This has brought the problem more urgently to the attention of macro economists.
The monsoon did partially keep to schedule, but debate remains over whether it was too little and/or too late. Good rains in the past fortnight, especially in hitherto dry areas, have brought down the total deficit from the 55% of June-end to 23% now. But much of the damage in agricultural terms (and thus on the economy) has already been done. The present rains merely offer the possibility that further damage might be limited.
Many farmers will be praying that is the case, particularly after the untimely, and deeply ironic, death last week of the charismatic Andhra Pradesh chief minister YS Rajasekhara Reddy in a helicopter crash. Often described as a farmers' leader and a son-of-the-soil, YSR was on one of his periodic trips to the rural areas to check the drought situation. Taking off in bad weather, the chopper rammed into a hill in the middle of a forest - in conditions of zero visibility and blinding rain.
The rains have not been playing truant in India alone. Seven other countries have been severely hit by drought and are staring helplessly at the resultant agriculture crisis.
Parts of the United States, China, Australia, Cambodia, Argentina, Kenya and Somalia are reeling under its effects - the difference being only in their ability to cope. Even in Europe, television pictures show townspeople, driven to distress by temperatures in the 40s Celsius, using public fountains to cool down.
Yet some experts and governments, in full cognizance of the facts, want us not to create panic and paint a picture of parched crops and a looming food crisis. This, they say, would push up food prices unnaturally, lead to hoarding and ultimately result in a situation where many more millions across the world would go hungry. And whether it is the developing world or the developed, it is those at the bottom of the pyramid who are the most affected in such scenarios.
["some experts and governments" includes the USDA]
This leads to a confusing divide between reality and government pronouncements, or even between the perspectives of government departments.
The Indian government, for one, claims that it will be able to insulate the bottom rung of society from the vagaries of drought. The class of landless agriculture labor, bereft of any farm work, has been promised sustenance wages through public works initiated under the welfarist National Rural Employment Guarantee Act (NREGA).
But perhaps they are not the worst victims. For that, one may have to look at the next tier on the economic pecking order - the small and medium farmer, whose heavily debt-powered investments on often merciless plots of farmland represent one of the riskier forms of venture capital the world has known. It is from these strata that one hears news of farmers' suicides.
In the six weeks up to August 27, more than 150 farmers committed suicide in Andhra Pradesh alone, according to an Associated Press report citing opposition parties and farmers' groups. That was six times the official toll of 25 farmer suicides in the state, where 70% of the 80 million population depend on agriculture, the report said.
The landless do lead hard-scrabble lives, but they have always migrated to where there is work and food. For those committed to their own hectare or so of land, even the laborer's financial security, by way of the expanded NREGA program, is a point of distress for the small employer: for, over and above his other expenses, he now has to pay higher wages too.
To ease the distress building up at this level, the government has designed a little stimulus package that would allow the farmer to take some advantage of late monsoon showers by sowing short-duration crops - anything to help him cut his losses and keep him from taking a big swig of that bottle of pesticide.
Before the crisis management plan rolled out, even the economist and Prime Minister Manmohan Singh had shown signs of alarm. "No one can control drought and it is a severe drought," he said in a public speech. Last Tuesday, when he addressed the Planning Commission of India, his first such meeting since he won the general election in May, the tone was more confident. "We are in a very strong position to manage the consequences of drought. Our food stocks in particular are very high. We should not be over-pessimistic," he said. The prime minister projected a buffer food stock of 50 million tonnes.
Meanwhile, Finance Minister Pranab Mukherjee, a veteran troubleshooter for the government, who was giving detailed responses on the drought situation to assuage fears, put out more conservative figures. He also claimed that "there's no need for panic" - but his surplus estimates were far lower.
Totting up the wheat and rice buffer stock, he put the food sur plus at a modest 16 million tonnes (10 million tonnes of wheat, six million of rice). These reserves are substantial and domestic food availability will not be a problem, according to Mukherjee.
Paddy, which has been badly hit by drought, will naturally have lower stock. By October 1, the rice stock is likely to be 13.7 million tonnes. (Given a normal buffer of 5.2 million tonnes and strategic reserves of 2 million tonnes, nearly 6 million tonnes will be surplus.) This despite the rainfall deficiency of 26% up to the end of August, which has brought down grain production by between 15 and 20%.
There is some aggressive, rearguard action unfolding on the paddy fields too. The government hopes to recoup the shortfall in grain production in the northern states of Uttar Pradesh and Bihar with the help of some never-say-die methods adopted by farmers in the rich states of Haryana and Punjab. The standing crop in the grain basin, it seems, has not all been allowed to wither. This was done by tapping into underwater reserves, pumped up through machines running on diesel subsidy.
Thus, Mukherjee said, there's going to be some good harvesting news as well. Dwelling on this in a recent interview, he quipped, "The situation could be bad, but that does not mean we should start eating lizards. We have the experience of tackling the drought of 1987-88, the worst of the century."
Well, that is an official admission about how bad the current drought is - if its psychological burden has to be alleviated by stories of worse nightmares. Mukherjee is in any case known for being a walking encyclopedia of sorts, an oral historian, even if he sometimes gives the impression of still being in the 20th century.
To put the final guarantee on demand-supply management, the government is also considering imports of food grain. The date and timing have not been indicated so that international prices do not shoot up in anticipation of a huge import order. Once the decision is taken, India could turn out to be a big buyer.
But the real battle is unfolding in India's innumerable, kerchief-sized farm plots. In badly affected districts, the central government, in tandem with the states, plans to introduce short-duration crops - pulses, oilseeds and others - on farms that have been slightly moistened in the late phase of the monsoon. The government still hopes some of the rain shortfall may be made up during the next week or so. With some luck, the 81 reservoirs in catchment areas will be back to nearly full. These are currently running at an average 39% of capacity.
Meanwhile, over and above a $2 billion diesel subsidy, short-term crop loans have been provided to some thousands of farmers across India. The Agriculture Ministry has convinced the Finance Ministry to give those who return their loans on time another 1% rebate on interest. The procurement price for any rice saved from the clutches of drought will be 1,000 rupees (US$20) per quintal (about 100 kilograms) up from 850 rupees last season.
The other aspect of drought is the impact it has on manpower utilization. With parched lands offering little job options to the landless labor, it typically sets off a wave of exodus to urban areas. This is what targeted welfare schemes such as the NREGA are intended to offset. According to one proposal, even those recruited to work on short-term crops should get coverage - that will provide labor wages and also, in effect, subsidize the farmer in another way.
All this adds up to an unplanned burden on government finances. The Reserve Bank of India sounded a warning in a recent report that deficient monsoons will not only affect agriculture output and put pressure on food prices, but raise demand for more subsidies and relief measures and thus push up fiscal deficit. The Central Statistical Organization, too, says the effect of drought has not been reflected in the first quarter data. It is certainly going to show up in the coming quarters.
So, despite the brave posturing, it's little wonder that the United Progressive Alliance government has quietly deferred its plan of introducing its proposed food security bill, which was to provide 25 kilograms of rice and/or wheat at three rupees to each family below the poverty line.
Santwana Bhattacharya is a New Delhi-based journalist who writes on politics, parliament and elections. She is currently working on a book on electoral reforms and the emergence of regional parties in India.
Example of the Indian government's "Demand-supply Management"
Bloomberg reports that Drought-Struck India May Have Record Wheat Crop for Second Year.
Drought-Struck India May Have Record Wheat Crop for Second Year
By Bibhudatta Pradhan
Sept. 25 (Bloomberg) -- India, the world's second-biggest wheat grower, expects to harvest a record crop for a second year as a revival in monsoon over the past month raises water levels in major reservoirs, a government official said.
Output may be 2 million metric tons more than the record 80.6 million tons gathered last year [Wow. This is so crazy it is funny. Apparently, a severe, country-wide drought is good for Indian wheat production], Agriculture Commissioner N.B. Singh told reporters today. Winter-sown rice harvest may be higher by 3.5 million tons from a year ago, he said.
[India has finally figured out its problem: too much rain. Now that it has finally experienced a severe nation-wide rain deficit, it will be able to harvest the 82.6 million ton of wheat it never could when rains were plentiful. Maybe if Indian farmers set their crops on fire, that would improve yields too! (SARCASM)]
Almost half of India, the world's largest producer of rice, wheat and sugar, is reeling from a drought caused by the driest monsoon in at least seven years. Rains have returned in the past month, increasing soil moisture and benefiting early winter crop growth, the farm ministry said last week.
A revival in rains from mid August has replenished water levels in reservoirs. Farmers use this water to grow wheat and oilseeds planted between October and December. The nation's 81 main reservoirs were 59 percent full on Sept. 24, up from 57 percent a week earlier.
Wheat, sowed in October and harvested starting March, makes up for more than 70 percent of India's winter grain output.
[I love this insanity. The graphic below captu res how ridiculous the situation is:
This story of India harvesting "a record crop for a second year" suggests:
A) The Indian government thinks we are complete idiots
B) The Indian government is desperate
C) Both A and B
The Grim Reality
DNA india reports about India's worst drought since 1918.
Worst drought, worse to come
Rajesh Sinha / DNA
Monday, September 28, 2009 2:10 IST
New Delhi: The monsoon season leaves India not just with the worst drought in decades but a sombre forecast for future.
In terms of affected area, this year's drought is the worst since 1918. Conditions surpass the one in 1972, considered the worst post-independence drought year.
The Indian Meteorological Department (IMD) reported deficient monsoon, with rain shortfall at 22%. Moreover, the area under deficient rainfall covers 56% of the country's districts, the IMD said.
When there is more than 10% rainfall deficiency, and more than 20% of the area is under dry weather, it is an "all-India drought". A "widespread drought" is when there is more than 10% deficiency, affecting more than 20% of the geographical area of the country. This year, there's 20% rainfall deficiency which has affected more than 50% of the area.
In the past 123 years, there have been 25 years of widespread drought. In terms of spread, the one in 1918 was the most severe, affecting more than 70% of the area, followed by 1899 (68.4%), 1877 (59.4%), 1972 (52.6%) and 1987 (47.7%). In 2002, rainfall deficiency was 19%, and 29% of India was under drought.
Recent studies predict that rainfall will deteriorate in the coming years. The melting of glaciers in the Arctic circle seems too far away to cause concern to Indians, but according to BN Goswami, director of the Indian Institute of Tropical Meteorology (IITM), Pune, freshwater melting from Greenland's ice sheet could weaken the monsoon to the extent of threatening perpetual drought. The Greenland ice melt will add more freshwater to the north Atlantic Ocean, making it less saline. This could weaken the circulation of ocean waters and temperature variations over the Indian subcontinent -- two key factors that could also weaken the summer monsoon, says Goswami.
Another study recently published in Nature said global warming may increase the frequency of a new breed of El Nino weather events, called El Nino Modoki, which would lead to rise in the frequency and intensity of droughts in India.
A study by Centre for Atmospheric Research at Indian Institute of Technology Delhi in May says the monsoon is weakening. Researchers found that long rainy spells -- more than 2.5 millimetres of rain daily for more than four consecutive days -- decreased across the country over the last 50 years while short and dry spells -- less than 2.5 mm rain daily increased.
In March, an article in Down to Earth magazine said while parts of the country are receiving extreme rainfall, overall moderate rainfall that benefit crops, is decreasing. Another study in Current Science said the number of days of more than 12 mm rainfall have decreased by 78% in the past 53 years.
In March, a Purdue University found that climate change could influence monsoon dynamics and cause less summer precipitation, a delay in the start of monsoon season and longer breaks between rainy periods. The South Asian summer monsoon -- critical to agriculture in Bangladesh, India, Nepal and Pakistan -- could be weakened and delayed due to rising temperatures, it said.
Nogger does some research about the situation brewing in India, and it's likely impact on crop production there.
Tuesday, 1 September 2009
Indian Take Away
I've been doing some research over the long weekend into the situation brewing in India, and it's likely impact on crop production there.
With monsoon rains down by 26% so far this season (starting June 1st) most analysts estimates are that final rainfall could finish up around 20% down this season.
That seems to assume that rainfall will be plentiful in this the last month of the rainy season. Not everybody is convinced, September normally only provides 20% of to tal monsoon rains. In addition some forecasters are saying that the El Nino effect could also mean a premature end to the monsoon season.
Checking back through the records there are only three years in the last thirty when monsoon rains in India have been 15% or more below normal: 1979, 1987 and 2002.
In each of these years, not only did summer crop production fall significantly, winter output was also sharply lower.
There hasn't been a year in the last thirty when monsoon rains were 20% or more below normal.
With reservoir levels low (only 42% of capacity), threatening electricity shortages as well as irrigation of winter crops, there is a school of thought that planting rapeseed this year may provide a more viable option for Indian farmers than wheat.
Rapeseed demands less water for one, and for two it's price is more closely aligned to that of soybeans, providing potentially higher returns for India's cash-strapped farmers.
Another factor being discussed is that the late arrival of the monsoon (June was the driest in over 80 years) means that many paddy fields were planted with late-sown varieties of rice. Many of these fields would normally go on to be planted with winter wheat, but because the rice harvest will be delayed getting wheat in here will be problematic, and at the very least impact on yields.
In the most recent drought year of 2002, soybean production fell 22%, rice 23.5%, corn 15.3% and wheat 9.3%. Total food crop production was 24 MMT lower.
Since 2002 the population of India has grown by an estimated 250 million people. Think about that, there's four times the size of the entire population of the UK more mouths to feed in India than there was just seven years ago.
The Sydney Morning Heraldreports about water wars in India.
Water wars forecast as feeding India's hungry leaves the land thirsty
September 26, 2009
Farmers who can no longer irrigate fear nothing will be left to drink, writes Matt Wade.
BALAWAS VILLAGE, Haryana: India is destined for water wars, one of its leading environmentalists has concluded after studying the effects of modern agriculture for more than 20 years.
''In a decade India could look like Darfur in Sudan,'' says Dr Vandana Shiva, a nuclear physicist turned environmental activist. ''When you run out of water it's a recipe for killing. Water really makes people so desperate.''
A patchy monsoon on the subcontinent this year has hit crops, particularly rice, highlighting the region's vulnerability to water shortages. But the problem is much bigger than one poor wet season.
In Haryana and Punjab, two states crucial to India's food security, farmers are drawing too much groundwater. Dubbed the subcontinent's breadbasket, this region has been the heartland of the country's green revolution since the mid-1960s. The high-yielding crop varieties grown here have enabled the country to feed its huge, fast-growing population. But the hybrid crops of the green revolution require a lot of water, as well as fertiliser and pesticides.
Farmers in Punjab and Haryana are now drilling deeper and deeper for water and the crop yields that once rose year after year have stagnated.
Last year the Prime Minister, Manmohan Singh, told an international agriculture conference there was a ''persistent feeling that the first green revolution has run its course ... we need a second green revolution''. But a second resource-intensive agricultural revolution is not sustainable.
An analysis of NASA satellite data taken over north-western India from 2002 to 2008 found aquifers were disappearing at an alarming rate. The study warned of the potential ''collapse of agriculture'' and severe shortages of drinking water in the region unless things changed.
Associate Professor Raj Kumar Jhorar, a soil and water specialist at Haryana Agricultural University, says too many farmers have switched to water-intensive crops such as rice, wheat and cotton. His research shows that the area of rice under cultivation in Haryana has risen by about 430 per cent since the late 1960s, cotton by 230 per cent and wheat by more than 200 per cent. ''This just isn't sustainable,'' he says.
A Punjab Government draft water policy document published last year said the state's water was being polluted by industrial waste, sewage and excessive pesticide use in agriculture. ''This can adversely affect the health of the populace and may cause diseases like cancer, skin diseases and miscarriage cases,'' it said.
These reports only confirm what local farmers already know.
Chatan Singh, a farmer in Balawas, has planted two crops in his fields since June but both have failed because of the scanty monsoon. A few years ago this would have been unthinkable because tubewells and a nearby canal could have made up for any shortfall in rain. But the canal recently ran dry and the tubewells are suddenly spewing out unusable saline water.
When this year's rains went truant, Chatan Singh's crops withered, leaving the father of eight deep in debt.
''This is new,'' he says. ''Once there was good water from the rains, the canal and the tubewells, but now it's scarce.''
He and his neighbours now drink the saline water that comes from the ground. Tests by a local university showed it was not fit for regular consumption but the villagers keep drinking. They have no alternative. [Yuck]
Shiva says water shortages could split communities along deeply entrenched divisions of caste and religion.
''What we will start seeing is localised conflicts over water,'' she says. ''As livelihoods evaporate, along with water, you will s ee all sorts of cracks opening up in society.''
Conflict is also possible between the majority rural population and the bursting cities.
''People with power live in cities and as the water crisis is deepening what remains is being increasingly delivered to the cities,'' Shiva says.
She is monitoring eight big river diversions to provide cities with more water.
Farmers in Balawas do not quibble with her prediction of violent conflict about water.
''Our wives already squabble over drinking water so when it gets to agricultural water there will be a much bigger fight,'' says one farmer, Jai Singh Sharma. His family owns 16 hectares of land in Balawas but he now plants crops on less than half a hectare because of a lack of water.
''Our wells are no longer giving us what we need,'' he says. ''If our water supply keeps receding at this rate we will see violence.''
At Dauatpur village, about 50 kilometres from Balawas, the farmers are just as pessimistic.
Kulbhushan Sharma, whose family owns six hectares, says he has been forced to drill his wells deeper, especially in the past five years.
''Slowly, slowly, year by year, things are going from bad to worse,'' he says.
''If this goes on it will be the end. Forget water for farming - we won't even have any to drink. The whole of India will be affected.''
There have been bitter fights recently about the dwindling supply of canal water in Dauatpur.
''The violence has started,'' Sharma says. Last month a gang of farmers at Aurangabad in the poverty-stricken state of Bihar gained nationwide publicity when they took up arms to guard their watered fields. They said people from nearby villages were trying to divert water towards their fields. They were ready to kill or be killed to protect their water.
''We don't want a fight but if someone diverts the canal water then how will we irrigate our fields?'' one of the armed men, Narendra Singh, told a local TV station.
The Government has been urged to manage water more effectively and to improve the patchy maintenance of the country's vast canal systems. The Punjab Government recently banned farmers from planting paddy rice until after the monsoon arrives in an attempt to save water.
However, political imperatives have stifled sensible reforms. Water is not priced appropriately and most farmers have free electricity to run their groundwater pumps. This encourages waste.
As if India's water problems were not enough already, global warming threatens to make them much worse. Scientists predict the annual monsoon, on which about 40 per cent of farmers depend, is likely to become more unpredictable as the country adds more than 20 million new mouths to feed every year. It is no wonder some locals are starting to fear the worst.
My reaction: Governments are lying about the looming food crisis. The USDA is definitely a part of this effort to "keep everyone calm" and "prevent panics".
As a result of governments covering up about the looming food shortage over the last few months, there has been no stockpiling (which would have help ease the crisis). Worse, with the USDA predicting record crops for everything under the sun, end users have been convinced to shift demand from 2008/09 (when world had a bumper harvest) to 2009/10 (which saw a catastrophic fall in global food production).
It is now too late to do anything. Before year end, shortages of wheat, soybean, sugar, etc will have reached the point where no about of ridiculous spin can hide them. The world will realize it is missing a few months food supply, and the panic will start. Prices of virtually all agricultural commodities will double or triple (which will also trigger a dollar collapse (more on that later)).
I recommend buying agricultural land.